| We have audited the accompanying financial statements of Omnitech
Infosolutions Ltd, which comprise the Balance Sheet as at March 31,
2014, and the Statement of Profit and Loss and Cash Flow Statement for
the year then ended, and a summary of significant accounting policies
and other explanatory information.
Management's Responsibility for the financial statements '
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company's preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Basis of Opinion
1. As stated in the note to financial statement for Retirement
Benefits, The Company's liability for gratuity is to be determined by
actuarial valuation made at the end of each financial year using the
projected unit credit method. The actuarial valuation report from the
LIC is not available hence the adhoc provision of 50% of the liability
of the previous financial year is made which is not as per accounting
standard ( AS-15) issued by the Institute of chartered Accountant of
India
2. Due to financial irregularity defaults in repayments, winding up
petitions are filed against the company by three unsecured Loan Party
(ICD) and which are pending for admission & for further hearing.
Further there are 2 arbitration petitions filed by two NBFC's against
the company which are pending for hearing. The Company is in active
discussions with these parties for
restructuring of these loans/ICD. The Management is of the view that
since matters relating to several of the financial irregularities are
sub judice and various proceedings are ongoing, any further adjustments
/ disclosures to the financial statements, if required, would be made
in the financial statements of the Company as and when the outcome of
the above uncertainties is known and the consequential adjustments /
disclosures are identified.
In view of the above, we are unable to comment on the adjustments /
disclosures which may become necessary as a result of further findings
of the ongoing legal proceedings and the consequential impact, if any,
on these financial statements.
Emphasis of Matters:
Without qualifying our opinion we draw our attention to the following
matters:
a. Balances of Debtors, Creditors, Loans and advances given are subject
to confirmation.
b. The company has made the provision for doubtful debts of Rs. 3306.05
against the trade receivable which are outstanding more than 365 days.
c. The inventories carried by the company include software which are in
the form of CDs. We have not verified the technical details of such
CDs.
d. Company also have intangible assets having gross block value of
Rs.19739.41 lacs out of which assets worth Rs. 1736. 57 Lacs have been
acquired during the year from its subsidiary Europe Omnitech Technology
services BV, Netherland. This assets has been acquired under tri party
agreement between the company, its subsidiary and the Vendor. M/S
Europe Omnitech Technology services BV has made payment of 19.00 lacs
Euro to the vendor company in the year 2012. Now Europe Omnitech
Technology services BV has transferred the said intangible assets to
the company at the value which it has paid to the vendor plus interest
of 1.99 lacs Euro. We have not verified the technical aspects of the
intangible assets.
e. The company have not been able to recover Rs 318.45 Lacs from the
staff who have left the company. The same have been written off in the
books during the year.
f. As stated in Note 3 "Long Term Borrowings" and Note 6 "Short Term
Borrowings" of the Financial Statements, wherein the Company's loan
liabilities has been reinstated in the Financial Statements based on
the bank statements pursuant to the Corporate Debt Restructuring Scheme
("CDR"). However, as per the information and explanation provided to
us, the Company is yet to Comply with the terms and conditions of the
scheme of CDR The company has been sanctioned Term Loans from GE
Capital Services and the outstanding balance as on 31^' March 2014 is
Rs.3146.47 lacs. The company has not been able to repay the stipulated
instalments and hence the GE Capital Services who has gone for
arbitration and has called back the credit facility hence the same has
been classified under Short term borrowings.
g. The Company has not been able to perform few contracts with some
parties for which it has to pay damages of Rs.l3.48 Lacs. Apart from
this one customer has invoked Bank Guarantee of Rs. 77.20 lacs for non
performance of Contract. The management informed us that they are
perusing with the customers and are hopeful to get the money back from
the customer.
h. As informed by the management the company has invested Rs. 14.06
iacs in its subsidiary in USA which is functioning at lower level of
operation and its investment value has been eroded and Similarly
company had invested Rs.45.41 lacs in one of its subsidiaries in
Singapore and as informed by the management the operation is not
started and hence the company has provided for the diminution in the
value of investment in accordance with the accounting standard 13
issued by the ICAI
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required subject to the our
comments in paragraph 1 & 2 in basis of opinion and in paragraph a to h
in Emphasis of Matters above, give a true and fair view in conformity
with the accounting principles generally accepted In India:
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2014;
b) in the case of the statement of Profit and Loss, of the loss for the
year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b) in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account.
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956;
e) on the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
( Referred to in paragraph 3 of our report of even date )
i. (a) The company has maintained proper records showing full
particulars including quantitative details and situation of its fixed
assets.
(b) The fixed assets are physically verified by the Management at
reasonable intervals having regard to size of the Company and nature of
its assets. We have been Informed that no material discrepancies were
noticed during such physical verification. The fixed assets has been
verified by the auditor appointed by the bank for special audit for CDR
purpose.
(c) According to information and explanation given to us, we are of the
opinion that during the year, the company has not sold/disposed off any
substantial part of its fixed assets; accordingly, going concern is not
affected and hence the provisions of sub clause (c) of clause (i) of
this order are not applicable
ii. (a) According to information and explanation given to us, the
inventory other than any inventory in transits has been physically
verified during the year by the management at regular intervals. In our
opinion, the frequency of verification carried out by the management is
reasonable. The inventory has been verified by the auditor appointed by
the bank for special audit for CDR purpose.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the company is maintaining proper records of inventory.
During the year the company has written off the inventory worth of
Rs.2103.19 lakhs. Also during the year the company has treated certain
stock amounting to Rs.1690.41 lakhs as stock in trade, which was
earlier treated as part of capital work in progress.
iii. (a) The Company has granted unsecured loans to its subsidiary
Company listed in the register maintained under Section 301 of the
Companies Act 1956. The maximum amount involved during the year in
respect of the said loans was Rs. 3651.96 Lacs and the year- end
balance of loan granted to the party was Rs.2019.66 Lacs.
(b) In our opinion, prima facie, the interest and other terms and
conditions of the aforesaid loan granted are not prejudicial to the
interest of the Company.
(c) in case of the loan granted to the subsidiary Company listed in the
register maintained u/s.301. The interest amount has been debited to
the lonee's account. The terms of arrangement do not stipulate any
repayment schedule and the loan is repayable on demand. Accordingly
paragraph 4(iii)(c) of the Order is not applicable to the Company in
respect of repayment of the principal amount.
(d) Unsecured loans granted by the company are repayable on demand,
hence there are no overdue amounts of more than rupees one lacs in
respect of the loan granted to the subsidiary Company.
(e) According to information and explanations given to us, the Company
has not taken any loans, secured or unsecured from companies, firms or
other parties covered in the register maintained under section 301 of
the Companies Act, 1956. Accordingly, provisions of clause 4(iii)) and
(g) of the Order, are not applicable to the Company and hence not
commented upon.
iv. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business for the purchase of inventory, fixed assets and for the sale
of goods. Further based on our examinations and according to the
information and explanations given to us, we have neither come across
nor have we been informed of any major weakness in the internal
control.
V. (a) According to the information and explanations given to us, we
are of the opinion that the particulars of contracts or arrangements
referred to in section 301 of the Companies Act, 1956 that need to be
entered into the register maintained under section 301 of the Companies
Act, 1956, if any, have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lakhs in
respect of any party during the year have been made at prices which are
reasonable having regards to prevailing market prices at the relevant
time.
vi. The Company has taken deposits from the public within the meaning
of section 58 - A & 58 AA of the Companies Act, 1956 and the Companies
(Acceptance of Deposit) rules 1975 and hence the provisions of the
clause of 4(vi) of the Companies (Auditor's Report) Order, 2003 (as
amended) are applicable to the company.The company has made the default
in making the repayment of deposit to the deposit holders on maturity
of the deposits. The company has not made compliance with rule 3Afor
maintenance of liquid assets and also made default in filling return of
deposit with the registrar and RBI. However the company has made
application to th e central government for extension of time limit for
making the repayment of deposits.
vii. in our opinion, the company has an internal audit system
commensurate with the size and nature of its business.
viii. In our opinion and according to the information and explanations
given to us, the maintenance of cost records has not been prescribed by
the Central Government under section 209 (l)(d) of the Companies Act,
1956, for the products manufactured / traded by the Company.
ix. (a) Undisputed Statutory dues Including provident fund, investor
education and protection fund, employees state insurance, income tax,
value added tax, wealth tax, service tax, custom duty, excise duty,
cess and other material statutory dues as may be applicable to company,
have been Irregularly deposited with the appropriate authorities
(b) According to the information and explanations given to us, as shown
in the table below there are the undisputed amounts payable In respect
of wealth tax, sales tax, customs duty, excise duty and cess if
applicable and were in arrears, as at March 31, 2014 for a period of
more than six months from the date they became payable.
Nature of Statutory Dues Amount in Lacs Period to which
the tax amount
relates
4.46 2012-13
Central Sales Tax Payable- Maharashtra
13.81 2013-14
Central Sales Tax Payable-Gurgaon 4.99 2013-14
Central Sales Tax Payable- Karnataka 1.39 2013-14
Central Sales Tax Payable-Tamil Nadu 0.81 2011-12
17.14 2010-11
Value Added Tax-Maharashtra 151.00 2011-12
111.89 2012-13
Value Added Tax- Kolkatta 28.37 2013-14
0.55 2011-12
Value Added Tax- Tamil Nadu 0.04 2013-14
130.28 2012-13
Service Tax Payable 110.25 2013 14
125.87 2012-13
Tax Deducted At Source 163.66 2013-14
422.37 2010-11
Income Tax Payable (Including 9.52 2011-12
Interest)
188.96 2012-13
Employees State Insurance 3.00 2013-14
Provident Fund 17.24 2013-14
Profession Tax Payable 1.70 2013-14
(c) According to the information and explanation given to us, the
following amount of vat tax, customs duty wealth tax, excise duty and
cess has not been deposited on account of any dispute.
Sr Nature of Statute Nature of Dues Period to which it
No relates
1 Income Tax Act 1961 Income Tax Asst Year 2009-10
2 Do Do Asst Year 2010-11
3 Value Added Tax Act Vat Financial year
2008-09
Nature of Statute Forum where the Amount in Lacs
dispute is
pending
Income Tax Act 1961 CIT Appeals Rs. 0.67
Do Do Rs. 0.57
Value Added Tax Act Dy Commssioner Rs. 50.43
of sales tax (Appeal) and Rs.422.68
X. The company has not accumulated losses as at March 31, 2014 however
it as incurred losses of Rs. 14647.88 lakhs during the financial
year ended on that date.
xi. In our opinion and according to the information and explanations
given to us, the company has defaulted in repayments term loans from
banks or financial institution as at balance sheet date. The company
has also applied for capital debt restructuring with the banks for
rescheduling of terms loans and other credit facility.
xii. In our opinion and according to information and explanations given
to us, the company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
xiii. In our opinion, the company is not a chit fund or a nidhi mutuai
benefit fund/society. Therefore, the provisions of ciause 4(xiii) of
the Companies (Auditor's Report) Order, 2003 are not applicable to the
company.
xiv. In our opinion, the company is not dealing in or trading in
shares, securities, debentures and other investments except those
investment which are held as investments. Accordingly the provisions of
clause 4 (xiv) of the companies (Auditor's Report) are not applicable
to the cotnpany.
XV. According to information and explanation given to us, the company
has given the following guarantee to various banks for granting the
credit facility to subsidiaries. The terms and other conditions, in our
opinion are nor prima facie prejudicial to the interest of the company
Sr Name of the Subsidiaries Name of the Bank Amount
No
1. Europe Omnitech Technology Services ICICI Bank USD 10.80
millions
2. Omnitech Services Pte Ltd Axis Bank USD 32 Lacs
3. Avensus Netherland B.V Axis Bank USD 15 Lacs
Name of the Subsidiaries Purpose
Europe Omnitech Technology Services Acquisition of company at abroad
Omnitech Services Pte Ltd For working capital facility
Avensus Netherland B.V For working capital facility
xvi. In our opinion, the term loans have been applied for the purpose
for which they were raised.
Xvii On the overall examinations of the balance sheet of the company,
in our opinion and according to information and explanations given to
us, no instances of application of long term funds for short term
purposes and short term fund for long term purposes were noticed.
xviii According to the information and explanations given to us, the
company has not made any preferential allotment of equity shares to
parties covered in the register maintained under section under section
301 of the Act.
The Company has not issued any debentures during the year; hence the
provisions of clause (xix) are not applicable.
XX. In our opinion, the company has not raised money by way of public
issue during the year, hence this clause will not applicable to the
company.
xxi. According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For POLADIA & CO.
Chartered Accountants
FRN No.: 128274W
Navin Gala
(Partner)
Membership No.: 040640
Place: Mumbai
Date: 28th May, 2014
| 