1. Report on the Financial Statements
We have audited the accompanying financial statements of Core Education
& Technologies Limited (the Company), which comprise the Balance
Sheet as at 31st March, 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.
2. 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 notified under the Companies Act, 1956 (the Act)
read with the General Circular 15/2013 dated 13th September, 2013 of
the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and fair presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
3. 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 judgement, 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, but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. 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.
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid financial statements give the
information required by the Act in the manner so required, and give a
true and fair view in conformity with the accounting principles
generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2014;
(ii) in the case of the Statement of Profit and Loss, of the loss of
the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. Emphasis of Matter
We invite attention to the following notes:
a) Note No. 37(b) of the accompanying financial statements of the
Company in respect of increase in its overdue trade receivables,
default in repayment of its dues to lenders and debenture holders,
salary arrears and arrears of statutory dues, etc., which indicates the
existence of material uncertainty that may cast significant doubt about
the Company''s ability to continue as going concern. As informed to us
by management, the Empowered Group of Corporate Debt Restructuring
(CDR) Cell has admitted the Company''s application under the CDR Scheme.
The Company''s ability to continue as a going concern is dependent,
interalia on the successful outcome of its application under CDR Scheme
and timely recovery of the trade receivables. On the basis of its
strong expectation of the successful outcome of its CDR application,
and other reasons stated in the aforesaid Notes, the Company has
prepared the accompanying financial statements on going concern
b) Note No. 37(c) of the accompanying financial statements of the
Company relating to the termination order received from Haryana
Government for the ICT Project and invocation of bank guarantee of Rs.
295,000,000/-. The Company has filed a special leave petition in the
Hon''ble Supreme Court against termination order. The Company believes
that it has a strong case on merits. The matter, being sub judice,
pending the outcome of the legal proceedings, no adjustment has been
made to the carrying value of receivables of Rs. 748,319,014/- and of
the fixed assets of Rs. 1,002,144,968/- at this stage, for this
c) Note No. 37(d) of the accompanying financial statements of the
Company relating to trade receivables which have remained overdue for
extended period of time. In the opinion of the management, these are
fully recoverable. The Company has received year-end balance
confirmations from these trade receivables and accordingly no provision
is deemed necessary by the Company.
Our opinion is not qualified in respect of these matters.
6. 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 sub-section (3) of Section 227 of the Act, we report
a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
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
c) the Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
d) in our opinion, the Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement comply with the Accounting Standards
notified under the Companies Act, 1956 read with the General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013;
e) on the basis of the written representations received from the
directors and taken on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2014, from being appointed
as a director in terms of clause (g) of sub-section (1) of Section 274
of the Act.
Annexure referred to in paragraph 1 under the heading Report on other
legal and regulatory requirements of our Report of even date
Re: Core Education & Technologies Limited (the Company)
(i) In respect of fixed assets:
a) The Company has maintained records showing the particulars,
including quantitative details and situation of its fixed assets except
for the assets at its overseas branches and BOOT Projects where the
records are stated to be under compilation.
b) As explained to us, the fixed assets are physically verified by the
management in accordance with a phased programmed of verification,
which in our opinion is reasonable, considering the size and nature of
its business. However, during the year, the Company has not carried out
verification of fixed assets.
(c) No substantial part of the fixed assets has been disposed off
during the year.
(ii) The inventories of the Company comprises of software work-in-
progress. Being intangible, the same could not be physically verified
by the management. Hence, Clause (ii) of paragraph 4 of the Order is
not applicable to the Company.
(iii) In respect of the loans. secured or unsecured, granted or taken
by the Company to/from companies , firms or other parties covered in
the register maintained under Section 301 of the Act:
a) The Company has not granted any loans during the year. Hence,
clauses (iii) (a) to (d) of paragraph 4 of the Order are not applicable
to the Company.
b) During the year, the Company has taken interest free loans from two
promoter companies as a result of invocation of the security by
company''s lenders given by promoter companies to them earlier. In
respect of the said loans, the maximum amount outstanding at any time
during the year and the year- end balance was Rs. 490,846,200/-.
c) In our opinion and according to the information and explanation
given to us, terms and conditions of the loan taken by the Company are
not prima facie prejudicial to the interest of the Company.
d) The principal amounts are repayable on demand.
(iv) In our opinion and according to the information and explanations
given to us, on an overall basis there is an adequate internal control
system commensurate with the size of the Company and the nature of its
business for the purchase of fixed assets and sale of products and
services. During the course of our audit, we have not observed any
continuing failure to correct major weakness in respect of these areas.
(v) Based on the audit procedures applied by us and according to the
information and explanations given to us, we are of the opinion that
there are no transactions that need to be entered into the register in
pursuance of Section 301 of the Companies Act. Hence,
Clause (v)(b) of paragraph 4 of the Order are not applicable to the
(vi) We are informed that the Company has not accepted any deposits
from the public within the meaning of Section 58A, 58AA of the
Companies Act, 1956 and the rules framed there under. We are also
informed by the Company''s management that no order has been passed by
the Company Law Board or any other authority in this regard.
(vii) The Company has an in-house internal audit system. However, in
our opinion, the same needs to be strengthened to make it commensurate
with the size and nature of its business.
(viii) According to the information and explanations given to us, the
requirement for maintenance of cost records u/s 209 (1) (d) of the
Companies Act, 1956 is not applicable to the Company.
(ix) a) According to records of the Company and information and
explanations given to us, the Company is not regular in depositing with
appropriate authorities undisputed amount of statutory dues including
Sales Tax, State Value Added Tax, Service Tax, Employee State
Insurance, Provident Fund, Profession Tax, Advance Tax and Tax deducted
b) According to the information and explanations given to us,
undisputed amounts, in respect of the statutory dues referred above
outstanding as at 31st March, 2014 for a period of more than six months
from the date they became payable are as under:
Nature of Dues Amount in Rs.
Tax Deducted at Source 78,895,104
Provident Fund Dues 8,003,608
ESIC Dues 128,461
Professional Tax 651,800
c) According to the information and explanations given to us, there are
no dues payable by the Company, under the Investor Education and
d) According to the information and explanations given to us, there are
no statutory dues of Sales Tax, State Value Added Tax, Income Tax and
Service Tax, which have not been deposited, on account of any dispute.
(x) The Company has no accumulated losses at the end of the financial
year. The Company has incurred cash losses during the financial year
covered by our audit but not in the immediately preceding financial
(xi) Based on our examination of records and according to information
and explanation given to us, the Company has defaulted in repayment of
dues to bank, financial institution and debenture holders during the
year as under:
Amount in Rs.
Delay in number of Banks Debenture Holders
Interest Principal Interest Principal
More than 180 days - 225,559,179 - -
Less than 180 days 267,104,927 38,863,208 19,125,000 -
Delay in number of Cash Credit/ Overdraft
days Facilities Overdrawn
(Minimum to Maximum)
More than 180 days 527,327-206,143,607
Less than 180 days -
Banks Debenture Holders
Interest Principal Interest Principal
More than 180 days 82,409,734 2,275,685,111 - -
Less than 180 days 147,703,994 839,830,277 151,693,973 192,000,000
Amount in Rs.
Continuing Default Cash Credit/ Overdraft
Facilities Financial Institution
Overdrawn (Minimum to
Maximum) Interest Principal
More than 180 days - 106,513,603 544,027,365
Less than 180 days 84,541-1 11,410,626 - -
Further, the Company has approached its lenders for restructuring of
its debts of Rs. 597.45 crores and also of Rs. 850.05 crores due to its
Non-CDR Lenders on bilateral basis as on May 1, 2013 through Corporate
Debt Restructuring Cell (CDR Cell). Restructuring proposal of the
Company was admitted by CDR Cell on 26th September, 2013. However,
Company has yet to receive the final approval from them.
(xii) Based on our examination of records and according to the
information and explanations given to us, the Company has not granted
loans and advances on the basis of security by way of pledge of shares,
debentures and other investments.
(xiii) The Company is not a chit/ nidhi/ mutual benefit fund/ society
and therefore provisions of Clause 4 (xiii) of the Order are not
applicable to the Company.
(xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments.
(xv) According to the information and explanations given to us, the
Company has given the guarantee of Rs. 5,643,039,170 for loans taken by
its wholly owned subsidiaries, viz. Core Education and Consulting
Solutions Inc., USA and Core Education and Consulting Solutions (UK)
Ltd from bank and/or financial institutions. In our opinion and
according to information and explanations given to us, the terms and
conditions, though not formalized, are not prejudicial to the interest
of the Company.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans taken during the year were applied for the
purpose for which they were obtained.
(xvii) According to the information and explanation given to us and on
overall examination of the balance sheet of the Company, we report
that, prima-facie no funds raised on short-term basis have been used
for long-term investment.
(xviii) The Company has not made any preferential allotment of shares
to parties and companies covered in the Register maintained under
Section 301 of the Act.
(xix) The Company has created securities/charges in respect of the
secured debentures issued in earlier year.
(xx) The Company has not raised any money by public issue during the
(xxi) During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of such case by the management.
For Chaturvedi & Shah For Asit Mehta & Associates
Firm Registration No.: 101720W Firm Registration No.: 100733W
Chartered Accountants Chartered Accountants
Jignesh Mehta Sanjay Rane
Membership No: 102749 Membership No: 100374
Place: Mumbai Place: Mumbai
Date: 10th June, 2014 Date: 10th June, 2014