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CORE Education & Technologies
BSE: 512199|NSE: COREEDUTEC|ISIN: INE247G01024|SECTOR: Computers - Software - Training
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« Mar 13
Auditor's Report (CORE Education & Technologies) Year End : Mar '14
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.
 
 4.  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
 assumption.
 
 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
 project.
 
 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
 that:
 
 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
 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, 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
 Company.
 
 (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
 at source.
 
 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
 
 VAT                                                      44,495,242
 
 Provident Fund Dues                                       8,003,608
 
 ESIC Dues                                                   128,461
 
 Professional Tax                                            651,800
 
 Total                                                   132,174,215
 
 c) According to the information and explanations given to us, there are
 no dues payable by the Company, under the Investor Education and
 Protection Fund.
 
 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
 year.
 
 (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
 days                                                                
                                                                    
                         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
 Continuing Default
                     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
 year.
 
 (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
 (Partner)                                                  (Partner)
 Membership No: 102749                          Membership No: 100374
 
 Place: Mumbai                                          Place: Mumbai
 Date: 10th June, 2014                          Date: 10th June, 2014
Source : Dion Global Solutions Limited
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