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Auditor Report of Arshiya Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of AR8HIYA LIMITED (Formerly known a* Arahiya International Limited) ("the Company"), which comprise the Balance Sheet as at 31* March, 2015, the Statement of Profit and Loss and Cash Row Statement for the year ended on that date, and a summary of significant accounting policies and other explanatory Information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors la responsible for the matters stated In section 134(5) of the Companies Act 2013 ("the Act") with respect to the preparation and presentation 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 principles generally accepted to India, including the Accounting Standards specified under Section 133 of the Act, reed with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also Includes maintenance of adequate accounting records In accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other Irregularities; selection end application of appropriate accounting policies; making Judegments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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.

Auditors' Responsibility

Our responsibility Is to express an opinion on these financial statements baaed on our audit.

We have taken into account the provisions of the Act, the accounting and accounting standards and matters which are required to be Included In the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit In accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 to the financial statements. The procedures selected depend on the auditor's Judegment, 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 eudHor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view In order to design audit procedures that are appropriate In the circumstances, but not for the purpose of expressing an opinion on whether the Company has In place an adequate Internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by (he Company's Directors, 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 on the standalone financial statements.

Basis for Qualified Opinion:

We draw attention to Note No. 50, relating to remuneration paid to ex-executive Director of the company for FY 2013-14, which have turned out to be in excess of the Omits prescribed under section 198 read with Schedule XIII to the Companies Act, 1956 due to the reasons stated In the note and hence, tits subject to the approval of the Central government

QuaMted Opinion:

In our opinion and to the beat of our information and according to the explanations given to us, except far the effect of the matter described In Beets for Qualified Opinion paragraph, these 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:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31.2015;

(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.

Emphasis of Matters

1. The Company continues to be under severe financial stress as reflected by:

(a) During the year, some of the secured borrowings turning to Non Performing Assets and assignment of a bank's dues in favour of Edelweiss Asset Reconstruction Company (Refer Note No. 31).

(b) Substantial creditors remaining outstanding to be paid.

(c) Unpaid employee dues amounting to 72,27,85,758 (Refer Note No. 10)

(d) Overdue loans from bank and other Parties aggregating to 73,25,66.79,256) (Including Interest accrued and due 71,57,21,57,406/-) (Refer Note No. 10)

(e) Unpaid Statutory dues of 76,59,53,556 remaining unpaid (Refer Note No. 10)

Despite the foregoing, these accounts have been prepared on a "Going Concern* basis as referred to In note no. 29 of the financial statements,

2. Further to above, we draw attention to the following matters In the Notes to the financial statements:

(a) Note No. 34 R»: Tax Deducted at source.

(b) Note No. 35(a) Re: Fixed Assets

(c) Note No. 35(b) Re: Capital work-in-Progress

(d) No provision for diminution In value of Investments In subsidiaries having been made for the reasons as stated In Note No 36.

(e) Note No. 37 Re: Made to Market Losses.

Our Opinion Is not modified In respect of these matters.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order, 2015 ("the Order*), Issued by the Central Government of India In terms of sub-section (11) of section 143 of the Companies Act, 2013, we give In the Annex Lie a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

As required by section 143(3) of the Act, we report that

a. We have sought and obtained al 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 for as It 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 aforesaid financial statements comply with Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014

a. On the basis of written representations received from the Directors as on Man* 31,2015 taken on record by the Board of Directors, none of the Directors Is disqualified as on Mar* 31,2015, from being appointed as a Director In terms of section 164(2) of the Act

f. With rasped to the other matters to be Included In the Auditor's Report In accordance with Rule 11 of the Companies (Audit and Auditors} Rules, 2014, In our opinion and to the bast of our Information and according to the explanations given to us:

i. The company has disclosed the impact of pending litigation on the financial position in to financial statements - Refer to Note No. 24(i) to 24fiv) and 38 of other notes to the financial statements.

I. The company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term derivative contracts Refer Note no. 37 of other notes to the financial statements.

ii. There has been a delay in transferring unclaimed dividend amounting to 76,19,750.'- which was due on 21" October, 2014, and which has since been transferred on 9th April, 2016.

Annexure to the Independent Auditors' Report

As referred to In the Annexure to the Independent Auditors' Report to the members of the Company on the financial statements for the year ended 31st Mar 2015, we report that:

I. In respect of the fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us. fixed assets have been physical/ verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

ii. Considering the nature of the business the Company does not require to purchase any inventory and hence, the provisions of clause 3(1) of the Order are not applies bis to the Company..

iii. The Company has granted Interest free unsecured loans to five parties covered In the register maintained under Section 189 of the Companies Act, 2013. Acceding to the terms of arrangement the loans are receivable after one year but within five years, hence the question of repayment during the year does not arise. There are no overdue amounts exceeding 7 One lakh as of year-end with respect to such loans granted.

iv. In our opinion and according to the Information and explanations given to us, 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 services. We have not noticed any major weaknesses in the internal control system during the course of audit

v. The Company has not accepted any deposits and hence, the directions of the Reserve Bank of India and the provisions of section 73 to 76 and other relevant provisions of the Companies Act. 2013 and the rules, are not applicable.

vi. We have broadly reviewed the books of accounts maintained by the Company In respect of services rendered pursuant to rules made by Government of India with regard to the maintenance of coat records as prescribed under section 146(1) of the Companies Act, 2013 and are of the opinion that, prime fade, the prescribed basic cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. In respect of statutory dues:

(a) The Company Is generally regular In depositing undisputed applicable statutory dues, except, fax deducted at source of 76,55,71,556 - which la outstanding as of the year-end for a period of more than six months from their due dotes of payment

(b) There are no disputed dues In respect of wealth tax, service tax, customs duty and excise duty which have not been deposited on account of any disputes. Details of disputed dues of Income Tax and Value Added Tax which have not been deposited are as under:

Name of the Nature of Amount Period to which the Statute Dues Involved amount relates (Rs)

Income Tax Act, Income Tax 12,67,53,458 Assessment Year 1961 2008-2009 to 2010- 2011

7,11,76,440

Value Added Maharashtra 20,51,279 Assessment Year Tax Value Added 2005-06 Tax

Name of the Forum where the Statute dispute Is pending

Income Tax Act, Commissioner of 1961 income Tax (Appeal)

Assessment Year Deputy Commissioner 2013-2014of Income Tax

Value Added Deputy Commissioner Tax of Sales Tax-(Appeal)

(c) There free been a delay in transferring unclaimed dividend amounting to 76,79,750 which was due on 21* October, 2014, and which has since been transferred on AprH, 2015.

viii. The accumulated tosses of the Company ere more than 50% of Its net worth. The Company has Incurred cash losses during the year end in the immediately preceding financial year.

ix. The Company has not Issued arty debentures. Based on our audit procedures and according to the Information and explanations given by the management during the year, the Company, taking Into account approved Corporate Debt Restructuring Package, has defaulted in repayment of dues to Banks and a Financial institution, the definite whereof are stated hereunder.

(Amount in Rs)

Banks

Principal Interest

FY 2013-2014 49,50,00,000 40,60,37,670

April 2014 - 94,13,808

May 2014- - 1,16,23,862

June 2014- - 2.54,33.566

July2014 - 2.74.03.622

August 2014 - 2,77,88225

September 2014 - 3,12.09,139

October 2014 2,57,07,562 11,00,08,536

November 2014 2,58,41,218 11.20,43,570

December 2014 2,58,41,218 13.92.63.937

January 2015 2,92,10,465 13,39,82,09

February 2015 3,18,47,360 13,49,17,814

March 2015 3,68,47,360 17,62,17,820

Total 67,03,55,163 134,53,43,681

Financial Institution

Principal Interest

FY 2013-2014 69,00,00,000

April 2014 - 1,37,37,604

May 2014- - 1,44,20,124

June 2014- - 1,41.83,113

July2014 - -

August 2014 -

September 2014 - 4/49,01,413

October 2014 - 1,56,21,874

November 2014 - 1,53,65,111

December 2014 - 1,61,28/491

January 2015 - 21.63,02,101

February 2015 - 1,50,47,906

March 2015 - 1,69,06,204

Total 69,00,00,000 18,27,04,021

x. In our opinion and according to the information and explanation given to us, the terms and condMons on which the company has given guarantees for loans taken by subsidiaries from Banks and Financial Institutions are prima facie not prejudicial to the interest of the Company.

xi. According to Information and explanations given to us, and on examination of the balance sheet and other records, we report that the term loan availed by the company has been applied for the purpose for which II Is raised.

xii. To the best of our knowledge and belief, and according to the Information and explanations given to us, and considering the size and nature of the Company's operations, no fraud of material significance on or by the Company has been noticed or reported during the year.

For M/ A. Partkh 8, Co. Chartered Accountants Firm Reg. No. 107556W

Mukul M. Patel Partner Membership No. 32489

Place: Mumbai Date: 15TH May. 2015


Mar 31, 2014

We have audited the accompanying financial statements of Arshiya Limited ("the company") which comprise the Balance Sheet as at March 31, 2014, 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.

The Financial Statements of the earlier year were audited by the previous Auditors'' whose report in respect of certain matters has been appropriately considered by us.

Management''s responsibility for the financial statements

The Company''s 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") read with General Circular 15/2013 dated 13 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 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 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. 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 for Qualified Opinion:

We draw attention to Note No. 48(H), relating to remuneration paid/ provided to ex-executive Director of the company, which has turned out to be in excess of the limits prescribed under section 198 read with Schedule XIII to the Companies Act, 1956 due to the reasons stated in the note and hence, it is subject to the approval of the Central government.

Qualified Opinion:

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in Basis for Qualified Opinion paragraph, the 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;

(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.

Emphasis of Matters

1. The Company continues to be under severe financial stress as reflected by:

(a) Approval of Corporate Debt Restructuring by Secured Lenders (Banks) (See Note No. 30)

(b) Unpaid Trade Creditors amounting to Rs. 604,351,466/- (Note No. 10)

(c) Unpaid employee dues amounting to Rs. 63,957,984/- (Note No. 10)

(d) Overdue loans from bank and other Parties aggregating to Rs. 1,857,615,073(including interest accrued and due Rs.425,387,805).

(e) Unpaid Statutory dues of Rs. 172,756,457

2. No provision for diminution in value of investments in subsidiaries having been made for the reasons as stated in Note No 33(i)

Other Matter

We draw attention to the Notes to the Financial Statements as follows:

1. Changes in the Accounting Policies as referred to in Note No. 32 and Note No. 35(1) with a view to comply with the requirements of relevant accounting standards / pronouncement of the Institute of Chartered Accountants of India as stated in the said Notes.

2. Note No 31(a) re: Fixed assets.

3. Note No. 31(b)(iv) re: Capital work-in-progress.

Our opinion is not qualified in respect of all these matters.

Report On Other Legal And Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 ("the said Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, on the basis of such checks of the books and records of the Company as we considered necessary and appropriate, and according to the information and explanations given to us during the course of the audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said 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) except for the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and

(e) On the basis of written representations received from the directors as on 31st March, 2014, 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 Companies Act, 1956.

Arshiva Limited

The Annexure referred to in our Report of even date to the members of Arshiya Limited on the accounts of the company for the year ended 31st March, 2014:

i. (a) During the year, the Company has updated and reconciled it''s records for the assets shifted and discarded from the lease premises surrendered/vacated during the earlier year and has written off the differences between the assets as per the records and their physical existence. The Company has maintained proper records giving details of class of assets, additions thereto, dates of put to use and depreciation provided with amounts thereof.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals, no material discrepancies were noticed on such verification.

(c) The Fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

ii. Considering the nature of its business the Company does not require to purchase inventory and hence, the provisions of clause 4(ii) of the Order are not applicable to the Company.

iii. (a) According to information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses 4 iii(b) to 4 iii(d) of the Order are not applicable.

(b) According to information and explanations given to us, the Company has taken interest free unsecured loan from two parties covered in the register maintained under Section 301 of the Companies Act, 1956. The year end balance of such loans is Rs. 1,138,204,264/-and maximum amount outstanding during the year is Rs.1,375,332,377/.-

(c) In our opinion, the terms and conditions of the said Interest free loan are prima facia not prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans there are no overdue amounts at the year-end.

iv. In our opinion and according to information and explanations given to us, there is an adequate internal control procedure commensurate with the size of the Company and nature of its business for the purchase of Fixed Assets and sale of Services except in our view, there were certain weaknesses in the internal control system with regard to purchase and sale of services, which need to be corrected. Further, the activities carried on by the Company do not require purchase of inventory and sale of goods.

v. In our opinion and according to the information and explanation given to us,

(a) the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Act have been so entered.

(b) the transactions made in pursuance of such contracts/arrangements exceeding value of Rupees five lakhs during the financial year are of special nature for which comparable prices are not available, hence we are unable to comment on the reasonableness of the price or otherwise of such transactions.

vi. The Company has not accepted deposit from public and hence, the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act 1956 and rules framed thereunder are not applicable to the Company.

vii. In our opinion, the internal audit function of the Company is carried out by a firm of Chartered Accountants and the internal audit system is commensurate with the size and nature of it''s business.

viii. We have broadly reviewed books of accounts maintained by the Company in respect of services rendered pursuant to rules made by Government of India with regard to the maintenance of cost records as prescribed under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed basic cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix. (a) The Company is generally regular in depositing undisputed applicable statutory dues, save and except, income tax deducted at source. The arrears of such outstanding as of the year-end for a period of more than six months from its due date of payment are Rs. 110,568,281/-.

(b) There are no disputed dues in respect of wealth tax, service tax, customs duty and excise duty which have not been deposited on account of any disputes. Details of disputed dues of Income Tax and Value Added Tax which have not been deposited are as under

Name of the Nature of Amount Period to Forum where the Statute Dues Involved Which the dispute is pending (Rs) amount relates

Income Tax Act, Income Tax 185,093,705 Assessment Year 2007-2008 Commissioner of Income Tax 1961 to 2011-2012 (Appeal)

4,350,076 Assessment Year 2006-2007 Income Tax Appellate Tribunal Value Added Tax Maharashtra Value 2,051,279 Assessment Year 2005-2006 Deputy Commissioner of Added Tax Sales Tax - (Appeal)

x. The Company has accumulated losses at the end of the financial year. It has incurred cash losses during the year but it had not incurred cash losses in the immediately preceding financial year.

xi. The Company has defaulted in repayment of dues to Banks and Financial Institution as under:

xii. According to the information and explanations given to us, the company has not granted loans and advances on the basis of security t way of pledge of shares, debentures and other securities.

xiii. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Hence, the provisions of clause 4(xiii) of the Order are n applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in securitie shares, debentures and other investments and hence, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

xv. In our opinion and according to the information and explanation given to us, the terms and conditions on which the company has give guarantees for loans taken by subsidiaries from Banks and Financial Institutions are prima facie not prejudicial to the interest of tr Company.

xvi. During the year, no term loans have been obtained by the Company and hence, the provisions of clause 4(xvi) of the Order are n applicable to the Company.

xvii. In our opinion and according to the information and explanation given to us, and on an overall examination of the Balance Sheet of tr Company, we report that funds raised during the year on short term basis have, prima facia, not been used for long term investment.

xviii. During the year company has allotted 5,250,000 equity shares of Rs. 2 at a premium of Rs. 143 per share upon conversion of 5,250,0C warrants issued in the earlier year to the parties covered in the register maintained under section 301 of the Act. The price at which the: warrants have been converted into equity shares is not prima facie prejudicial to the interest of the company.

xix. The Company has not issued any debentures during the year and also did not have any outstanding debentures as at the end of tr year. Hence, the provisions of clause 4 (xix) of the Order are not applicable to the Company.

xx. The Company has not raised any money by way of public issue during the year. Therefore, the provisions of clause 4 (xx) of the Ordi are not applicable to the Company.

xxi. To the best of our knowledge and belief, and according to the information and explanations given to us, and considering the size ar nature of the Company''s operations, no fraud of material significance on or by the Company has been noticed or reported during tr year.

For M. A. PARIKH & Co.

Chartered Accountants

Firm Reg.No.107556W

Mukul Patel

Partner

Membership No. 32489

Place: Mumbai

Date: 9th July, 2014


Mar 31, 2013

Report on the financial statements

We have audited the accompanying financial statements of Arshiya International Limited ("the company") which comprise the balance sheet as at March 31,2013, 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 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. 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements 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 31,2013;

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.

Emphasis of Matter

(i) We draw attention to Note 36(b), relating to remuneration paid/provided to Chairman and Managing Director of the Company, has turned out to be in excess of the limits prescribed under Section 198 read with Schedule XIII to the Companies Act 1956 due to less during the year, hence it is subject to the approval of the Central Government.

(ii) The company is under severe financial stress which is due to and evident from increased trade receivables and payables and majority of them are overdue, full and final settlement dues of resigned employees of Rs.23,253,374 are in arrears, statutory dues i.e. income tax deducted at sources, service tax and value added tax of Rs.176,189,607are in arrears, the dues (interest and repayment of borrowings) of banks and a financial institution and a non-banking finance company are delayed and Rs.2,385,428,587 are overdue, short-term funds are used for long-term purposes and certain lenders have filed court cases against the company and directors due to dishonour of cheques. To mitigate financial stress, the company has taken various steps including cost cutting exercise and opted for corporate debt restructuring (CDR) plan which is admitted and under consideration of the CDR cell.

Our opinion is not qualified in above matters.

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:

(i) 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;

(ii) 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;

(iii) 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;

(iv) in our opinion, the balance sheet, statement of profit and loss, and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act; and

(v) on the basis of written representation received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, 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

(I) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. However, the Company is in the process of updating and reconciling its records for the assets shifted and discarded from the leased premises surrendered/vacated during the year.

(b) The fixed assets are physically verified by the management during the year as per the phased program designed to cover all the assets over a period, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. We are informed that discrepancies noticed on such verification as compared to book records of Rs. 54,276,945 have been properly dealt with in the books of account except for assets under reconciliation as stated in (a) above.

(c) During the year, there is no disposal of substantial part of fixed assets.

(ii) Considering the nature of business activity carried out by the Company, the company does not have any inventory. Hence, requirements of the clause (ii) of paragraph 4 of the order are not applicable.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act.

(b) According to the information and explanations given to us, the Company has taken interest free unsecured loan from three parties (interest bearing loan from one party for part of the year) covered in the register maintained under section 301 of the Act. The year-end balance of such loans is Rs. 814,344,104 and the maximum amount outstanding during the year is Rs. 933,344,832.

(c) In our opinion, the rate of interest (wherever applicable) and other terms and conditions of such loans taken are prima facie not prejudicial to the interests of the Company.

(d) In respect of the aforesaid loans there is no overdue amount at the year-end considering the terms of the loan except interest outstanding of Rs. 5,602,932.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase and sale of services except weaknesses noticed in the internal control system with regard to purchase of fixed assets, purchase and sale of services of logistic division which needs to be strengthened and weaknesses to be corrected. The Company''s activities do not involve purchase of inventory and sale of goods.

(v) In our opinion and according to the information and explanations given to us,

(a) the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Act have been so entered.

(b) the transactions made in pursuance of such contracts/arrangements exceeding value of Rupees five lakhs during the financial year are of special nature for which comparable prices are not available, hence we are unable to comment on the reasonableness of the price or otherwise of such transactions.

(vi) The Company has not accepted any deposits from the public during the year.

(vii) The internal audit function is carried out by a firm of Chartered Accountants. In our opinion, the Company''s internal audit system needs to be strengthened with regard to areas of coverage and timely completion.

(viii) According to the information and explanations given to us, the Company is in the process of updating cost records in respect of the services rendered by the Company for which the maintenance of cost records has been prescribed under Section 209(1) (d) of the Act pursuant to the Companies (Cost Accounting Records) Rules, 2011 notified by the Central Government of India vide notification dated 3 June 2011.

(ix) According to the records of the Company examined by us and information and explanations given to us:

(a) The company is generally regular in depositing investor education and protection fund, custom duty, excise duty, cess and other material statutory dues to the extent applicable with the appropriate authorities except that the company is not regular in depositing provident fund, employee state insurance, income tax, value added tax and service tax. There are no undisputed amounts payable in respect of the aforesaid dues outstanding as at March 31, 2013 for a period of more than six months from the date they became payable except income tax deducted at source of Rs.57,722,482, service tax of Rs. 100,534 and works contract tax (VAT) of Rs.5,403,462.

(b) There are no disputed dues on account of value added tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited. Details of disputed dues of income tax which have not been deposited are as under:

Name of the Amount in Period to which the Forum where the dispute statute/Nature Rs. amount relates is pending of dues

Income Tax Act, 4,350,076 Assessment year Income Tax Appellate 1961 2006-2007 Tribunal

Income tax 126,753,459 Assessment year 2008- Commissioner of Income 2009 to 2010-2011 Tax (Appeals)

(x) The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current financial year or in the immediately preceding financial year.

(xi) The Company has defaulted in repayment of dues to Banks and financial Institutions as under:

(Amount in Rs)

Banks Financial Institutions Delay in number of days Interest Principal Interest Principal

Upto60days 505,676,073 55,000,000 8,936,917

Upto61-120 days 351,738,960

Upto 121-180 days 97,552,106

Unpaid as on March 31, 2013

Upto 60 days 353,810,112 116,263,854 36,997,837

Upto61 -120 days 7,404,471 564,692,786 300,000,000

Upto 121-180 days 6,218,384 220,000,000 390,000,000

More than 180 days 110,000,000

(xii) 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) The Company is not a chit fund or a nidhi / mutual benefit fund / society.

(xiv) The Company is not dealing or trading in securities, debentures and other investments.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by subsidiaries from banks and financial institutions are prima facie not prejudicial to the interests of the Company.

(xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us, and the examination of the balance sheet of the Company and other records, on overall basis, we report that short-term funds to the extent of Rs.900,936,605 have been used for long- term investments.

(xviii) During the year, the Company has allotted warrants convertible into equity shares on preferential basis, in terms of Chapter VII of SEBI (ICDR) Regulations, 2009, to a party covered in the register maintained under section 301 of the Act. The price at which these warrants convertible into equity shares are issued is not prima facie prejudicial to the interest of the Company.

(xix) The Company has not issued any secured debentures during the year.

(xx) The Company has not raised any money by way of public issues during the year.

(xxi) Based on our audit procedures performed and according to the information and explanations given by the management, no fraud on or by the Company has been noticed or reported during the course of our audit.

For MGB & Co.

Chartered Accountants

Firm Registration Number 101169W

Mohanlal Bhandari

Partner

Membership Number 012912

Mumbai, May 30, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Arshiya International Limited as at 31 March 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (the Act), and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, 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 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 dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as at 31 March 2012 from being appointed as a director in terms of clause (g) of sub- section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon 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 31 March 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure referred to in paragraph 3 of Auditors Report to the Members of Arshiya International Limited on the accounts for the year ended 31 March 2012.

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) The fixed assets have been physically verified by the management during the year as per the phased program designed to cover all the fixed assets over a period, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. As informed, no discrepancies were noticed on such verification.

(c) During the year, there was no disposal of substantial part of fixed assets.

ii. Considering the nature of business activity carried out by the Company, the company does not have any inventory. Hence, requirements of the clause (ii) of paragraph 4 of the order are not applicable.

iii. (a) According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

(b) According to information and explanations given to us, the Company has not taken any loan, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act.

iv. In our opinion and according to the information and explanations given to us and having regard to the facts that certain capital items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and sale of services. The Company s activities do not involve purchase of inventories and sale of goods. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal controls systems except for the capital items as stated above.

v. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(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 Act and exceeding the value of rupees five lacs, are of a special nature, for which comparative prices are not available. Hence, we are unable to comment on the reasonableness of the price or otherwise of such transactions.

vi. The Company has not accepted any deposits from the public during the year.

vii. In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

viii. According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under Section 209(1) (d) of the Act for the services rendered by the Company.

ix. According to the information and explanations given to us and records of the company examined by us,

a) Undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues as applicable have generally been regularly deposited with the appropriate authorities except delay in few cases. There are no undisputed amounts payable in respect of aforesaid dues outstanding as at 31 March 2012 for a period of more than six months from the date they became payable.

b) There are no disputed amounts on account of sales tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited. Details of disputed amounts on account of income tax are as under:

Name of the statute Nature of dues Amount (Rs.) Period to which the amount relates Forum where the dispute is pending

Income Tax Act, 1961 Income tax 4,350,076 Assessment Year 2006-2007 Income Tax Appellate Tribunal

x. The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current financial year or in the immediately preceding financial year.

xi. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions during the year. The Company has not issued any debentures during the year.

xii. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company.

xiv. The Company is not dealing or trading in shares, securities, debentures and other investments during the year.

xv. In our opinion and according to the information and explanations given to us, the terms and conditions on which the company has given guarantees for loans taken by subsidiaries from banks and financial institutions are prima facie not prejudicial to the interests of the Company.

xvi. According to the information and explanations given to us, and on examination of the balance sheet and other records, we report that the term loans availed by the company has been applied for the purpose for which they were raised.

xvii. According to the information and explanations given to us, and the examination of the balance sheet of the Company and other records, on overall basis, we report that short-term funds to the extent of Rs. 491,457,765 have been used for long-term investments.

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 not issued any secured debentures during the year.

xx. The Company has not raised any money by way of public issues during the year.

xxi. Based on the audit procedures performed and according to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.

For MGB & Co

Chartered Accountants

Firm Registration Number 101169W

Sanjay Kothari

Partner

Membership Number 048215

Mumbai, 7th July 2012

 
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