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Auditor Report of Birla Capital And Financial Services Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Birla Capital and Financial Services Limited which comprise the Balance Sheet as at March 31, 2014 and 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.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 misstatements ,whether due to fraud and 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 Standards on auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with the ethical requirements plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

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 risk of material misstatements 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 expressing an opinion on the effectiveness of entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies and the reasonableness of accounting estimates made by management, as well as evaluating the overall financial statement.

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 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 Profit and Loss Account, of the profit/ loss for the year ended on that date; and

(c) in the case of Cash Flow Statement, of the cash flow 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 term of sub section (4A) of the 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. 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 purposes 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 these books.

(iii) The Balance Sheet and Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and cash flow statements comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representation 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 Section 274(1)(g) of the Companies Act, 1956.

Annexure to the Independent Auditors'' Report

Of the even date of member of Birla Capital and Financial Services Limited on the financial statement for the year ended 31st march 2014

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, We report that:

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

(b) The fixed assets have been physically verified by the management at reasonable intervals, which in our opinion, is considered reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verifications.

(c) In our opinion, a substantial part of fixed assets has not been dispose off during the year.

(ii) The Company has a policy of treating motion pictures under production as inventory till the date of release/agreement whichever is earlier. Consequently, there is no tangible inventory carried by the Company. Accordingly, the provisions of Paragraph 4(ii) of the said Order are not applicable to the Company.

(iii) The company has granted interest free advances to two parties covered the register maintained under section 301 of the Companies Act, 1956. As below

S/no. Name of Company Opening Loan Repay Balance Givenl

Birla Financial Distribution Private Limited - 14.65 1.9

Birla Gold and Precious Metals Private Limited - 13.52 -

Nirved Traders Pvt. Ltd 103.84 270.07 71.92

Shearson Investor & Trading 327.48 NIL 64.00 Co Pvt Ltd

S/no. Name of Company Max Closing Amount Balance

Birla Financial Distribution Private Limited 12.75 12.75

Birla Gold and Precious Metals Private Limited 13.52 13.52

Nirved Traders Pvt. Ltd 307.66 301.99

Shearson Investor & Trading 327.48 263.47 Co Pvt Ltd

(iv) In our opinion, and according to the information and explanations given to us, the Company''s internal control procedures for the purchase of inventory and for the sale of goods and services needs to be further strengthened so as to be commensurate with the size of the Company and nature of its business. In respect of purchase of fixed assets, the Company has adequate internal control procedures commensurate with the size of the Company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

(v) In our opinion the particulars of all contracts or arrangements that need to be been entered in the register maintained under section 301 of the Companies Act, 1956 so entered Owing to the unique and specialized nature of the items involved and in the absence of any comparable prices, we are unable to comment as to whether the transactions made in pursuance of such contracts or arrangements have been made at the prevailing market prices at the relevant time.

(vi) In our opinion to the information and explanation given to us the Company has complied with the provision of section 58A, 58AA or any other applicable provision of the Companies Act, 1956 and the Companies (Acceptance and Deposit) Rules 1975, with regard to the deposit accepted from public. No order has been passed by the Company Law Board, National Company Law Tribunal or Reserve bank of India or any court or any other Tribunal.

(vii) The Company has an internal audit system, commensurate with the size of the Company and the nature of its business.

(viii) As informed to us, the maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 in respect of the activities of the Company. Accordingly the provisions of Paragraph 4(viii) of the said Order are not applicable to the Company.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees, state insurance, income-tax, sales tax, wealth-tax, service-tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have been regularly deposited with the appropriate authorities.

(b) The dues outstanding in respect of Income-tax on account of any dispute are as follows. Name of the statute Nature of Amount period to which the the dues amount relates

Income Tax Act, 1961 Income tax Income Tax *7.24 Lacs A.Y. 2009-10

Income Tax Act, 1961 Income tax Income Tax **63.24 Lacs A.Y. 2011-12

* Company appeal against the said orders of income tax in higher authority. For A.Y. 2009-10 matter pending before ITAT- B Bench.

** Company appeal against the said orders of income tax in higher authority. For A.Y. 2011-12 matter pending before CIT Appeal.

(x) After considering the effect of quantified qualification, in our opinion and according to the information and explanations given to us, the accumulated losses of the Company at the end of the financial year does not exceed fifty percent of its net worth. The Company has not incurred cash losses during the current financial year and also in the immediately preceding financial year.

(xi) In our opinion, and on the basis of our examination and according to the information and explanations given to us, the Company has not defaulted in repayment of its dues to financial institutions.

(xii) In our opinion, and on the basis of our examination and according to the 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. Accordingly the provisions of Paragraph 4(xii) of the said Order are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of Paragraph 4(xiii) of the said Order are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Paragraph 4(xiv) of the said Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee to the Company as reflected in Note no 3 to Schedule ''S''.

(xvi) According to the information and explanations given to us that the company had not raised any term loan.

(xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long-term purposes.

(xviii) The Company has not made preferential allotment of shares to the parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of Paragraph 4(xviii) of the said Order are not applicable to the Company.

(xix) The Company has not issued any debentures during the year. Accordingly, the provisions of Paragraph 4(xix) of the said Order are not applicable to the Company.

(xx) During the year the Company has partly restructured the Bank loan by issuing Fully Convertible Warrants as stated in Notes.

(xxi) To the best of our knowledge and belief, and according to the information and explanations given to us, there have been no cases of fraud on or by the Company noticed or reported during the year.

For Goyal Nitin & Associates Chartered Accountants FRN: 016160C

CA Nitin Goyal Partner M. No - 414520 Mumbai, 30th May 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of M/s Birla Leasing & Infrastructure Limited (''the Company'') which comprise the Balance Sheet as at 31st March 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 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.

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 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, 2013;

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

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

Other Matter with respect to financial statements Further to our comments in the Annexure referred in report on other legal and regulatory requirements, we wish to state that:

a) Sundry Debtors, Sundry Creditors, Loans & Advances, are subject to adjustments due to verification and reconciliation of amounts as per books and consequential adjustments thereof.

b) No provision has been made in respect of the following: -

(i) Income Tax Demands aggregating Rs.5,32,21,791 against which the company has referred the matter to the Settlement Commission. The Settlement commission has passed order in favour of the Company and has directed the Assessing Officer to recalculate the net tax liability/ Refund.

(ii) Gratuity amounting to Rs.46,500 accrued upto March 2013 is accounted for on cash basis and payable at the time of settlement of the employees accounts. The Company has not obtained an actuarial certificate for the valuation of the gratuity liability upto 31st March, 2013.

(iii) Leave encashments accrued upto employees for which liability has not been determined is accounted on cash basis, since the same will be accounted for at the time of settlement of the employees'' accounts. The Company has not obtained an actuarial certificate for the valuation of Leave encashment upto 31st March, 2013.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, 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, 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 Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on 31st March, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 st MARCH, 2013 OF BIRLA CAPITAL AND FINANCIAL SERVICES LIMITED

On the basis of such checks as we considered appropriate and in terms of the information and ex planations given to us, we state that: -

i. In respect of its fixed a ssets;

a) The Company has generally maintained proper records showing full particulars, includ ing quantitative details and situation of fixed assets;

b) As explained to us, considering th e nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as p er the verification plan adopted by the Company, which is reasonable having regard to the size of the company and nature of its assets. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not, in our opinion, material however the same have been properly dealt with in the B ooks of Account.;

c) During the year under audit, the Company h as not disposed off any of its fixed assets;

ii. In respect of its Inventories;

The Company does not have inventory, accordingly the clause 4 (ii) (a) to (c) are not applicable;

iii. In respect of its L oans;

a) The Company h as granted interest bearing Inter corporate Deposits, to Companies covered in the register maintained under section 301 of the Companies Act, 1956.

b) The Company has not taken Inter corporate Deposits, from Companies covered in the register maintained under section 301 of the Companies Act, 1956.

c) In our opinion, the rate of interest and other terms & conditions on which th e loans are granted/taken, are not prima facie prejudicial to the interest of the company.

d) In case of loans granted/taken, the borrower h as been regular in making th e payment of interest as stipulated. The terms of arrangement do not stipulate the repayment schedule and is repayable on demand. Accordingly, paragraph 4(iii)(c ) of the order is not applicable to the Company in respect of payment of principal amount.

As per the information and explanation given to us all the loans and advances granted are repayable on demand and there is no overdue amount of more than Rs.1,00,000/- in respect of loans granted to th e body corporate listed in register maintained under section 301 of the Companies Act,1956. Accordingly, paragraph 4(iii)(d) of the order is not app licable.

iv . In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business;

v. a) On the basis of audit procedures performed by us, and according to the information and explanation given to us, the transactions required to be entered in the register required to be maintained under Section 301 of the Companies Act has been so entered; b) In our opinion an d according to information and explanations given to u s, th e transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regards to prevailing market prices at the relevant time except and unless as mentioned in Para (iii) above;

vi. In our opinion, during the year the Company has not accepted any public deposits and hence the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from th e public is not applicable.

vii. In our opinion the Company h as system of in ternal audit commensurate with the size and nature of its business.

viii. According to information and explanation provided to us, maintenance of cost records has not been prescribed by the C entral Government under Section 209(1) (d) of the Companies Act, 1956;

ix. a) As per the records of th e Company, it has been observed that the Company has been generally regular in depositing undisputed statutory dues including Income tax, Sales tax, Provident fund, Employees'' State Insurance and other material Statutory Dues with the ap propriate authorities;

b) On the basis of our examination of the documents and records of the Company and the informatio n and explanations given to us upon our enquiries, there are no On the basis of our examination of the documents and records of the Company and the information and explanations given to us upon our enquiries, there are no amounts payable in respect of Sales Tax, Income Tax, Service Tax, on account of any dispute except the amount disputed in respect of Income Tax is Rs. 532.22 lacs against which the Company has referred the matter to the settlement commission. The settlement commission has passed t he order in favour of the Company and has directed the Assessing Officer to recalculate the net tax liability/ Refund.

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

The Company has neither borrowed any sums from financial institutions nor through debentures and therefore question of repayment does not arise.

As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities; Para 4(xii) of the Order is not applicable.

In our opinion, considering t he nature of activities carried on by the company during the period, the provisions of

any special statute, applicable to Chit Fund/ Nidhi/ Mutual benefit Fund/ Societies are not applicable to the

Company, hence Para 4(xiii) of t he Order is not applicable.

The Company has maintained proper records of transaction and contracts in respect of investments in securities and timely entries have been made therein. All Investments at the close of the year have been held in the name of the Company.

As per the information and explanations given to us and on our enquiries and records of the Company examined by us, the Company has not given any guarantee for loans taken from financial institutions and/or banks on behalf of others;

The Company has not obtained any term loan during the year hence Para 4(xvi) is not applicable.

According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments. No long term funds have been used to finance short term asset except permanent working capital.

In our opinion, and on the basis of information and explanations given to us, since the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, Para 4(xviii) of t he Order is not applicable; In our opinion, and on the basis of information and explanations given to us, since the company has not issued any debenture during t he period, question of creating securities in respect thereof does not arise.

xx. In our opinion, on the basis of information and explanations given to u s, since the Company has not raised any money by public issue during the period, Para 4(xx) of the Order is not applicable;

xxi. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to u s, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have been informed of any such case by the management.

For M. L. Choraria & Associates

Chartered Accountants

M. M. Choraria

Proprietor

Membership No:44180

F.R.N. 113782W

Date: 10.05.2013

Place: Mumbai


Mar 31, 2012

We have audited the attached Balance Sheet of Birla Capital And Financial Services Limited as at 31st March 2012, and the annexed Profit and Loss Account for the year ended on that date. 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.

1. We have conducted our audit in accordance with auditing standards generally accepted in India. These 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 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.

2. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we have enclosed Annexure as a statement on the matters specified in paragraphs 4 and 5 of the said Order.

3. Further to our comments in the annexure referred above we hereby wish to state that:

a) Sundry Debtors, Sundry Creditors, Bank accounts, Loans & Advances, are subject to adjustments due to verification and reconciliation of amounts as per books and consequential adjustments thereof.

b) No provision has been made in respect of the following: -

(i) Income Tax Demands aggregating Rs. 5,32,21,791/- against which the company has referred the matter to the Settlement Commission. The Settlement commission has admitted the company's application under section 245D(1) of the Income Tax Act, 1961 and the matter is sub judice.

(ii) Income matters of earlier years in appeals, rectification, towards which the liability is not ascertained, will be accounted for in the year in which the matters are settled.

(iii) Gratuity amounting to Rs. 122333/- upto March 2012 is accounted for on cash basis, since the same will be accounted for at the time of settlement of the employees accounts.

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 the Books of the Company;

(iii) The Balance Sheet and Profit and Loss Account & cash flow dealt with by this report are in agreement with the Books of the Company;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account & cash flow dealt with by this report comply with the Companies (Accounting Standards) Rules, 2006, referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable;

(v) On the basis of written representations received from the Directors, as at 31st March 2012, and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March 2012, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

4. In our opinion and to the best of our information and according to the explanations given to us and as per the management representation made to us, the said accounts read together with Schedules and other notes thereon give the information required by the Companies Act, 1956, 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 the affairs of the Company as at 31st March,2012;

(ii) in the case of the profit and loss account, of the loss for the year ended on that date;

(iii) in the case of cash flow statement of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (REFERRED TO IN PARAGRAPH 2 OF OUR REPORT) OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2012 OF BIRLA CAPITAL AND FINANCIAL SERVICES LIMITED

On the basis of such checks as we considered appropriate and in terms of the information and explanations given to us, we state that: -

i. In respect of its fixed assets;

a) The Company has generally maintained proper records showing full particulars, including quantitative details and situation of fixed assets;

b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification plan adopted by the Company, which is reasonable having regard to the size of the company and nature of its assets. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not, in our opinion, material however the same have been properly dealt with in the Books of Account.;

c) During the year under audit, the Company has not disposed off any of its fixed assets;

ii. In respect of its Inventories;

The Company does not have inventory, accordingly the clause 4 (ii) (a) to (c) are not applicable; iii. In respect of its Loans;

a) The Company has granted interest bearing Inter corporate Deposits, to Companies covered in the register maintained under section 301 of the Companies Act, 1956.

b) The Company has not taken Inter corporate Deposits, from Companies covered in the register maintained under section 301 of the Companies Act, 1956.

c) In our opinion, the rate of interest and other terms & conditions on which the loans are granted/ taken, are not prima facie prejudicial to the interest of the company.

d) In case of loans granted/taken, the borrower has been regular in making the payment of interest as stipulated. The terms of arrangement do not stipulate the repayment schedule and is repayable on demand. Accordingly, paragraph 4(iii)(c ) of the order is not applicable to the Company in respect of payment of principal amount.

e) As per the information and explanation given to us all the loans and advances granted are repayable on demand and there is no overdue amount of more than 1,00,000/- in respect of loans granted to the body corporate listed in register maintained under section 301 of the Companies Act,1956. Accordingly, paragraph 4(iii)(d) of the order is not applicable.

iv. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business;

v. a) On the basis of audit procedures performed by us, and according to the information and explanation given to us, the transactions required to be entered in the register required to be maintained under Section 301 of the Companies Act has been so entered;

b) In our opinion and according to 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 have been made at prices which are reasonable having regards to prevailing market prices at the relevant time except and unless as mentioned in Para (iii) above;

vi. In our opinion, during the year the Company has not accepted any public deposits and hence the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from the public is not applicable.

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

viii. According to information and explanation provided to us, maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956;

ix. a) As per the records of the Company, it has been observed that the Company has been regular in depositing undisputed statutory dues including Income tax, Sales tax, Provident fund, Employees' State Insurance and other material Statutory Dues with the appropriate authorities;

b) On the basis of our examination of the documents and records of the Company and the information and explanations given to us upon our enquiries, there are no amounts payable in respect of Sales Tax, Income Tax, Service Tax, on account of any dispute except the amount disputed in respect of Income Tax is Rs. 532.22 lacs against which the Company has referred the matter to the settlement commission. The settlement commission has admitted the company's application under section 245(D)(1) of the Income Tax Act 1961, & the matter is sub judice.

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

xi The Company has neither borrowed any sums from financial institutions nor through debentures and therefore question of repayment does not arise.

xii As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities; Para 4(xii) of the Order is not applicable.

xiii In our opinion, considering the nature of activities carried on by the company during the period, the provisions of any special statute, applicable to Chit Fund/ Nidhi/ Mutual benefit Fund/ Societies are not applicable to the Company, hence Para 4(xiii) of the Order in not applicable.

xiv. The Company has maintained proper records of transaction and contracts in respect of investments in securities and timely entries have been made therein. All Investments at the close of the year have been held in the name of the Company.

xv As per the information and explanations given to us and on our enquiries and records of the Company examined by us, the Company has not given any guarantee for loans taken from financial institutions and/or banks on behalf of others;

xvi The Company has not obtained any term loan during the year hence Para 4(xvi) is not applicable.

xvii According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments. No long term funds have been used to finance short term asset except permanent working capital.

xviii In our opinion, and on the basis of information and explanations given to us, since the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, Para 4(xviii) of the Order is not applicable;

xix In our opinion, and on the basis of information and explanations given to us, since the company has not issued any debenture during the period, question of creating securities in respect thereof does not arise.

xx In our opinion, on the basis of information and explanations given to us, since the Company has not raised any money by public issue during the period, Para 4(xx) of the Order is not applicable;

xxi During the course of our examination of the books of account 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 fraud on or by the Company, noticed or reported during the year nor have been informed of any such case by the management.

For M.L.Choraria & Associates Chartered Accountants M.M.Choraria Date : 15/05/2012 Proprietor

Place: Mumbai Membership No:44180

F.R.N. 113782W


Mar 31, 2010

We have audited the attached Balance Sheet of Birla Capital & Financial Services Limited as at 31st March 2010, and the annexed Profit and Loss Account for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

1 We have conducted our audit in accordance with auditing standards generally accepted in India. These 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 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.

2 As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of- India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclosed in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

3 Further to our comments in the annexure referred to above subject to no

a) Sundry Debtors, Sundry, Creditors, Bank accounts, Loans & Advances, Assets on Lease in custody of the parties, Stock on hire in custody of the parties are subject to adjustments due to verification and reconciliation of amounts as per books..

b) No provision has been made in respect of the following: -

(i) Income Tax Demands aggregating Rs. 5,32,21,791/- against which the company has referred the matter to the Settlement Commission. The Settlement commission has admitted the companys application under section 245D(1) of the Income Tax Act, 1961,

(ii) Income matters of earlier years in appeals, rectification, towards which the liability is not ascertained, will be accounted for in the year in which the matters are settled.

(iii) Gratuity amounting to Rs 61725/- Upto March 2010, since the same will be accounted for at the time of settlement of the employees accounts 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 the Books of the Company;

iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the Books of the Company,

iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3c) of section 211 of the Companies Act, 1956 to the extent applicable;

v) On the basis of written representations received from the Directors, as at 31st March 2010, and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March 2010, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

4 In our opinion and to the best of our information and according to the explanations given to us and management representation made to us, the said accounts read together with Schedules and other notes thereon give the information required by the Companies Act, 1956, in the manner so required, present 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 the affairs of the Company as at 31st March,2010;

ii) in the case of the profit and loss account, of the Loss for the year ended on that date;



ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITORS REPORT OF EVEN DATE ON THE^ FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st March,2010 OF BIRLA CAPITAL & FINANCIAL SERVICES LIMITED

On the basis of such checks as we considered appropriate and in terms of the information and explanations given to us, we state that: -

i. In respect of its fixed assets;

a) The Company has generally maintained proper records showing particulars, including quantitative details and situation of fixed assets;

b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification plan adopted by the Company, which is reasonable having regard to the size of the company and nature of its assets except in case of Leased Assets, where the confirmations have been received from the lessees. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not, in our opinion, material however the same have been properly dealt with in the Books of Account.

c) During the year under audit, the Company has not disposed off substantial part of its fixed assets;

ii. In respect of its Inventories;

The Company does not have inventory, accordingly the clause 4 (ii) (a) to (c) are not applicable;

iii. In respect of its Loans;

a) The Company has granted interest bearing Inter corporate Deposits, to Companies covered in the register maintained under section 301 of the Companies Act, 1956.

b) The Company has not taken Inter corporate Deposits, from Companies covered in the register maintained under section 301 of the Companies Act, 1956.

iv In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business;

v a) On the basis of audit procedures performed by us, and according to the information and explanation given to us, the transactions required to be entered in the register required to be maintained under Section 301 of the Companies Act has been so entered;

b) In our opinion and according to 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 have been made at prices which are reasonable having regards to prevailing market prices at the relevant time except and unless as mentioned in Para (iii) above;

vi In our opinion, during the year the Company has not accepted any public deposits and hence the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from the public is not applicable.

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

viii According to information and explanation provided to us, maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956;

ix a) According to the records of the Company, it has been regular in depositing undisputed statutory dues including Income tax, Sales tax, Provident fund Act, Employees State Insurance Act and other material Statutory Dues with the appropriate authorities;

b) On the basis of our examination of the documents and records of the Company and the information and explanations given to us upon our enquiries in this, there are no disputed amounts payable in respect of Sales Tax, Income Tax Service Tax, outstanding at the last day of the period ended 31st March 2010. The amount disputed in respect of Income Tax is Rs. 532.22 lacs against which the company has referred the matter to the settlement commission. The settlement commission has admitted the companys application under section 245(D)(1) of the Income Tax Act 1961,

x The Company has not borrowed any sums from financial institutions nor through debentures;

xi The Company has maintained proper records of transaction and contracts in respect of investments in securities and timely entries have been made therein. All Investments at the close of the year have been held in the name of the Company.

xii As per the information and explanations given to us on our enquiries and records of the company examined by us, the Company has not given any guarantee for loans taken from financial institutions and/or banks by others;

xiii According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments. No long term funds have been used to finance short term asset except permanent working capital

xiv As per the information and explanation given to us and on our enquiries in this behalf there were no frauds reported by the Company during the year;

xv As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities; para 4(xii) of the Order is not applicable: However the Company has pledged its fixed deposit to Union Bank Of India against the overdraft facilities granted to a Company.

xvi In our opinion, considering the nature of activities carried on by the company during the period, the provisions of any special statute, applicable to Chit Fund/Nidhi/Mutual benefit Fund/Societies are not applicable to the Company;

xvii In our opinion, on the basis of information and explanations given to us, since the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, para 4(xviii) of the Order is not applicable;

xvii In our opinion, on the basis of information and explanations given to us, since the company has not issued any debenture during the period, para 4(xix) of the Order is not applicable;

xviii In our opinion, on the basis of information and explanations given to us, since the company has not raised any money by public issue during the period, para 4(xx) of the Order is not applicable;

xix During the course of our examination of the books of account 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 fraud on or by the company, noticed or reported during the period nor have been informed of any such case by the management.

For M.LChoraria & Associates

Chartered Accountants

M.M.Choraria

Date; 22/04/2010 Proprietor

Place: Mumbai Membership No:44180





 
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