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Auditor Report of DCM Financial Services Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of DCM Financial Services Limited ("the Company"), which comprise the Balance Sheet as at March 31,2015, and the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act 2013 ("the Act") with respect to the preparation of these standalone 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 in India, including the Accounting Standards referred specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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 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 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 control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 qualified audit opinion.

Basis for Qualified Opinion

(i) The accounts and financials of the company have been prepared on going concern on the assumption and premises made by the management of the Company that (a) The fresh restructuring scheme would be approved by the Hon'ble Delhi High Court in totality which is still pending for approval & acceptance (b) adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis and

(c) injection of Rs.1,950.00 Lacs as promoters quota which has already been infused by the management group. The same has been explained in Note 30.

(ii) No provision of Rs.823.24 Lacs (Rs.14,843.55 Lacs towards accumulated Interest as at 31st March, 2015) (Previous Year - Rs14,020.03 Lacs) which is simple interest calculated @10% per annum as stipulated in the Fresh Restructuring Scheme filed before Hon'ble Delhi High Court, towards Interest on Debentures, Term Loans & Bank, Fixed Deposits and Inter Corporate Deposits, have been provided in the financial statements. Had these been provided for in the financial statements, the net loss for the year ended 31st March, 2015 and cumulative net loss as well as Current / Non-Current Liabilities as at 31st March, 2015 would have been overstated by Rs.823.23Lacs and Rs.14843.55Lacs respectively. This is a contravention of the Accounting Standard 1 on Disclosure of Accounting Policies issued by Ministry of Corporate Affairs, Government of India. The same has been explained in Note 4.1.g, Note 4.4(g) and Note 4.6.

(iii) For redemption of debentures of Rs.8.75 Lacs, debenture redemption reserve is required to be created. Debenture redemption reserve of Rs.8.75 lacs has not been created due to insufficient profits. The same has been explained in Note 2.2.

(iv) The value of assets charged as security in favor of banks, debenture-holders & financial institutions have been depleted over a period of time. The depletion has not yet been ascertained by the Company. To the extent of shortfall, if any, the liability is unsecured, whereas the same has been shown as secured. The same has been explained in Note 4.1.e and Note 4.2.b & 4.3.1.

(v) Fixed Deposits and Bills Payable as per Fixed Deposit Register maintained by the Company are Rs.5627.29 lacs whereas the same as per financials books comes to Rs.5617.20 lacs. Their is a difference of Rs.10.69 lacs which is un-reconciled in the Fixed Deposit Register. The reason is either lack of identification of depositors or no claim or confirmation having been received by the company. The provision of such differential amount has not been made in the books of accounts. The provision of such differential amount has not been made. The same has been explained in Note 4.4.(e) & Note 4.4.(f).

(vi) Balance confirmation of bills receivable and payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management about its recoverability in the financials including considering the NPA Provisions, are good for recovery/ payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, it is not feasible for us to determine financial impact on the financials. Please refer Note No-31.

(vii) Due to liquidity crisis in the past, minimum liquid assets @ 15% of Fixed Deposits as per directives of Reserve Bank of India under Non-Banking Company Prudential Norms, has not been maintained by the company. The company has applied to RBI and Company Law Board for exemption from maintaining minimum liquid assets and payment of penal interest but the disposal of the application is still pending. The same has been explained in Note 4.4.(h).

(viii) Global IT Options Limited has till 31st March, 2015 incurred expenditure of Rs.20.47 lacs for & on behalf of its Holding Company (i.e. DCM Financial Services Limited). It comes under the category of short term funding. In case of Inter-Corporate Deposit, Section 186 of Companies Act, 2013 stipulates to charge interest at a rate not less than the bank declared by Reserve Bank of India. No Interest has not been provided on outstanding balance of Rs.20.47 lacs by Company to its subsidiary - Global IT Options Limited. It is non compliance of Section 186 of Companies Act, 2013, which could attract penalties.

(ix) Contingent liabilities and Other Commitments

(a) Claims lodged and contingent liability arising out of suits and winding up petitions filed against the company not acknowledged as debts amounts to Rs.826.38 Lacs. There are also other cases filed in consumer, civil & criminal courts and other courts against the company for which the company is contingently liable but for which the amount is not quantifiable.

(b) Punjab & Sind bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs.1,217.52 Lacs against which the amount payable to them, as per books is Rs.803.40 Lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs.414.12 Lacs has been made. In the event of default in the payment of interest and principal or default as per Fresh Restructuring Scheme or Fresh Restructuring Scheme is rejected, the concessions made by PSB shall stand withdrawn and their claim settled before the Debt Recovery Tribunal of Rs.1,217.52 Lacs will become payable with immediate effect.

(c.) IndusInd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs.1,042.42 Lacs against which the amount payable to them as per books is Rs.577.00 Lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs.465.42 Lacs has been made. In the event that the company fails to pay the interest or principal or company default as per Fresh Restructuring Scheme or Fresh Restructuring Scheme is rejected, the concessions made by IndusInd Bank will be withdrawn and the amount claimed in the Debt Recovery Tribunal amounting to Rs.1,042.42 Lacs would be payable with immediate effect.

(d) During the year 1999, the company had received Rs.100.00 Lacs from one of its debtors i.e. Pure Drinks New Delhi Ltd. and reduced the same amount from his recoverable balance. Subsequently the Hon'ble Punjab and Haryana Court deemed that payment is an out of turn payment and asked the company to deposit back the said amount. The company had filed a SLP with the Hon'ble Supreme Court of India which has been dismissed by them. Therefore the company is liable to deposit the amount mentioned above which has yet to be deposited. And in view of restrictions imposed on operations of Bank A/c's by Hon'ble Delhi High Court, the company has filed an application to release this money for depositing the same with Punjab & Haryana High Court.

(e) During the year ended 30th June, 2011 the company's tenant has filed a claim of Rs.100.00 Lacs against the company due to damages suffered by the tenant which is pending under arbitration proceedings as on 31st March, 2015.

(f) There is a demand of Rs.141.75 Lacs raised by Income Tax Department for the Assessment Year 2010-11 for payment of income tax under the Income Tax Act, 1961, which is disputed by the company as brought forward losses under the Income Tax Act has not been allowed by the department and rectification application for deletion of above said demand has been filed by the company which is pending before the appropriate authorities.

(g) There is an award passed by the arbitrator against the company in the matter of MS Shoes East Limited on May 28, 2012 for Rs.512.80 Lacs i.e. claim amount along with interest of Rs.307.00 Lacs for an underwriting given by the company in the year 1995 for the public issue of M/s MS Shoes East Ltd. The same has been contested by Company before Hon'ble Delhi High Court.

(h) Due to dispute with the builder M/s NBCC Ltd. from which the company had purchased an office premises in the year 1995, regarding a claim for Rs.283.00 Lacs on account of increase in super area and certain other expenditure M/s NBCC Ltd. had incurred and the same is pending in arbitration.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid standalone 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 of the state of affairs of the Company as at 31st March 2015, and its profit/loss and its cash flows for the year ended on that date

Emphasis of Matter

Till June, 2007, Group Companies funded expenditure or repayments made by the company worth Rs.549.71 Lacs. The same had been shown or credited to the Share Application Account in the financial statements of the Company. Company had already passed special resolution to allot appropriate shares, however the same is subject to sanction of Fresh Restructuring Scheme by the Hon'ble Delhi High Court. Such amounts were not received by the company under any invitation or subscription to any issue and the enabling resolutions passed in this regard have expired & shares cannot be issued as per SEBI Guidelines. Besides, such amount of share application money is covered under Private Placement Rules defined under Companies Act, 2013. Companies Act 2013 stipulates that if a company had received any amount by way of subscriptions to any shares, stock, bonds or debentures before the 1st April. 2014, such share application money should either be allotted till 1st June, 2015 or be refunded. During the year ended 31-March-2015, the Company has transferred such amount of Rs.549.71 Lacs from Share Application to Long-Term Liabilities & shall seek permission for payment upon sanction of Fresh Restructuring Scheme by the Hon'ble Delhi High Court.

Our opinion is not modified in the matter.

Report on Other Legal and Regulatory Requirements

(1) 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 Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and, except for the matters described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, 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 impact of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2013;

f. The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an Qualified effect on the functioning of the Company.

g. On the basis of written representations received from the directors as on March 31,2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015, from being appointed as a director in terms of section 164(2) of the Act.

h. The Qualified remarks relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

i. With respect 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 best of our information and according to the explanations given to us

a. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 24 to the financial statement.

b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

c. The company moved an application before the Hon'ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company. The company filed a fresh Scheme of Arrangement for the reorganization of the share capital of the company and for compromise with the secured and unsecured creditors of the company, hereinafter referred to as the "fresh restructuring scheme" before the Hon'ble Delhi High Court, New Delhi on 24th September 2004 mentioning therein repayment schedule. All the unpaid matured fixed deposits of Rs.5617.20 Lacs, Unpaid Matured Debentures of Rs.2552.29 Lacs & Stale cheques in respect of balance of uncashed/unrealized in respect of Fixed Deposits and Non Convertible Debentures totaling Rs.14.73 Lacs issued prior to submission of restructuring scheme & as well as after the scheme which were not encashed by the FD and NCD Holders standing as at 31st March, 2015. All these matured fixed deposits, Unpaid Matured Debentures & Stale Cheques are more than seven year old. Out of Rs.14.73 Lacs of Stale Cheques, Rs.13.74 lacs were issued prior to submission of said fresh restructuring scheme & rest has been issued after the issuance of fresh restructuring scheme. During the year ended 31-March-2015, Rs.14.16 Lacs and Rs.0.57 Lacs has been transferred from the Stale Cheques Account to Fixed Deposits Account and Debentures Account respectively. Company represents that all the said amounts are payable as per the outcome of fresh restructuring scheme pending before Hon'ble Delhi High Court at New Delhi and Based on above, there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph (1) of our report on other legal and regulatory requirements of even date)

Annexure referred to in paragraph (1) of our report on other legal and regulatory requirements of Independent Auditor's Report to the members of DCM Financials Services Limited on the financial statements for the year ended March 31, 2015

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

(b) The fixed assets (other than the assets given on lease/hire purchase) have been physically verified by the management in a phased manner so that the entire assets lying at the Head Office and branches are covered within a period of three yeaRs. There is a program of verification of such fixed assets which, in our opinion, is reasonable having regards to the size of the Company in terms of number & nature of assets & manpower available. As explained to us by the management, no discrepancies were noticed on such verification.

(ii) (a) Inventories of stock of shares and securities have been physically verified during the year by the management and in our opinion, the frequency of verification is reasonable.

(b) The procedures for physical verification of inventories of stock of shares and securities followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business, except matter stated at Point No-14 of this Annexure.

(c) The company is maintaining proper records of its inventories of stock of shares and securities. The discrepancies noticed during the course of physical verification between the physical stocks and the book records were not material. However the same have been properly dealt with in the books of account, except matter stated at Point no. 14 of this Annexure.

(iii) The Company has not granted loans to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013,

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of fixed assets, purchase & sale of services. The activities of the Company do not involve purchase or sale of goods. Further, on the basis of our examination of the books and the records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed about any continuing failure on the part of the management to correct major weaknesses in the aforesaid internal control procedures.

(v) The company has not accepted deposits from the public during the year. The directives issued by the Reserve Bank of India and the provision of section 73 to 76 or any other relevant provision of the Companies Act 2013, the extent applicable, on deposits accepted in the earlier years and the outstanding deposits at the end of current year have not been complied with particularly relating to the register of depositors which does not agree with general ledger, general provisions regarding default in repayment of deposits, default in repayment of interest and maintenance of liquid asset assets. A notice has also been issued by the Reserve Bank of India for the company to show cause why penal action should not be taken against the company as prescribed under the RBI Act.

(vi) As explained to us maintenance of cost records has not prescribed pursuant to the rules made by the Central Government under Section 148(1) (d) of the Companies Act, 2013

(vii) (a) According to the information and explanations given to us, no undisputed amounts payable in respect of 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 undisputed statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(b) As explained by the management, there is a disputed demand of Rs.152.12 lakhs and Rs.141.74 lakhs for the Assessment Year 2009-10 and 2010-11 respectively for the payment of Income tax Act,1961, which is disputed by the company as the brought forward losses under the Income tax Act has not been allowed by the department. The rectification application for deletion of above said two demands has been filed by the company which is pending before the appropriation authorities

(c) There is no amount which is required to be transferred to investor education and protection fund in accordance with relevant provisions of the Companies act, 2013 and rules there- under.

(viii) The accumulated losses at the end of the financial year exceed its net worth. The company has incurred cash losses in this financial year as against cash losses in the financial year immediately preceding the current financial year.

(ix) The company had defaulted in the repayment of dues to financial institutions, banks and debenture holders as explained in Note Nos. 4.1 to 4.3 and Note No. 4.5 of Notes to Accounts.

The matter is sub-judice with Hon'ble Delhi High Court as the company had filed a fresh Scheme of Arrangement for the reorganization of the share capital of the company and for compromise with the secured and unsecured creditors of the company, hereinafter referred to as the "fresh scheme" before the Hon'ble Delhi High Court at New Delhi on 24th September 2004 and the same is pending as at 31st March, 2015.

(x) The company has not given any guarantee for loans taken by others from bank or financial institutions and therefore rest of the sub-clause is inapplicable and has not been commented upon.

(xi) According to the information and explanations given to us and on an overall examination of the books of accounts of the company, we report that no term loan was taken during the year ended 31st March, 2015. However, the term loans taken by company in earlier years were applied for the purpose for which such loans obtained.

(xi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit

For V Sahai Tripathi & Co. Chartered Accountants Firm's Registration Number-000262N

Place: New Delhi MANISH MOHAN Date : 29th May, 2015 Partner M.N.- 091607




Mar 31, 2014

We have audited the accompanying financial statements of DCM Financial Services Limited ("the Company"), which comprise the Balance Sheet as at March 31,2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory infbrmation.

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") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and 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, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion

(i) Recognition of rental income of Rs. 68.26 lacs during the financial year ended 31st March, 2014 which should not have been recognized in view of uncertainty in realization of such income & also non provision of doubtful debts against rental receivable of Rs. 499.43 lacs pertaining to previous years which have not yet been realized. Had these been rectified in the financial statements, the net loss for the year ended 31" March, 2014 and cumulative net loss as at 31stMarch, 2014 would have been overstated by Rs 68.26 Lacs and Rs 567.69 Lacs respectively. Similarly Current Assets would have been understated by Rs 567.69 Lacs.

(ii) No provision of Rs 826.38 Lacs (Rs 14020.03 Lacs towards accumulated Interest as at 31stMarch, 2014) which is simple interest calculated @10% per annum as stipulated in the Fresh Restructuring Scheme filed before Hon''ble Delhi High Court, towards Interest on Debentures, Term Loans & Bank, Fixed Deposits and Inter Corporate Deposits, have been provided in the financial statements. Had these been provided for in the financial statements, the net loss for the year ended 31* March, 2014 and cumulative net loss as welt as Current I Non Current Liabilities as at 31st March, 2014 would have been overstated by Rs. 826.38 Lacs and Rs. 14020.03 Lacs respectively. This is a contravention of the Accounting Standard 1 on Disclosure of Accounting Policies issued by Ministry of Corporate Affairs, Government of India. The same has been explained in Note 4.1.f, Note4.1.g.(i), Note4.2.c&4.2.d, Note 4.3.2, Note 4.3.3, Note 4.4(f) and Note 4.6.

(iii) For redemption of debentures of Rs 8.75 Lacs, debenture redemption reserve is required to be created. Debenture redemption reserve of Rs 8.75 lacs has not been created due to insufficient profits. The same has been explained in Note 2.2.

(iv) The value of assets charged as security in favor of banks, debenture-holders & financial institutions have been depleted over a period of time. The depletion has not yet been ascertained by the Company. To the extent of shortfall, if any, the liability is unsecured, whereas the same has been shown as secured. The same has been explained in Note 4.1.d and Note 4.2.b&4.3.1.

(v) Fixed Deposits and Bills Payable as per Fixed Deposit Register maintained by the Company are Rs. 5642.96 lacs whereas the same as per financials books comes to Rs. 5632.27 lacs. Their is a difference of Rs. 10.69 lacs which is un-reconciled in the Fixed Deposit Register. The reason is either lack of identification of depositors or no claim or confirmation having been received by the company. The provision of such differential amount has not been made in the books of accounts. The provision of such differential amount has not been made. The same has been explained in Note 4.4.(d) & Note 4.4.(e).

(vi) Due to liquidity crisis in the past, minimum liquid assets @ 15% of Fixed Deposits as per directives of Reserve Bank of India under Non Banking Company Prudential Norms, has not been maintained by the company. The company has applied to RBI and Company Law Board for exemption from maintaining minimum liquid assets and payment of penal interest but the disposal of the application is still pending. The same has been explained in Note 4.4.(g).

(vii) Till June, 2007, Group Companies funded expenditure or repayments made by the company worth Rs. 549.71 Lacs. The same has been shown or credited to the Share Application Account in the financial statements of the Company. Company had already passed special resolution to allot appropriate shares, however the same is subject to sanction of Fresh Restructuring Scheme by the Hon''ble Delhi High Court. In view of pending approval or acceptance of Fresh Restructuring Scheme in the Hon''ble Delhi High Court, no shares either have been allotted by the Company or repaid or refunded the said share application money. As per Section 73(2) of the Companies Act, 1956, Interest is payable against such share application money. Company has not made any provision in the financials towards Interest payable on the unpaid amount of share application money in compliance with Section 73(2) of the Companies Act, 1956. The company has not attempted to determine the financial impact, accordingly the financial impact of the same is not ascertainable.

(viii) The accounts and financials of the company have been prepared on going concern on the assumption and premises made by the management of the Company that (a) The fresh restructuring scheme would be approved by the Hon''ble Delhi High Court in totality which is still pending for approval & acceptance (b) The promoters of the company have provided letter of support, (c) adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis and (d) injection of Rs. 19.50 crores as promoters quota which has already been infused by the management group. The same has been explained in Note 29.

(ix) Contingent liabilities and Other Commitments

ix.(a) Punjab & Sind Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs. 1217.52 lacs against which the amount payable to them as per books of accounts is Rs. 803.40 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 414.12 lacs has been made.

This is subject to approval of fresh restructuring scheme which is pending before Hon''ble Delhi High Court and since the Company has not made payment of interest & principal in accordance with the concession granted by Punjab & Sind Bank, Rs. 1217.52 became payable to Punjab & Sind Bank. No provision for the difference of Rs. 414.12 lacs has been made by the Company. Besides Interest from 1st April, 2005 to till 31st March, 2014, overdue interest, default charges are not provided for. The Company has not attempted to determine the financial impact, accordingly the net loss for the year is understated and cumulative net loss is also understated to that extent. ix.(b) Induslnd Bank filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs. 1042.42 lacs against which the amount payable to them as per books is Rs. 577.00 lacs. The company contends that the dues of the Bank are to be anticipated to be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 465.42 lacs has been made.

This is subject to approval of fresh restructuring scheme which is pending before Hon''ble Delhi High Court and since the Company has not made payment of interest & principal in accordance with the concession granted by Indusind Bank, Rs. 1042.42 became payable to Indusind Bank. No provision for the difference of Rs. 465.42 lacs has been made by the Company. Besides Interest from 1" April, 2005 to till 31" March, 2014, overdue interest, default charges are not provided for. The Company has not attempted to determine the financial impact, accordingly the net loss for the year is understated and cumulative net loss is also understated to that extent.

ix.(c) During the year ended 30th June, 2009, the Company had received Rs. 100.00 lacs from one of the Debtors and reduced the balance recoverable from the debtors account. Subsequently the Hon''ble Punjab and Haryana Court deemed that payment to be an out of turn payment and asked the company to deposit the amount. The Company had filed a SLP with the Hon''ble Supreme Court of India which has been dismissed by them. The Company is liable to deposit the amount mentioned above which has yet to be deposited.

ix.(d) There is an award passed by the arbitrator against the company in the matter of MS Shoes East Limited on May 28,2012 for Rs. 51.28 lacs i.e. claim amount along with interest of Rs. 307 lacs for an underwriting given by the company in the year 1995 for the public issue of M/s MS Shoes East Ltd. The same has been contested by Company before Hon''ble Delhi High Court.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the 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 Profit and Loss Account, of the loss forthe 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

We draw your attention to The directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956, to the extent applicable, on deposits accepted in the earlier years and outstanding deposits at the end of the current year have not been complied with particularly relating to the register of depositors which does not agree with the general ledger, general provisions regarding default in repayment of deposits, default in payment of interest and maintenance of liquid assets. A notice has also been issued by the Reserve Bank of India for the company to show cause why penal action should not be taken against the company as prescribed under the RBI Act. Our opinion is not qualified in this matter.

Report on Other Legal and Regulatory Requirements

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

2. As required by section 227(3) of the Act, we report that;

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. except for the matter described in the Basis for Qualified Opinion paragraph, 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 the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 except under sub clause (B) & clause (g) of sub section (1) of Section 274 of the said Act.

ANNEXURE TO AUDITOR''S REPORT

(Referred to in paragraph (1) of our report on other legal and regulatory requirements of Independent Auditor''s Report of even date)

Annexure referred to in paragraph (1) of the report on other legal and regulatory requirements of Independent Auditor''s Report to the members of DCM Financial Services Limited on the financial statements for the year ended March31,2014

1. (a) The company is maintaining records showing full particulars, including quantitative details and situation offixed assets lying/situated at the Head Office and branch office.

(b) The fixed assets (other than the assets given on lease/hire purchase) have been physically verified by the management in a phased manner so that the entire assets lying at the Head Office and branches are covered within a period of three years. There is a program of verification of such fixed assets which, in our opinion, is reasonable having regard to the size of the company in terms of number & nature of assets & manpower available. As explained to us by the management, no material discrepancies were noticed on such verification.

(c) Fixed assets worth Rs. 0.26 lacs were disposed off during the year ended 31st March, 2014. The company has not disposed off a substantial part of its fixed assets during the year to affect the status of the company as a going concern.

2. (a) According to the information and explanations given to us, physical verification of stock of shares and securities was conducted by the management at periodic intervals.

(b) In our opinion, the procedures followed by the company for physical verification of stock of shares and securities are reasonable and adequate in relation to the size of the company and the nature of its business, except matter stated at Point No.-14 of this Annexure.

(c) The company is maintaining records of stock of shares and securities and there were no discrepancies noticed by them on their physical verification, except matter stated at Point No.-14 of this Annexure.

3. In respect of loans, secured or unsecured, granted or taken by the company to/ from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:-

a) To the best of our knowledge and according to the information and explanations given to us, the Company has not taken any unsecured loan from the Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, during the financial year ending 31st March-2014.

b) To the best of our knowledge and according to the information and explanations given to us, the Company has not granted any unsecured loan(s) to any party, firms or Companies covered in the register maintained under Section 301 of the Companies Act, 1956, during the financial year ending 31-March-2014.

c) Accordingly, the rest of the sub-clauses are not applicable to the Company during the reporting period ending 31 -March-14.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventories and fixed assets and for the sale /realization of services and there was no continuing failure to correct major weakness in the internal control system.

5. lnrespectoftransactionscoveredunderSection301 of the Companies Act, 1956:-

(a) According to the information and explanations given to us, we are of the opinion that there are no transactions which are required to but have not been entered in the register maintained under section 301 of the Companies Act, 1956. b) In our opinion and according to the information and explanations given to us, there were no transactions during the year exceeding the value of rupees five lakhs in respect of any party made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956.

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits during the year. The directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956, to the extent applicable, on deposits accepted in the earlier years and outstanding deposits at the end of the current year have not been complied with particularly relating to the register of depositors which does not agree with the general ledger, general provisions regarding default in repayment of deposits, default in payment of interest and maintenance of liquid assets. A notice has also been issued by the Reserve Bank of India for the company to show cause why penal action should not be taken against the company as prescribed under the RBI Act.

7. In our opinion, the company has an internal audit system, which is commensurate with its size and nature of its business.

8. As explained to us maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, in our opinion the company is generally regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales tax, Wealth tax, Service Tax, Custom Duty, Excise Duty cess and any other statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of the above dues which were outstanding as at 31 st March, 2014 for a period of more than six months from the date of their becoming payable.

(b) As explained by the management, there is a disputed demand of Rs. 152.12 lakhs and Rs. 141.74 lakhs for the Assessment Year 2009-10 and 2010-11 respectively for payment of income tax under the Income Tax Act, 1961, which is disputed by the company as the brought forward losses under the Income Tax Act has not been allowed by the department. The rectification application for deletion of above said two demands has been filed by the company which is pending before the appropriate authorities.

10. The company has accumulated losses of more than 50% of its net worth as at 3T March, 2014 but has not incurred cash losses during the preceding financial year as well as during the current year as per the statement of profit & loss. However after considering the impact of qualifications referred to in the Main Auditor''s Report, there is a loss in both the said two financials years.

11. The company has defaulted in the repayment of dues to the debenture holders, financial institution, and banks as explained in Note Nos. 4.1 to 4.3 and Note No 4.5 of Notes to Accounts.

12. As explained to us by the management, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not a chit fund, nidhi, mutual benefit fund ora society. Accordingly, the provisions of clause (xiii) of the Order are not applicable.

14. According to the information and explanations given to us, during the period ended 31- March 2014, the company has not entered into any transactions of dealing or trading in shares, securities, debentures and other investments for which proper records of such transactions are required to be maintained. Shares, securities, debentures and other investments have been held by the company in its name except in cases of bad deliveries where shares held as stock in trade, were not in the name of the company. These have been removed from the records during the year. The value of quoted securities which are in physical form & has not yet been converted into DEMAT Form have been reconciled at value of Rs. 1 such securities.

15. According to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions during the year.

16. According to the information and explanations given to us, no term loans were obtained by the company during the year.

17. According to the information and explanations given to us, no short term loans/inter-corporate deposits were raised by the company during the year.

18. During the year, 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. Accordingly, clause 4(xviii) of the order is not applicable.

19. The company has not issued any debentures during the year.

20. The company has not raised any money by public issue during the year.

21. During the course 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 any instance of material fraud on or by the company advised or reported during the year nor have we been informed of such cases by the management.

For V.Sahai Tripathi &Co. Chartered Accountants Firm''s Registration Number: 000262N

Place : New Delhi (Manish Mohan) Dated :30th May, 2014 Partner Membership No. 91607


Jun 30, 2011

(1) We have audited the attached balance sheet of DCM Financial Services Limited as at 30th June, 2011 and also the profit & loss account 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 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 the management as well as evaluating the overall presentation of financial statements. 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 in terms of section 227 (4A) of the Companies Act, 1956, (the Act) and on the basis of such checks of the books and records of the company as we considered 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.

(4) These accounts have been prepared using the going concern assumption based on an assumption & premises made by the management that fresh scheme would be approved by Hon'ble Delhi High Court, adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis and on the letter of financial support by the promoter group. These accounts do not include any adjustments that would result from discontinuance of the existing financial support by the promoter group.

(5) 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 purpose of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the company as far as appears from our examination of the books.

(c) The company's balance sheet and profit & loss account dealt with by this report are in agreement with the books of account.

(d) In our opinion the balance sheet, profit & loss account and the cash flow statement of the company dealt with by this report comply with requirements of the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 except for non-provision of interest and discounting charges on accrual basis as prescribed by Accounting Standard 1 and non-provision of doubtful receivables and other current assets as prescribed by Accounting Standard 28 on Impairment of Assets.

(e) Based on the representations made by all the Directors of the company and the information and explanations duly certified given to us by the company none of the Directors of the company are disqualified as on 30th June, 2011 from being appointed as a Director in terms of section 274 of the Companies Act, 1956 except sub clause (B) & clause (g) of sub section (1).

However, due to defaults in repayment of Fixed Deposit listed in section 274(1)(g) of the Companies Act, 1956, the company has become a disqualifying company and consequently its directors are disqualified from being appointed or re-appointed as directors of any other company.

(f)In our opinion and to the best of our information and according to the explanations given to us, the said balance sheet and profit & loss account subject to recognition of Rental Income of Rs 105.68 Lacs during the financial year ended 30th June, 2011 & non provision of doubtful debts against Rental Receivable of Rs 280.69 lacs pertaining to previous years which have not yet been realized & are also doubtful of recovery, net profit for the year & current assets are overstated and cumulative net loss is understated to that extent, non provision of doubtful realization on stock in trade of Rs. 1.96 lacs, net profit for the year & Current Assets are overstated and cumulative net loss is understated to that extent along-with Notes 5 (c), 5(e) 6(B), (C), (D), 7(e), 8 on non-provision of interest on debentures, term loans and banks, fixed deposits, and inter corporate deposits, 5(d) on non- creation of debenture redemption reserve, Note 1 on application for acceptance of fresh scheme of arrangement which is pending before the Hon'ble Delhi High Court for approval & acceptance, Note 5(a) and 6(E) on security against debentures and banks and institutions respectively, Note 7(a) on defaults in repayment to depositors, Note 7(c) & 7(d) on un- reconciled differences in fixed deposit register, Note 7(f) on non- maintenance of statutory minimum liquid assets, Note 9 on non- provision of NPA's, Note 11 on non-reconciliation of stock in trade, Note 13 on assumption by the management that the company is a going concern, Note 14(a) on absence of balance confirmation, Note 14(b) on un-reconciled balances, Note -15 on payment of Director's Remuneration of Rs 3.54 Lacs without obtaining approval of Central Government under Section 309 of the Companies Act, 1956, Note 18 on contingent liabilities not ascertained and Para 6 of CARO relating to fixed deposits and the remaining notes appearing thereon read with the Accounting Policies give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view :-

i) In the case of the balance sheet of the state of affairs of the company as at 30th June, 2011; and

ii) In the case of the profit & loss account of the company of the Profit for the year ended 30th June, 2011; and

iii) In the case of the cash flow statement of the cash flows for the year ended on 30th June, 2011.

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph (3) of our report of even date)

1. (a) The company is maintaining records showing full particulars, including quantitative details and situation of fixed assets at the Head Office and branch office.

(b) The fixed assets (other than the assets given on lease/hire purchase) have been physically verified by the management in a phased manner so that the entire assets lying at Head Office and branches are covered within a period of three years. There is a program of verification of such fixed assets which, in our opinion, is reasonable having regard to the size of the company in terms of number & nature of Assets & manpower available. As explained to us by the management, no material discrepancies were noticed on such verification.

(c) There was no disposal of fixed assets except discharged of the contractual obligation during the year .

2. (a) According to the information and explanations given to us, physical verification of stock of shares and securities was conducted by the management at periodic intervals.

(b) In our opinion, the procedures followed by the company for physical verification of stock of shares and securities are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining records of stock of shares and securities and there were no discrepancies noticed by them on their physical verification except in cases of bad deliveries where shares held as stock in trade were not in the name of the company. The same has been removed from records during the year. The Company has kept with itself few shares & securities as a security received from its customer against the recoverable amount of Rs. 164.96 Lacs, which are under reconciliation & confirmation. This has been explained in Note No. - 11 of Notes to Accounts.

3. The company has not during the year, granted/taken any loans to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act and therefore clause (iii) is not applicable and hence has not been commented upon.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventories and fixed assets and for the sale /realization of services and there was no continuing failure to correct major weakness in the internal control system.

5. In our opinion and according to the information and explanations given to us, there were no transactions during the year, which require to be entered in the register maintained under section 301.

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits during the year. The directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956, to the extent applicable, on deposits accepted in the earlier years and outstanding deposits at the end of the current year have not been complied with particularly relating to the register of depositors which does not agree with the general ledger, general provisions regarding default in repayment of deposits, default in payment of interest and maintenance of liquid assets. A notice has also been issued by the Reserve Bank of India for the company to show cause why penal action should not be taken against the company as prescribed under the RBI Act.

7. In our opinion, the company has an internal audit system, which is commensurate with its size and nature of its business.

8. Maintenance of cost records has not been prescribed by the Central Govt. under clause (d) of sub-section (1) of section 209 of the Act.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, in our opinion the company is generally regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales tax, Wealth tax, Service Tax, Custom Duty, Excise Duty cess and any other statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there was no undisputed amounts payable in respect of the above dues which were outstanding as at 30th June, 2011 for a period of more than six months from the date of their becoming payable.

(b) There is a disputed statutory due that have not been deposited on account of matters pending before appropriate authorities, a demand of Rs.152.12 Lakh for payment of income tax under the Income tax Act, 1961, which is disputed by the Company.

10. The company has accumulated losses of more than 50% of its net worth as at 30th June, 2011 but has not incurred cash losses during the preceding financial year as well as during the current year as per profit & loss account. However after considering qualifications referred in Main Auditor's Report, there is loss in the said two financials years.

11. The company has defaulted in the repayment of dues to the debenture holders, financial institution, and banks as explained in Note Nos. 5 & 6 of Notes to Accounts.

12. As explained to us by the management of the Company, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not a chit fund, nidhi, mutual benefit fund or a society. Accordingly, the provisions of clause (xiii) of the Order are not applicable.

14. According to the information and explanations given to us, during the year, the company has not entered into any transactions of dealing or trading in shares, securities, debentures and other investments for which proper records of the transactions. Shares, securities, debentures and other investments have been held by the company in its name except in cases of bad deliveries where shares held as stock in trade were not in the name of the company. The same has been removed from records during the year. The Company has kept with itself few shares & securities as a security received from its customer against the recoverable amount of Rs. 164.96 Lacs, which are under reconciliation & confirmation. This has been explained in Note No. - 11 of Notes to Accounts.

15. According to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions during the year.

16. According to the information and explanations given to us, no term loans were obtained by the company during the year.

17. According to the information and explanations given to us, no short term loans/inter-corporate deposits were raised by the company during the year.

18. During the year, the company has not made any preferential allotment of share to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clause 4(xviii) of the order is not applicable.

19. The company has not issued any debentures during the year.

20. The company has not raised any money by public issue during the year.

21. During the course 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 any instance of material fraud on or by the company advised or reported during the year nor have we been informed of such cases by the management.

For V Sahai Tripathi & Co

Chartered Accountants FRN-00262N

Sd/-

Place : New Delhi (Manish Mohan)

Dated: 05-Dec-2011 Partner

Membership No: 091607


Jun 30, 2010

(1) We have audited the attached balance sheet of DCM Financial Services Limited as at 30th June, 2010 and also the profit & loss account and the cash flow statement for the year ended on that date annexed thereto. 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.

(2) We conducted our audit in accordance with 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 the management as well as evaluating the overall presentation of financial statements. We believe that our audit provides a reasonable basis forouropinion.

(3) As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, (the Act) and on the basis of such checks of the books and records of the company as we considered 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.

(4) These accounts have been prepared using the going concern assumption based on the letter of financial support by the promoter group. These accounts do not include any adjustments that would result from discontinuance of the existing financial support by the promoter group.

(5) 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 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 the books.

(c) The companys balance sheet and profit & loss account dealt with by this report are in agreement with the books of account.

(d) In our opinion the balance sheet, profit & loss account and the cash flow statement of the company dealt with by this report comply with requirements of the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 except for non-provision of interest and discounting charges on accrual basis as prescribed by Accounting Standard 1 and non- provision of doubtful receivables and other current assets as prescribed by Accounting Standard 28 on Impairment of Assets.

(e) Based on the representations made by all the Directors of the company and the information and explanations duly certified given to us by the company none of the Directors of the company are disqualified as on 30th June, 2010 from being appointed as a Director in terms of section 274 of the Companies Act, 1956 except sub clause(B) & clause(g) of sub section(1).

However, due to defaults in repayment of Fixed Deposit listed in section 274(1)(g) of the Companies Act, 1956, the company has become a disqualifying company and consequently its directors are disqualified from being appointed or re-appointed as directors of any other company.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said balance sheet and profit & loss account subject to recognition of Rental Income of Rs 102.96 Lacs during the financial year ended 30* June, 2010 & non provision of doubtful debts against Rental Receivable of Rs 274.28 lacs pertaining to previous years which have not yet been realized & are also not certain to realize, net profit for the year & current assets are overstated and cumulative net loss is understated to that extent, non provision of doubtful realization on stock in trade ofRs. 6.54 lacs, net profit for the year & Current Assets are overstated and cumulative net loss is understated to that extent along-with Notes 5 (c), 5(e) 6(B), (C), (D), 7(e), 8 on non-provision of interest on debentures, term loans and banks, fixed deposits, and inter corporate deposits, 5(d) on non-creation of debenture redemption reserve, Note 1 on application for acceptance of fresh scheme of arrangement which is pending before the Hon ble Delhi High Court for approval & acceptance, Note 5(a) and 6(E) on security against debentures and banks and institutions respectively, Note 7(a) on defaults in repayment to depositors, Note 7(c) & 7(d) on un-reconciled differences in fixed deposit register, Note 7(f) on non-maintenance of statutory minimum liquid assets, Note 9 on non-provision ofNPA s, Note 11 on non-reconciliation of stock in trade, Note 13 on assumption by the management that the company is a going concern, Note 14(a) on absence of balance confirmation, Note 14(b) on un-reconciled balances, Note -15 on payment of Directors Remuneration of Rs 1.86 Lacs without obtaining approval of Central Government under Section 309 of the Companies Act, 1956, Note 18 on contingent liabilities not ascertained and para 6 of CARO relating to fixed deposits and the remaining notes appearing thereon read with the Accounting Policies give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view :-

i) In the case of the balance sheet of the state of affairs of the company as at 30" June, 2010; and

ii) In the case of the profit & loss account of the company of the Profit for the year ended 30th June, 2010; and

iii) In the case of the cash flow statement of the cash flows for the year ended on 30th June, 2010.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph (3) of our report of even date)

1. (a) The company is maintaining records showing full particulars, including quantitative details and situation of fixed assets at the Head Office and branch office,

(b) The fixed assets (other than the assets given on lease/hire purchase) have been physically verified by the management in a phased manner so that the entire assets lying at Head Office and branches, are covered within a period of three years. There is a program of verification of such fixed assets which, in our opinion, is reasonable having regard to the size of the company in terms of number & nature of Assets & manpower available. As explained to us by the management, no material discrepancies were noticed on such verification.

(b) There was no disposal of fixed assets except discharged of the contractual obligation during the year.

2. (a) According to the information and explanations given to us, physical verification of stock of shares and securities was conducted by the management at periodic intervals.

(b) In our opinion, the procedures followed by the company for physical verification of stock of shares and securities are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining records of stock of shares and securities and there were no discrepancies noticed by them on their physical verification except in cases of bad deliveries where shares held as stock in trade were not in the name of the company. The Company have kept with itself few shares & securities as a security received from its customer against the recoverable amount of Rs. 164.96 Lacs, which are under reconciliation & confirmation. This has been explained in Note No.- 11 of Notes to Accounts.

3. The company has not during the year, granted/taken any loans to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act and therefore clause (iii) is not applicable and hence has not been commented upon.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for tAe purchase of inventories and fixed assets and for the sale of services and there was no continuing failure to correct major weakness in the internal control system.

5. In our opinion and according to the information and explanations given to us, there were no transactions during the year, which require to be entered in the register maintained under section 301.

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits during the year. The directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956, to the extent applicable, on deposits accepted in the earlier years and outstanding deposits at the end of the current year have not been complied with particularly relating to the register of depositors which does not agree with the general ledger, general provisions regarding default in repayment of deposits, default in payment of interest and maintenance of liquid assets. A notice has also been issued by the Reserve Bank of India for the company to show cause why penal action should not be taken against the company as prescribed under the RBI Act.

7. In our opinion, the company has an internal audit system, which is commensurate with its size and nature of its business.

8. Maintenance of cost records has not been prescribed by the Central Govt, under clause (d) of sub-section (1) of section 209 of the Act.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, in our opinion the company is generally regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales tax, Wealth tax, Service Tax, Custom Duty, Excise Duty cess and any other statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of the above dues which were outstanding as at 30th June, 2010 for a period of more than six months from the date of their becoming payable.

(b) As explained to us, there are no disputed statutory dues that have not been deposited on account of matters pending before appropriate authorities.

10. The company has accumulated losses of more than 50% of its net worth as at 30th June, 2010 but has not incurred cash losses during the preceding financial year as well as during the current year as per profit & loss account. However after considering qualifications referred in Main Auditors Report, there is loss in the said two financials years.

11. The company has defaulted in the repayment of dues to the debenture holders, financial institution, and banks as explained in Note Nos. 5 & 6.

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

13. The company is not a chit fund, nidhi, mutual benefit fund or a society. Accordingly, the provisions of clause (xiii) of the Order are not applicable.

According to the information and explanations given to us, during the year, the company has not entered into any transactions of dealing or trading in shares, securities, debentures and other investments for which proper records of the transactions. Shares, securities, debentures and other investments have been held by the company in its name except in cases of bad deliveries where shares held as stock in trade were not in the name of the company. The Company have kept with itself few shares & securities as a security received from its customer against the recoverable amount of Rs. 164.96 Lacs, which are under reconciliation & confirmation. This has been explained in A/ofe No.- 11 of Notes to Accounts.

14. According to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions during the year.

15. According to the information and explanations given to us, no term loans were obtained by the company during the year.

16. According to the information and explanations given to us, no short term loans/inter-corporate deposits were raised by the company during the year.

17. The company has not made any preferential allotment of equity shares during the year.

18. The company has not issued any debentures during the year.

19. The company has not raised any money by public issue during the year.

20. During the course 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 any instance of material fraud on or by the company advised or reported during the year nor have we been informed of such cases by the management.

For V Sahai Tripathi & Co

Chartered Accountants FRN:00262N

Place : New Delhi (Mahesh Sahai)

Dated: 07.12.2010 Partner

Membership No: 006730



 
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