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Auditor Report of Escorts Finance Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Escorts Finance Limited ('the Company1), which comprise the Balance Sheet as at March 31, 2015, the statement of Profit and Loss and the Cash Flow Statement for the year then ended and summary of significant accounting policies and other explanatory information.

2. 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 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 standalone financial statements, that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditor's Responsibility

Our responsibility is to express an opinion on these standalone 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 thereunder.

We conducted out 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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone 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 financial control relevant to the Company's preparation of the standalone financial statements, that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the standalone financial statements.

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

4. Basis of Qualified Opinion

Attention is invited to the following matters in the Notes to the Standalone Financial Statements:

i. Note No. 21, regarding non-maintenance of investments in Government Securities as liquid assets in terms of Section 45-IB of Reserve Bank of India Act, 1934;

ii. Note No. 22, regarding non-maintenance of minimum capital adequacy ratio required to be maintained in terms of Non-Banking Financial Companies requirements;

iii. Note No. 24, regarding the Company's credit rating;

iv. Note No. 25, regarding unpaid/unclaimed matured Fixed Deposit Liability;

v. Note No. 29, regarding non-provision of preference dividend on cumulative preference shares;

vi. Note No. 30, regarding non-determination of Employee Terminal Benefits on actuarial basis.

5. Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in sub-paragraphs (iv), (v) and (vi) of Paragraph 4 under the Basis for Qualified Opinion above, 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 March 31, 2015, and its Loss and its cash flows for the year ended on that date.

6. Other Matters

The Company had filed an application with Reserve Bank of India for deregistration of its NBFC status and accordingly Certificate of Registration has been surrendered.

7. Report on Other Legal and Regulatory Requirements

A. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in the 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 Paragraph 3 & 4 of the order, to the extent applicable.

B. As required by Section 143(3) of the Act, we report that:

(i) We have sought and 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 it appears from our examination of those books.

(iii) The Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this Report, are in agreement with the books of account.

(iv) Except for the effect of the matters described in sub-paragraphs (iv), (v) and (vi) of Paragraph 4 under the Basis for Qualified Opinion above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

(vi) With respect of 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 made disclosure regarding pending litigations in its standalone financial statements, the amount of which is stated to be presently unascertainable, as referred to in Note No. 20(b) to the Financial Statements;

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

c) The Company has not deposited amounts to the Investor Education and Protection Fund against unpaid fixed deposit liabilities including interest thereon, as referred to in Note No. 25 to the Financial Statements;

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT

(Referred to in Paragraph 5 (A) of our report of even date)

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

(b) The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified at reasonable intervals. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verification.

(ii) In view of the nature of the operations of the Company, the Company does not hold any inventory other than stock of repossessed assets, which have been verified by the management during the year. Provision has been made in respect of discrepancies / diminution in the value of such stock as at the end of the year end;

(iii) During the year, the Company has not granted loans to bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013 (The Act'). Accordingly, paragraph 3(iii)(a) and (b) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the Company and the limited nature of its business in relation to fixed assets. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have not observed any major weakness in the internal control system during the course of the audit.

(v) In respect of deposits accepted from the public, in our opinion and according to the information and explanation given to us, the directives issued by Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Companies Act, 2013, the Company had not complied with the said norms in relation to repayment of deposit on their respective maturity dates. However, In accordance with the Hon'ble Delhi High Court's Order / direction dated March 04, 2011, Escorts Benefit Trust (EBT) created by Escorts Limited, repaid matured fixed deposit liability against the claims received till March 03, 2013. Claims received after said dates are also being entertained and settled after due verification. As at March 31, 2015, the unpaid/unclaimed matured fixed deposits liability (including interest thereon) is Rs. 1357.40 lacs (Previous Year Rs. 1606.08 lacs).

(vi) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under sub-section (1) to Section 148 of the Companies Act, 2013, in respect of any of the activities of the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the

Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income-Tax, Service Tax, Wealth Tax, Value Added Tax, ESIC and other material Statutory Dues have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Excise duty and Customs duty.

According to the information and explanations given to us, and on the basis of our examination of the books of account, no undisputed amounts payable in respect of Provident Fund, Employees State insurance , Income-Tax, Sales Tax,, Wealth Tax, Service Tax, Customs duty, Excise Duty,Value Added Tax, cess were in arrears, as at 31 March 2015, for a period of more than six months from the date they became payable except income tax liability amounting to Rs. 22.25 lacs.

(b) According to the information and explanations given to us, there are following dues of Income-Tax, Value Added Tax and other material Statutory Dues which have not been deposited with the appropriate authorities on account of any dispute.

Sl Nature of Period to Forum where Unpaid No. Statutory which the dispute is Amount Dues amount pending (in Rs. relates Lacs)

1 Income Tax AY 2004-05 DCIT, New Delhi 34.94 AY 2005-06 DCIT, New Delhi 131.34

2 Value Added Tax AY 2001-02 AC Appeal, Kolkata 2.26

AY 1994-95 DC Appeal, Noida 0.54

AY 1999-01 AC Appeal, Jaipur 1.52

(c) The Company has not deposited amounts of Rs. 1357.40 lacs to the Investor Education & Protection Fund against unpaid fixed deposit liabilities including interest thereon.

(viii) The Company has accumulated losses at the end of the financial year and also has incurred losses during the year. The net worth of the Company continues to stand fully eroded as at the end of the financial year.

(ix) In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of dues to the financial institutions or banks. The Company does not have any outstanding debentures.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

(xi) According to the information and explanations given to us, no term loan has been obtained by the Company during the year.

(xii) To the best of our knowledge and belief and according to the information and explanations given to us, no material frauds on or by the Company was noticed or reported during the year.

For N.M. Raiji & Co., Chartered Accountants Firm Regn. No. 108296W



CA S N Shivakumar Place: Faridabad Partner Dated:26th May,2015 M.No.088113


Mar 31, 2014

1. Report on the Financial Statements

We have audited the accompanying financial statements of Escorts Finance Limited (''the Company''), which comprise the Balance Sheet as at March 31, 2014, and the Profit and Loss Statement and Cash Flow Statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information.

2. Management''s Responsibility for the Financial Statements

Management of the Company is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flow 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 misstatements, whether due to fraud or error.

3. Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirement 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 amount 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 reasonableness of the accounting estimates made by the 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 qualified audit opinion.

4. Basis for Qualified Opinion

Attention is invited to the following Notes to the Financial Statements:

(i) Note 21, regarding non-maintenance of investments in Government Securities as liquid assets in terms of Section 45-IB of Reserve Bank of India Act, 1934;

(ii) Note 22, regarding non-maintenance of minimum Capital Adequacy Ratio required to be maintained in terms of Non-Banking Financial Companies requirements;

(iii) Note 24, regarding the Company''s credit rating;

(iv) Note 25, regarding unpaid/unclaimed matured Fixed Deposit liability;

(v) Note 29, regarding non-provision of preference dividend on cumulative preference shares;

(vi) Note 30, regarding non-determination of Employees Terminal Benefits on actuarial basis.

5. Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in paragraph 4(iv), 4(v) and 4(vi) of basis for Qualified Opinion above, 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 March 31, 2014;

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

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

6. Other Matters

The Company has filed an application with Reserve Bank of India for deregistration of its NBFC status and accordingly Certificate of Registration has been surrendered.

7. Report on Other Legal and Regulatory Requirements

(i) 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 enclose in the Annexure a statement of the matters specified in paragraph 4 and 5 of the said order.

(ii) Further to our comments in the Annexure referred to in Paragraph 6(i) above, as required by 227(3) of the Act, we report that;

a. We have obtained all the information and explanation 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 appear from our examination of those books;

c. The Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d. Except for the effect of the matter described in paragraph 4(iv), 4(v) and 4(vi) of basis for Qualified Opinion above, in our opinion, the Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt herewith comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

e. On the basis of the written representations received from the Directors and taken on records by the Board of Directors, none of the Director is disqualified, as at the balance sheet date, from being appointed as Director in terms of section 274(1)(g) of the Companies Act, 1956;

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE AUDITOR''S REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS FINANCE LIMITED

1. (a) The Company has maintained its fixed assets register showing full particulars, including quantitative details and the situation of its fixed assets;

(b) Fixed assets are physically verified by the management at reasonable intervals. In our opinion, the frequency of verification of the fixed assets by the management is reasonable having regard to the size of the Company and the nature of its assets. There was no material discrepancies noticed during such verification;

(c) The assets disposed off during the year are not significant and therefore do not affect the going concern assumption;

2. In view of the nature of the operations of the Company, the Company does not hold any inventory other than stock of repossessed assets, which have been verified by the management during the year. Provision has been made in respect of discrepancies/diminution in the value of such stock as at the year end;

3. (a) During the year, the Company has not granted any loans, secured or unsecured, to Companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956. In view of the above, clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company;

(b) During the year, the Company has not taken any loans, secured or unsecured, from companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956. In view of the above, clause 4(iii) (f) and (g) of the Order are not applicable to the Company;

4. In our opinion and according to the information and explanations provided to us there are adequate internal control procedures commensurate with the size of the Company and the limited nature of its business in relation to fixed assets. In our opinion, internal controls need to be strengthened in relation to other areas.

5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered in the register required to be maintained under Section 301 of Companies Act, 1956. Accordingly clause

(v) (a) of the Order is not applicable to the Company;

6. In respect of deposits accepted, in our opinion and according to the information and explanation given to us, the directives issued by Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 the Company had not complied with the said norms in relation to repayment of deposits on their respective maturity dates. However, In accordance with the Hon''ble Delhi High Court''s Order/direction dated 4th March 2011, Escorts Benefit Trust (EBT) created by Escorts Limited, repaid matured fixed deposit liability against the claims received till 3rd March 2013. Claims received after said date are also being entertained and settled after due verification. As at 31st March 2014, the unpaid/unclaimed matured fixed deposits liability (including interest thereon) is Rs. 1606.08 lacs (Previous Year Rs. 1747.43 lacs).

7. The internal audit system of the Company, in our opinion, needs to be considerably strengthened;

8. In view of nature of business of the Company, the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 has not been prescribed by the Central Government; DCIT

9. (a) According to the records, information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of provident fund, investor education protection fund, employee''s state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other statutory dues applicable to it and no undisputed amounts payable were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable except income tax liability amounting to Rs. 22.25 lacs;

(b) The following are the details of disputed Income Tax and Sales Tax that have not been paid to the concerned authorities:

Nature of Period to Forum where Unpaid Amount Statutory which the dispute is (in Rs. Lacs) Dues amount relates pending

1 Income Tax AY 2004-05 DCIT, New Delhi 34.94

AY 2005-06 DCIT, New Delhi 131.34

2 Sales Tax AY 2001-02 AC Appeal, Kolkata 2.26

AY 1994-95 DC Appeal, Noida 0.54

AY 1999-01 AC Appeal, Jaipur 1.52

10. Although the Company has made profit during the year, it has accumulated losses as at end of financial year and also has incurred losses in the immediately preceding financial year. The net worth of the Company continues to stand fully eroded as at the end of the financial year;

11. Based on our audit procedures and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institution or bank;

12. Based on our examination and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

13. As explained to us, the provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company;

14. The Company is not dealing or trading in shares, securities, debentures and other investments;

15. On the basis of the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions;

16. Based on information and explanations given to us by the management, no term loan has been obtained by the company during the year;

17. On the basis of our examination of the books of accounts and as per information and explanations given to us, in our opinion, no funds were raised by the company on short-term basis 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 Act;

19. The Company did not have any outstanding debentures during the year;

20. The Company has not raised any money by public issues during the year;

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanation 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 we been informed of such case by the management.

For N.M. Raiji & Co., Chartered Accountants Firm Regn. No. 108296W

S.N. Shivakumar Place: Faridabad Partner Dated: 21st May, 2014 M.No. 088113


Mar 31, 2012

1. We have audited the attached Balance Sheet of ESCORTS FINANCE LIMITED ("the Company"), as at March 31,2012 and also the Profit and Loss Statement 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 as amended by the Companies (Auditors' Report) (Amendment) Order 2004 (the Order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is invited to the following Notes to the Financial Statements:

(i) Note 22, regarding non-maintenance of investments in Government Securities as liquid assets in terms of Section 4S-IB of Reserve Bank of India Act,l 934;

(ii) Note 23, regarding discharge of Fixed Deposit holders liabilities by Escorts Limited;

(iii) Note 24, regarding non-verification of investment in securities.

(iv) Note 26, regarding non-maintenance of Minimum Capital Adequacy Ratio required to be maintained in terms of Non-Banking Financial Companies requirements;

(v) Note 27, regarding the Company's credit rating;

(vi) Note 30, regarding trade and related receivables written off during the year against which full provision were held.

(vii) Note 31, regarding non-provision of preference dividend on cumulative preference shares.

(viii) Note 32, regarding non-determination of Employees Terminal Benefits on actuarial basis.

5. Further to our comments in the Annexure referred to in paragraph 3 to 4 above, 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, except for investment referred to in Para 4 (iii) above

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, except where stated otherwise;

(v) on the basis of written representations received from the directors as on March 31,2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified, as on March 31,2012 from being appointed as a director under clause(g) of sub-section (1) of Section 274 of the Companies Act, 1956 and

(vi) subject to our observations in paragraph 4(ii), (iii), (vii) and (viii) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012,

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

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

ANNEXURE TO THE AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS FINANCE LIMITED

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

(b) Fixed assets have been physically verified by the management during the year. In our opinion, the frequency of verification of the fixed assets by the management is reasonable having regard to the size of the Company and the nature of its assets. There was no material discrepancies noticed during such verification;

(c) The fixed assets disposed off during the year are not significant and therefore do not affect the Going Concern Assumption;

2. In view of the nature of the operations of the Company, the Company does not hold any inventory other than stock of repossessed assets, which have been verified by the management during the year. Provision has been made in respect of discrepancies/diminution in the value of such stock as at the year end;

3. (a) During the year, the Company has not granted any loans, secured or unsecured, to Companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) During the year, the Company has not taken any loans, secured or unsecured, from companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations provided to us there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and for sale of goods/services. In our opinion, internal controls need to be strengthened In relation to other areas.

5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered in the register required to be maintained under Section 301 of Companies Act, 1956.

6. In respect of deposits accepted, in our opinion and according to the information and explanation given to us, the directives issued by Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 the Company had not complied with the said norms in relation to repayment of deposits on their respective maturity dates. However, the fixed deposit liability to the extent of Rs. 141.85 crores out of the total liability of Rs. 162.77 crores has already been discharged by Escorts Limited. As stated in Note 23 to the Financial Statements, the unpaid matured/unclaimed fixed deposit liability (including interest there on) amounting to Rs. 2,091.64 lacs as on 31st March 2012 (Rs. 3,244.69 lacs as on 31st March 2011) shall be met out of funds/assets of requisite value kept with Escorts Benefit Trust created by Escorts Limited in terms of direction of the Hon'ble Delhi High Court, issued while disposing off the Scheme of Compromise and Arrangement filed by the company along with Escorts Limited before the Hon'ble court vide which Escorts Limited had undertaken to bail out the fixed deposit holders and creditors of the Company.

7. The internal audit system of the Company, in our opinion, needs to be strengthened;

8. In view of nature of business of the Company, the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 has not been prescribed by the Central Government;

9. (a) According to the records, information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of provident fund, investor education protection fund, employee's state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other statutory dues applicable to it and no undisputed amounts payable were outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable except in respect of income tax liability amounting to Rs. 22.25 lacs;

(b) The following are the details of disputed Income Tax and Sales Tax that have not been paid to the concerned authorities:

Nature of Period to which Forum where Unpaid Amount Statutory the amount dispute is (in Rs. Lacs) Dues relates pending

1. Income Tax AY 2004-05 ITAT, New Delhi 34.94

AY 2005-06 ITAT, New Delhi 131.35

2. Sales Tax AY 2001-02 AC Appeal, Kolkata 2.26

AY 1994-95 DC Appeal, Noida 0.54

AY 1999-01 AC Appeal Jaipur 1.52

10. The Company has accumulated losses at the end of the financial year and also has incurred losses during the year. The net worth of the Company continues to stand fully eroded as at the end of the financial year;

11. Based on our audit procedures and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institution or bank;

12. Based on our examination and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

13. As explained to us, the provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company;

14. The Company is not dealing or trading in shares, securities, debentures and other investments. However, investment in share of Escorts Assets Management Limited has been reinstated during the year in the books of account (Refer Note 25 to the Financial Statements);

15. On the basis of the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions;

16. Based on information and explanations given to us by the management, no term loan has been obtained by the company during the year;

17. On the basis of our examination of the books of accounts and as per information and explanations given to us, in our opinion, no funds were raised by the company on short-term basis 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 Act;

19. The Company did not have any outstanding debentures during the year;

20. The Company has not raised any money by public issues during the year;

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanation 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 we been informed of such case by the management.

For N.M. Raiji & Co., Chartered Accountants Firm Regn. No. 108296W

Sd/- S.N. Shivakumar Partner M.No.088113

Place: Faridabad Dated: 14th July, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of Escorts Finance Limited, as at March 31, 2011 and also the Profit and 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 mis-statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Attention is invited to:

(i) Note 3 of Schedule 14 Part B, regarding non-maintenance of investments in Government Securities as liquid assets in terms of Section 45-B(1) of Reserve Bank of India Act,1934;

(ii) Note 4 of Schedule 14 Part B, regarding non-verification of investment in securities.

(iii)Note 5 of Schedule 14 Part B, regarding non-maintenance of minimum Capital Adequacy Ratio required to be maintained in terms of Non-Banking Financial Companies requirements;

(iv)Note 6 of Schedule 14 Part B, regarding the Companys credit rating;

(v) Note 7 of Schedule 14 Part B regarding discharge of Fixed Deposit holders liabilities by Escorts Limited;

(vi)Note 9 of Schedule 14 Part B regarding existence/working condition of some of the fixed assets.

(vii) Note 11 of Schedule 14 Part B regarding non-determination of Employees Terminal Benefits on actuarial basis.

(viii) Note 16 of Schedule 14 Part B regarding pending reconciliation of advance tax/ provision for tax/TDS recoverable.

5. Further to our comments in the Annexure referred to in paragraph 3 above, 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 , except for investment referred to in Para 4 (ii) above

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books,

(iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts,

(iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report 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 representations received from the directors as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified from being a director in this company. However, the directors of the company are disqualified from being appointed as a director in other companies in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956, and

(vi) subject to our observations in paragraph 4(ii),(v),(vi),(vii) and (viii) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011,

(b) in the case of the Profit and Loss Account, of the Profit for the year ended on that date, and

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

ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS FINANCE LIMITED

1. (a) The Company has maintained its fixed assets register showing full particulars, including quantitative details and the situation of its fixed assets;

(b) Fixed assets have been physically verified by the management during the year; Consequent upon such verification, fixed assets aggregating to Rs 41.67 lacs ( Gross Value Rs. 841.86Lacs. ) have been written off in the books .

(c) The assets disposed off during the year by the Company amounted to Rs.308.96 lacs at WDV are material . However, this does not affect the going concern assumption;

2. In view of the nature of the operations of the Company, the Company does not hold any inventory other than stock of repossessed assets, which have been verified by the management during the year. Provision has been made in respect of discrepancies/ diminution in the value of such stock as at the year end;

3. (a) During the year, the Company has not granted any loans, secured or unsecured, to Companies, firms or

parties covered in the register maintained under Section 301 of the Companies Act, 1956. In view of the above, clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company;

(b) During the year, the Company has not taken any loans, secured or unsecured, from companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956. In view of the above, clause 4(iii) (f) and (g) of the Order are not applicable to the Company;

4. In our opinion and according to the information and explanations provided to us there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and for sale of goods/ services. In our opinion, internal controls need to be strengthened in relation to other areas.

5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered in the register required to be maintained under Section 301 of Companies Act, 1956. Accordingly clause (v)(a) of the Order is not applicable to the Company;

6. In respect of deposits accepted, in our opinion and according to the information and explanation given to us, the directives issued by Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 the Company had not complied with the said norms in relation to repayment of deposits on their respective maturity dates. However, as stated in Note 7, Schedule 14, Part B, the fixed deposit liability to the extent of Rs. 130.32 crores out of the total liability of Rs. 162.77 crores has already been discharged by Escorts Limited in terms of the Scheme of Compromise and Arrangement filed before the Honble Delhi High Court. For the balance liability of Rs. 32.45 crores, funds/assets of adequate value have been made available by Escorts Limited to a Trust in terms of the direction of the Honble Delhi High Court at the time of permitting the withdrawl of the Scheme /petitions. The Company has transferred the fixed deposit liability in its books of account to the credit of Escorts Limited to the extent of payments made upto 31st March,2011.

7. The internal audit system of the Company, in our opinion, needs to be strengthened;

8. In view of nature of business of the Company, the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 has not been prescribed by the Central Government;

9. (a) According to the records, information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of provident fund, investor education protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other statutory dues applicable to it and no undisputed amounts payable were outstanding as at 31st March, 2011 for a period of more than six months from the date they became payable;

(b) The following are the details of disputed Income Tax and Sales Tax that have not been paid to the concerned authorities:

Sl Nature of Statutory No Dues Forum where Dispute is Pending Unpaid Amount (in Rs.Lacs)

1 Income Tax CIT (Appeals) 295.83

2 Sales Tax AC Appeal, Kolkata 2.26 DC Appeal, Noida 0.54 DC Appeals Jaipur 1.52

10. Although the Company has made profits during the year, it has accumulated losses as at the end of the financial year and also has incurred losses in the immediately preceding financial year. The net worth of the Company continues to stand fully eroded as at the end of the financial year;

11. Based on our audit procedures and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institution or bank;

12. Based on our examination and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

13. As explained to us, the provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the Company;

14. The Company is not dealing or trading in shares, securities, debentures and other investments;

15. On the basis of the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions;

16. Based on information and explanations given to us by the management, no term loan has been obtained by the company during the year;

17. On the basis of our examination of the books of accounts and as per information and explanations given to us, in our opinion, no funds were raised by the company on short-term basis 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 Act;

19. The Company did not have any outstanding debentures during the year;

20. The Company has not raised any money by public issues during the year;

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanation 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 we been informed of such case by the management.

For N.M. Raiji & Co., Chartered Accountants Firm Regn. No. 108296W

S. N. Shivakumar Partner M.No. 88113

Place: Faridabad Date : 4th May, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Escorts Finance Limited, as at March 31, 2010 and also the Profit and 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 mis-statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Attention is invited to:

(i) Note 3b of Schedule 15 Part B, regarding non-maintenance of investments in Government Securities as liquid assets in terms of Section 4S-B(1) of Reserve Bank of India Act, 1934;

(ii) Note 4 of Schedule 15 Part B, regarding non-verification of investment in securities.

(iii) Note 5 of Schedule 15 Part B, regarding non-maintenance of minimum Capital Adequacy Ratio required to be maintained in terms of Non-Banking Financial Companies requirements;

(iv) Note 7 of Schedule 15 Part B, regarding the Companys credit rating;

(v) Note 9 of Schedule 15 Part B regarding non-provision of interest for overdue period on matured unpaid fixed deposits;

(vi)Note 10 of Schedule 15 Part B regarding existence/ working condition of some of the fixed assets.

(vii) Note 18 of Schedule 15 Part B regarding reconciliation of advance tax / provision for tax/ TDS recoverable.

5. Further to our comments in the Annexure referred to in paragraph 3 above, 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 those books,

(iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts,

(iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report 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 representations received from the directors as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified from being a Director in this Company. However, the Directors of the Company are disqualified from being appointed as a Director in other companies in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 and

(vi) subject to our observations in paragraph 4(H), (v), (vi) and (vii) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010,

(b) in the case of the Profit and Loss Account, of the Loss for the year, ended on that date, and

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



ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS FINANCE LIMITED

1. (a) The Company also needs to update its fixed assets register to show full particulars, including quantitative details and the situation of its fixed, assets;

(b) Fixed assets have not been physically verified by the management during the year;

(c) The assets disposed off during the year were not material and do not affect the going concern assumption;

2. In view of the nature of the operations of the Company, the Company does not hold any inventory other than stock of repossessed assets, which have been verified by the management during the year. Provision has been made in respect of discrepancies/ diminution in the value of such stock as at the year end;

3. (a) During the year, the Company has not granted any loans, secured or unsecured, to Companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956. In view of the above, clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company;

(b) During the year, the Company has not taken any loans, secured or unsecured, from companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956. In view of the above, clause 4(iii) (f) and (g) of the Order are not applicable to the Company;

4. In our opinion and according to the information and explanations provided to us there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and for sale of goods/services. In our opinion, internal controls needs to be strengthened in relation to other areas.

5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered in the register required to be maintained under Section 301 of Companies Act, 1956. Accordingly clause (v)(a) of the Order is not applicable to the Company;

6. In respect of deposits accepted, in our opinion and according to the information and explanation given to us, the directives issued by Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 the Company has not complied with the said norms in relation to repayment of deposits on their respective maturity dates. We are informed by the management that a scheme of compromise and arrangement has been filed with the Honble Delhi High Court, where the matter is sub-judice. As per the interim order of the Court, partial repayments have been made to certain depositors in hardship cases determined by independent committee set up by the Court. The Scheme is pending final approval of the Honble Delhi High Court. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal;

7. The internal audit system of the Company, in our opinion, needs to be strengthened;

8. In view of nature of business of the Company, the maintenance of cost records under clause (d) of sub- section (1) of Section 209 of the Companies Act, 1956 has not been prescribed by the Central Government;

9. (a) According to the records, information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of provident fund, investor education protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other statutory dues applicable to it and no undisputed amounts payable were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable;

(b) The following are the details of disputed Income Tax and Sales Tax that have not been paid to the concerned authorities:

S. No. Nature of Forum where Dispute is Pending Unpaid Amount (in Statutory Dues Rs. Lacs)

1 Income Tax CIT (Appeals) 295.83

2 Sales Tax AC Appeal, Kolkata 2.26

DC Appeal, Noida 0.54

10. The Company has accumulated losses at the end of the financial year and also has incurred losses during the year. The net worth of the Company continues to stand fully eroded as at the end of the financial year;

11. Based on our audit procedures and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institution or bank;

12. Based on our examination and according to the information and. explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

13. As explained to us, the provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the Company;

14. The Company is not dealing or trading in shares, securities, debentures and other investments;

15. On the basis of the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions;

16. Based on information and explanations given to us by the management, no term loan has been obtained by the company during the financial year;

17. On the basis of our examination of the books of accounts and as per information and explanations given to us, in our opinion, no fund were raised by the company on short term basis during the financial 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 Act;

19. The Company did not have any outstanding debentures during the year;

20. The Company has not raised any money by public issues during the year;

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanation 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 we been informed of such case by the management.

For N.M. Raiji&Co.

Chartered Accountants

Sd/

S. N. Shivakumar

Place: Faridabad Partner

Date: 11th August, 2010 M.No. 88113

Firm Regn. No. 108296W

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