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Auditor Report of Harita Seating Systems Ltd.

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Harita Seating Systems Limited, Chennai - 600006 ("the Company"), which comprise of the Balance Sheet as at 31st March 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year ended on that date along with Notes on accounts.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2013;

b) in the case of the Statement of Profit and Loss, 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.

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) 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) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement

comply with the Accounting Standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956; and e) on the basis of written representations received from the directors as on 31st March 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Annexure referred to in our report of even date on the accounts for the year ended 31st March 2013

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

(b) Fixed assets are physically verified by the management at reasonable intervals. In our opinion, the interval is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The assets disposed off during the year are not substantial and therefore do not affect the going concern status of the Company.

(ii) (a) The inventory has been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory with third parties, which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account.

(iii) (a) During the year the Company has not granted loans and advances, to Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(b) During the year the Company has availed Rs.500 Lakhs and repaid Rs.150 lakhs of unsecured loan from a party covered in the register maintained under section 301 of the Companies Act, 1956. The amount outstanding at the year end is Rs.650 Lakhs including balance due as on 1st April 2012 - Rs. 300 Lakhs. During the year the company has repaid (interest bearing) advance of Rs.90 Lakhs to its subsidiary. The opening balance was Rs.347 Lakhs leaving an outstanding of Rs.257 Lakhs payable to the subsidiary.

(c) In our opinion, the rate of interest and the terms and other conditions of loan availed by the Company were not, prima facie prejudicial to the interest of the Company. The payment of interest was regular and in accordance with the terms of loan. No portion of the principal amount was due for repayment during the financial year.

(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, with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no minor or major continuing failure has been noticed in the internal control system.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion, that the contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956, have been properly entered in the said register.

(b) In our opinion and according to the information and explanations given to us, transactions entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value by rupees five lakhs during the year in respect of each party have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

(vii) The Company has an Internal Audit System, which in our opinion is commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government under Section 209(1)(d) of the Companies Act, 1956 for maintenance of cost records and are of the opinion that prima-facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records provided to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Investor

Education and Protection Fund, Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess and other statutory dues with the appropriate authorities. However, there have been marginal delays in respect of Value Added Tax and Service tax. The provisions of Employees'' State Insurance Act, 1948 are not applicable to the units at Hosur and Pune.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears as at 31st March 2013 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, the following are the details of the disputed dues that were not deposited with the authorities concerned.

Name of the Nature of Forum where Amount involved Statute dues dispute is pending (Rs. in Lakhs)

TNVAT Tamil Nadu Act, 2006 Value Added High Court of Madras 323.03 Tax

KVAT Karnataka Joint Commissioner Act, 2004 Value Added of C.T. (Appeals) 5.95 Tax Bangalore

Central Excise Excise Duty The Asst. and Act,1944 Additional Commissioner 314.59 Chennai III Commissionerate

Finance Act, Service Tax The Asst. and 1994 Additional Commissioner 325.71 Chennai III Commissionerate

Income Tax Income Tax Commissioner of Income 1,206.94 Act, 1961 Tax (Appeals), Chennai

(x) The Company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) Based on our verification and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to its banks.

(xii) 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.

(xiii) The Company is not a chit / nidhi / mutual benefit fund / society and as such this clause of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. In this year the company has also not traded in mutual fund investments. Proper records have been maintained in respect of these transactions and contracts and timely entries have been made therein. The investments have been held by the Company in its own name.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The term loans availed by the Company were utilised for the purpose for which the loans were obtained.

(xvii) On the basis of our examination, the Company has not used funds raised on short-term basis for long term investments.

(xviii) During the year the Company has not allotted any shares on preferential basis to parties and Companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(xix) During the year the Company has not issued any secured debenture.

(xx) During the year the Company has not raised any money by public issue.

(xxi) Based on the audit procedure adopted and information and explanation given to us by the management, no fraud on or by the Company has been noticed or reported during the course of audit except a defalcation of Rs. Six Lakhs by alteration of vouchers. This has been written off to the debit of freight charges as recovery was not possible. The Company has since then taken adequate measures to prevent recurrence of such instances in future.

For SUNDARAM & SRINIVASAN

CHARTERED ACCOUNTANTS

FRN: 004207S

M BALASUBRAMANIYAM

Chennai Partner

22nd May 2013 Membership No.F7945


Mar 31, 2012

We have audited the attached Balance Sheet of Harita Seating Systems Limited, Chennai 600 006 as at 31st March 2012 and the Statement of Profit and Loss for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

2. As required by the Companies (Auditor's Report) Order, 2003 and amended by the Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government 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.

3. Further to our comments in the Annexure, referred to above, we state 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 it appears from our examination of those books. The Company's branch accounts were also audited by us.

(iii) The balance sheet, statement of profit and loss and cash flow statement referred to in this report are in agreement with the books of account including its branch.

(iv) In our opinion, the balance sheet, statement of profit and loss 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 31st March 2012 and taken on record by the board of directors, we report that no director is disqualified from being appointed as a director of the Company in terms of clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956 on the said date.

(vi) In our opinion and to the best of our information and according to the explanations given to us, they said accounts read together with the Significant Accounting Policies and other notes thereon particularly Note (XXVII) No.5 on Managerial remuneration 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 so far as it relates to the Balance Sheet, of the state of affairs of the Company as at 31st March 2012;

b. in so far as it relates to the Statement of Profit and Loss, of the profit for the year ended on that date; and

c. in so far as it relates to the cash flow statement, of the cash flows for the year ended on that date.

For SUNDARAM & SRINIVASAN

CHARTERED ACCOUNTANTS

FRN: 004207S

M BALASUBRAMANIYAM

Chennai Partner

30th May 2012 Membership No.F7945

(i) (a) The Company has maintained proper records

showing full particulars including quantitative details and situation of fixed assets.

(b) Fixed assets are verified physically by the management at reasonable intervals. In our opinion the interval is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed during verification were not material and have been properly dealt with in the books of account.

(c) The assets disposed off during the year are not substantial and therefore do not affect the going concern status of the Company.

(ii) (a) The inventories have been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory with third parties which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the books stocks were not material and have been properly dealt with in the books of account.

(iii) (a) During the year the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(b) During the year, the Company has taken and repaid an unsecured loan of Rs. 300 lakhs from one company covered in the register maintained under Section 301 of the Companies Act, 1956 and the Company has partly repaid another unsecured loan during the year which was taken in earlier years. The amount outstanding against that loan at the year end is Rs. 300 lakhs.

(c) In our opinion, the rate of interest and the terms and other conditions of loan availed by the Company were not, prima facie prejudicial to the interest of the Company. The payment of interest was regular and in accordance with the terms of loan. No portion of the principal amount was due for re-payment during the financial year.

(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 with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no minor or major continuing failure has been noticed in the internal control system.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the contracts or arrangements that need to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956 have been properly entered in the said Register.

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding in value by rupees five lakhs during the year in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government under Section 209(1)(d) of the Companies Act, 1956 for maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records provided to us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Investor Education and Protection Fund, Sales Tax, Wealth Tax, Service Tax, Income Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. The provisions of Employees State Insurance Act, 1948 are not applicable to the units at Hosur and Pune.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2012 for a period of more than six months from the date they became payable.

(c) According to information and explanations given to us, the following is the detail of the disputed dues that were not deposited with the concerned authorities:

Name of the Nature of Forum where Amount involved Statute dues dispute is pending (Rs. in Lakhs)

Tamil Nadu Tamil Nadu Value Added Value Added High Court of Madras 114.78 Tax Act, 2006 Tax

Karnataka Karnataka The Joint Commissioner Value Added Value Added of Commercial Taxes 5.95 Tax Act, 2003 Tax (Appeals) Bangalore

Central Excise Excise duty The Assistant and Act, 1944 Additional Commissioner Chennai III Commissioner ate 269.51

Finance Act, Service tax The Assistant and 1994 Additional Commissioner Chennai III Commissioner ate 290.25

Income Tax Income Tax Commissioner of Income Act, 1961 Tax (Appeals ), Chennai 44.77

(x) The Company has not incurred cash loss during the year. However, the Company has incurred cash losses during the immediately preceding financial year.

(xi) Based on our verification and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to its banks.

(xii) 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.

(xiii) The Company is not a chit / nidhi / mutual benefit fund / society and as such clause (xiii) of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. However, the Company invests its surplus funds in mutual funds from time to time. Securities are held as current investments and are not traded in.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The term loan availed by the Company was utilized for the purpose for which the loan was obtained.

(xvii) On the basis of our examination, the Company has not used funds raised on short term basis for long term investment.

(xviii)During the year, the Company has not allotted any shares on preferential basis to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) During the year, the Company has not issued any secured debentures.

(xx) During the year, the Company has not raised any money by public issue.

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

For SUNDARAM & SRINIVASAN

CHARTERED ACCOUNTANTS

FRN: 004207S

M BALASUBRAMANIYAM

Chennai Partner

30th May 2012 Membership No.F7945


Mar 31, 2011

We have audited the attached Balance Sheet of Harita Seating Systems Limited, Chennai 600 006 as at 31st March 2011 and the Profit and Loss account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

2. As required by the Companies (Auditor's Report) Order, 2003 and amended by the Companies (Auditor's report) (Amendment) Order, 2004 issued by the Central Government 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.

3. Further to our comments in the Annexure, referred to above, we state 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 it appears from our examination of those books. The Company's branch accounts were also audited by us;

(iii) the balance sheet, profit and loss account and cash flow statement referred to in this report are in agreement with the books of account including its branch;

(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 31st March 2011 and taken on record by the board of directors, we report that no director is disqualified from being appointed as a director of the Company in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the said date; and

(vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

a. In so far as it relates to the balance sheet, of the state of affairs of the Company as at 31st March 2011;

b. In so far as it relates to the profit and loss account, of the loss for the year ended on that date; and

c. In so far as it relates to the cash flow statement, of the cash flows for the year ended on that date.

Annexure referred to in our report of even date on the accounts for the year ended 31st March 2011.

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

(b) Fixed assets are verified physically by the management at reasonable intervals. In our opinion the interval is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The assets disposed off during the year are not substantial and therefore do not affect the going concern status of the Company.

(ii) (a) The inventories have been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory with third parties which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the books stocks were not material and have been properly dealt with in the books of account.

(iii) (a) During the year the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(b) During the year, the Company has taken an unsecured loan of Rs. 300 lakhs from one Company covered in the register maintained under Section 301 of the Companies Act, 1956. The amount outstanding at the year end is Rs. 1800 lakhs.

(c) In our opinion, the rate of interest and the terms and other conditions of loan taken by the Company were not, prima facie prejudicial to the interest of the Company. The payment of interest was regular and in accordance with the terms of loan. No portion of the principal amount was due for re-payment during the financial year.

(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 with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no minor or major continuing failure has been noticed in the internal control system.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the contracts or arrangements that need to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956 have been properly entered in the said register.

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the register maintained under Section 301of the Companies Act, 1956 and exceeding in value by rupees five lakhs during the year in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1)(d) of the Companies Act, 1956 for maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records provided to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Investor Education and Protection Fund, Sales Tax, Wealth Tax, Service Tax, Income Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. However, there have been delays in few payments dealt with herein. The provisions of Employees State Insurance Act, 1948 are not applicable to the units at Hosur and Pune.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2011 for a period of more than six months from the date they became payable.

(c) According to information and explanations given to us, the following is the detail of the disputed dues that were not deposited with the concerned authorities: Name of the Nature of Amount Forum where statute dues (Rs. in Lakhs) dispute is pending

Income Tax Income tax 44.77 Commissioner of Income Act, 1961 tax (Appeals), Chennai

Central Excise Excise duty 199.81 The Commissioner of Act, 1944 Central Excise, Chennai III Commissionerate

Central Excise Excise duty 38.19 The Assistant Act, 1944 Commissioner of Central Excise, Hosur II Division, Hosur

Finance Act, Service tax 179.15 The Commissioner of 1994 Central Excise, Chennai III Commissionerate.

Finance Act, Service tax 9.20 The Additional 1994 Commissioner of Central Excise, Chennai III Commissionerate.

Finance Act, Service tax 40.16 The Asst. Commissioner 1994 of Central Excise Hosur II Division Hosur.

Karnataka Value 5.95 The Joint.Commissioner Value Added Added Tax of Commercial Taxes Tax, 2003 (Appeals), Bangalore.

Tamil Nadu Value 94.37 High Court of Madras, Value Added Added Tax Chennai Tax, 2006

(x) The Company has incurred cash loss during the year. However, the accumulated losses is not exceeding fifty percent of its net worth.

(xi) Based on our verification and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to its banks.

(xii) 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.

(xiii) The Company is not a chit / nidhi / mutual benefit fund / society and as such clause (xiii) of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. However, the Company invests its surplus funds in mutual funds from time to time. Securities are held as long term investments and are not traded in.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The term loan availed by the Company was utilized for the purpose for which the loan was obtained.

(xvii) On the basis of our examination, the Company has not used funds raised on short term basis for long term investment.

(xviii) During the year, the Company has not allotted any shares on preferential basis to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) During the year, the Company has not issued any secured debentures.

(xx) During the year, the Company has not raised any money by public issue.

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

For SUNDARAM & SRINIVASAN

CHARTERED ACCOUNTANTS FRN: 004207S

M BALASUBRAMANIYAM

Partner Membership No.F7945

Chennai 3rd August, 2011


Mar 31, 2010

We have audited the attached balance sheet of Hartta Seating Systems Limited, Chennai 600 006 as at 31 * March 2010 and the profit and loss account for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date.These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

2. As required by the Companies (Auditors Report) Order, 2003 and amended by the Companies (Auditors report) (Amendment) Order, 2004 issued by the Central Government 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.

3. Furtherto our comments in the Annexure, referred to above, we state 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. The Companys branch accounts were also audited by us.

(ili) The balance sheet, profit and loss account and cash flow statement referred to in this report are in agreement with the books of account including its branch.

(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 31 st March 2010 and taken on record by the board of directors, we report that no director is disqualified from being appointed as a director of the Company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 on the said date.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

a. In so far as it relates to the balance sheet, of the state of affairs of the Company as at 31 st March 2010,

b. In so far as it relates to the profit and loss account, of the profit after tax for the year ended on that date, and

c. In so far as it relates to the cash flow statement, of the cash flows of the Company for the year ended on that date.

Auditors report to the shareholders of Harita Seating Systems Limited, Chennai for the year ended 31st March, 2010

Annexure referred to in our report of even date on the accounts for the year ended 31st March 2010

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

(b) All the assets have not been physically verified by the management during the year but there Is a regular programme of verification at reasonable Intervals, which, in our opinion. Is reasonable having regard to the size of the Company and the nature of Its assets. No material discrepancies were noticed on such verification,

(c) During the year, the Company transferred Land, Buildings, Plant & machinery and other assets to its subsidiary namely M/s. Harita Fehrer Limited, Chennai (formerly Harita Polymer Limited) for the purpose of manufacture of Foams. The transfer did not affect the going concern status of the Company.

(il) (a) The inventory other than In-transit have been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory with third parties which have not been physically verified, there Is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion, the Company has maintained proper records of inventory.

The discrepancies between the physical stocks and the books stocks were not material and have been properly dealt with in the books of account.

(Ill) (a) During the year the Company has granted unsecured loan of Rs.5627.53 lakhs to one Company listed In the Register maintained under Section 301 of the Companies Act, 1956, which Is also a subsidiary of the Company.

The rate of interest and other terms and conditions are not prejudicial to the Interest of the Company.

The loan is not outstanding at the yea end.

(b) During the year, the Company has taken unsecured loan from one Company covered in the register maintained under Section 301 of the Companies Act, 1956.

In our opinion, the rate of interest and the terms and other conditions of loan taken by the Company were not, prima facie prejudicial to the interest of the Company.

The aggregate amount involved in the transaction is Rs. 1500 lakhs. This is outstanding at the year end. The payment of Interest thereon was regular.

(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 with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the contracts or arrangements that need to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956 have been properly entered in the said register.

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the register maintained under Section 301 and exceeding in value by rupees five lakhs during the year in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. fyi) The Company has not accepted any deposit from the public.

(vll) The Company has an internal audit system which, in our opinion, is commensurate with the size and nature of Its business.

(viil) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government under Section 209 (l)(d) of the Companies Act, 1956 for maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records provided to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Investor Education and Protection Fund, Sales Tax, Wealth Tax, Service Tax, Income Tax, Customs Duly, Excise Duty, Cess and other material statutory dues with the appropriate authorities. However certain marginally delayed remittances were noticed in respect of some payments dealt with herein. The provisions of Employees State Insurance Act, 1948 are not applicable to the units at Hosur and Pune.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2010 for a period of more than six months from the date they became payable

(c) According to information and explanations given to us, the following is the detail of the disputed dues, that were not deposited with the concerned authorities:

Name of the Nature of Amount Faum where statute dues (Rs. in Lakhs) dispute is pending

Income Income tox 0,98 Commissioner of

Tax Act, 1961 Tax Act, 1961

Income-tax

(Appeds),Chennoi

Central Excise Excise duly 199.81 The Commissioner of

Central Excise, Chennai III Division, Commissionerate

Finance Act, Service tax 6.48 The Commissionef of

1994 Central Excise,

Chennai III Division,

Commissionerate

4.82 The Asst.

Commissioner of Central Excise, Hosur II Division, Hosur.

Kamataka Value 5.95 The Joint.

Value Added Added Commissioner of

Tax Tax Commercial Taxes,

(Appeals), Bangalore.

Tamil Nadu Value 114.78 High Court at

Value Added Added Judicature at Madras, Tax Tax Chennai.



(x) The Company has not incurred cash loss during the year. However in the previous year, the Company had incurred cash Loss.

(xi) Based on our verification and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to its banks.

(xii) 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.

(xill) The Company is not a chit / nidhi / mutual benefit fund / society and as such clause (xiii) of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. However, the Company invests its surplus funds in mutual funds from time to time. During the year, the Company has invested in shares of the subsidiary company in respect of which proper records have been maintained of the transactions and timely entries have been made thereon. Securities are held as long term investments and are not traded in.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The term loan availed by the Company was utilized for the purpose for which the loan was obtained.

(xvll) On the basis of our examination, the Company has not used funds raised on short term basis for long term investment.

(xviil) During the year, the Company has not allotted any shares on preferential basis to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xlx) During 1he year, the Company has not issued any secured debentures.

(xx) During the year, the Company has not raised any money by public issue.

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

For SUNDARAM & SRINIVASAN

Chartered Accountants

FRN: 004207S

M BALASUBRAMANIYAM

Chennai Partner

30th July 2010 Membership No.F7945



 
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