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Auditor Report of Indbank Merchant Banking Services Ltd.

Mar 31, 2015

1) We have audited the accompanying financial statements of M/s. INDBANK MERCHANT BANKING SERVICES LIMITED, which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2) The Company's Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to 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 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

3) Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

4) We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

5) 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 financial control relevant to the Company's preparation of the financial statements that give true and fair view 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 Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2015;

b) In the case of the Statement of Profit and Loss, of the 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, 2015 ("the Order") issued by the Central Government of India in terms of sub- section (11) of the section 143 of the Act, we give in the Annexe-1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2) As required by section 143(5), we have included in Annexe-2, a statement on the matters specified in the Directions issued by The Comptroller and Auditor General Of India, and in our opinion, no action is required to be taken thereon and there is no impact on the accounts and Financial Statements of the Company.

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

a) 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.

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) the Balance Sheet, the Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

f) The Company has adequate internal financial controls system in place and the operating effectiveness of such controls is adequate.

g) With respect to the other matters included in the Auditor's Report and to our best of our information and according to the explanations given to us :-

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 29 to the financial statements

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

iii. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company during the current Financial Year.

ANNEXURE 1 REFERRED TO IN OUR REPORT OF EVEN DATE

With reference to the Annexure 1 referred to in paragraph 1 of the Auditors' Report of even date to the Members of the M/s. Indbank Merchant Banking Services Ltd on the accounts for the year ended 31st March 2015, we report that:

Sl. No. Particulars

(i) (a) Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets; (b) Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;

Auditors Remark

Yes, the Company has maintained proper records.

It has been reported to us that the fixed assets have been physically verified by the management on a random basis during the year. No materials discrepancies were noticed on verification.

(ii) (a) Whether physical verification of inventory has been conducted at reasonable intervals by the management;

Not Applicable.

(b) Are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported;

Not Applicable.

(c) Whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account;

Not Applicable.

(iii) Whether the company has granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. If so,

No, the company has not given loans to any other company, firms or other parties covered in the register.

(a)Whether receipt of the principal amount and interest are also regular; and

Not Applicable.

(b) If overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for recovery of the principal and interest;

Not Applicable.

(iv) Is there an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Whether there is a continuing failure to correct major weaknesses in internal control system.

In our opinion, and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the region and nature of its business with regard to purchase of Fixed assets and payments for expenses and sale of goods. During the course of audit, no major weakness has been noticed in the internal controls.

(v) In case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under, where applicable, have been complied with- If not, the nature of contraventions should be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not-

No, the company has not accepted any deposits from the public

(vi) Where maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act, whether such accounts and records have been made and maintained;

As informed to us, the Central Government has not prescribed maintenance of cost records by the Region under section 128 of the Companies Act, 2013 in respect of the business of the Region.

(vii) (a) Is the company regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.

According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Service Tax and Cess to the extent applicable have been regularly deposited, ESI, Excise Duty, Customs and Cess are not applicable to this company. According to the information and explanation given to us were no outstanding statutory dues as on March 2015 for a period of more than six months from the date they become payable.

(b) In case dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not constitute a dispute).

According to the information and explanation provided by the management following are the disputed dues in respect of income tax and sales tax that have not been deposited.

Assessment Year Amount (In lakhs)

INCOME TAX

1998-99 32.13

2007- 08 617.47

2008- 09 1129.05

2009- 10 72.23

Sales Tax 42.78

(c) Whether the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time.

The company did not declared dividend for the past seven years.

(viii) Whether in case of a company which has been registered for a period not less than five years, its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year;

The Company had accumulated loss of Rs.268.49 lakhs as at 31.03.2014. During the current year, the company has earned a profit of Rs.191.29 lakhs, after adjusting the accumulated loss.

(ix) Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders- If yes, the period and amount of default to be reported;

Based on our audit procedures and on the explanation and information given by the management the company has not availed any loans from any financial institution or bank or debentures.

(x) Whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company;

The company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) Whether term loans were applied for the purpose for which the loans were obtained;

No term loans have been availed during the financial year by the company.

(xii) Whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated.

Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For M/s A V DEVEN & Co., Chartered Accountants, (Firm Reg. No.000726S)

Place: Chennai - 600 083 (CA. R. Raghuraman) Date : 12.05.2015 Partner (M. No.201760)


Mar 31, 2014

1. We have audited the accompanying financial statements of M/s. INDBANK MERCHANT BANKING SERVICES LIMITED ("the Company") which comprise the Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss and Statement of Cash Flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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

AUDITOR''S RESPONSIBILITY

3. 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.

4. 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 statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

OPINION

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

6. 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, subject to Note No.27 regarding non-consideration of liability towards interest claim of Rs.897.48 lakhs under the right of recompense clause on settled borrowings availed earlier from Indian Bank, the Holding Company. Had the liability been recognized in the Books, the profit of Rs.30.02 lakhs would have become a loss of Rs.867.46 lakhs.

a) in the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

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

c) in the case of 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 Sub-section (3C) of Section 211 of the Companies Act, 1956.

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

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 AUDITORS'' REPORT

The Annexure referred to in paragraph 1 of the our Report of even date to the members of M/s.INDBANK MERCHANT BANKING SERVICES LIMITED on the accounts of the company for the year ended March 31, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

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

c) Fixed assets sold during the year do not constitute a substantial part of the total fixed assets of the Company.

2. Clause 2 of Paragraph 4 of Companies (Auditor''s Report) Order, 2003, relating to inventory, is not applicable to the Company.

3. According to the information and explanations, given to us and on the basis of our examination of the books of account, the Company has not granted or taken any loans secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clauses iii (b) to iii (g) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. Based on the audit procedures applied by us and according to the information and explanation provided by the management, there are no transactions that have been made in pursuance of contracts or arrangements referred to in section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposits from the public covered under Section 58A and 58AA of the Companies Act, 1956.

7. As per information and explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. The Central Government has not prescribed the maintenance of cost records under clause (d) of Sub-section (1) of Section 209 of the Companies Act, 1956.

9. a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Service Tax, and Cess to the extent applicable have generally been regularly deposited with the appropriate authorities. The other statutory dues viz. ESI, Excise duty, Customs duty and Cess are not applicable to this Company. According to the information and explanations given to us there were no outstanding statutory dues as on March 31, 2014 for a period of more than six months from the date they become payable.

b) According to the information and explanations given to us, the following are the particulars of disputed dues in respect of income tax and sales that have not been deposited.

Income Tax:

Assessment Year Amount (Rs.Lakhs) Forum Where the Dispute is pending

2007- 08 617.47 High Court, Madars

2008- 09 1129.05 High Court, Madras

Sales Tax - Chennai:

Assessment Year Amount (Rs.Lakhs) Forum Where the Dispute is pending

1993-94 6.20

1994-95 10.33 Appeal filed by the department pending before the sales tax tribunal

1998-99 14.20

Sales Tax - Rajasthan:

Assessment Year Amount (Rs.Lakhs) Forum Where the Dispute is pending

1995-96 1.27

1996-97 9.73 Joint Commissioner of Commercial 1997-98 3.10 Taxes (Appeals)

1998-99 0.49

10. The Company has accumulated losses of Rs.298.51 lakhs as at 31.03.2013 which has been reduced to Rs.268.49 lakhs after adjusting the net profit of Rs.30.02 lakhs for the year and the Company has not incurred cash losses during this financial year 2013-14.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has defaulted in the payment of interest claim of Rs.897.48 lakhs under right of recompense on settled borrowings availed earlier from Indian Bank, the holding company. However, it is reported that company has requested its Parent Company - Indian Bank, for waiver of this amount.

12. 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. The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanation given to us, proper records & timely entries have been maintained by the Company for the transactions and contracts relating to trading in Shares, Mutual funds, Debentures & other Investments. The Investments of the company are held in its own name.

15. According to information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at March 31,2014, we report that no funds raised on short term basis have been used for long term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the company has not made any preferential allotment of shares during the year.

19. The Company has not issued debentures during the period under audit.

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

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For M/s A V DEVEN & CO., Chartered Accountants FRN No.: 000726S

Place: Chennai-83 (CA R. Raghuraman) Date : 23.04.2014 Partner (M.No. 201760)


Mar 31, 2011

We have audited the attached Balance Sheet of INDBANK MERCHANT BANKING SERVICES LIMITED as at 31st March 2011 and the Profit and Loss Account for the year ended 31st March 2011 and also the Cash Flow Statement for the year ended 31 st March 2011 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.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on 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.

1. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 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.

2. Further to our comments in the Annexure referred to 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 purpose of our audit;

II. In our opinion, proper books of account as required by law, have been kept by the Company so far as appears from our examination of these 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 account;

IV. In our opinion, the Balance Sheet and 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 by the Directors, as on 31st March 2011, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2011 from being appointed as a director in terms.of clause (g) of sub section (1) of section 274 of the Companies Act, 1956.

VI. 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, subject to Note No.10 regarding non-consideration of liability towards interest claim of Rs.897.48 lakhs under the right of recompense clause on certain settled borrowings by the Holding Company. Had the liability been recognized in the Books, the loss of Rs.992.65 lakhs would have become a loss of Rs.1890.13 lakhs.

a) in the case of Balance Sheet, of the state of affairs of the Company as at 31stMarch 2011;

b) in the case of Profit and Loss Account, of the Loss for the year ended 31 st March 2011; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended 31 st March 2011.

ANNEXURE TO THE AUDITORS' REPORT Referred to in paragraph 1 of our Report of even date.

Re: Indbank Merchant Banking Services Ltd.

(i) a. The company has maintained records showing full particulars including situation and quantity of fixed assets.

b. Fixed assets of the Company have been physically verified by the Company during the year.

c. The fixed assets that have been sold during the year do not constitute a substantial part of the total fixed assets of the Company.

(ii) Clause (ii) of Paragraph 4 of Companies (Auditor's Report) Order, 2003, relating to inventory, is not applicable to the Company.

(iii) The Company has not granted or taken any loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly clauses (iii)b to (iii)g of Companies (Auditors Report) Order, 2003, are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and rendering of services. During the course of our audit, we have not observed any major weaknesses in internal controls.

(v) In our opinion and according to the information and explanation given to us, there are no transactions that have been made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956.

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

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

(viii)The Central Government has not prescribed the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.

(ix) a. The Company is regular in depositing with appropriate authorities all applicable undisputed statutory dues viz. Provident Fund, Investor Education and Protection Fund, Income Tax Sales Tax, Service Tax, and Cess. The other statutory dues viz. ESI, Excise duty, Customs duty and Cess are not applicable to this organization. There are no arrears of outstanding undisputed statutory dues as at 31 st March 2011 for a period of more than six months from the date they become payable.

b. According to the records of the Company and the information and explanations given to us, the following are the particulars of disputed dues in respect of income tax and sales tax that have not been deposited.

Name of the Statute Assessment Amount Forum where the Year (Rs.Lak dispute is pending hs) Income Tax Act 2000-01 186.55 Assessing Officer

2001-02 441.11 Assessing Officer

2003-04 19.93 Assessing Officer

2004-05 392.87 Assessing Officer

2005-06 239.54 Assessing Officer

2006-07 315.89 Assessing Officer

2007-08 1027.53 Commissioner of Income Tax (Appeals)

2008-09 1154.81 Commissioner of Income Tax (Appeals)

Sales Tax 1993-94 5.05

1994-95 8.63 Joint Commissioner of Commercial Taxes 1995-96 12.05 (Appeals)

1998-99 10.64

(x) The Company has no accumulated losses. The Company has incurred cash losses during this financial year.

(xi) The Company has not defaulted in repayment of dues to its bankers. There are no borrowings from financial institutions. The Company has not issued any debentures.

(xii) Adequate documents and records are maintained by the Company for the loans and advances granted on the basis of security by way of pledge of shares and other securities.

(xii) The provisions of special statute applicable to chit funds / nidhi / mutual benefit funds / society do not apply to the Company.

(xiv) In our opinion and according to the information given to us, proper records have been maintained by the Company for the transactions and contracts relating to trading in shares, securities, debentures and other investments and timely entries have been made therein. The investments of the Company are held in its own name.

(xv) In our opinion and according to the explanations and information given to us the Company has not given guarantees for loans taken by others from banks and financial institutions.

(xvi) The Company has not availed any term loans.

(xvii) No short-term funds have been raised during the year.

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

(xix) No debentures have been issued by the Company during the year.

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

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For & on behalf of Raman Associates Chartered Accountants

G Venkataraman Partner Membership No.10022

Place: Chennai Date: 18.04.2011


Mar 31, 2010

We have audited the attached Balance Sheet of INDBANK MERCHANT BANKING SERVICES LIMITED as at 31st March 2010 and the Profit and Loss Account for the year ended 31st March 2010 and also the Cash Flow Statement for the year ended 31st March 2010 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.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on 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.

1. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 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 Annexurea statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to 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 purpose of our audit;

II. In our opinion, proper books of account as required by law. have been kept by the Company so far as appears from our examination of these 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 account;

In our opinion, the Balance Sheet and 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 by the Directors, as on 31st March 2010, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956.

VI 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, subject to Note No. 10 regarding non-consideration of liability towards interest claim of Rs. 1147.48 lakhs under the right of recompense clause on certain settled borrowings by the Holding Company. Had the liability been recognized in the Books, the loss of Rs. 165.28 lakhs would have become a loss of Rs.1312.76 lakhs.

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

b) in the case of Profit and Loss Account, of the Loss for the year ended 31st March 2010; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended 31st March 2010.

ANNEXURE TO THE AUDITORSREPORT

Referred to in paragraph 1 of our Report of even date. Re: Indbank Merchant Banking Services Ltd.

a. The company has maintained records showing full particulars including situation and quantity of fixed assets (other than given on lease). In case of assets given on lease, the asset register contains partywise amounts which is backed by separate asset records.

b. The assets given on lease have been physically verified by the management, excluding assets relating to

liquidation / suit filed cases. In case of certain assets where inspection were not possible, amounts have been fully provided for, which in our opinion is reasonable. Fixed assets other than given on lease of the Company have been physically verified by the Company during the year.

c. The fixed assets that have been sold during the year do not constitute a substantial part of the total fixed assets of the Company.

(ii) Clause (ii) of Paragraph 4 of Companies (Auditors Report) Order,2003, relating to inventory, is not applicable to the Company

(iii) The Company has not granted or taken any loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly clauses (iii)b to (iii)g of Companies (Auditors Report) Order, 2003, are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and rendering of services. During the course of our audit, we have not observed any major weaknesses in internal controls.

(v) In our opinion and according to the information and explanation given to us, there are no transactions that have been made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companics Act, 1956.

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

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

(viii) The Central Government has not prescribed the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.

(ix) a. The Company is regular in depositing with appropriate authorities all applicable undisputed statutory dues viz. Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Service Tax, and Cess. The other statutory dues viz. ESI, Excise duty, Customs duty and Cess are not applicable to this organization. There are no arrears of outstanding undisputed statutory dues as at 31st March 2010 for a period of more than six months from the date they become payable.

b. According to the records of the Company and the information and explanations given to us, the following are the particulars of disputed dues in respect of sales tax, income tax, interest tax, service tax and cess that have not been deposited.

Name of the Statute Assessment Amount Forum where the dispute is pending Year (Rs.Lakhs) i Income Tax Act 2000-01 580.32 Assessing Officer 2001-02 441.12 Assessing Officer 2003-04 19.94 Assessing Officer 2004-05 394.09 Assessing Officer 2005-06 239.53 Commissioner of Income Tax (Appeals) 2006-07 315.88 Commissioner of Income Tax (Appeals) 2007-08 1027.53 Commissioner of income Tax (Appeals) Interest Tax Act 1996-97 35.66 Madras High Court 1997-98 16.25 Income Tax Appeiiaie Tribunal 2000-01 5.81 IncomeTax Appellate Tribunal Sales Tax 1993-94 5.05 1994-95 8.63 Joint Commissioner of Commercial Taxes 1995-96 12.05 (Appeals) 1998-99 10.64

(x) The Company has no accumulated losses. The Company has not incurred cash losses during this financial year and the immediately preceding financial year.

(xi)The Company has not defaulted in repayment of dues to its bankers. There are no borrowings from financial institutions. The Company has not issued any debentures.

(xii) Adequate documents and records are maintained by the Company for the loans and advances granted on the | basis of security by way of pledge of shares and other securities

(xiii) The provisions of special statute applicable to chit funds / nidhi / mutual benefit funds / society do not apply to the Company.

(xiv) In our opinion and according to the information given to us, proper records have been maintained by the Company for the transactions and contracts relating to trading in shares, securities, debentures and other investments and timely entries have been made therein. The investments of the Company are held in its own name.

(xv) in our opinion and according to the explanations and information given to us the Company has not given guarantees for loans taken by others from banks and financial institutions.

(xvi) 1 he Company has not availed any term loans.

(xvii) No short-term funds have been raised during the year



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

(xix) Mo debentures have been issued by the Company during the year.

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

(xxI) According to the information and explanations given to us. no fraud on or oy the Company has been noticed or reported during the year.



For & on behalf of Raman Associate Chartered Accountants Place: Chennai Date: 16.04.2010 G Venkataraman Partner Membership No. 10022

 
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