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Auditor Report of ISF Ltd.

Mar 31, 2014

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

Managements'' 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 notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

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

Opinion

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

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

b. In the case of the 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 (Auditors'' 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 the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441 Aofthe 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 ( Referred to in paragraph 1 under Report on other Legal & Regulatory requirements Section 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 Fixed Assets have been physically verified by the management at the end of the year which in our opinion is reasonable having regard to the size of the Company and the nature of assets. No material discrepancies were noticed on such verification.

c) As fixed assets disposed off during the year are not significant, the going concern assumption is not affected.

ii. As per information and explanations given to us and taking into consideration the nature of business, clauses (ii) (a) regarding physical verification of inventories and its frequency, (ii) (b) regarding procedures of physical verification of inventories and (ii) (c) regarding maintenance of records of inventory and discrepancies noticed on verification between physical stocks and book records are not applicable

iii. a) The Company has granted unsecured loans to a company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 13286767/- and balance of Rs. 13286767/- was outstanding at the year end.

b) In our opinion, the rate of interest and other terms and conditions on which the loan was given to the above party are not prima facie prejudicial to the interest of the company.

c) As there are no stipulations regarding the above loan, we are unable to offer our comments on the same.

d) There is no overdue amount of loan granted to the company listed in the Register maintained under section 301 of the Companies Act, 1956.

e) The company has taken unsecured loans from two directors and thirty one relatives covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs 38637224/- and balance of Rs. 26757224/- was outstanding at the year end,

f) In our opinion, the rate of interest and other terms & conditions of loans taken by the company are not prima facie prejudicial to the interest of the company.

g) The company is regular in repayment of principal amount and interest on the above loans.

h) There is no overdue amount of loans taken from companies listed in the Register maintained under Section 301 of the Companies Act, 1956.

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 nature of its business with regard to purchases of fixed assets. The Company does not undertake any purchases of inventory, sale of goods and services. During the course of our audit we have not come across any major weakness in internal controls.

vii. In our opinion, the Internal audit function carried out during the year by a firm of Chartered Accountants appointed by the Management has been commensurate with the size of the company and nature of its business.

viii. The provisions of clause (viii) of the Order regarding maintenance of cost records under clause (d) of Sub-Section (1) of Section 209 of the Companies Act, 1956 are not applicable to the.

ix. a) According to the information and explanations given to us and the records of the company examined by us, the company has been generally regular in depositing with appropriate authorities undisp -uted statutory dues including Provident Fund, Income Tax, Wealth Tax and other material Statutory dues applicable to it. However, according to the information & explanations given to us, the provis -ons of Employees State Insurance, Sales Tax, Custom Duty & Excise Duty are not applicable to the Company in view of its nature of business.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues applicable to the company as stated above were in arrears as at the last day of the financial year for a period of more than six months from the date they became payable.

c) According to the books of account and records as produced and examined by us in accordance with the generally accepted auditing practices in India and information and explanations given to us, there are no dues of sales tax, income tax, custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

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

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not obtained any borrowings from any financial institutions or by way of debentures.

xii. Based on our examination of documents and records and as per informations explanations given to us, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion the company is not a chit fund or nidhi/mutual benefit fund/society and hence clause (xiii) of the Order is not applicable.

xiv. In our opinion, as the Company does not deal or trade in shares, securities, debentures and other investments, the provisions of paragraph 4(xiv) are not applicable.

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

xvi. In our opinion, the term loans have been applied for the purpose for which they were raised.

xvh. According to the information and explanations given to us and on an overall examination of the

Balance Sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

xviii. According to the information & explanations given to us, no preferential allotment of shares has been made by the company to parties and companies covered in the Register maintained under Section 301 of the Companies Act.

xix. According to the information & explanations given to us, no debentures have been issued by the company during the year.

xx Based on our examination of books and records of the company, no public issue was made by the company during the year.

xxi. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the company nor have we been informed by the management of any such instance being noticed or reported during the year.

For JAGDISH SAPRA & CO. CHARTEREDACCOUNTANTS FIRM REGISTRATION N0.001378N

Place: NEW DELHI (VIPAL KALRA) Dated: 31-05-2014 PARTNER M.NO.084583


Mar 31, 2012

We have audited the attached Balance Sheet of ISF Limited as at 31st March, 2012, 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 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 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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 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; hi. 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, Profit & 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, 2012 and

taken on record by the Board of Directors, we report that none of the directors is disqualified as on

31st March, 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of

Section 274 of the Companies Act, 1956; 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 Notes and Significant Accounting Policies 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 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 Account, of the profit of the Company for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flow for the year ended on that date.

ANNEXURE

(Referred to in paragraph 3 of Auditors' 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 Fixed Assets except those on Lease have been physically verified by the management at the end of the year which in our opinion is reasonable having regard to the size of the Company and the nature of assets. No material discrepancies were noticed on such verification.

c) No assets were disposed off during the year. Hence the provision of paragraph 4(i)(c) of the Order are not applicable.

ii.) As per information and explanations given to us and taking into consideration the nature of business, clauses (ii) (a) regarding physical verification of inventories and its frequency, (ii) (b) regarding procedures of physical verification of inventories and (ii) (c) regarding maintenance of records of inventory and discrepancies noticed on verification between physical stocks and book records are not applicable to the Company.

iii. a) The company has granted unsecured loans to three companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 7406812/- and balance of Rs. 2027966/- was outstanding at the year end.

b) In our opinion, the rate of interest and other terms and conditions on which the loans were given to the parties are not prima facie prejudicial to the interest of the company.

c) The parties are repaying the principal amount as stipulated and have been regular in repayment of interest.

d) There is no overdue amount of loans granted to the companies listed in the Register maintained under section 301 of the Companies Act, 1956.

e) The company has taken unsecured loans from two directors, thirty seven relatives and from two companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 3,34,30,000/- and balance of Rs. 2,62,20,000/- was outstanding at the year end.

f) In our opinion, the rate of interest and other terms & conditions of loans taken by the company are not prima facie prejudicial to the interest of the company.

g) The company is regular in repayment of principal amount and interest on the above loans.

h) There is no overdue amount of loans taken from companies listed in the Register maintained under Section 301 of the Companies Act, 1956.

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 nature of its business with regard to purchases of fixed assets. The Company does not undertake any purchases of inventory, sale of goods and services. During the course of our audit we have not come across any continuing failure to correct major weaknesses in internal controls.

v. a) According to the information & explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, the loan transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at interest rates which are reasonable having regard to prevailing market rates at the relevant time.

vi. In our opinion and according to the information and explanations given to us, as the company does not hold any deposits other than from directors and'relatives of directors, the provisions of Sections 58A and 58AA of the Companies Act, 1956, other relevant provisions of the Act and the Rules framed thereunder in respect thereof are not applicable to the company as the company does not hold any deposits other than from directors and relatives of directors.

vii. In our opinion, the Internal audit function carried out during the year by a firm of Chartered

Accountants appointed by the Management has been commensurate with the size of the company and nature of its business.

viii. The provisions of clause (viii) of the Order regarding maintenance of cost records under clause

(d) of Sub-Section (1) of Section 209 of the Companies Act, 1956 are not applicable to the Company.

ix. a) According to the information and explanations given to us and the records of the company examined by us, the company has been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Income Tax, Wealth Tax and other material Statutory dues applicable to it. However, according to the information & explanations given to us, the provisions of Employees State Insurance, Sales Tax, Custom Duty & Excise Duty are not applicable to the Company in view of its nature of business.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues applicable to the company as stated above were in arrears as at the last day of the financial year for a period of more than six months from the date they became payable.

c) According to the books of account and records as produced and examined by us in accordance with the generally accepted auditing practices in India and information and explanations given to us, there are no dues of sales tax, income tax, custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

x. The Company does not have any accumulated losses as at the end of the financial year. The Company has not incurred cash losses during the current year. However there were no cash losses in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not obtained any borrowings from any financial institutions or by way of debentures.

xii. Based on our examination of documents and records and as per information & explanations given to

us, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion the company is not a chit fund or nidhi/mutual benefit fund/society and hence clause (xiii) of the Order is not applicable to the company.

xiv. In our opinion, the Company has kept proper records of transactions and contracts of dealing or trading in shares and timely entries have been made therein. The shares and other investments have been held by the Company in its own name.

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

xvi. In our opinion, the term loans have been applied for the purpose for which they were raised.

xvii. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report'that no funds raised on short term basis have been used for long term investment.

xviii. According to the information & explanations given to us, no preferential allotment of shares has been made by the company to parties and companies covered in the Register maintained under Section 301 of the Companies Act.

xix. According to the information & explanations given to us, no debentures have been issued by the company during the year.

xx. Based on our examination of books and records of the company, no public issue was made by the company during the year.

xxi. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the company nor have we been informed by the management of any such instance being noticed or reported during the year.

For JAGDISH SAPRA & COMPANY FIRM REGISTRATION NO.001378N CHARTERED ACCOUNTANTS

NEW DELHI. (VIPAL KALRA) DATED : 30-05-2012 PARTNER M.NO.084583


Mar 31, 2011

We have audited the attached Balance Sheet of ISF Limited as at 31st March, 2011, 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 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 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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 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 account;

iv. In our opinion, the Balance Sheet, Profit & 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 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; 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 Notes and Significant Accounting Policies 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 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 of the Company for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flow for the year ended on that date.

ANNEXURE

(Referred to in paragraph 3 of Auditors' 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 Fixed Assets except those on Lease have been physically verified by the management at the end of the year which in our opinion is reasonable having regard to the size of the Company and the nature of assets. No material discrepancies were noticed on such verification.

c) No assets were disposed off during the year. Hence the provision of paragraph 4(i)(c) of the Order are not applicable.

ii.) As per information and explanations given to us and taking into consideration the nature of business, clauses (ii) (a) regarding physical verification of inventories and its frequency, (ii) (b) regarding procedures of physical verification of inventories and (ii) (c) regarding maintenance of records of inventory and discrepancies noticed on verification between physical stocks and book records are not applicable to the Company.

iii. a) The company has granted unsecured loans to two companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 2535684/- and balance of Rs. 2535684/- was outstanding at the year end.

b) In our opinion, the rate of interest and other terms and conditions on which the loans were given to the parties are not prima facie prejudicial to the interest of the company.

c) The parties are repaying the principal amount as stipulated and have been regular in repayment of interest.

d) There is no overdue amount of loans granted to the companies listed in the Register maintained under section 301 of the Companies Act, 1956.

e) The company has taken unsecured loans from a director, twenty seven relatives and from two companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 5,87,25,000/- and balance of Rs. 1,32,60,000/- was outstanding at the year end.

f) In our opinion, the rate of interest and other terms & conditions of loans taken by the company are not prima facie prejudicial to the interest of the company.

g) The company is regular in repayment of principal amount and interest on the above loans.

h) There is no overdue amount of loans taken from companies listed in the Register maintained under Section 301 of the Companies Act, 1956.

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 nature of its business with regard to purchases of fixed assets. The Company does not undertake any purchases of inventory, sale of goods and services. During the course of our audit we have not come across any continuing failure to correct major weaknesses in internal controls

v. a) According to the information & explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that Section. .

b) In our opinion and according to the information and explanations given to us, the loan transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at interest rates which are reasonable having regard to prevailing market rates at the relevant time.

vi. In our opinion and according to the information and explanations given to us, as the company does not hold any deposits other than from directors and relatives of directors, the provisions of Sections 58A and 58AA of the Companies Act, 1956, other relevant provisions of the Act and the Rules framed there under in respect thereof are not applicable to the company as the company does not hold any deposits other than from directors and relatives of directors.

vii. In our opinion, the Internal audit function carried out during the year by a firm of Chartered Accountants appointed by the Management has been commensurate with the size of the company and nature of its business.

viii. The provisions of clause (viii) of the Order regarding maintenance of cost records under clause (d) of Sub-Section (1) of Section 209 of the Companies Act, 1956 are not applicable to the Company.

ix. a) According to the information and explanations given to us and the records of the company examined by us, the company has been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Income Tax, Wealth Tax and other material Statutory dues applicable to it. However, according to the information & explanations given to us, the provisions of Employees State Insurance, Sales Tax, Custom Duty & Excise Duty are not applicable to the Company in view of its nature of business.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues applicable to the company as stated above were in arrears as at the last day of the financial year for a period of more than six months from the date they became payable.

c) According to the books of account and records as produced and examined by us in accordance with the generally accepted auditing practices in India and information and explanations given to us, there are no dues of sales tax, income tax, custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

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

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not obtained any borrowings from any financial institutions or by way of debentures.

xii. Based on our examination of documents and records and as per information & explanations given to us, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion the company is not a chit fund or nidhi/mutual benefit fund/society and hence clause (xiii) of the Order is not applicable to the company.

xiv. In our opinion, the Company has kept proper records of transactions and contracts of dealing or trading in shares and timely entries have been made therein. The shares and other investments have been held by the Company in its own name.

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

xvi. In our opinion, the term loans have been applied for the purpose for which they were raised.

xvii. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

xviii. According to the information & explanations given to us, no preferential allotment of shares has been made by the company to parties and companies covered in the Register maintained under Section 301 of the Companies Act.

xix. According to the information & explanations given to us, no debentures have been issued by the company during the year.

xx. Based on our examination of books and records of the company, no public issue was made by the company during the year.

xxi. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the company nor have we been informed by the management of any such instance being noticed or reported during the year.

For JAGDISH SAPRA & COMPANY

FIRM REGISTRATION NO.001378N

CHARTERED ACCOUNTANTS

NEW DELHI. (VIPAL KALRA)

DATED : 15-07-2010 PARTNER

M.NO.084583


Mar 31, 2010

We have audited the attached Balance Sheet of Interstate Finance Limited as at 31st March, 2010, 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.

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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. /

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

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 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 account;

iv. In our opinion, the Balance Sheet, Profit & 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, 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; 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 Notes and Significant Accounting Policies 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 the case of the Balance Sheet, of the state of affairs of the Company as 31st March, 2010

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

c) In the case of the Cash Flow Statement, of the cash flow for the year ended on that date.

ANNEXURE (Referred to in paragraph 3 of Auditors 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 Fixed Assets except those on Lease have been physically verified by the management at the end of the year which in our opinion is reasonable having regard to the size of the Company and the nature of assets. No material discrepancies were noticed on such verification.

c) No assets were disposed off during the year. Hence the provision of paragraph 4(i)(c) of the Order are not applicable.

ii.) As per information and explanations given to us and taking into consideration the nature of business, clauses (ii) (a) regarding physical verification of inventories and its frequency, (ii) (b) regarding procedures of physical verification of inventories and (ii) (c) regarding maintenance of records of inventory and discrepancies noticed on verification between physical stocks and book records are not applicable to the Company.

iii. a) The company has granted unsecured loans to three companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 8842724/- and balance of Rs. 1634191/- was outstanding at the year end.

b) In our opinion, the rate of interest and other terms and conditions on which the loans were given to the parties are not prima facie prejudicial to the interest of the company.

c) The parties are repaying the principal amount as stipulated and have been regular in repayment of interest.

d) There is no overdue amount of loans granted to the companies listed in the Register maintained under section 301 of the Companies Act, 1956.

e) The company has taken unsecured loans from a director, thirty four relatives and from two companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 65925192/- and balance of Rs. 37972000/- was outstanding at the year end.

f) In our opinion, the rate of interest and other terms & conditions of loans taken by the company are not prima facie prejudicial to the interest of the company.

g) The company is regular in repayment of principal amount and interest on the above loans.

h) There is no overdue amount of loans taken from companies listed in the Register maintained under Section 301 of the Companies Act, 1956.

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 nature of its business with regard to purchases of fixed assets. The Company does not undertake any purchases of inventory, sale of goods and services. During the course of our audit we have not come across any continuing failure to correct major weaknesses in internal controls.

v. a) According to the information & explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, the loan transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at interest rates which are reasonable having regard to prevailing market rates at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve bank of India, provisions of sections 58A and 58Act of the Companies Act, 1956, relevant provisions of the Act and the Rules framed thereunder in respect of deposits accepted from the public except that liquid assets required to be maintained on the basis of public deposits outstanding on 30.09.2009 for the quarter ended march 2010 were short by Rs 857021/. No order has been passed by the Company Law Board or National Company Law Tribunal or any Court or any other Tribunal.

vii. In our opinion, the Internal audit function carried out during the year by a firm of Chartered Accountants appointed by the Management has been commensurate with the size of the company and nature of its business.

viii. The provisions of clause (viii) of the Order regarding maintenance of cost records under clause (d) of Sub-Section (1) of Section 209 of the Companies Act, 1956 are not applicable to the Company.

ix. a) According to the information and explanations given to us and the records of the company examined by us, the company has been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Income Tax, Wealth Tax and other material Statutory dues applicable to it. However, according to the information & explanations given to us, the provisions of Employees State Insurance, Sales Tax, Custom Duty & Excise Duty are not applicable to the Company in view of its nature of business.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues applicable to the company as stated above were in arrears as at the last day of the financial year for a period of more than six months from the date they became payable.

c) According to the books of account and records as produced and examined by us in accordance with the generally accepted auditing practices in India and information and explanations given to us, there are no dues of sales tax, income tax, custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

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

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not obtained any borrowings from any financial institutions or by way of debentures.

xii. Based on our examination of documents and records and as per information & explanations given to

us, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion the company is not a chit fund or nidhi/mutual benefit fund/society and hence clause (xiii) of the Order is not applicable to the company.

xiv. In our opinion, the Company has kept proper records of transactions and contracts of dealing or trading in shares and timely entries have been made therein. The shares and other investments have been held by the Company in its own name.

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

xvi. In our opinion, the term loans have been applied for the purpose for which they were raised.

xvii. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

xviii. According to the information & explanations given to us, no preferential allotment of shares has been made by the company to parties and companies covered in the Register maintained under Section 301 of the Companies Act.

xix. According to the information & explanations given to us, no debentures have been issued by the company during the year.

xx. Based on our examination of books and records of the company, no public issue was made by the company during the year.

xxi. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the company nor have we been informed by the management of any such instance being noticed or reported during the year.

For JAGDISH SAPRA & CO.

CHARTERED ACCOUNTANTS

PLACE : NEW DELHI (VIPAL KALRA)

DATED : 20.04.2010 PARTNER

M.NO.084583

 
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