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Auditor Report of KBS India Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of KBS India 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

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

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

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

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

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

Opinion

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

(i) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st March, 2015;

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

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

Report on Other Legal and Regulatory Matters

1. As required by the Companies (Auditor's Report) Order,2015, issued by the Central Government of India in term of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in the paragraphs 3 and 4 of the Order, to the extent applicable.

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

a) We have 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 the company has kept proper books of account as required by the law have been kept by the Company so far as appears from our examinations 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 accounts.

d) 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 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 directors, as on 31st March 2015 and taken on the record by the Board of Directors, we report none of the Directors are disqualified as on 31st March 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial position.

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

1. a. The Company has maintained proper record showing particulars, including quantitative details and situation of fixed assets.

b. As explained to us Fixed Assets according to the practice of the company are physically verified by the management at reasonable intervals, which in our opinion, is reasonable, looking to the size of the company and the nature of the business. No material discrepancies were noticed on such verification.

2. a. The Company is a stock broking company and has its inventory in shares. As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c. On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical inventory and the book records were not material and have been properly dealt with in the books of account.

3. In respect of the loans secured or unsecured, granted or taken by the company to/from companies, firms of other parties covered in the register maintained under Section 189 of the Companies Act, 2013:

a. The company has given loan to its subsidiary. In respect of the said loan, the maximum amount outstanding as on 31/03/2015 is Rs. 13,77,93,715/-.

b. In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions of the loan given by the Company, are not prejudicial to the interest of the Company.

c. The principal amounts are repayable on demand and there is no repayment schedule. The interest is payable on demand.

d. In respect of the said loans, the same are repayable and therefore the question of overdue amounts does not arise. In respect of the interest, there are no overdue amounts.

e. The company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under the Act.

4. In our opinion and according to the information and explanation given to us, generally there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchase of shares, fixed assets and for sale of the shares. Further, on the basis of our examinations of books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct this major weakness in the aforesaid internal control procedures.

5. According to the information and explanations provided by the management, we are of the opinion that, the transactions that need to be entered into the register maintained under the Act have been so entered.

6. The company has not accepted any deposits from the public to which 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.

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

8. The Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Companies Act.

9. a) According to the records of the company examined by us, and as per the information and explanations given to us, in our opinion, the company is generally regular in depositing the undisputed statutory dues including Income tax, Wealth tax, Service tax and other statutory dues with the appropriate authorities except TDS which includes minor delay in payments.

b) According to the information and explanations given to us and on the basis of examination of the documents and records, there are no disputed statutory dues, which are not been deposited with the appropriate authorities.

10. The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses during the year under report.

11. On the basis of the records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.

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

13. On the basis of the records examined by us and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of dealings in shares and securities and other investment and timely entries have been made therein. The aforesaid securities have been held by the Company except to the extent of exemption granted under the Act.

14. According to information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institutions.

15. As explained to us, the Company has not raised any term loans during the year.

16. According to the information and explanations given to us and on an overall examination of the Financial Statements of the Company and after placing reliance on the reasonable assumptions made by the Company, there are no funds raised on a short-term basis, which have been used for long-term investment, and vice versa.

17. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the Company, has been noticed or reported by the Company during the year.

For and on behalf of

Gopal Rao & Associates

Chartered Accountants

Firm Registration No. 127055W



(N.G.Rao)

Proprietor

Membership.No. 33665

Place: Mumbai

Date: 22nd May 2015


Mar 31, 2014

We have audited the accompanying financial statements of the KBS India Limited, which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and 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

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

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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 said accounts together with the notes thereon give the information required by the Companies Act, 1956, in the manner so and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st March, 2014;

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

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

Report on Other Legal and Regulatory Matters

1. As required by the Companies (Auditors Report) Order, 2003, as amended, issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks as we considered necessary and appropriate, and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a statement on the matters specified in the paragraph 4 and 5 of the said 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 the company has kept proper books of account as required by the law have been kept by the Company so far as appears from our examinations 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 accounts.

d) 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 the sub – sections (3C) of the section 211 of the companies Act, 1956.

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

Aimexure to the Auditor''s Report (Referred to in paragraph 3 of our report of Even Date)

l.a. The Company has maintained proper record showing particulars, including quantitative details and situation of fixed assets.

b. As explained to us Fixed Assets according to the practice of the company are physically verified by the management at reasonable intervals, which in our opinion, is reasonable, looking to the size of the company and the nature of the business. No material discrepancies were noticed on such verification.

2. a. The Company is a stock broking company and has its inventory in shares. As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

c. In our opinion and according to the explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

d. On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical inventory and the book records were not material and have been properly dealt with in the books of account.

3. In respect of the loans secured or unsecured, granted or taken by the company to/from companies, firms of other parties covered in the register maintained under section 30f of the Companies Act, 1956:

b. The company has given loan to its subsidiary. In respect of the said loan, the maximum amount outstanding as on 31/03/2014 is Rs. 12,92,89,784/-.

f. In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions of the loan given by the Company, are not prejudicial to the interest of the Company.

g. The principal amounts are repayable on demand and there is no repayment schedule. The interest is payable on demand.

h. In respect of the said loans, the same are repayable and therefore the question of overdue amounts does not arise. In respect of the interest, there are no overdue amounts.

i. The company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) arid (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information arid explanation given to us, generally there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchase of shares, fixed assets and for sale of the shares. Further, on the basis of our examinations of books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct this major weakness in the aforesaid internal control procedures.

5. According to the information and explanations provided by the management, we are of the opinion that, the transactions that need to be entered into the register maintained under section 301 have been so entered.

6. The company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956 and rules framed there under apply.

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

8. The Central Government has not prescribed maintenance of cost records under section 209(l)(d) of the Companies Act, 1956.

9. a) According to the records of the company examined by us, and as per the information and explanations given to us, in our opinion, the company is generally regular in depositing the undisputed statutory dues including Income tax, Wealth tax, Service tax and other statutory dues with the appropriate authorities except TDS wrhich includes minor delay in payments. However, the undisputed statutory dues outstanding for more than six months are as per Annexure "A" attached.

b) According to the information and explanations given to us and on the basis of examination of the documents and records, there are no disputed statutory dues, which are not been deposited with the appropriate authorities.

10. The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses during the year under report.

11. On the basis of the records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.

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

13. In our opinion, the Company is not a chit fund or a mdhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

14. Ck the basis of the records examined by us and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of dealings in shares and securities and other investment and timely entries have been made therein. The aforesaid securities have been held by the Company except to the extent of exemption granted under section 49 of the Companies Act, 1956.

15. According to information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institutions. Accordingly, clause 4 (xv) of the Order is not applicable.

16. As explained to us, the Company has not raised any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the Financial Statements of the Companv and after placing reliance on the reasonable assumptions made by the Company, there are no funds raised on a short-term basis, which have been used for long-term investment, and vice versa.

18. The Companv has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. As per information & explanations given to us, and on the basis of the records and documents examined by us, the Company has not issued any secured debentures during the year.

20. As per information & explanations given to ns, and on the basis of the records and documents examined by us, The Company has not raised money during the year.

21. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the Company, has been noticed or reported by the Company during the year.

For and on behalf of

Gopal Rao & Associates Chartered Accountants

N. G. Rao (Proprietor) Membership No. 33665 Firm Registration No. 127055W

Place: Mumbai Date: 30.05.2014


Mar 31, 2011

1. We have audited the attached Balance sheet of M/s. KBS INDIA LIMITED (Formerly known as KBS Capital Management Ltd) as at 31stMarch 2011 together with the Profits Loss Accounts Cash Flow Statement for the year ended as on that date annexed hereto. These financial statements are the responsibility of the Board of Directors of KBS India Ltd. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 a test basis, evidence supporting the amount and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks as we considered necessary and appropriate, and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a statement on the matters specified in the paragraph 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above, we report that:

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

b. In our opinion the company has kept proper books of account as required by the law so far as appears from our examinations of those books.

c. The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of accounts.

d. In our opinion the Balance Sheet and Profit & Loss Account dealt with by this report comply with the Accounting Standards referred to in the sub sections (3C)of the section 211 of the companies Act, 1956.

e. On the basis of written representations received from directors, as on 31st March 2011 and taken on the record by the Board of Directors, we report none of the Directors are 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.

5. 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 Account Policies and Notes to 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.

i. In the case of the Balance Sheet of the state of affairs of the company as at 31st March 2011;

ii. In the case of the Profit and Loss account, of the Profit for the year ended as on that date.

iii. In the case of Cash Flow Statement of the Cash Flow for the year ended on that date.

KBS INDIA LIMITED

Annexure to the Auditor's Report.

(Referred to in paragraph 3 of our report of Even Date)

1. a. The Company has maintained proper record showing particulars, including quantitative details and situation of fixed assets.

b. As explained to us Fixed Assets according to the practice of the company are physically verified by the management at reasonable intervals, which in our opinion, is reasonable, looking to the size of the company and the nature of the business. No material discrepancies were noticed on such verification.

2. a. The Company is a stock broking company and has its inventory in shares. As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c. On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical inventory and the book records were not material and have been properly dealt with in the books of account.

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

a. The company has given loan to its subsidiary. In respect of the said loan, the maximum amount outstanding as on 31/03/2011 is Rs. 10,70,57,100.30.

b. In our opinion and according to the information and explanation given to us, the rate of interest of interest and other terms and conditions of the loan given by the Company, are not prejudicial to the interest of the Company.

c. The principal amounts are repayable on demand and there is no repayment schedule. The interest is payable on demand.

d. In respect of the said loans, the same are repayable and therefore the question of overdue amounts does not arise. In respect of the interest, there are no overdue amounts.

e. The company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanation given to us, generally there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchase of shares, fixed assets and for sale of the shares. Further, on the basis of our examinations of books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct this major weakness in the aforesaid internal control procedures.

5. According to the information and explanations provided by the management, we are of the opinion that, the transactions that need to be entered into the register maintained under section 301 have been so entered.

6. The company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of section 58Aand 58AAof the Companies Act, 1956 and rules framed there under apply.

7. In our opinion, the Company has an adequate internal audit system Commensurate with its size and nature of its business* .

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

9. a. According to the records of the company examined by us, and as per the information and explanations given to us, in our opinion, the company is generally regular in depositing the undisputed statutory dues including Income tax, Wealth tax, Service tax and other statutory dues with the appropriate authorities. However, the undisputed statutory dues outstanding for more than six months are as per Annexure 'A' enclosed.

b. According to the information and explanations given to us and on the basis of examination of the documents and records, there are no disputed statutory dues, which are not been deposited with the appropriate authorities.

10. The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses during the year under report.

11. On the basis of the records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.

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

13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

14. On the basis of the records examined by us and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of dealings in shares and securities and other investment and timely entries have been made therein. The aforesaid securities have been held by the Company except to the extent of exemption granted under section 49 of the Companies Act, 1956.

15. According to information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institutions. Accordingly, clause 4 (xv) of the Order is not applicable.

16. As explained to us, the Company has not raised any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the Financial Statements of the Company and after placing reliance on the reasonable assumptions made by the Company, there are no funds raised on a short-term basis, which have been used for long-term investment, and vice versa.

18. The Company has made preferential allotment of shares to parties and companies covered in the register maintained undersection301 of the Companies Act, 1956.

19. As per information & explanations given to us, and on the basis of the records and documents examined by us, the Company has not issued any secured debentures during the year.

20. As per information & explanations given to us, and on the basis of the records and documents examined by us, The Company has raised money by issue of GDRs, during the year.

21. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the Company, has been noticed or reported by the Company during the year.

For and on behalf of

GOPAL RAO & ASSOCIATES.

Chartered Accountants

F.R.NO.127055W

(N.G.Rao)

Proprietor

M.No. 33665

Place: Mumbai.

Date : 11/08/2011


Mar 31, 2010

1. We have audited the attached Balance sheet of M/s. KBS Capital Management Ltd. as at 31st March 2010 together with the Profit & Loss Account for the year ended as on that date annexed hereto. These financial statements are the responsibility of the Board of Directors of KBS Capital Management Ltd. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 a test basis, evidence supporting the amount and disclosure 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 ouropinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks as we considered necessary and appropriate, and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a statement on the matters specified in the paragraph 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above.we report that:

a. We have obtained all information and explanations, which to the best of our knowledge and belief were necessary for the purpose of ouraudit.

b. In our opinion the company has kept proper books of account as required by the law so far as appears from our examination of those books.

c. The Balance Sheet and Profit and Loss Accountdealtwith by this report are in agreement with the books of accounts.

d. During the year, the Company has passed an Ordinary Resolution through the Postal Ballot process, result of which was declared on 31st December 2009 increasing the Authorized capital of the company from 7 crore to 14 crore. The necessary fees/stamp duty has not been paid to the Registrar of Companies and to that extent the increase in share capital is defective. The Liability towards stamp duty / registration fees and additional fees payable for delayed filing of e-form 5 has not been provided in the accounts.

e. In our opinion the Balance Sheet, and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in the sub-sections (3C) of section 211 of the Companies Act, 1956.

f. On the basis of written representations received from directors, as on 31s,March 2010 and taken on the record by the Board of Directors, we report that none of the Directors are 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.

g. In ouropinion 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 Notes to 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.

i.In the case of Balance Sheet of the state of affairs of the company as at 31st, March 2010;

and

ii.In the case of the Profit and Loss account. of the loss for the year ended as on that date.

Annexure to the Auditors Report. (Referred to in paragraph 3 of our report of Even Date)

1. a. The Company has maintained proper record showing particulars, including quantitative details and situation of fixed assets.

b. As explained to us Fixed Assets according to the practice of the company are physically verified by the management at reasonable intervals, which in our opinion, is reasonable, looking to the size of the company and the nature of the business. No material discrepancies were noticed on such verification.

c. During the year, the company has sold Xerox Machine.

2. a. The Company is a stock broking company and has its inventory in shares. As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c. On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical inventory and the book records were not material and have been properly dealt with in the books of account.

3. a. According to the information and explanation given to us, the Company has not granted unsecured loans to companies, firms and other parties covered in the register maintained undersection 301 of the CompaniesAct, 1956.

b. According to the information and explanation given to us, the Company has not taken any unsecured loans from the companies, firms and other parties covered in the register maintained undersection 301 of the CompaniesAct, 1956.

c. As there are no stipulation for the recovery and payment of principal amount and interest, the question of regularity in recovery and payment of principal and interest does not arise. According to the information given to us, the loans taken and granted to the parties referred herein above are not prima-facie prejudicial to the interest of the company.

d. There are no over due amounts of such loans as on 31st,March 2010.

4. In our opinion and according to the information and explanation given to us, generally there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchase of shares, fixed assets and for sale of the shares. Further, on the basis of our examinations of books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct this major weakness in the aforesaid internal control procedures.

5. According to the information and explanations provided by the management, we are of the opinion that, the transactions that need to be entered into the register maintained undersection 301 have been so entered.

6. The company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of section 58Aand 58AAof the CompaniesAct, 1956 and rules framed there under apply.

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

8. The Central Government has not prescribed maintenance of cost records undersection 209(1 )(d) of the CompaniesAct, 1956.

9. a. According to the records of the company examined by us, and as per the information and explanations given to us, in our opinion, the company is generally regular in depositing the undisputed statutory dues including Income tax, Wealth tax, Service tax and other statutory dues with the appropriate authorities. However, the undisputed statutory dues outstanding for more than six months are as per Annexure A attached.

b. According to the information and explanations given to us and on the basis of examination of the documents and records, there are no disputed statutory dues, which are not been deposited with the appropriate authorities.

10. The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses during the year under report.

11. On the basis of the records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.

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

13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

14. On the basis of the records examined by us and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of dealings in shares and securities and other investment and timely entries have been made therein. The aforesaid securities have been held by the Company except to the extent of exemption granted under section 49 of the Companies Act, 1956.

15. According to information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institutions. Accordingly, clause 4 (xv) of the Order is not applicable.

16. As explained to us, the Company has not raised any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the Financial Statements of the Company and after placing reliance on the reasonable assumptions made by the Company, there are no funds raised on a short-term basis, which have been used for long-term investment, and vice versa.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained undersection 301 oftheCompaniesAct, 1956.

19. As per information & explanations given to us, and on the basis of the records and documents examined by us, the Company has not issued any secured debentures during the year.

20. As per information & explanations given to us, and on the basis of the records and documents examined by us, The Company has not raised any money by public issue, during the year.

21. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the Company, has been noticed or reported by the Company during the year.

For Gopal Rao & Associates

Chartered Accountants F.R.NO.127055W

N. G. Rao

(Proprietor) Membership No. 33665.

Place :Mumbai Date: 29.05.2010


Mar 31, 2009

1. We have audited the attached Balance sheet of M/s. KBS Capital Management Ltd. as at 31st March 2009 together with the Profit & Loss Account for the year ended as on that date annexed hereto. These financial statements are the responsibility of the Board of Directors of KBS Capital Management Ltd. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 a test basis, evidence supporting the amount and disclosure 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 reasonabje basisforouropinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks as we considered necessary and appropriate, and according to the information and explanations given to us during the course of our audit, we enclose in theAnnexure a statement on the matters specified in the paragraph 4 and 5 of the said order.

4. Furtherto our comments in theAnnexure referred to above, we report that:

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

b. In our opinion the company has kept proper books of account as required by the law so far as appears from our examination of those books.

c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts.

d. In our opinion the Balance Sheet, and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in the sub-sections (3C) of section 211 of the Companies Act, 1956.

e. On the basis of written representations received from directors, as on 31st March 2009 and taken on the record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of sec.274 of the Companies Act, 1956.

f. 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 Notes to 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.

i. In the case of Balance Sheet of the state of affairs of the company as at 31st March 2009;

and

ii. In the case of the Profit and Loss account of the loss for the year ended as on that date.

Annexure to the Auditors Report. (Referred to in paragraph 3 of our report of Even Date)

1. a. The Company has maintained proper record showing particulars, including quantitative details and situation of fixed assets.

b. As explained to us Fixed Assets according to the practice of the company are physically verified by the management at reasonable intervals, which in our opinion, is reasonable, looking to the size of the company and the nature of the business. No material discrepancies were noticed on such verification.

c. During the year, there was no disposal of fixed assets.

2. a. The Company is a stock broking company and has its inventory in shares. As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c. On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical inventory and the book records were not material and have been properly dealt with in the books of account.

3. a. According to the information and explanation given to us, the Company has not granted unsecured loans to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b. According to the information and explanation given to us, the Company has not taken any unsecured loans from the companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956.

c. As there are no stipulation for the recovery and payment of principal amount and interest, the question of regularity in recovery and payment of principal and interest does not arise. According to the information given to us, the loans taken and granted to the parties referred herein above are not prima-facie prejudicial to the interest of the company.

d. There are no overdue amounts of such loans as on 31" March 2009.

4. In our opinion and according to the information and explanation given to us, generally there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchase of shares, fixed assets and for sale of the shares. Further, on the basis of our examinations of books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct this major weakness in the aforesaid internal control procedures.

5. According to the information and explanations provided by the management, we are of the opinion that, the transactions that need to be entered into the register maintained under section 301 have been so entered.

6. The company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of section 58Aand 58AAof the Companies Act, 1956 and rules framed there under apply.

7. In our opinion, the Company has an adequate internal audit system Commensurate with its size and nature of its business.

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

9. a. According to the records of the company examined by us, and as per the information and explanations given to us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including Income tax, Wealth tax, Service tax and other statutory dues with the appropriate authorities. However, the undisputed statutory dues outstanding for more than six months are as per Annexure A attached.

b. According to the information and explanations given to us and on the basis of examination of the documents and records, there are no disputed statutory dues, which are not been deposited with the appropriate authorities.

10. The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses during the year under report.

11. On the basis of the records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.

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

13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

14. On the basis of the records examined by us and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of dealings in shares and securities and other investment and timely entries have been made therein. The aforesaid securities have been held by the Company except to the extent of exemption granted under section 49 of the Companies Act, 1956.

15. According to information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institutions. Accordingly, clause 4 (xv) of the Order is not applicable.

16. As explained to us, the Company has not raised any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the Financial Statements of the Company and after placing reliance on the reasonable assumptions made by the Company, there are no funds raised on a short-term basis, which have been used for long-term investment, and vice versa.

18. 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.

19. As per information & explanations given to us, and on the basis of the records and documents examined by us, the Company has not issued any secured debentures during the year.

20. As per information & explanations given to us, and on the basis of the records and documents examined by us, The Company has not raised any money by public issue, during the year.

21. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the Company, has been noticed or reported by the Company during the year.

For GOPAL RAO & ASSOCIATES.

Chartered Accountants

(N.G.Rao)

Proprietor M.No.33665

Place: Mumbai. Date :30th June 2009

 
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