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Auditor Report of Khandwala Securities Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Khandwala Securities Limited ('the Company') which comprise the Balance Sheet as at 31stMarch 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year ended and a summary of significant accounting policies and other explanatory information.

2. Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation 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 ma intendance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditor's Responsibility

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

We conducted 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 fi nancial control 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 financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its profit and cash flows for the year ended on that date.

5. Report on Other Legal and Regulatory Requirements

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

2. Further to our comments in our opinion referred to above, we report that:

a. The Company had advanced application money towards purchase of shares of Rs. 216.69 lacs, which is outstanding for a period of 156 months as at the end of the year. In the absence of information regarding the status of the allotment or the net worth of the entities in which the Company made applications, we are unable to ascertain the extent to which an amount of Rs. 216.69 lacs is recoverable and accordingly, the effect thereof on the financial statements cannot be ascertained. Please refer Note No. 21 forming part of financial statements.

b. Long-term deposits to various companies of Rs. 530.00 lacs are subject to confirmation and subsequent adjustments, if any. Please refer Note No. 22 forming part of financial statements.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

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

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

(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 of company except as reported in Notes to the accounts.

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

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE AUDITOR'S REPORT

With reference to the Annexure referred to in the Independent Auditors' Report to the Members of Khandwala Securities Limited ('the Company') on the financial statements for the year ended 31 March 2015, we report that:

(i) In respect of company's fixed assets;

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

(b) The fixed assets were physically verified during the year by management of the respective entities in accordance with a phased periodical programme of verification which, in our opinion and the opinion of other auditors, is reasonable. According to the information and explanations given to us and based on the auditor's report of the aforesaid subsidiary companies and associate companies incorporated in India, no material discrepancies were noticed on such verification.

(ii) The Company is a service company primarily engaged in the business of rendering merchant banking service. Accordingly, it does not hold any physical inventories. Thus, paragraph 3(ii) of Order is not applicable.

(iii) In our opinion and according to the information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. Hence reporting under clause 3(iii) of the Order is not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with size of the Company & nature of its business for the purchase of fixed assets and for sale of service. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) According to the information and explanations given to us, the Company has not accepted deposits within the meaning of section 73 to 76 or any other relevant provisions of the Act and rules framed there under. However the company has received loan from an individual amounting to Rs. 11,61,000/- in the FY 2011- 12 and same is due in year 2016-2017.

(vi) The Central Government has not prescribed the maintenance of cost records under sub-section (l) of section 148 of the Act, for any of activities of the Company.

(vii) According to the information and explanations given to us and on the basis of the our examination of the records of the Company, in respect of statutory dues:

(a) The company is regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, service tax, and any other statutory dues with the appropriate authorities. However there have been few cases of delays in payment of statutory liabilities.

(b) There are no materials dues of income tax or service tax or which have not been deposited with appropriate authorities as at 31st March, 2015 on account of any pending dispute except reported as below.

Details of dues of income tax which not been deposited as at March 31, 2015 on account of disputes are given below:

Name Nature Amount Period to which Forum Under of the of the (Rs. In the amount where Section Statute Dues Lacs) relates Dispute is pending

Income Income 31.88 A.Y. 2006-07 CIT(A) 271(1)(C)

Tax Act Tax 7.80 A.Y. 2007-08 CIT(A) 271(1)(C)

1961 19.49 A.Y. 2009-10 CIT(A) 271(1)(C)

4.96 A.Y. 2007-08 ITAT 143(3)

82.65 A.Y. 2009-10 ITAT 143(3)

(c) The Company has generally been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the company act and Rules made thereunder within time.

(viii) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses in the financial year. However company has incurred cash loss in previous Financial Year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions and bank. The company has not issued any debentures.

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

(xi) According to the information and explanations given to us, Company has not obtained any term loan in current Financial Year.

(xii) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For Udyen Jain and Associates Chartered Accountants ICAI Reg. No. : 116336W

Mr. Udyen Jain Partner Mem. No:F- 101201 Place: Mumbai Date : 26th May, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Khandwala Securities Limited (''the Company'') which comprise the Balance Sheet as at 31stMarch 2014, the Statement of Profit and Loss for the year ended and a summary of significant accounting policies and other explanatory information.

2. Management''s Responsibility for the Financial Statements

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

3. Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical 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, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

4. Opinion

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

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

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

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

5. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, 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. Further to our comments in our opinion referred to above, we report that:

a. The Company had advanced application money towards purchase of shares of Rs. 216.69 lacs, which is outstanding for a period of 144 months as at the end of the year. In the absence of information regarding the status of the allotment or the net worth of the entities in which the Company made applications, we are unable to ascertain the extent to which an amount of Rs. 216.69 lacs is recoverable and accordingly, the effect thereof on the financial statements cannot be ascertained. Please refer Note No. 21 forming part of financial statements.

b. Long-term deposits to companies of Rs. 530.00 lacs are subject to confirmation and subsequent adjustments, if any. Please refer Note No 23 forming part of financial statements.

3. 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 and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account;

d. Except for our comments above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India

ANNEXURE TO THE AUDITOR''S REPORT (Referred to in paragraph 4 of our report of even date to the members of Khandwala Securities Limited on the financial statements for the period from April 1, 2013 to March 31, 2014)

1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. Discrepancies have been identified and adjusted/rectified in the records relating to fixed assets.

2. According to the information & explanations given to us and having regards to the size of the company and the nature of its business, in our opinion the frequency of physical verification of fixed assets need to be strengthened.

3. None of the fixed assets have been revalued during the year.

4. No substantial part of the fixed assets was disposed off during the year.

5. The Company is a service company primarily engaged in the business of rendering merchant banking services. Accordingly, it does not hold any physical inventories. Thus, paragraph 4(ii) of the Order is not applicable.

6. The company has not granted any loans, secured or unsecured during the period.

7. The rate of interest and the other terms and conditions are prima facie not prejudicial to the interest of the company

8. As the company has not taken any loans, secured or unsecured, from companies covered u/s 301 of the Companies Act 1956, during the period, the clause no. 4(iii)(b) and 4(iii)(c) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

9. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and with regards to sale of service. The activities of the Company do not involve any purchase of inventory and sale of goods. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system.

10. To the best of knowledge and belief, and according to the information and explanations given to us, we are of the opinion that transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

11. No transactions have been entered during the period in the register maintained in pursuance of section 301 of the Companies Act, 1956 and based on the audit procedures applied by us and according to the information and explanations given and the representations made to us, we have not come across any transaction that need to be entered into the register maintained in pursuance of section 301 of the Companies Act, 1956. Accordingly, sub-clause (b) is not applicable.

12. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits from the public to which the provisions of Section 58A or Section 58AA of the Companies Act, 1956 apply.

13. According to the information and explanations given to us, the Company has an internal audit system. In our opinion, the internal audit system is adequate with regards to the size of the company and the nature of its business.

14. According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for any of the activities ot the Company.

15. According to the information and explanations given tc us, during the period the company was generally regular in depositing with appropriate authority undisputed statutory dues, though there have been few cases of delays in payments of statutory liabilities.

16. According to the information and explanations given tc us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income-tax, Sales-tax, Service tax and other material statutory dues have not been deposited in time during the year.

17. According to the records of the company, the dues outstanding of Income Tax and cess on account of any dispute are as follows:

Name of the Nature Amount Period to which Statute of the (Rs.) the amount Dues relates

Income Tax Income 31.88 A.Y. 2006-07 Act 1961 Tax 7.80 A.Y. 2007-08 2.5 A.Y. 2008-09

19.49 A.Y. 2009-10

4.96 A.Y. 2007-08

58.89 A.Y. 2008-09

82.65 A.Y. 2009-10

Name of the Statue Forum where Under Dispute is Section pending

Income Tax Act 1961 CIT(A) 271(1)(C)

CIT(A) 271(1)(C)

CIT(A) 271(1)(C)

CIT(A) 271(1)(C)

ITAT 143(3)

ITAT 143(3)

ITAT 143(3)

18. TDS defaults showing on TDS traces website for the various Financial Years as on 31st March 2014 and Company is under process of rectifying the defaults by revising the TDS returns.

19. The Company has granted loans and advances on the basis of security by way of pledge of shares from Bank during the year.

20. According to the information and explanations given to us, no personal expenses have been charged to revenue account.

21. As at the balance sheet date, the Company does not have accumulated losses. The Company has incurred cash losses in the current year.

22. According to the information and explanations given to us, though the company has not defaulted in the repayment of dues to financial institutions and banks however amount of Rs. 1.20 Cr is pending towards preferential shareholder for preference dividend.

23. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a Nidhi / mutual benefit fund / society. Therefore the provisions of paragraph 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

24. In respect of the Company''s dealings or trading in shares, securities, debentures and other investments, proper records have been maintained on a timely basis in respect of the transactions and contracts during the period under report. According to the information and explanations given to us, shares and other securities held as investments are in the Company''s name, except in cases where the same are in the process of being transferred in its name.

25. According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks which are prima facie prejudicial to the interest of the company.

26. According to the information and explanations given to us, the Company had applied term loans availed for the purpose for which they were obtained.

27. In our opinion and according to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, prima facie, no funds raised on short-term basis have been applied for long-term investments and vice versa.

28. According to the information and explanations given to us, during the period under report, the Company has not made preferential allotments of equity shares to persons listed in the register maintained under Section 301 of the Companies Act, 1956.

29. As the company did not have any debentures outstanding during the year, the clause no. 4(xix) of Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

30. The Company has not made any public issue of shares or debentures during the period; accordingly, the question of disclosure of end use of proceeds of public issues does not arise.

31. The company is not a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986).

32. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the period, nor have we been informed of such case by the management.

For Udyen Jain and Associates

Chartered Accountants

Mr. Udyen Jain

Partner

Mem. No: F- 101201

Firm Reg. No. : 116336W

Place: Mumbai

Date : 30th May, 2014


Mar 31, 2012

1. We have audited the attached Balance Sheet of Khandwala Securities Limited as at March 31, 2012 and also the Profit and Loss Account and the Cash Flow Statement for the period from April 1, 2011 to March 31, 2012 annexed thereto (all together referred to as 'financial statements'). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. (i) The Company had advanced application money towards purchase of shares of Rs. 216.69 lacs, which is outstanding for a period more than 120 months as at the end of the year. In the absence of information regarding the status of the allotment or the net worth of the entities in which the Company made applications, we are unable to ascertain the extent to which an amount of Rs. 216.69 lacs is recoverable and accordingly, the effect thereof on the financial statements cannot be ascertained. The company has already initiated legal proceeding against the investee for the recovery of the share application money. Please refer note no. 20 of Notes forming part of financial statements.

(ii) Short-term deposits from companies of Rs 100.00 lacs as subject to confirmation and consequential adjustments, if any. Please refer note no. 21 of Notes forming part of financial statements.

(iii) Short-term deposits to companies of Rs. 530.00 lacs together with interest accrued thereon Rs. 135.80 lacs (included in loans and advances) are subject to confirmation and subsequent adjustments, if any. Please refer note no. 22 of Notes forming part of financial statements.

We are unable to assess the extent to which the amounts indicated in paragraphs (iii) are recoverable and the amount in paragraph (ii) is payable, and accordingly, the effect thereof on the financial statements cannot be ascertained.

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

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

a. Except for the matters stated in paragraph 3 above, 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;

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, profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the balance sheet, profit and loss account and the 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;

e. On the basis of written representations received by the Company from its directors, we report that as on March 31, 2012 none of the directors is disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. Except for our comments in paragraph 3 above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1. In the case of the balance sheet, of the state of affairs of the Company as at March 31, 2012;

2. In the case of the profit and loss account, of the Loss of the Company for the period ended on that date; and

3. In the case of the cash flow statement, of the cash flows of the Company for the period ended on that date.

(Referred to in paragraph 4 of our report of even date to the members of Khandwala Securities Limited on the financial statements for the period from April 1, 2011 to March 31, 2012)

1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. Discrepancies have been identified and adjusted/rectified in the records relating to fixed assets.

2. According to the information and explanations given to us and having regard to the size of the Company and the nature of its business, in our opinion the frequency of physical verification of fixed assets is reasonable

3. None of the fixed assets have been revalued during the year.

4. No substantial part of the fixed assets was disposed off during the year.

5. According to the information and explanations given to us, the management has conducted physical verification of inventory held in physical form during the period, as also at the balance sheet date. In respect of inventory held in dematerialized form, the holding as at the balance sheet date has been confirmed by the depositories. In our opinion, having regard to the nature of the inventories, the frequency of physical verification is reasonable.

6. In our opinion, and according to the information and explanations given to us, the procedures for 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.

7. In our opinion, and according to the information and explanations given to us, the Company has maintained proper records of inventory during the period. Discrepancies, if any noticed on physical verification of inventory as compared to book records maintained were not of a material nature and have been properly dealt with in the books of account.

8. The company has not granted any loans, secured or unsecured during the period.

9. The rate of interest and the other terms and conditions are prima facie not prejudicial to the interest of the company

10. As the company has not taken any loans, secured or unsecured, from companies covered u/s 301 of the Companies Act 1956, during the period, the clause no. 4(iii)(b) and 4(iii)(c) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

11. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

12. To the best of knowledge and belief, and according to the information and explanations given to us, we are of the opinion that transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

13. No transactions have been entered during the period in the register maintained in pursuance of section 301 of the Companies Act, 1956 and based on the audit procedures applied by us and according to the information and explanations given and the representations made to us, we have not come across any transaction that need to be entered into the register maintained in pursuance of section 301 of the Companies Act, 1956. Accordingly, sub-clause (b) is not applicable.

14. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits from the public to which the provisions of Section 58A or Section 58AA of the Companies Act, 1956 apply.

15. According to the information and explanations given to us, the Company has an internal audit system. In our opinion, the internal audit system is adequate with regards to the size of the company and the nature of its business.

16. According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for any of the activities of the Company.

17. According to the information and explanations given to us, during the period the Company was generally regular in depositing with appropriate authorities, undisputed statutory dues.

18. According to the information and explanations given to us, no personal expenses have been charged to revenue account.

19. As at the balance sheet date, the Company does not have accumulated losses. The Company has incurred cash losses in the current year.

20. According to the information and explanations given to us, the company has not defaulted in the repayment of dues to financial institutions and banks.

21. To the best of our knowledge, and according to the information and explanations given 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.

22. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of paragraph 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

23. In respect of the Company's dealings or trading in shares, securities, debentures and other investments, proper records have been maintained on a timely basis in respect of the transactions and contracts during the period under report. According to the information and explanations given to us, shares and other securities held as investments are in the Company's name, except in cases where the same are in the process of being transferred in its name.

24. According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks which are prima facie prejudicial to the interest of the company.

25. According to the information and explanations given to us, the Company had applied term loans availed for the purpose for which they were obtained.

26. In our opinion and according to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, prima facie, no funds raised on short-term basis have been applied for long-term investments and vice versa.

27. According to the information and explanations given to us, during the period under report, the Company has not made preferential allotments of equity shares to persons listed in the register maintained under Section 301 of the Companies Act, 1956.

28. As the company did not have any debentures outstanding during the year, the clause no. 4(xix) of Companies (Auditor's Report) Order, 2003 is not applicable to the company.

29. The Company has not made any public issue of shares or debentures during the period; accordingly, the question of disclosure of end use of proceeds of public issues does not arise.

30. The company is not a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986).

31. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the period, nor have we been informed of such case by the management.

For Udyen Jain & Associates

Chartered Accountants

Aniket Kulkarni

Partner

M.No:- A 127246

Firm Registration No. 116336W

Date: 09th August, 2012

Place: Mumbai


Mar 31, 2011

1. We have audited the attached Balance Sheet of Khandwala Securities Limited as at March 31, 2011 and also the Profit and Loss Account and the Cash Flow Statement for the period from April 1, 2010 to March 31, 2011 annexed thereto (all together referred to as 'financial statements'). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 amounts and disclosures in the financial statements.- An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. (i) The Company had advanced application money

towards purchase of shares of Rs. 216.69 lacs, which is outstanding for a period more than 108 months as at the end of the year. In the absence of information regarding the status of the allotment or the net worth of the entities in which the Company made applications, we are unable to ascertain the extent to which an amount of Rs. 216.69 lacs is recoverable and accordingly, the effect thereof on the financial statements cannot be ascertained. The company has already initiated legal proceeding against the investee for the recovery of the share application money. Please refer note 3 of Schedule Q to the financial statements.

(ii) Short-term deposits availed from companies, together with interest accrued thereon-aggregating Rs 197.90 lacs as of the balance sheet date, and are subject to confirmation and consequential adjustments, if any. Please refer note 4 of Schedule Q to the financial statements.

(iii) Loans/Deposits placed with companies, aggregating Rs. 530 lacs, and certain interest accrued aggregating Rs. 135.80 lacs as at the balance sheet dated 31st March 2011, are subject to confirmation and consequential adjustments, if any. No provision for interest receivable has been made from the deposits for the year. Please refer note 5 of Schedule Q to the financial statements.

We are unable to assess the extent to which the amounts indicated in paragraphs (iii) are recoverable and the amount in paragraph (ii) is payable, and accordingly, the effect thereof on the financial statements cannot be ascertained.

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

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

a. Except for the matters stated in paragraph 3 above, 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;

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, profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the balance sheet, profit and loss account and the 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;

e. On the basis of written representations received by the Company from its directors, we report that as on March 31, 2011 none of the directors is disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. Except for our comments in paragraph 3 above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1. In the case of the balance sheet, of the state of affairs of the Company as at March 31, 2011;

2. In the case of the profit and loss account, of the Loss of the Company for the period ended on that date; and

3. In the case of the cash flow statement, of the cash flows of the Company for the period ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT

(Referred to in paragraph 4 of our report of even date to the members of Khandwala Securities Limited on the financial statements for the period from April 1, 2010 to March 31, 2011)

1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. Discrepancies have been identified and adjusted/rectified in the records relating to fixed assets.

2. According to the information and explanations given to us and having regard to the size of the Company and the nature of its business, in our opinion the frequency of physical verification of fixed assets is reasonable

3. None of the fixed assets have been revalued during the year.

4. No substantial part of the fixed assets was disposed off during the year.

5. According to the information and explanations given to us, the management has conducted physical verification of inventory held in physical form during the period, as also at the balance sheet date. In respect of inventory held in dematerialized form, the holding as at the balance sheet date has been confirmed by the depositories. In our opinion, having regard to the nature of the inventories, trie frequency of physical verification is reasonable.

6. In our opinion, and according to the information and explanations given to us, the procedures for 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.

7. In our opinion, and according to the information and explanations given to us, the Company has maintained proper records of inventory during the period. Discrepancies, if any noticed on physical verification of inventory as compared to book records maintained were not of a material nature and have been properly dealt with in the books of account.

8. The company has not granted any loans, secured or unsecured during the period.

9. The rate of interest and the other terms and conditions are prima facie not prejudicial to the interest of the company

10. As the company has not taken any loans, secured or unsecured, from companies covered u/s 301 of the Companies Act 1956, during the period, the clause no. 4(iii)(b) and 4(iii)(c) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

11. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

12. To the best of knowledge and belief, and according to the information and explanations given to us, we are of the opinion that transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

13. No transactions have been entered during the period in the register maintained in pursuance of section 301 of the Companies Act, 1956 and based on the audit procedures applied by us and according to the information and explanations given and the representations made to us, we have not come across any transaction that need to be entered into the register maintained in pursuance of section 301 of the Companies Act, 1956. Accordingly, sub-clause (b) is not applicable.

14. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits from the public to which the provisions of Section 58A or Section 58AA of the Companies Act, 1956 apply.

15. According to the information and explanations given to us, the Company has an internal audit system. In our opinion, the internal audit system is adequate with regards to the size of the company and the nature of its business.

16. According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for any of the activities of the Company.

17. According to the information and explanations given to us, during the period the Company was generally regular in depositing with appropriate authorities, undisputed statutory dues.

18. According to the information and explanations given to us, no personal expenses have been charged to revenue account.

19. As at the balance sheet date, the Company does not have accumulated losses. The Company has incurred cash losses in the current year.

20. According to the information and explanations given to us, the company has not defaulted in the repayment of dues to financial institutions and banks.

21. To the best of our knowledge, and according to the information and explanations given 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.

22. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of paragraph 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

23. In respect of the Company's dealings or trading in shares, securities, debentures and other investments, proper records have been maintained on a timely basis in respect of the transactions and contracts during the period under report. Acccrding to the information and explanations given to us, shares and other securities held as investments are in the Company's name, except in cases where the same are in the process of being transferred in its name.

24. According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks which are prima facie prejudicial to the interest of the company.

25. According to the information and explanations given to us, the Company had applied term loans availed for the purpose for which they were obtained.

26. In our opinion and according to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, prima facie, no funds raised on short-term basis have been applied for long-term investments and vice versa.

27. According to the information and explanations given to us, during the period under report, the Company has not made preferential allotments of equity shares to persons listed in the register maintained under Section 301 of the Companies Act, 1956.

28. As the company did not have any debentures outstanding during the year, the clause no. 4(xix) of Companies (Auditor's Report) Order, 2003 is not applicable to the company.

29. The Company has not made any public issue of shares or debentures during the period; accordingly, the question of disclosure of end use of proceeds of public issues does not arise.

30. The company is not a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985(1 of 1986).

31. During the course of our examination of the books and . records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the period, nor have we been informed of such case by the management.



For Udyen Jain & Associates Chartered Accountants

Aniket Kulkarni Partner M.No:-A 127246 Firm Registration No. 116336W

Date : 27th May 2011 Place: Mumbai


Mar 31, 2010

1. We have audited the attached Balance Sheet of Khandwala Securities Limited as at March 31, 2010 and also the profit and Loss Account and the Cash Flow Statement for the period from April 1, 2009 to March 31, 2010 annexed thereto (all together referred to as financial statements). These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and signifcant 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. (i) The Company had advanced application money towards purchase of shares of Rs. 216.69 lacs, which is outstanding for a period more than 96 months as at the end of the year. In the absence of information regarding the status of the allotment or the net worth of the entities in which the Company made applications, we are unable to ascertain the extent to which an amount of Rs. 216.69 lacs is recoverable and accordingly, the effect thereof on the financial statements cannot be ascertained. The company has already initiated legal proceeding against the investee for the recovery of the share application money. Please refer note 3 of Schedule Q to the financial statements.

(ii) Short-term deposits availed from companies, together with interest accrued thereon-aggregating Rs 250.45 lacs as of the balance sheet date, and are subject to confrmation and consequential adjustments, if any. Please refer note 4 of Schedule Q to the financial statements.

(iii) Loans/Deposits placed with companies, aggregating Rs. 530 lacs, and certain interest accrued aggregating Rs. 135.80 lacs as at the balance sheet dated 31st March 2010, are subject to confrmation and consequential adjustments, if any. No provision for interest receivable has been made from the deposits for the year. Please refer note 5 of Schedule Q to the financial statements.

We are unable to assess the extent to which the amounts indicated in paragraphs (iii) are recoverable and the amount in paragraph (ii) is payable, and accordingly, the effect thereof on the financial statements cannot be ascertained.

4. 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 specifed in paragraphs 4 and 5 of the said Order.

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

a. Except for the matters stated in paragraph 3 above, 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;

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, profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the balance sheet, profit and loss account and the 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;

e. On the basis of written representations received by the Company from its directors, we report that as on March 31, 2010 none of the directors is disqualifed from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. Except for our comments in paragraph 3 above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1. In the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010;

2. In the case of the profit and loss account, of the Loss of the Company for the period ended on that date; and

3. In the case of the cash fow statement, of the cash fows of the Company for the period ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 4 of our report of even date to the members of Khandwala Securities Limited on the financial statements for the period from April 1, 2009 to March 31, 2010)

1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. Discrepancies have been identifed and adjusted/rectifed in the records relating to fixed assets.

2. According to the information and explanations given to us and having regard to the size of the Company and the nature of its business, in our opinion the frequency of physical verifcation of fixed assets is reasonable

3. None of the fixed assets have been revalued during the year.

4. No substantial part of the fixed assets was disposed off during the year.

5. According to the information and explanations given to us, the management has conducted physical verifcation of inventory held in physical form during the period, as also at the balance sheet date. In respect of inventory held in dematerialized form, the holding as at the balance sheet date has been confrmed by the depositories. In our opinion, having regard to the nature of the inventories, the frequency of physical verifcation is reasonable.

6. In our opinion, and according to the information and explanations given to us, the procedures for physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

7. In our opinion, and according to the information and explanations given to us, the Company has maintained proper records of inventory during the period. Discrepancies, if any noticed on physical verifcation of inventory as compared to book records maintained were not of a material nature and have been properly dealt with in the books of account.

8. The company has not granted any loans, secured or unsecured during the period.

9. The rate of interest and the other terms and conditions are prima facie not prejudicial to the interest of the company

10. As the company has not taken any loans, secured or unsecured, from companies covered u/s 301 of the Companies Act 1956, during the period, the clause no. 4(iii)(b) and 4(iii)(c) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

11. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

12. To the best of knowledge and belief, and according to the information and explanations given to us, we are of the opinion that transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

13. No transactions have been entered during the period in the register maintained in pursuance of section 301 of the Companies Act, 1956 and based on the audit procedures applied by us and according to the information and explanations given and the representations made to us, we have not come across any transaction that need to be entered into the register maintained in pursuance of section 301 of the Companies Act, 1956. Accordingly, sub-clause (b) is not applicable.

14. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits from the public to which the provisions of Section 58A or Section 58AA of the Companies Act, 1956 apply.

15. According to the information and explanations given to us, the Company has an internal audit system. In our opinion, the internal audit system is adequate with regards to the size of the company and the nature of its business.

16. According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for any of the activities of the Company.

17. According to the information and explanations given to us, during the period the Company was generally regular in depositing with appropriate authorities, undisputed statutory dues.

18. According to the information and explanations given to us, no personal expenses have been charged to revenue account.

19. As at the balance sheet date, the Company does not have accumulated losses. The Company has incurred cash losses in the current year.

20. According to the information and explanations given to us, the company has not defaulted in the repayment of dues to financial institutions and banks.

21. To the best of our knowledge, and according to the information and explanations given 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.

22. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of paragraph 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

23. In respect of the Companys dealings or trading in shares, securities, debentures and other investments, proper records have been maintained on a timely basis in respect of the transactions and contracts during the period under report. According to the information and explanations given to us, shares and other securities held as investments are in the Companys name, except in cases where the same are in the process of being transferred in its name.

24. According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks which are prima facie prejudicial to the interest of the company.

25. According to the information and explanations given to us, the Company had applied term loans availed for the purpose for which they were obtained.

26. In our opinion and according to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, prima facie, no funds raised on short-term basis have been applied for long-term investments and vice versa.

27. According to the information and explanations given to us, during the period under report, the Company has not made preferential allotments of equity shares to persons listed in the register maintained under Section 301 of the Companies Act, 1956.

28. As the company did not have any debentures outstanding during the year, the clause no. 4(xix) of Companies (Auditors Report) Order, 2003 is not applicable to the company.

29. The Company has not made any public issue of shares or debentures during the period; accordingly, the question of disclosure of end use of proceeds of public issues does not arise.

30. The company is not a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986).

31. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the period, nor have we been informed of such case by the management.



For Udyen Jain & Associates Chartered Accountants

Aniket Kulkarni Partner M.No:- A 127246 Date: 09th August 2010 Place: Mumbai

 
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