Auditor Report of KIFS Financial Services Ltd.

Mar 31, 2018

Report on the financial statements

We have audited the accompanying financial statements of KIFS Financial Services Limited (“the company”), which comprise the balance sheet as at March 31, 2018, the statement of profit and loss, the cash flow statement, and a summary of the 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 stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone 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 maintenance of adequate accounting records in accordance with the preparation of the act for safeguarding 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.

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 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 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.

Opinion

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

a) in the case of the balance sheet of the state of affairs of the company’s at March 31, 2018;

b) in the case of the profit and loss, of the profit for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flow for the year ended on that date.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the order”), as issued by central government of India in terms of sub section (11) of section 143 of Companies Act, 2013 we give in the Annexure - 1 a statement on the matters specified in paragraph 3 and 4 of the order.

2. 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 account;

(d) in our opinion, the aforesaid financial statements comply with the accounting standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014;

(e) on the basis of the written representations received from the directors as on March 31, 2018 taken on record by the board of directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of section 164(2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in Annexure - 2; and

(g) 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 derivative contracts for which there were any material foreseeable losses; and

iii. there were no amounts which were required to be transferred to the investor education and protection fund by the company.

1. (a) The company is maintaining proper records showing full particulars, including full particulars, including quantitative details and situation of fixed assets;

(b) The company has regular programs of physical verification of its fixed assets by which fixed assets are verified in a phase manner over a period of the year. in accordance with this verification, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. in our opinion, this periodicity of physical verification is reasonable having regard to the size of the company and the nature of its assets;

(c) As the company has no immovable property as fixed assets, information required under this para is not applicable.

2. The company is a non-banking finance company. Accordingly, it does not hold any physical inventories. thus, paragraph 3(ii) of the order is not applicable to the company.

3. (a) According to the information and explanation given to us, the company has granted loans, secured or unsecured to companies, firms, limited liability partnerships or other related parties covered in the register maintained u/s 189 of the Companies Act, the closing balance due from the above parties as at March 31, 2018 is Rs.201.42 lacs and the maximum amount involved during the year was Rs. 201.42 lacs. However, the terms & conditions for grant of such loans are not prejudicial to the company’s interest.

(b) In respect of loans granted to companies covered in the register maintained under section 189 of the Companies Act, 2013. The principal amounts, are repayable on demand and there is no repayment schedule.

(c) In respect of aforesaid loan specified in para 3(a) above, there are no overdue amount.

4. In our opinion and according to the information and explanations given to us, the provisions of section 185 and 186 of the Act, has been complied with considering the exemptions given to NBFC companies.

5. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the meaning of section 73 to 76 of the Companies Act, 2013 and rules framed thereunder.

6. We have been informed by the management, no cost audit records have been prescribed under section 148(1) of the Companies Act, 2013 in respect of financial services provided by the company.

7. According to the information and explanations given to 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 income tax, service tax and other material statutory dues have been generally regularly deposited during the year by the company with the appropriate authorities. However, in case of delays in few instances the same has been deposited along with interest due thereon.

According to the information and explanations given to us, no undisputed amount payable in respect of income tax, wealth tax, value added tax, service tax and other statutory dues applicable to the company were in arrears as on March 31, 2018 for a period of more than six months from the date become payable.

8. Based on our verification and according to the information and explanations given by the management, the company has not defaulted in repayment of loans or borrowings to a financial institution, bank, government or dues to debenture holders.

9. The company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, para 3(ix) of the order is not applicable.

10. According to the information and explanations given to us, no material fraud by the company or on the company by its officers or employees has been noticed or reported during the course of our audit.

11. According to the information and explanations given to us and based on our examination of the records of the company, the company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule v of the Act.

12. In our opinion and according to information and explanations given to us, the company is not a nidhi company. Accordingly, para 3(xii) of the order is not applicable.

13. According to the information and explanations given to us and based on our examination of records of the company, transactions with related parties are in compliance with section 177 and 188 of the Act, wherever applicable, and details of such transactions have been disclosed in the financial statements as required by applicable accounting standards.

14. According to the information and explanations given to us and based on our examination of records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, the provisions of clause 3(xiv) of the order are not applicable to the company.

15. According to the information and explanations given to us and based on our examination of records of the company, the company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, para 3(xv) is not applicable.

16. The company being an NBFC, is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. The company is registered as a non-banking financial company (“NBFC”) with the Reserve Bank of India (“RBI”) and has got classified as a non-banking financial company with effect from February 18, 1998.

Report on the internal financial controls under clause (i) of sub section 3 of section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of KIFS Financial Services Limited (“the company”) as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the company for the year ended on that date.

Management''s responsibility for internal financial controls

The company’s management is responsible for establishing and maintaining internal financial controls based on the guidance note on audit of internal financial controls over financial reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' responsibility

Our responsibility is to express an opinion on the company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the guidance note on audit of internal financial controls over financial reporting (the “guidance note”) and the standards on auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial control, both applicable to an audit of internal financial control and, both issued by the Institute of Chartered Accountants of India. Those standards and the guidance note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understating of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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 of error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the company’s internal financial controls system over financial reporting.

Meaning of internal financial controls over financial reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that;

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statement.

Inherent limitations of internal financial controls over financial reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatement due to error or fraud may occur and not be detected. Also, projections of any evaluation of internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on;

i. existing policies and procedures adopted by the company for ensuring orderly and efficient conduct of business;

ii. continuous adherence to company’s policies;

iii. existing procedures in relation to safeguarding of company’s fixed assets, investments, inventories, receivables, loans and advances made and cash and bank balances;

iv. existing system to prevent and detect fraud and errors;

v. accuracy and completeness of company’s accounting records; and

vi. existing capacity to prepare timely and reliable financial information.

For Bimal Shah Associates,

Chartered accountants

FRN: 101505W

Bimal A. Shah

(Proprietor)

Membership no.: 042372

Ahmedabad, May 22, 2018

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Mar 31, 2016

Independent Auditor''s Report

To the Members of

KIFS Financial Services Limited,

Report on the Financial Statements

We have audited the accompanying financial statements of KIFS Financial Services Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss, the Cash Flow Statement, and a summary of the 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 stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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 maintenance of adequate accounting records in accordance with the preparation of the Act for safeguarding 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.

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 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 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.

Opinion

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

a) In the case of the Balance Sheet of the state of affairs of the Company''s at March 31, 2016;

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

c) In the case of the Cash Flow Statement, of the cash flow for the year ended on that date. Report on other Legal and Regulatory Requirements

1 As required by the Companies (Auditor''s Report) Order, 2016 ("the Order"), as issued by the Central Government of India in terms of Sub section (11) of Section 143 of Companies Act, 2013, we give in the form of "Annexure -1", a statement on the matters specified in paragraph 3 and 4 of the said order.

2 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 March 31, 2016 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2016 from being appointed as a Director in terms of Section 164(2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure-2"; and

(g) 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 derivative contracts for which there were any material foreseeable losses; and

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

1. (a) The Company is maintaining proper records showing full particulars, including full particulars, including quantitative details and situation of fixed assets;

(b) The Company has regular programs of physical verification of its fixed assets by which fixed assets are verified in a phase manner over a period of the year. In accordance with this verification, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets; and

(c) As the Company has no immovable property as Fixed Assets, information required under this para is not applicable.

2. The Company is a Non Banking Financial Company. Accordingly, it does not hold any physical inventories. Thus, paragraph 3(ii) of the Order is not applicable to the Company.

3. (a) According to the information and explanation given to us, the Company has granted loans, secured or unsecured to companies, firms, limited liability partnerships or other related parties covered in the register maintained u/s 189 of the Companies Act, 2013 the closing balance due from the above parties as at March 31, 2016 is Rs. 976.30 Lacs and the maximum amount involved during the year was Rs. 1,733.65 Lacs. However, the terms & conditions for grant of such loans are not prejudicial to the Company''s interest.

(b) In respect of loans granted to Companies covered in the register maintained under Section 189 of the Companies Act, 2013, the Principal amounts, are repayable on demand and there is no repayment schedule.

(c) In respect of aforesaid loan specified in para 3(a) above, there are no overdue amount.

4. In our opinion and according to the information and explanations given to us, the provisions of section 185 and 186 of the Act, has been complied with considering the exemptions given to NBFC Companies.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 and rules framed there under.

6. We have been informed by the management, no cost audit records have been prescribed under Section 148(1) of the Companies Act, 2013 in respect of financial services provided by the Company.

7. According to the information and explanations given to 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 Income Tax, Service Tax and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. However, in case of delays in few instances the same has been deposited along with interest due thereon.

According to the information and explanations given to us, no undisputed amount payable in respect of Income Tax, Wealth Tax, Value added Tax, Service Tax and other statutory dues applicable to the Company were in arrears as on March 31, 2016 for a period of more than six months from the date become payable.

8. Based on our verification and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowings to a Financial Institution, Bank, Government or dues to debenture holders.

9. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, para 3(ix) of the Order is not applicable.

10. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

11. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V of the Companies Act, 2013.

12. In our opinion and according to information and explanations given to us, the Company is not a Nidhi Company. Accordingly, para 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on our examination of records of the Company, transactions with related parties are in compliance with section 177 and 188 of the Act, wherever applicable, and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14. According to the information and explanations given to us and based on our examination of records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the financial year. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us and based on our examination of records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, para 3(xv) is not applicable.

16. The Company being a NBFC, is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. The Company is registered as a Non-Banking Financial Company ("NBFC") with the Reserve Bank of India ("RBI") and has got classified as a Non Banking Financial Company with effect from February 18, 1998.

Report on the Internal Financial Controls under Clause (i) of Sub section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of KIFS Financial Services Limited ("the Company") as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial control, both applicable to an audit of Internal Financial Control and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understating of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement, if any, of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company''s internal financial control over financial reporting includes those policies and procedures that;

I. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

II. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and

III. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatement due to error or fraud may occur and not be detected. Also, projections of any evaluation of internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on;

i. existing policies and procedures adopted by the Company for ensuring orderly and efficient conduct of business;

ii. continuous adherence to Company''s policies;

iii. existing procedures in relation to safeguarding of Company''s fixed assets, investments, inventories, receivables, loans and advances made and cash and bank balances;

iv. existing system to prevent and detect fraud and errors;

v. accuracy and completeness of Company''s accounting records; and

vi. existing capacity to prepare timely and reliable financial information.

For M/s. Shailesh Parikh & Co.,

Chartered Accountants

FRN: 109858W

Shailesh C. Parikh

(Proprietor)

Membership No.: 039254

Ahmedabad,

May 24, 2016

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Mar 31, 2015

We have audited the accompanying financial statements of KIFS FINANCIAL SERVICES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement, and a summary of the 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 stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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 maintenance of adequate accounting records in accordance with the preparation of the Act for safeguarding 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.

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 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 assess 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 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 qualified audit opinion on the financial statements.

OPINION

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

a) In the case of the Balance Sheet of the state of affairs of the company's at March 31,2015;

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

i) As required by the Companies (Auditor's Report) Order,2015 ("the order"), as issued by Central Government of India in terms of sub section (11) of section 143 of Companies Act, 2013 we give in the Annexure a statement on the matters specified in paragraph 3 and 4 of the order.

ii) 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 account.

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

(e) On the basis of 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

(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 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 AUDITORS' REPORT

The Annexure referred to in our Independent Auditors' Report to the members of the KIFS FINANICIAL SERVICES LIMITED on the financial statements for the year ended 31 March 2015, We report that:

1. a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As explained to us, a substantial portion of the Fix Assets has been physically verified by the management during the year and no material discrepancies have been noticed on such verification.

2. The Company is Non Banking Finance Company and it does not hold any physical inventories. Hence the question of physical verification and proper maintenance of inventory records does not arise.

3.

a) According to the information and explanation given to us the Company has granted loans, Secured or unsecured to Four companies/firms or other parties listed in the register maintained under section 189 of the Companies Act, 2013, the closing balance due from the above parties as at 31st March, 2015 is Rs. 9,54,69,550/- and the maximum amount involved during year was Rs. 12,37,34,748/-.

b) In respect of loans granted to Companies covered in the register maintained under section 189 of the Companies Act, 2013. The Principal amounts, are repayable on demand and there is no repayment schedule.

c) In respect of aforesaid loan specified in para 3(a) above, the same are repayable on demand and therefore the question of overdue amount does not arise.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to disbursement and recovery of loans under micro finance program and for purchase of fixed assets. We have not observed any major weakness in the internal control system during the course of the audit.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits during the year and consequently directives issued by Reserve Bank of India and Provisions of section 73 to 76 or any other relevant provision of the Companies Act and rules framed there under are not applicable to the company.

6. The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services rendered by the Company.

7.

a) According to the information and explanations given to 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 income tax, service tax, and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. However, in case of delays in few instances the same has been deposited along with interest due thereon.

According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, service tax, and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no material dues of Income tax & Service Tax which have not been deposited with the appropriate authorities on account of any dispute.

c) According to the information and explanations given to us there are no amounts payable to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under.

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

9. In our opinion and according to the information and the explanations given to us, the Company has not defaulted in repayment of dues to financial institution/banks during the year.

10. In our opinion and according to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions which are prejudicial to the interest of the company.

11. To the best of our knowledge and belief and according to the information and explanation given to us, in our opinion, the cash credit & other facilities obtained during the year were, applied by the Company for the purpose for which they were obtained.

12. During the course of our examination of the books and records of the company, carried out in accordance with the auditing standards generally accepted in India, we have neither come across any instance of fraud on or by the company , noticed or reported during the year, nor have we been informed of such case by the management.

13. For NBFC (Not accepting public deposits)

a. The company is registered u/s 45 IA of the RBI Act, 1934 and obtained certificate.

b. The Board of Directors has passed a resolutions for the non-acceptance of any public deposit.

c. During the year Company has not accepted any public deposit.

d. The Company has complied with the prudential norms relating to Income Recognition, Accounting Standards, Assets classification and Provisioning for Bad & Doubtful debts as applicable to it.

Place: Ahmedabad For, Shailesh C. Parikh & Co Date : 28/05/2015 Chartered Accountants FRN :109858W

(Shailesh C. Parikh) Proprietor Mem No. 039254

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Mar 31, 2014

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

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2014 dated 14th September, 2014 of the Ministry of Corporate Affairs in respect of Section 143 of the Companies Act, 2014 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR''S RESPONSIBILITY

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

OPINION

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

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2014 dated 14th September, 2014 of the Ministry of Corporate Affairs in respect of Section 143 of the Companies Act, 2014.

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

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of KIFS Financial Services Ltd. on the accounts of the company for the year ended 31st March, 2014.

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

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

b) As explained to us, the assets have been physically verified by the management during the year; no material discrepancies were noticed on such verification.

c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year and therefore does not affect the going concern assumption.

02 a) There are no inventories, so question of its physical verification does not arise.

b) This clause is not applicable to the company.

c) This clause is not applicable to the company.

03 a) The company has taken loans from Companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. There were four such parties and maximum amount involved during the year was Rs. 3976.27 Lacs and year-end balance is Rs. Nil. The company has given loans to the three parties covered in the register maintained under section 301 of the Companies Act, 1956. The Maximum amount involved during the year was Rs. 4377.43 Lacs and year-end balance of said loan was Rs. 307.83 Lacs.

b) The rate of interest and other terms and conditions of loans taken/given by the company are prima facie not prejudicial to the interest of the company.

c) The loans granted are re-payable on demand. The payment of interest has been regular on such loans. The Company is regular in repaying the principal amounts, wherever stipulated and has been regular in the payment of interest.

d) There are no overdue amounts to the parties covered in the register maintained under section 301 of the Act.

04 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 for the purchase of fixed assets and for sale of goods and services. During the course of audit, we have neither come across nor have been informed of any continuing failure to correct major weakness in the internal control procedures.

05 a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance to section 301 of the Companies Act, 1956 have been so entered in the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us, these transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956 and exceeding the value of Rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

06 In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit within the meaning of the provisions of section 58A and 58AA of the companies Act, 1956 and the rules made there under.

07 In our opinion and as per the information and explanations given to us there is reasonable internal control procedure commensurate with the size and nature of its business.

08 The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub section (1)of section 209 of the Act for any of the activities of the Company.

09 a) According to the records of the Company, undisputed statutory dues including Income-Tax and other statutory dues applicable to it have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st March, 2014 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us there is no amounts payable in respect of Income Tax, Wealth Tax and Sales Tax which have not been deposited on account of any disputes.

10 The Company has no accumulated losses as at 31st March, 2014 and has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institution or bankas at the balance sheet date.

12 The company has granted loans and advances on the basis of security of shares, debentures and other securities given by the borrowers and adequate documents and records are maintained for the same.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14 In our opinion, the Company has maintained proper records pertaining to its shares & securities trading transactions and contracts and timely entries have been made therein.

15 As per the information and explanations given to us the provident fund scheme is not applicable so the question of reporting on deduction and payment thereof does not arise.

16 According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institution.

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

18 The company has not made any preferential allotment of shares to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19 The company has not issued any debenture, so question of creation of security for the same does not arise.

20 The company has not raised any money by public issues during the year.

21 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 fraud on or by the company has been noticed or reported during the year, nor have we been informed of such case by the management.

22 For NBFC (Not accepting public deposits)

a. The company is registered u/s45 IA of the RBI Act, 1934 and obtained certificate.

b. The Board of Directors has passed a resolutions for the non - acceptance of any public deposit.

c. During the year company has not accepted any public deposit.

d. The company has complied with the prudential norms relating to Income Recognition, Accounting Standards, Assets classification and Provisioning for Bad & Doubtful debts as applicable to it.



For, Shailesh C. Parikh & Co. Chartered Accountants (Registration No: 109858W)

Sd/- Shailesh Parikh Proprietor Mem. No.: 039254

Place: Ahmedabad Date: 27/05/2014

---

Mar 31, 2013

We have audited the accompanying financial statements of KIFS Financial Services Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

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

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 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.

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

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

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

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

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

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe purpose of our audit;

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received form the directors as on March 31,2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of KIFS Financial Services Ltd. on the accounts of the company for the year ended 31st March, 2013.

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

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

b) As explained to us, the assets have been physically verified by the management during the year; no material discrepancies were noticed on such verification.

c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year and therefore does not affect the going concern assumption.

02 a) There are no inventories, so question of its physical verification does not arise.

b) This clause is not applicable to the company.

c) This clause is not applicable to the company.

03 a) The company has taken loans form Companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. There were two such parties and maximum amount involved during the year was Rs. 487.84 Lacs and year-end balance is Rs. Nil. The company has given loans to the two parties covered in the register maintained under section 301 of the Compan ies Act, 1956. The Maximum amount duringthe year was Rs. 1644.49/- Lacs and year end balance of said loan was Rs. 738.73 lacs.

b) The rate fo interest and other terms and conditions of loans taken/given by the company are prima facie not prejudicial to the interest of the company.

c) The loans granted are re-payable on demand. The payment of interest has been regular on such loans. The Company is regular in repaying the principal amounts, wherever stipulated and has been regular in the payment of interest.

d) There are no overdue amounts to the parties covered in the register maintained under section 301 of the Act.

04 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 for the purchase of fixed assets and for sale of goods and services. During the course of audit, we have neither come across nor have been informed of any continuing failure to correct major weakness in the internal control procedures.

05 a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance to section 301 of the Companies Act, 1956 have been so entered in the register required to be maintained underthat section.

b) In our opinion and according to the information and explanations given to us, these transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956 and exceeding the value of Rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard tothe prevailing market prices atthe relevanttime.

06 In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit within the meaning of the provisions of section 58A and 58AA of the companies Act, 1956 and the rules made there under.

07 In our opinion and as per the information and explanations given to us there is reasonable internal control procedure commensurate with the size and nature of its business.

08 The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub section 209 of the Act for any of the activities of the Company.

09 a) According to the records of the Company, undisputed statutory dues including Income- Tax and other statutory dues applicable to it have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st March, 2013 for a period of more than six months form the date they became payable.

b) According to the information and explanations given to us there are no amounts payable in respect of Income Tax, Wealth Tax and Sales Tax which have not been deposited on account of any disputes.

10 The Company has no accumulated losses as at 31st March, 2013 and has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institution or bank as atthe balance sheet date.

12 The company has granted loans and advances on the basis of security of shares, debentures and other securities given by the borrowers and adequate documents and records are maintained forthe same.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14 In our opinion, the Company has maintained proper records pertaining to its shares & securities trading transactions and contracts and timely entries have been made therein.

15 As per the information and explanations given to us the provident fund scheme is not applicable so the question of reportingon deduction and payment thereof does not arise.

16 According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others formbanksorfinancial institution.

17 Based on the information and explanations given to us and on an overall examination of the

Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short- term basis have been used for long-term investment by the Company.

18 The Company has made preferential allotment of 4000000 shares to the holding company covered in the register maintained under section 301 of the Companies Act, 1956. As per the overall examination of relevant papers produced before us for verification, the price at which such shares have been allotted is not prejudicial to the interest of the company.

19 The company has not issued any debenture, so question of creation of security for the same does not arise.

20 The company has not raised any money by public issues during the year.

21 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 fraud on or by the company has been noticed or reported during the year, nor have we been informed of such case by the management.

22 For NBFC (Not accepting public deposits)

a. The company is registered u/s 45IA of the RBI Act, 1934 and obtained certificate.

b. The Board of Directors has passed a resolution for the non - acceptance of any Public deposit.

c. During the year company has not accepted any public deposit.

d. The company has complied with the prudential norms relating to income Recognition, Accounting Standards, Assets classification and Provisioning for Bad & Doubtful debts as applicable to it.

For, Shailesh C. Parikh & Co.

Chartered Accountants

(Registration No: 109858W)

Sd/-

Shailesh C. Parikh

Place: Ahmedabad (Proprietor)

Date : 24/05/2013 Membership Number: 039254

---

Mar 31, 2012

We have audited the attached Balance Sheet of KIFS Financial Services Ltd ("the Company") as at 31Sl March, 2012, the statement of Profit and Loss and Cash Flow Statement for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

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

(i) We have obtained all the information and explanation, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of accounts as required by law have been kept by the company so far it appears from our examination of those books

(iii) 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 account of the Company;

(iv) In our opinion, the Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this report comply with the accounting standard referred to in section 211 (3C) of the Companies Act, 1956 to the extent applicable.

(v) On the basis of written representation received from directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors are disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956,

(vi) In our opinion and to the best of our information and according to the explanations given to us the said accounts read 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 :

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2012 and,

(b) in the case of the Statement of Profit and Loss, of the Profit of the Company for the year ended on that date and

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

ANNEXURE TO THE AUDITOR''S REPORT (Referred to in paragraph 3 of ojur report of even date)

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

b) The assets have been physically verified by the management during the year. According to the information and explanations given to us, no discrepancy was noticed on such physical verification as compared to the book records.

c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

02 a) There are no inventories, so question of its physical verification does not arise.

b) This clause is not applicable to the company.

c) This clause is not applicable to the company.

03 a) The company has taken loans from Companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. There were three such parties and maximum amount involved during the year was Rs. is Rs. 3509.50 Lacs and year-end balance is Rs. Nil. The company has given loans to the one party covered in the register maintained under section 301 of the Companies Act, 1956. The Maximum amount involved and year-end balance of said loan was Rs. 754.49 Lacs.

b) The rate of interest and other terms and conditions of loans taken/given by the company are prima facie not prejudicial to the interest of the company.

c) The loans granted are re-payable on demand. The payment of interest has been regular on such loans. The Company is regular in repaying the principal amounts, wherever stipulated and has been regular in the payment of interest.

d) There are no overdue amounts to the parties covered in the register maintained under section 301 of the Act.

04 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 for the purchase of fixed assets and for sale of goods and services. Further on the basis of our examination of the 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 major weakness in the aforesaid internal control procedures.

05 a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance to section 301 of the Companies Act, 1961 have been so entered.

b) In our opinion and according to the information and explanations given to us, these transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956 and exceeding the value of Rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit within the meaning of the provisions of section 58A and 58AA of the companies Act, 1956 and the rules made there under.

07 In our opinion and as per the information and explanations given to us there is reasonable internal control procedure commensurate with the size and nature of its business.

08 The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub section (1) of section 209 of the Act for any of the activities of the Company.

09. a) According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Income-Tax and other statutory dues applicable to it with the appropriate authorities. The provisions of provident fund are not applicable to the Company.

b) According to the information and explanations given to us and the records of the Company examined by us we are of the opinion that there are no disputed dues of Income-Tax, Wealth-Tax, Custom Duty, Excise Duty and cess as at 31st March, 2012 which have not been deposited on account of such a dispute.

10. The Company has no accumulated losses as at 31st March, 2012 and has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date.

12. The company has granted loans and advances on the basis of security of shares, debentures and other securities given by the borrowers and adequate documents and records are maintained for the same.

13. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company has maintained proper records pertaining to its shares & securities trading transactions and contracts and timely entries have been made therein. The Company has held its investments in shares and securities in its own name.

15. As per the information and explanations given to us the provident fund scheme is not applicable so the question of reporting on deduction and payment thereof does not arise.

16. According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institution.

17. The company has taken unsecured loans and has applied it for the purpose for which it was taken. The company has taken over draft on its fixed deposit.

18. Based on information and explanations given to us and on an overall examination of Balance Sheet of the company, in our opinion, funds raised on a short-term basis have not been used for long-term investments.

19. 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.

20. The company has not issued any debenture, so question of creation of security for the same does not arise.

21. The company has not raised any money by public issues during the year.

22. 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 fraud on or by the company has been noticed or reported during the year, nor have we been informed of such case by the management.

23. For NBFC (Not accepting public deposits)

a. The company is registered u/s 45 IA of the RBI Act, 1934 and obtained certificate.

b. The Board of Directors has passed a resolutions for the non - acceptance of any public deposit.

c. During the year company has not accepted any public deposit

d. The company has complied with the prudential norms relating to Income Recognition, Accounting Standards, Assets classification and Provisioning for Bad & Doubtful debts as applicable to it.

For, Shailesh C. Parikh & Co.

Chartered Accountants

(Registration No. 109858W)

Place: Ahmadabad (Shailesh Parikh)

Date : 23-05-2012 Proprietor

Mem No. 039254

---

Mar 31, 2011

We have audited the attached Balance Sheet of KIFS Financial Services Ltd as at 31st March, 2011 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto.

These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (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.

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

(i) We have obtained all the information and explanation, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of accounts as required by law have been kept by the company so far it appears from our examination of those books

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow dealt with by this report are in agreement with the books of account of the company;

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow dealt with by this report comply with the accounting standard referred to in section 211(3C) of the Companies Act, 1956 to the extent applicable.

(v) On the basis of written representation received from directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors are disqualified from being appointed as a director in terms of clause (g) of sub-section (I) of section 274 of the Companies Act, 1956,

(vi) In our opinion and to the best of our information and according to the explanations given to us the said accounts read 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 :

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2011 and,

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

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

Annexure referred to in paragraph 3 of our Auditor''s Report of even date on the accounts of KIFS Financial Services Ltd. for the year ended on 31st March, 2011

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

b) The assets have been physically verified by the management during the year. According to the information and explanations given to us, no discrepancy was noticed on such physical verification as compared to the book records.

c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

02 a) There are no inventories, so question of its physical verification does not arise,

b) This clause is not applicable to the company.

c) This clause is not applicable to the company.

03 a) The company has taken loans from Companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. There is only one such party and maximum amount involved is Rs. 150,00,000/- and yearend balance is Rs Nil The company has given loans to the one party covered in the register maintained under section 301 of the Companies Act, 1956. The Maximum amount involved is Rs. 400,00,000/-.

b) The rate of interest and other terms and conditions of loans taken/given by the company are prima facie not prejudicial to the interest of the company,

c) The loans granted are re-payable on demand. The payment of interest has been regular on such loans.

d) There are no overdue amounts to the parties covered in the register maintained under section 301 of the Act.

04 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 for the purchase of inventory, fixed assets and for sale of eoods. Further on the basis of our examination of the 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 major weakness m the aforesaid internal control procedures.

05 a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance to section 301 of the Companies Act, 1961 have been so entered.

b) In our opinion and according to the information and explanations given to us, these transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956 and exceeding the value of Rupees five lacs in respect of any party during the year have been made at prices which art! reasonable having regard to the prevailing market prices at the relevant time.

06, In our opinion and according to the information and explanations given to us, the company has not accepted any deposit within the meaning of the provisions of section 58A and 58 A A of the companies Act, 1956 and the rules made there under.

07 In our opinion and as per the information and explanations given to us there is reasonable internal control procedure commensurate with the size and nature of its business.

08 In our opinion this company being finance company, the maintenance of cost records have been not prescribed by the Central Government under clause (d) of sub section (1) of section 209 of the Act.

09. a) According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Income-Tax, Sales-Tax and other statutory dues applicable to it with the appropriate authorities. The provisions of provident fund are not applicable to the Company.

b) According to the information and explanations given to us and the records of the Company examined by us we are of the opinion that there are no disputed dues of Income-Tax, Sales- Tax, Wealth-Tax, Custom Duty, Excise Duty and cess as at 31st March, 2011 which have not been deposited on account of such a dispute.

10. The Company has no accumulated losses as at 31st March, 2011 and has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given by the management, the Company has not taken any loans from financial institutions and banks so question of default in its repayment does not arise. However, the company has used over draft facility against their fixed deposits.

12. The company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and adequate documents and records are maintained for the same.

For, Shailesh C. Parikh & Co.

Charted Accountants

(Registration No. 109858W)

Place : Ahmadabad (Shailesh Parikh)

Date : 18-06-2011 Proprietor

Mem. No. 039254

---

Mar 31, 2010

We have audited the attached Balance Sheet of KIFS Financial Services Ltd (formerly known as Khandwala Capital Services Ltd.) as at 31st March, 2010 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto.

These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (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.

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

(i) Wc have obtained all the information and explanation, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our- opinion, proper books of accounts as required by law have been kept by the company so far in appears from our examination of those books

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow dealt with by this report are in agreement with the books of account of the company;

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow dealt with by this report comply with the accounting standard referred to in section 2ll(3C) of the Companies Act, 1956 !o the extent applicable.

(v) On the basis of written representation received from directors, as on 31st March, 2010 and taken on record by the Board of Directors, we report that 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,

(vi) In our opinion and to the best of our information and according to the explanations given to us the said accounts read 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 :

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 3lsl March, 2010 and,

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

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

Annexure referred to in paragraph 3 of our Auditor''s Report of even date on the accounts of KIFS Financial Services Ltd. (Formerly known as Khandwala Capital Services Ltd.), for the year ended on 31st March, 2010

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

b) The assets have been physically verified by the management during the year. According to the information and explanations given to us, no discrepancy was noticed on such physical verification as compared to the book records.

c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

02 a) There are no inventories, so question of its physical verification does not arise.

b) This clause is not applicable to the company.

c) This clause is not applicable to the company.

03 a) The company has taken loans from Companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. There is only one such party and maximum amount involved is Rs. 32,00,000/- and yearend balance is Rs. Nil. The company has given loans to the two parties covered in the register maintained under section 301 of the Companies Act, 1956. The Maximum amount involved is Rs. 28000000/- and Rs. 6800000/- respectively.

b) The rate of interest and other terms and conditions of loans taken by the company are prima facie not prejudicial to the interest of the company.

c) The loans granted are re-payable on demand. The payment of interest has been regular on such loans.

d) There are no overdue amounts to the parties covered in the register maintained under section 301 of the Act. _

04 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 for the purchase of inventory, fixed assets and for sale of goods. Further on the basis of our examination of the 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 major weakness in the aforesaid internal control procedures.

05 a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance to section 301 of the Companies Act, 1961 have been so entered.

b) In our opinion and according to the information and explanations given to us, these transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956 and exceeding the value of Rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

06. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit within the meaning of the provisions of section 58A and 58AA of the companies Act, 1956 and the rules made there under.

07 In our opinion and as per the information and explanations given to us there is reasonable internal control procedure commensurate with the size and nature of its business.

08 In our opinion this company being finance company, the maintenance of cost records have been not prescribed by the Central Government under clause (d) of sub section (1) of section 209 of the Act.

09. a) According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Income-Tax, Sales-fax and other statutory dues applicable to it with the appropriate authorities. The provisions of provident fund are not applicable to the Company.

b) According to the information and explanations given to us and the records of the Company examined by us we are of the opinion that there are no disputed dues of Income-Tax, Sales- Tax, Wealth-Tax, Custom Duty, Excise Duty and cess as at 31st March, 2010 which have not been deposited on account of such a dispute.

10. The Company has no accumulated losses as at 31st March, 2010 and has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given by the management, the Company has not taken any loans from financial institutions and banks so question of default in its repayment does not arise. However, the company has used over draft facility against their fixed deposits.

12. The company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and adequate documents and records are maintained for the same.

13. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/ '' societies are not applicable to the Company. .

14. In our opinion, the Company has maintained proper records pertaining to its share trading transactions and contracts and timely entries have been made therein. The Company has held its investments in shares and securities in its own name.

15. As per the information and explanations given to us the provident fund scheme is not applicable so the question of reporting on deduction and payment thereof does not arise.

16. The company has regularly deposited statutory dues with appropriate authorities during the year wherever applicable.

17. According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institution.

18. The company has taken unsecured loans and has applied it for the purpose for which it was taken. Company has taken over draft on its fixed deposit.

19. Based on information and explanations given to us and on an overall examination of Balance Sheet of the company, in our opinion, funds raised on a long-term basis have not been used for short-term investments.

20. 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.

21. The company has not issued any debenture, so question of creation of security for the same does not arise.

22. The company has not raised any money by public issues during the year.

23. 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 fraud on or by the company has been noticed or reported during the year, nor have we been informed of such case by the management.

24. For NBFC (Not accepting public deposits)

a. The company is registered u/s 45 IA of the RBI Act, 1934 and obtained certificate.

b. The Board of Directors has passed a resolutions for the non - acceptance of any public deposit.

c. During the year company has not accepted any public deposit

d. The company has complied with the prudential norms relating. to Income Recognition, Accounting Standards, Assets classification and Provisioning for Bad & Doubtful debts as applicable to it. ''

For, Shailesh C. Parikh & Co.

Chartered Accountants

(Registration No. 109858W)

Placc : Ahmedabad (Shailesh Parikh)

Date : 18-05-2010 Proprietor

Mem No. 039254