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Auditor Report of Lloyd Electric and Engineering Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of LLOYD ELECTRIC & ENGINEERING LIMITED ("the Company") which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss Account and the Cash Flow Statement for the year ended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matter stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation & presentation 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 provisions 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 control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

Auditors' Responsibility

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

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

An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk 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 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 the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 on the financial statements.

Opinion

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

Report on Other Legal and Regulatory Requirements

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

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

a) We have sought and 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 it appears from our examination of those books.

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

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

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

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

i) The financial statements have disclosed the impact of pending litigations on the financial positions of the Company as referred in Note 29.

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

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

REFERRED TO IN PARAGRAPH 1 UNDER 'REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS' SECTION OF OUR REPORT OF EVEN DATE OF LLOYD ELECTRIC & ENGINEERING LIMITED FOR THE YEAR ENDED 31ST MARCH, 2015

1. a) The company has maintained proper records showing full particulars including quantitative details and situation of the Fixed Assets.

b) Fixed Assets have been physically verified by the management during the year.

In our opinion the frequency of such verification is reasonable having regard to the size of the Company and the nature of its fixed assets. No material discrepancies were noticed on such physical verification.

2. a) The inventory has been physically verified during the year by the management at reasonable intervals

b) The procedures of the physical verification of the inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of the Business.

c) The Company is maintaining proper records of the inventory. The discrepancies noticed on physical stocks and the book records were not material.

3. a) The Company has taken loans from wholly owned subsidiary Lloyd Coils Europe of Euro 3 Million (equivalent to INR 21.10 crores).

b) In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, the borrowers have been regular in the payment of the interest as stipulated. The terms of arrangements do not stipulate any repayment schedule in the loans are repayable on demand. Accordingly, paragraph 4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount.

c) There are no overdue amounts of more than rupees one lakh in respect of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weakness in the internal controls system.

5. According to the information and explanations given to us, the Company has not accepted any deposit, in terms of the directive issued by the Reserve Bank of India and the provisions of the Section 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under.

6. We have broadly reviewed the cost records maintained by the Company prescribed by the Central Government under Section 148(1) of the Companies Act, 2013and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. a) According to the records of the Company, the Company is regular in depositing undisputed Statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Excise, valued added tax cess and any other statutory dues with the appropriate authorities, however there is some delay in depositing Govt. dues due to financial difficulties. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Service Tax, Excise Duty and Cess were outstanding, at the financial reporting period ending on 31st March 2015 for a period of more than six months from the date they became payable.

b) As on 31st March, 2015 according to the records of the Company the following are the particulars of disputed dues on account of Excise duty, HP State Electricity Board and Sales Tax and have not been deposited.

Particulars Financial Year Amount Dispute (Rs.in Lacs) Pending

Excise Duty 2006-2007 21.75 Appellate Tribunal

HP State Electricity Board 2009-2010 10.55 Supreme Court

Sales Tax Authority 2009-2010 83.88 High Court

Further, the company, has received show cause notices from custom department post the balance sheet date. The total demand under show cause notices received is Rs. 46.23 crore.

c) According to the information and explanations given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provision of the Companies Act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time.

8. The company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by our audit and the immediate preceding financial year.

9. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues of financial institutions, banks and debenture holders.

10. In our opinion and according to the information and explanation given to us, the terms & conditions of the guarantees given by the Company for loan taken by the subsidiary Companies from bank are prima facie not prejudicial to the interest of the company.

11. In our opinion and according to the information and explanation given to us, the term loans have been applied for the purposes for which they were obtained.

12. As per information and explanation given to us no fraud on or by the Company has been noticed or reported during the course of our Audit.

for SURESH C. MATHUR & CO.

Chartered Accountants,

(Firm Registration No. 000891N)

Place : New Delhi (BRIJESH C. MATHUR)

Dated: 28.05.2015 PARTNER

Membership No.-083540




Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of LIOYD ELECTRIC & ENGINEERING LIMITED (''''the Company'''') which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss Account and the Cash Flow Statement for the year then ended which are revised statements of the original statements of Balance Sheet , the statement of Profit and Loss Account and the cash Flow Statement covered by the audit report of Lloyd Electric & Engineering Limited dated 30th May 2013 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 and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) 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 misstatements, whether due to fraud or error.

The Board of Directors of the Company has reopened and revised the aforesaid Accounts to give effect of operation of Heat Exchanger undertaking of Perfect Radiators & Oil Coolers Pvt. Ltd., which has been demerged and transferred to Lloyd Electric & Engineering Limited as per orders of Hon''ble High Courts of Delhi and Rajasthan dated 8th April 2013 and 31st May 2013 respectively and become effective from 11th June 2013 on filling of the same with the Registrar of Companies , with appointed date as 1st April 2011.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the finanacial statements.

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

Emphasis on the matter

We have considered the earlier auditor''s report dated 30th May 2013 on the original accounts for the yearn ended 31st March, 2013 and have examined the changes made as under :

We draw attention to Note no. 32 to the financial statement and report that the financial statements have been reopened and revised by the Company''s Management pursuant to the orders of the Hon''ble High Courts of Delhi and Rajasthan dated 8th April, 2013 and 31st May, 2013 respectively, approving the Scheme of arrangement which became effective on 11th June 2013 upon filing the said orders with the Registrar of Companies. Pursuant to the order, the Heat exchanger undertaking of Perfect Radiators & Oil Coolers Pvt. Ltd. (PROC) stands demerged and transferred to Lloyd Electric & Engineering Limited (LEEL) with appointed date as 1st April 2011.

Opinion

In our opinion and to the best of the information and according to the explanations given to us, the said account read with Note No. 32 to notes to accounts in the aforesaid financial statements give the information required by the Act in the manner so required and give true and fair view in conformity with the accounting principles generally accepted in India.

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2013.

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

(iii) In the case of the Cash Flow Statement, of the cash flows of the Company 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 in terms of Section 227(4A) 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 it appears from our examination of those books.

c) The Balance Sheet, the statement of Profit & 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, the statement of Profit & Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

e) On the basis of written representations received from the directors as on 31st March, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act.

REFERRED TO IN PARAGRAPH 1 UNDER ''REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS'' SECTION OF OUR REPORT OF EVEN DATE OF LLOYD ELECTRIC & ENGINEERING LIMITED FOR THE YEAR ENDED 31ST MARCH, 2013

1. a) The Company has maintained proper records showing full particulars including quantitative details and situation of the Fixed Assets.

b) Fixed Assets have been physically verified by the management during the year.

In our opinion the frequency of such verification is reasonable having regard to the size of the Company and the nature of its fixed assets. No material discrepancies were noticed on such physical verification.

c) The fixed assets disposed off during the year were not substantial. According to the information and explanation given to us, we are of the opinion that the disposal of the fixed assets has not affect the going concern status of the Company.

2. a) The inventory has been physically verified during the year by the management at reasonable intervals.

b) The procedures of the physical verification of the inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of the Business.

c) The Company is maintaining proper records of the inventory. The discrepancies noticed on physical stocks and the book records were not material.

3. The Company has neither granted nor taken any loans secured or unsecured to/from Companies, Firms and other parties covered in the register maintained u/s 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weakness in the internal controls system.

5. In respect of Contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of the knowledge and belief and according to the information and explanation given to us:

a) The particulars of Contracts or arrangements referred to in Section 301 of the Companies act, 1956 that need to be entered in the Register maintained under the said Section have been so entered.

b) Where each of such transaction is in excess of Rupees five lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market price at the relevant time.

6. The Company has not accepted any deposits from the public therefore the provision of Section 58A and 58AA of the Companies Act, 1956 are not applicable to the Company.

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

8. We have broadly reviewed the cost records maintained by the Company and are of opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. According to the records of the Company and Information and explanations given to us, the Company has been regular in depositing undisputed statutory dues including provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities during the year. This disputed matter pending before authority is as under:as under:

Particulars Financial Year Amount Dispute (Rs. in Lacs) Pending

Excise Duty 2006-2007 21.75 Appellate Tribunal

Sales Tax 1994-1995 4.76 Rajasthan Tax Board

Income Tax (Penalty) 2006-2007 46.06 CIT (Appeals), N.Delhi

10. The Company does not have accumulated Losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by our audit and the immediate preceding financial year.

11. The Company has not defaulted in repayment of dues of financial institution / bank and debenture holders.

12. In our opinion and according to the information and explanations given to us the Company has not granted loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund/nidhi/mutual benefit fund. Therefore the provision of the clause 4(xiii) of the Companies (Auditors report) Order, 2003 (as amended) are not applicable to the Company.

14. In our opinion the Company is not dealing or trading in shares/securities, debentures and other investments. Accordingly the provision of the clause 4(xiv) of the Companies (Auditors report) Order, 2003 (as amended) are not applicable to the Company.

15. In our opinion and according to the information and explanation given to us, the terms & conditions of the guarantees given by the Company for loan taken by others from banks and financial institutions are prima facie not prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanation given to us, the term loans have been applied for the purposes for which they were obtained.

17. According to the information and explanation given to us, and, on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.

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

19. The Company has not issued any Debentures during the year.

20. During the year the Company has not raised any money by way of public issue.

21. As per information and explanation given to us no fraud on or by the Company has been noticed or reported during the course of our Audit.

for SURESH C. MATHUR & CO.

Chartered Accountants,

(Firm Registration No. 000891N)

PLACE : NEW DELHI (BRIJESH C. MATHUR)

DATED : 29thAugust, 2013 PARTNER

Membership No.-083540

 
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