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Auditor Report of Lok Housing & Constructions Ltd.

Mar 31, 2014

1. We have audited the accompanying financial statements of LOK HOUSING AND CONSTRUCTIONS 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.

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

Auditors'' Responsibility

3. 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.

4. 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.

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

Opinion

6. 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, subject to the Company having not made provision for additional consideration / compensation claimed by Mr. Suresh Thanawala and others, a secured creditor for land development rights as the same being disputed and under negotiation, the amount there of being unascertainable, give a true and fair view;

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

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

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

Report on Other Legal and Regulatory Requirements

7. 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.

8. 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 referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with The General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 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 7 of the Our Report of even date to the members of LOK HOUSING AND CONSTRUCTIONS LIMITED 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:

la. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

lb. As per the information and explanations given to us physical verification of fixed assets has been carried out at regular intervals and we have been informed that no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and nature of its fixed assets.

lc. During the year, the Company has not disposed of any substantial / major part of fixed assets.

2a. As per the information furnished, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

2b. In our opinion and according to the information and explanations given to us the procedure for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of business.

2c. The Company is maintaining proper records of inventory. In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3a. As per the information furnished, the Company has outstanding unsecured advances given aggregating to Rs. 0.65 lacs (previous year Rs. 6.49 lacs) to 1 party (previous year 3 party) listed in the register maintained under Section 301 of the Companies Act, 1956, the terms of which are prima facie not prejudicial to the interest of the Company.

3b. As per the information furnished, the Company has not taken loans (previous year nil) from any party ( previous year no party) listed in the register maintained under Section 301 of the Companies Act, 1956, the terms of which are prima facie not prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control procedures.

5a. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been so entered.

5b. In our opinion and according to the information and explanations given to us, there are no transactions exceeding the value of Rs. five lacs each which have been made at prices which are unreasonable having regard to prevailing market prices at the relevant time.

6. In our opinion, the Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules made there under. Hence, the Clause (vi) of the order is not applicable.

7. The Company has an adequate internal audit system commensurate with the size of the Company and the nature of its business. However the same need to be strengthened.

8. As informed to us, the maintenance of cost records has been prescribed by the Central Government under section 209(l)(d) of the Companies Act,1956, in respect of the activities carried on by the Company. On our verification and as per information and explanation given to us such accounts and records have been made and maintained.

9a. According to the information and explanations given to us and the records examined by us, the Company is generally depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, customs duty, excise-duty, cess and other statutory dues wherever applicable. Undisputed arrears of statutory dues outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable are as under:

Nature of Period Undisputed Tax dues Amount (Rs. in lacs)

Income tax F.Y. 2010-11 23.12

Income tax F.Y. 2011-12 38.94

Income tax F.Y. 2007-08 0.96 (Lok Enterprises)

Income tax F.Y. 2010-11 96.73 (Lok Enterprises)

Income tax F.Y. 2011-12 0.45 (Lok Enterprises)

Service Tax F.Y. 2010-11 37.05

Service Tax F.Y. 2011-12 32.35

Service Tax F.Y. 2012-13 6.14

9b. According to the records of the Company, dues of sales tax, income-tax, customs, wealth-tax, excise duty, cess (excluding interest) which have not been deposited on account of disputes and the forum where the dispute is pending are as under:

Nature of dues Period Forum Disputed Tax Amount (Rs. in lacs)

Income tax F.Y. 2004-05 ITAT, 10.44 Mumbai

Income tax F.Y. 2008-09 CIT(A) 1045.41

Income tax F.Y. 2008-09 ITAT, 26.46 Mumbai

Income tax F.Y. 2009-10 CIT(A) 1662.34

Income tax F.Y. 2010-11 CIT(A) 100.45

Please refer to note no. 15.5 of notes to accounts, regarding non provision of interest u/ s 220 of the Income Tax Act, 1961.

10. There are no accumulated losses of the Company as on 31st March, 2014. The Company has not incurred any cash loss during the financial year covered by our audit but has incurred cash loss of Rs.1868.55 lacs in the immediately preceding financial year.

11. During the year, repayment of dues to financial institutions and banks are partly made and as per the Company''s records the amount due in this respect is as under:

Sr. Name of Insti- Amount of due Over due No. tution/Bank o/s on 31-03-2014 since (Rs. in lacs)

1. State Bank of 1656.27 31-03-2014 India

12. Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/ or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, provisions of any special statute applicable to chit fund /nidhi / mutual benefit fund/ society are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us, the Company is not a dealer or trader in shares securities, debentures and other investments.

15. In our opinion and according to the information and explanation given to us, the Company has not given any guarantees for loans taken by others from banks or Financial Institutions.

16. In our opinion and according to the information and explanation given to us, on an overall basis, the term loans have been applied for the purpose of which they are obtained.

17. According to the information and explanations given to us and on the basis of an overall examination of the Balance sheet of the Company, in our opinion no funds raised on short-term basis have been used for long-term investment. Similarly no long-term funds have been used to finance short-term assets except permanent working capital.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanations given to us, during the year, the Company has not issued any debentures.

20. According to the information and explanations given to us, during the year the Company has not raised any money by way of public issues.

21. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For Bhupendra Shroff & Co. Chartered Accountants Firm No.: 101458W

B. N. Shroff Partner Membership No.: 5039

Place : Mumbai, Date : May 29th, 2014


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of LOK HOUSING AND CONSTRUCTIONS 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’s Responsibility for the Financial Statements.

2. 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.

Auditors’ Responsibility

3. 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.

4. 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.

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

Opinion

6. 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'' of the loss 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

7. 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.

8. 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 referred to in subsection (3C) of section 211 of the Companies Act'' 1956;

e) on the basis of written representations received from 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 7 of the Our Report of even date to the members of LOK HOUSING AND CONSTRUCTIONS LIMITED 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 during the course of our audit'' we report that :

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

1b. As per the information and explanations given to us physical verification of fixed assets has been carried out at regular intervals and we have been informed that no material discrepancies were noticed on such verification. In our opinion'' the frequency of verification is reasonable'' having regard to the size of the Company and nature of its fixed assets.

1c. During the year'' the Company has not disposed of any substantial / major part of fixed assets.

2a. As per the information furnished'' the inventories have been physically verified during the year by the management. In our opinion'' having regard to the nature and location of stocks'' the frequency of the physical verification is reasonable.

2b. In our opinion and according to the information and explanations given to us the procedure for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of business.

2c. The Company is maintaining proper records of inventory. In our opinion'' discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3a. As per the information furnished'' the Company has outstanding unsecured advances given aggregating to Rs. 6.49 lacs (previous year Rs. 4.72 lacs) to 3 party (previous year 1 party ) listed in the register maintained under Section 301 of the Companies Act'' 1956'' the terms of which are prima facie not prejudicial to the interest of the Company.

3b. As per the information furnished'' the Company has not taken loans (previous year nil) from any party ( previous year no party) listed in the register maintained under Section 301 of the Companies Act'' 1956'' the terms of which are prima facie not prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanations given to us'' there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. During the course of our audit'' no major weakness has been noticed in the internal control procedures.

5a. Based on the audit procedures applied by us and according to the information and explanations provided by the management'' we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been so entered.

5b. In our opinion and according to the information and explanations given to us'' there are no transactions exceeding the value of Rs. five lacs each which have been made at prices which are unreasonable having regard to prevailing market prices at the relevant time.

6. In our opinion'' the Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A and 58AA of the Companies Act'' 1956 and rules made there under. Hence'' the Clause (vi) of the order is not applicable.

7. The Company has an adequate internal audit system commensurate with the size of the Company and the nature of its business. However the same need to be strengthened.

8. As informed to us'' the maintenance of cost records has been prescribed by the Central Government under section 209(l)(d) of the Companies Act'' 1956'' in respect of the activities carried on by the Company. On our verification and as per information and explanation given to us such accounts and records have been made and maintained.

9a. According to the information and explanations given to us and the records examined by us'' the Company

is generally depositing with appropriate authorities undisputed statutory dues including provident fund'' investor education and protection fund'' employees’ state insurance'' income-tax'' sales-tax'' wealth-tax'' customs duty'' excise-duty'' cess and other statutory dues wherever applicable. Undisputed arrears of statutory dues outstanding as at 31st March'' 2013 for a period of more than six months from the date they became payable are as under:

Nature of Period Undisputed Tax dues Amount (Rs. in lacs)

Income tax F.Y. 2008-09 15.59

Income tax F.Y. 2010-11 20.82

Income tax F.Y. 2011-12 35.07

9b. According to the records of the Company'' dues of sales tax'' income-tax'' customs'' wealth-tax'' excise duty'' cess (excluding interest) which have not been deposited on account of disputes and the forum where the dispute is pending are as under:

Nature of dues Period Forum Disputed Tax Amount (Rs. in lacs)

Income tax F.Y. 2004-05 CIT(A) 11.59

Income tax F.Y. 2006-07 CIT(A) 3.21

Income tax F.Y. 2006-07 CIT(A) 282.00

Income tax F.Y. 2007-08 CIT(A) 198.00

Income tax F.Y. 2008-09 CIT(A) 1''045.41

Income tax F.Y. 2008-09 ITAT 26.46

Income tax F.Y. 2009-10 CIT(A) 1''662.34

Please refer to note no. 15.5 of notes to accounts'' regarding non provision of interest u/s 220 of the Income Tax Act'' 1961.

10. There are no accumulated losses of the Company as on 31st March'' 2013. The Company has incurred cash loss during the financial year covered by our audit but not in the immediately preceding financial year.

11. During the year'' repayment of dues to financial institutions and banks are partly made and as per the Company’s records the amount due in this respect is as under:

Sr. Name of Amount of due Over due No. Institution/ o/s on 31-03-2013 since Bank (Rs. in lacs'')

1. State Bank of 833.00 31-03-2013 india

12. Based on our examination of the records and the information and explanations given to us'' the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares'' debentures and other securities.

13. In our opinion'' provisions of any special statute applicable to chit fund /nidhi / mutual benefit fund/ society are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us'' the Company is not a dealer or trader in shares securities'' debentures and other investments.

15. In our opinion and according to the information and explanation given to us'' the Company has not given any guarantees for loans taken by others from banks or Financial Institutions.

16. In our opinion and according to the information and explanation given to us'' on an overall basis'' the term loans have been applied for the purpose of which they are obtained.

17. According to the information and explanations given to us and on the basis of an overall examination of the Balance sheet of the Company'' in our opinion no funds raised on short-term basis have been used for long-term investment. Similarly no long-term funds have been used to finance short-term assets except permanent working capital.

18. According to the information and explanations given to us'' the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanations given to us'' during the year'' the Company has not issued any debentures.

20. According to the information and explanations given to us'' during the year the Company has not raised any money by way of public issues.

21. According to the information and explanations given to us'' no material fraud on or by the Company has been noticed or reported during the year. For Bhupendra Shroff & Co.

Chartered Accountants

Firm No.: 101458W B.N.Shroff

Partner

Membership No.: 5039

Mumbai'' July 23'' 2013


Mar 31, 2012

We have audited the Balance Sheet of LOK HOUSING AND CONSTRUCTIONS LIMITED as at 31st March, 2012 and the Statement of Profit & Loss of the Company for the year ended on that date annexed there to. 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 have conducted our audit in accordance with the auditing standards generally accepted in India. These 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 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.

We report that:

1. As required by the Companies (Auditor's Report) Order, 2003 issued by the Company Law Board in terms of section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraph 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above, we state 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 Books of the Company;

c. The Balance Sheet and the Statement of Profit & Loss and Cash Flow statement referred to in this report are in agreement with the Books of Account.

d. In our opinion the Balance Sheet, the Statement of Profit & Loss and Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in section 211(3C) of the Companies Act, 1956;

e. On the basis of the confirmations received from the directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors of the Company are disqualified from being appointed as directors of the company under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. In our opinion and to the best of our knowledge and according to the information and explanation given to us the said Balance Sheet, the Statement of Profit & Loss and Cash Flow Statement read together with the notes there on attached thereto give the information required by the Companies Act, 1956 in the manner so required and, Subject to provision for interest and other charges payable uponfinal settlement particularly with State Bank Of India, which is in advance stage of negotiation, the amount thereof being unascertainable.(See Notes 5.2.1, 5.3.1 and 5.3.2 to Accounts.) give a true and fair view, in conformity with the accounting principles generally accepted in India:

i. In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2012;

ii. In the case of the the Statement of Profit & 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 for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph (1) of our Report of even date)

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

1b. As per the information and explanations given to us physical verification of fixed assets has been carried out at regular intervals and we have been informed that no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and nature of its fixed assets.

1c. During the year, the Company has not disposed of any substantial / major part of fixed assets.

2a. As per the information furnished, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

2b. In our opinion and according to the information and explanations given to us the procedure for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of business.

2c. The Company is maintaining proper records of inventory. In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3a. As per the information furnished, the Company has outstanding unsecured advances given aggregating to Rs. 4.72 lacs (previous year Rs. 365.76 lacs) to 1 party (previous year 1 party ) listed in the register maintained under Section 301 of the Companies Act, 1956, the terms of which are prima facie prejudicial to the interest of the Company.

3b. As per the information furnished, the Company has no loans taken (previous year nil) from any party (previous year no party) listed in the register maintained under Section 301 of the Companies Act, 1956, the terms of which are prima facia not prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control procedures.

5a. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been so entered.

5b. In our opinion and according to the information and explanations given to us, there are no transactions exceeding the value of Rs. five lacs each which have been made at prices which are unreasonable having regard to prevailing market prices at the relevant time.

6. In our opinion, the Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules made there under. Hence, the Clause (vi) of the order is not applicable.

7. The Company has an adequate internal audit system commensurate with the size of the Company and the nature of its business. However the same need to be strengthened.

8. As informed to us, the maintenance of cost records has been prescribed by the Central Government under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company. On our verification and as per information and explanation given to us such accounts and records have been made and maintained.

9a. According to the information and explanations given to us and the records examined by us, the Company is generally depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, customs duty, excise-duty, cess and other statutory dues wherever applicable. Undisputed arrears of statutory dues outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable are as under:

Nature of dues Period Undisputed Tax Amount (Rs. in Lacs)

Income tax F.Y 2008-09 20.59

Income tax F.Y. 2010-11 20.82

Mvat Sales Tax F.Y. 2010-11 0.47

Service Tax F.Y. 2010-11 1.42

9b. According to the records of the Company, dues of sales tax, income-tax, customs, wealth-tax, excise duty, cess (excluding interest) which have not been deposited on account of disputes and the forum where the dispute is pending are as under:

Nature of Period Forum Disputed dues Tax Amount (Rs. in lacs)

Income tax F.Y 2005-06 CIT(A) 11.59

Income tax F.Y 2006-07 ITAT 7,568.88

Income tax F.Y 2006-07 A.O. 282.00

Income tax F.Y. 2007-08 CIT (A) 5,936.15

Income tax F.Y 2007-08 A.O. 198.00

Income tax F.Y. 2008-09 CIT(A) 1,045.41

Income tax F.Y 2008-09 ITAT 26.46

Please refer to note no. 15.5 of notes to accounts, regarding non provision of interest u/s 220 of the Income Tax Act, 1961.

10. There are no accumulated losses of the Company as on 31st March, 2012. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. The Company has defaulted in repayment of dues to financial institutions, banks and debenture holders, and as per the Company's records the amount outstanding in this respect are as under:

Sr Name of Amount of due Over due No Institution/ o/s on 31-03-2012 since Bank (Rs. in lacs)

1. State Bank of 4,961.59 14-12-2007 India

For the above purpose we have relied on figures as reflected in the books of account of the Company. The figures as claimed by the Banks / Financial Institutions are not available to us as the same are being disputed.

12. Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, provisions of any special statute applicable to chit fund /nidhi / mutual benefit fund/ society are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us, the Company is not a dealer or trader in shares securities, debentures and other investments.

15. In our opinion and according to the information and explanation given to us, the Company has not given any guarantees for loans taken by others from banks or Financial Institutions.

16. In our opinion and according to the information and explanation given to us, on an overall basis, the term loans have been applied for the purpose of which they are obtained.

17. According to the information and explanations given to us and on the basis of an overall examination the balance sheet of the Company, in our opinion no funds raised on short-term basis have been used for long-term investment. Similarly no long-term funds have been used to finance short-term assets except permanent working capital.

18. According to the information and explanations given to us, during the year the Company has converted 22,00,000 optionally convertible share warrants into equity shares at Rs. 40/- per warrant (including a premium of Rs. 30/-) on preferential basis to parties and companies covered in the register maintained under section 301 of the Act.

19. According to the information and explanations given to us, during the year, the Company has not issued any debentures.

20. According to the information and explanations given to us, during the year the Company has not raised any money by way of public issues.

21. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

FOR BHUPENDRA SHROFF & CO.,

Chartered Accountants

Firm No. 101458W

B. N. SHROFF

Partner

Mumbai, Membership No. 5039

Date : 7th August, 2012


Mar 31, 2010

We have audited the Balance Sheet of LOK HOUSING AND CONSTRUCTIONS LIMITED as at 31st March, 2010 and the Profit & Loss Account of the Company for the year ended on that date annexed there to. These financial Statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the auditing standards generally accepted in India. These 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 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.

We report that:

1. As required by the Companies (Auditors Report) Order, 2003 issued by the Company Law Board in terms of section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraph 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above, we state 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 Books of the Company;

c. The Balance Sheet and Profit & Loss Account and Cash Flow statement referred to in this report are in agreement with the Books of Account.

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

e. On the basis of the confirmations received from the directors, as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the directors of the Company are disqualified from being appointed as directors of the company under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. In our opinion and to the best of our knowledge and according to the information and explanation given to us the said Balance Sheet, Profit & Loss Account and Cash Flow Statement read together with the notes there on attached thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India:

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

ii. In the case of the Profit & Loss Account 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 for the year ended on that date..

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph (1) of our Report of even date)

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

lb. As per the information and explanations given to us physical verification of fixed assets has been carried out at regular intervals and we have been informed that no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and nature of its fixed assets.

lc. During the year, the Company has not disposed of any substantial / major part of fixed assets.

2a. As per the information furnished, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

2b. In our opinion and according to the information and explanations given to us the procedure for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of business.

2c. The Company is maintaining proper records of inventory. In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3a. As per the information furnished, the Company has outstanding unsecured advances given aggregating to Rs.16,89.91 lacs (previous year Rs.14,60.84 lacs) to 5 parties (previous year 5 parties) listed in the register maintained under Section 301 of the Companies Act, 1956, the terms of which are prima facie prejudicial to the interest of the Company.

3b. As per the information furnished, the Company has no loans taken (previous year Rs.562.50 lacs) from any party (previous year 1 party) listed in the register maintained under Section 301 of the Companies Act, 1956, the terms of which are prima facie not prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control procedures.

5a. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been so entered.

5b. In our opinion and according to the information and explanations given to us, there are no transactions exceeding the value of Rs. five lacs each which have been made at prices which are unreasonable having regard to prevailing market prices at the relevant time.

6. In our opinion, the Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules made there under. Hence, the Clause (vi) of the order is not applicable.

7. The Company has an adequate internal audit system commensurate with the size of the Company and the nature of its business. However the same need to be strengthened.

8. We are informed that in case of the Company the Central Government has not prescribed maintenance of cost record as required under section 209(1) (d) of the Companies Act,1956.

9a. According to the information and explanations given to us and the records examined by us, the Company is generally depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, customs duty, excise-duty, cess and other statutory dues wherever applicable. Undisputed arrears of statutory dues outstanding as at 31 st March, 2010 for a period of more than six months from the date they became payable are as under:

Nature of Period Undispured Tax Amount

dues (excluding interest for delay)

(Rs. in lacs)

Income tax FY. 2007-08 15.95

Income tax F.Y. 2008-09 44.41

9b. According to the records of the Company, dues of sales tax, income-tax, customs, wealth-tax, excise duty, cess (excluding interest) which have not been deposited on account of disputes and the forum where the dispute is pending are as under:

Nature of Period Forum Disputed dues Tax Amount (Rs. in hies)

Income tax F.Y. 2002-03 CIT (A) 11.26

Income tax F.Y. 2006-07 CIT(A) 75,68.88

Income tax F.Y 2006-07 ITAT 2,82.00

Income tax F.Y. 2007-08 Assessing 1,31.11 Officer

Income tax F.Y 2007-08 ITAT 1,98.00

Income tax FY. 2008-09 ITAT 26.46

Please refer to Point no. 3 & 4 of notes to accounts

10. There are no accumulated losses of the Company as on 31st March, 2010. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. The Company has defaulted in repayment of dues to financial institutions, banks and debenture holders, and as per the Companys records the amount outstanding in this respect are as under:

Sr. Name of Amount of Over due No. Institution / due o/s on since Bank 31 -03-2010 (Rs. in lacs)

1. State Bank of India 41,98.99 14.12.2007

For the purpose we have relied on figures available from the Companys records and not from those available from the

Banks / Financial Institutions as the figures either disputed or are not available from the Banks / Financial Institutions, due to the disputes.

12. Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, provisions of any special statute applicable to chit fund /nidhi / mutual benefit fund/ society are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us, the Company is not a dealer or trader in shares securities, debentures and other investments.

15. In our opinion and according to the information and explanation given to us, the Company has not given any guarantees for loans taken by others from banks or Financial Institutions.

16. In our opinion and according to the information and explanation given to us, on an overall basis, the term loans have been applied for the purpose of which they are obtained.

17. According to the information and explanations given to us and on the basis of an overall examination the balance sheet of the Company, in our opinion no funds raised on short-term basis have been used for long-term investment. Similarly no

long-term funds have been used to finance short-term assets except permanent working capital.

18. According to the information and explanations given to us, during the year the Company has allotted 50,00,000 optionally convertible share warrants at Rs. 40/- per warrant (including a premium of Rs. 30/-) on preferential basis to parties and companies covered in the register maintained under section 301 of the Act.

19. According to the information and explanations given to us, during the year, the Company has not issued any debentures.

20. According to the information and explanations given to us, during the year the Company has not raised any money by way of public issues.

21. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For BHUPENDRA SHROFF & CO.,

Chartered Accountants Firm No. 101458W

B N SHROFF

Partner Membership No. 5039. Mumbai, Date : 9th August, 2010

 
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