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Auditor Report of Lumax Automotive Systems Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of LUMAX AUTOMOTIVE SYSTEMS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, 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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes 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 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 controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for qualified opinion

1. Inventories '29,01,31,912/-

a. The management has not valued the inventories at lower of cost and net realizable value whichever is lower as required by accounting standard to valuation of inventories but has stated them solely at cost inclusive of taxes and duties. The inventory prepared by the company shows a large amount of inventories very old which are un-useable for manufacturing purposes and are in obsolete nature and have scrap value only. The difference between the valuation of stock at cost and net realizable value whichever is lower and as shown in the books of accounts is substantial. On account of the above loss of the company will be increased and inventories will be decreased. The management has not quantified the difference. This matter was also qualified in audit report of earlier years. b. Stock in transit '4,66,24,216/- :- The raw material was imported in the earlier years and was not cleared from custom authorities. The custom authorities have already issued notices U/s 48 of the Custom Act, 1962 for auction of the above goods. The company has not provided any evidence whether the material is lying with custom authorities or auctioned by them. That in case the Govt. authorities had made the auction of goods the company suffered a loss of '4,66,24,216/-. The custom duty liability of the above goods is about '1.36 crore which is also not provided in the financial statements. This matter was also qualified in audit report of earlier year.

2. Trade receivable long term (due for more than twelve months- unsecured consider doubtful- no provision for doubtful receivable) '12,78,18,588/-:-That the debts were outstanding for a quite period of long time and in our opinion the entire debts are bad and should be w/off in the books of the company. Due to the above opinion the loss of the company will be increased by '12, 78,18,588/- and the trade receivable long term will be reduced by that amount. This matter was also qualified in audit report of earlier year.

3. Short term loans and advances (unsecured consider good) '9,84,72,987/ -('6,84,91,775/-):- The company has given advances '85,76,645/- to five parties during the year for which satisfactory explanation of giving the advances has not been provided. Further it is noticed that the suppliers and tooling amounts recoverable from customers amounting to '7.13 crores are not fulfilling their obligations nor making the payments to the company. The company has not taken proper steps for recovery of the above amounts. That in our opinion the advances under report are doubtful for recovery for which the company should have made the provision for the same. Due to above, the losses of the company will be increased by substantial amount.

4. No Provision has been made in the financial statements for Interest in respect of (i) delayed/ non- payment to suppliers/ service providers which are registered under the provisions of The Micro, Small or Medium Enterprises Development Act, 2006 (ii) delayed payments/outstanding payments in respect various statutory dues such as provident fund, employees' state insurance, income tax, wealth tax, sales tax, excise duty, cess and other statutory dues and (iii) on enhanced cost not paid '2,79,72,000/- to HSIIDC in respect of factory plot at Manesar. This matter was also qualified in audit report of earlier year ;

5. As mentioned in note 11 of the notes to accounts no.29 regarding confirmations of the balances of sundry creditors and debtors, loans and advances, price variance claims and rebate claimed from suppliers have not been obtained and they are subject to reconciliations and subsequent adjustments if any. As such we are unable to express any opinion as to the effect on the financial statements for the year.

6. Going concern concept:- The financial statements indicates that the company has accumulated losses and its net worth has been fully eroded ( without considering the capital reserves and capital revaluation reserve) and the company has incurred a net cash loss in the current as well as in the preceding financial year. That keeping in view of our audit observations 1 to 5 above, reporting under "Emphasis of matter" as under, report made in (Auditor's report) order, 2015, defaults in repayment of the loans to Banks and financial institutions and the current liabilities exceeded its current assets as at the balance sheet date, it indicates the existence of a material uncertainty that make cast significant doubt about the company's ability to continue as a going concern. However the financial statements of the company have been prepared on a going concern basis.

Emphasis of matters

We draw attentions to the following matters given in the notes to the financial statements (Note No.29) other than reported in "Basis for qualified opinion" and report made in (Auditor's report) order, 2015, our considered opinion in respect of the said notes are as under:-

1. Note No.29- 2(d):- The Company has evaluated the useful lives of fixed assets on the basis of Internal Technical Assessment which are based in accordance with the rates given in schedule-XIV of the Companies Act, 1956. The company has not obtained a report from Independent technical person that the internal assessment is justified.

2. Note No.29 - 2(p.) Impairment of assets:- As stipulated in AS-28, the company assessed potential generation of economic benefits from its business unit and is of the view that assets employed in continuing business are capable of generating adequate returns over their useful lives in the usual course of business. There is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

The company has already closed down its units at Faridabad, Aurangabad and Pune. The Plant and machinery, Other Fixed assets excluding land and building and stocks have been stated at cost less accumulated depreciation/ at cost respectively, the management has no plans to restart the above units in future. That as per accounting standard-10 "Accounting for fixed assets" such fixed assets is required to be stated at the lower of net book value and net realizable value in the financial statements. The opinion in respect of stocks has already been given above in qualified opinion. The expected losses are to be recognized in the profit and loss statement and such fixed assets should be shown separately in the balance sheet as ' Assets retired from active use and held for disposal. However the company has not followed AS-10 and AS-2 and has not booked expected losses. Further the carrying amount as shown in the financial statement is more than its recoverable amount and the company has not booked impairment loss as required by AS-28 'Impairment of assets'

3. Note No.29- 3(a)- "Contingent liabilities":- The company has inadequate records of Sales tax assessments. The contingent liabilities reported in respect of Sales tax are in respect of financial years for which assessment orders are available with the company. That there can be a possibility of contingent liabilities/ascertained liabilities in respect of Sales tax for which the assessment orders are not with the company. Further no evidences have been furnished in respect of filing appeals with higher Sales Tax authorities.

4. Note No.29- 3(b)- "Capital Commitments":- The company has decided to postpone its capital commitment expenditure in respect of capital work in progress '2,46,22,558/- ('2,63,57,993/-) on account of inadequacy of liquid funds. The company will have to suffer the loss in case the company fails to fulfill its capital commitments program.

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us except for the possible effects of the matters described in the Basis of qualified opinion paragraph, Emphasis of Matter paragraph and adverse remarks in CARO,2015, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its Loss 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 the paragraph 3 and 4 of the Order, to the extent applicable.

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

a) Subject to the matters described in the Basis for Qualified opinion paragraph, Emphasis of matters paragraph and Auditor's report order, 2015, 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) Except for the possible effect of the matters described in the Basis for Qualified opinion paragraph, Emphasis of matters paragraph and Auditor's report order, 2015, 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, Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) Except for the possible effect of the matter described in the Basis for Qualified opinion paragraph, Emphasis of matter paragraph and Auditor's report order, 2015, 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) The matters described in the Basis for Qualified opinion paragraph, Emphasis of matter paragraph and Auditor's report order, 2015, in our opinion, may have an adverse effect on the functioning of the company.

f) On the basis of the written representations received from the directors as on 31st March, 2015 and 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;

g) The qualifications relating to the maintenance of accounts and other matters connected therewith are stated in the 'Basis for Qualified opinion' paragraph, 'Emphasis of matter' paragraph and Auditor's report order, 2015; and

h) 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 has disclosed the impact of pending litigations on its financial positions in its financial statements(See note no.3(a) of Notes to accounts (Note No.29) of the financial statements).

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

III. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditors' Report

(The Annexure referred to in our Independent Auditors' Report to the members of LUMAX AUTOMOTIVE SYSTEMS LIMITED ( 'the company') on the financial statements for the year ended 31s1 March, 2015, we report that:

i. (a) The company which is maintaining records showing full particulars, including quantitative details and situation of fixed assets have not been produced for our verification. Also the fixed assets have not been physically verified by the management during the year, hence we are unable to comment on the discrepancies, if any.

ii. (a) The Management has conducted physical verification of inventory in respect of its working units at Manesar at reasonable intervals. However no physical verification has been carried out in respect of the closed units at Plot No. 78, Sector-6, Faridabad, Aurangabad unit and 12/2, Mathura Road, Faridabad and two Pune Units. The stock values in respect of the closed units have been taken as per values declared in the earlier financial statements.

(b) In our opinion and according to the information and explanation given to us the procedures of physical verification of inventory followed by the management at working unit referred to above is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory and subject to observation made in paras ii(a) and (b) above, we are of the opinion that the Company is maintaining proper records. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

iii. As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of The Companies Act, 2013. Accordingly, the provisions of clauses (iii)(a) and (iii) (b) of the Order, 2015 are not applicable to the Company

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control systems commensurate with the size of the Company and the nature of its business, for sale of goods/services and for the purchase fixed assets. However the internal control system for purchase of inventory is inadequate since the purchases are made without inviting quotations. In our opinion this a continuing failure to correct major weakness in the internal control system.

v. The Company has not accepted any deposits from the public.

vi. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records u/s 148(1) of the Companies Act, 2013 related to the manufacture of auto components and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not however made detailed examination of the same.

vii. (a) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amount deducted / accrued in the books of the company in respect of undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

(b) According to the information and explanation given to us, the undisputed amounts payable in respect of provident fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other undisputed statutory dues were outstanding,, at the year end for a period of more than six months from the date they became payable are Rs. 12,52,10,182/-(previous year Rs. 13,34,55,488/-)

(c) According to the records of the company and the information and explanations given to us, the dues outstanding of Income tax, sales tax, Wealth tax, service tax, custom duty, excise duty, Value added tax and cess on account of any dispute are as follows :

S. Name of the Statute Nature of Amount Period to which No Dues (In lacks) the amount relates

1 Income Tax Act, 1961 Income Tax 1.89 F.Y 2006-07

2 Haryana Value added VAT 1935.68 F. Y. 2008-09 tax (Local) to 2011-12

3. Haryana Value added CST 488.09 F.Y. 2008-09 tax (Central) To F.Y. 2011-12

4 Maharashtra State 116.86 F.Y.2010-11 Value added tax (Local) VAT

5 Maharashtra State 89.55 F.Y.2010-11 Value added tax (Central) CST

S. Name of the Statute Forum where the dispute is pending No

1 Income Tax Act, 1961 Review petition pending with A.O.

2 Haryana Value added Appeal is pending before Joint Excise tax (Local) & Taxation Commissioner (Appeals), Faridabad

3. Haryana Value added Appeal is pending before Joint Excise tax (Central) & Taxation Commissioner (Appeals), Faridabad

4 Maharashtra State Commissioner (Appeals), Pune Value added tax (Local)

5 Maharashtra State Commissioner (Appeals), Pune Value added tax (Central)

d. According to the information and explanations given to us, the amount required to be transfer to investor education and protection fund in accordance with relevant provisions of the Companies Act, and rules made there under has been transferred to such fund within time.

viii. The company has accumulated losses and the company has incurred cash losses in the current financial year as well as in the immediately preceding financial year.

ix. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues to banks and financial institution as here under:-

Particulars Overdue amount with interest

HSIIDC (Term Loan) 10,15,47,000

Axis Bank/ICICI Bank(Vehicle loans) 13,22,449

Electronics Finance Limited (Term Loan) 30,08,140

Syndicate Bank-working capital limit 8,25,36,129

The company did not have any debentures during the year.

x. According to the information and explanations given to us the Company has not given guarantee for loans taken by others from bank or financial institutions.

xi. According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

xii. Based upon the audit procedures performed for the purpose of reporting a true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit nor we have been informed of such cases by the management.

FOR R.JAIN & SANJAY ASSOCIATES, ICAI FIRM REGISTRATION NO.012377N, CHARTERED ACCOUNTANTS

PLACE: NEW DELHI CA-R.K. JAIN DATE: 30/05/2015 (PARTNER) MEMBERSHIP NO: - 9981




Mar 31, 2014

We have audited the accompanying financial statements of LUMAX AUTOMOTIVE SYSTEMS LIMITED (''the Company'') which comprise the balance sheet as at 31 March 2014, the statement of profit and loss and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give 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 dates 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. Auditor''s Responsibility

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

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

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

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 subject to our observations in para. 2(d) below (Report on other legal and regulatory requirements) 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 31 March 2014;

II. in the case of the statement of profit and loss, of the loss 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.

Report on Other Legal and Regulatory Requirements

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

2. As required by section 227(3) of the Act and subject to observations as under, 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 General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013, subject to our following observations that :-

i. As mentioned I stated in Note No.-14(Balance sheet) and Para 16 (iii) (accounting policies) of Note No. 29 regarding notes to accounts, the company has valued the inventories at costlestimated cost inclusive of taxes and duties instead of at Cost or realizable value whichever is lower and exclusive of taxes paid, which are subsequently recoverable from the taxing authorities, which is not in compliance with Accounting Standard to valuation of inventories prescribe in the companies (Accounting Standards) Rules 2006. In our opinion the old inventories which are unusable for manufacturing purposes and are in obsolete nature should have been valued at realizable value and provision for loss in value should have been provided by the company. Further stock in transit in hand valuing ''4,73,43,5921- is imported raw material and was lying with the Central Warehousing Corporation. The company has not obtained confirmation of the material lying in the Warehouse from Central Warehousing Corporation.

ii. No Provisions have been made in the financial statements in respect of the following items:-

(a) Provision for Interest in respect of delayedI non- payment to suppliersI service providers which are registered under the provisions of The Micro, Small or Medium Enterprises Development Act, 2006 as well as in respect of delayed paymentsloutstanding payments in respect various statutory dues such as provident fund, employees'' state insurance, income tax, wealth tax, sales tax, excise duty, cess and other statutory dues;

(b) Provision for doubtful debts and loans and advances amounting to ''181927873I- and ''5826525I- respectively which are considered doubtful of recovery. In our opinion most of the doubtful debts and loan and advances are bad in nature and the company should have made the provision for the same.

(c) Short provision of labour compensation payable to workers with whom the settlements were made during the year by ''8 lakhs. Consequent to the above observations the loss is under stated.

(d) Provision of ''2,79,72,0001- and interest thereon on non- payment on account of enhanced cost raised by HSIIDC in respect of factory plot No. 46, Sector-3, IMT, Manesar, Gurgaon, Haryana.

iii. As mentioned in note 15 of the notes to accounts no 29 regarding the balances of some of the sundry creditors and debtors, loans and advances, price variance and rebate claims are subject to confirmation I reconciliation and subsequent adjustments if any. As such we are unable to express any opinion as to the effect their of on the financial statements for the year.

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

ANNEXURE TO THE AUDITOR''S REPORT

(The Annexure referred to in our report to the members of LUMAX AUTOMOTIVE SYSTEMS LIMITED ( ''the company'') for the year ended 31st March, 2014.

i. (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. However fixed assets have not been physically verified by the management during the year, hence we are unable to comment on the discrepancies, if any.

(b) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

ii. (a) The Management has conducted physical verification of inventory in respect of its working units at Manesar, Gurgaon and 12/2, Mathura Road, Faridabad at reasonable intervals. However no physical verification has been carried out in respect of the closed units at Plot No. 78, Sector-6, Faridabad, Aurangabad unit and two Pune Units. The stock values in respect of the closed units have been taken as per values declared in the earlier financial statements.

(b) In our opinion and according to the information and explanation given to us the procedures of physical verification of inventory followed by the management at working units referred to above are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory and subject to observation made in paras ii(a) and (b), we are of the opinion that the Company is maintaining proper records. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

iii. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act.

(b) The company has taken interest bearing unsecured loans from Directors and companies covered in the register maintained u/s 301 of the Act. The number of the parties and maximum amounts involved during the year were eight and Rs.4,27,02,465/- and the year end balance of loans taken from such parties was Rs.3,76,48,433/-. The rate of interest and other terms and conditions of the loans taken are not prima facie prejudicial to the interest of the Company. There is no stipulation in respect of repayment of principal amounts and interest thereon.

v. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the Company, and according to the information and explanation given to us, as per the checking carried out in accordance with the auditing standards generally accepted in India, neither we have observed nor we have been reported for any continuing failure to correct major weaknesses in internal control systems.

v. (a) 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 particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained u/s 301 of the Act.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act.

vii. The Company has an internal audit system, which in our opinion, is not adequate and needs to be enlarge to be commensurate with the size of company and the nature of its business.

viii. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records u/s 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the records examined by us, 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 and cess have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees'' state insurance, income tax, sales tax, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are Rs. 13,34,55,488/-

(c) According to the information and explanations given to us and the records of the company examined by us, the particulars of dues of Income Tax, Sales Tax, Wealth Tax, Services Tax, Customs duty and Excise Duty as at 31-03-2013, which have not been deposited on account of the dispute are as follows :

S. No Name of the Nature of Amount('') Statute Dues

1. Income Tax Income Tax 5,48,585 Act, 1961

2. Haryana Value VAT including 25.78 Lakhs added tax (Local) interest

3. Central Sales CST including 67.09 Lakhs Tax Act, 1956 interest 73.65 Lakhs

Name of the Statute Period to Forum where the which relate dispute is pending

Income Tax Act, 1961 F.Y 2006-07 Review petition pending with A.O.

Haryana Value added tax (Local) F.Y. 2009-10 On account of non submission of statutory forms

Central Sales Tax Act, 1956 F.Y. 2008-09 On account of non submission of F.Y. 2009-10 statutory forms

x . The company has no accumulated losses. However the company has incurred cash losses in the current financial year and no cash losses were incurred in the immediately preceding financial year.

xi. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks or financial institution except the following:- (a) installments of the term loan and interest with HSIIDC amounting to ''5,53,29,060/- as at the date of balance sheet (b) default during the year with IDBI Bank of two installments of ''20 lakh each for a period of 6 and 3 months which were re-paid in the accounting year. There were no dues to debenture holders during the year.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv. The Company is not dealing or trading in shares, securities, debentures and other investments. The other provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003, (As amended) are not applicable to the company.

xv. According to the information and explanations given to us the Company has not given guarantee for loans taken by others from bank or financial institutions.

xvi. According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

xvii. Based on examination of documents, records and fund flow statement made available to us and on the basis of information and explanations given to us, the Company has not used funds raised on short term basis for long term investment

xviii. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained u/s 301 of the Companies Act, 1956.

xix. The Company has neither issued nor had any outstanding debenture during the year.

x x . The Company has not raised any money through a public issue during the year.

xxi. Based upon the audit procedures performed for the purpose of reporting a true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit nor we have been informed of such cases by the management.

FOR R.JAIN & SANJAY ASSOCIATES, ICAI FIRM REGISTRATION NO.012377N, CHARTERED ACCOUNTANTS

PLACE: NEW DELHI CA-R.K. JAIN

DATE : 30th MAY 2014 (PARTNER)

MEMBERSHIP NO: - 9981


Mar 31, 2013

Report on the Financial Statements We have audited the accompanying financial statements of LUMAX AUTOMOTIVE SYSTEMS LIMITED (''the Company'') which comprise the balance sheet as at 31 March 2013, the statement of profit and loss and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information in which are incorporated accounts audited by us and the branch accounts of two units at Pune were audited by another auditor. The reports submitted by the branch auditor have been considered by us in oreparation of this report.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance 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.

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

The branch auditors in their audit reports of Pune units have made the following

opinion in respect of the audit of accounts of the said units.

"Due to labour unrest and other practical difficulties, the operations at Pune Units I and II of the company were terminated during the year. Further, the Account Records could not be taken out from the premises of said units and therefore, could not be made available to us for the purpose of Audit. Due to non availability of account records, and other necessary documents, we could not perform any on-site Audit procedures in accordance with generally accepted Auditing Standards in India and therefore, are unable to comment on correctness of the financial statements or otherwise. We are also unable to comment on the adjustments or disclosures, if any, that might have been arisen or required to be reported upon, had we performed on-site Audit procedures." 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 subject to our observations in para. 2(d) below (Report on other legal and regulatory requirements) 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 31 March 2013;

II. in the case of the statement of profit and loss, of the profit for the year ended on that date; and

III. In the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. Subject to the audit observations and the opinion expressed in earlier para. and as required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act and subject to the opinion para as above and observations as under , 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, subject to our observations that

i. As mentioned / stated in Note No.-14(Balance sheet) and Para 16 (iii) (accounting policies) of Note No. 29 regarding notes to accounts, the company has valued the inventories at cost/estimated cost inclusive of taxes and duties instead of at Cost or realizable value whichever is lower and exclusive of taxes paid, which are subsequently recoverable from the taxing authorities, which is not in compliance with Accounting Standard to valuation of inventories prescribe in the companies (Accounting Standards) Rules 2006. In our opinion the old inventories which are unusable for manufacturing purposes and are in obsolete nature should have been valued at realizable value and provision for loss in value should have been provided by the company.

ii. As stated in para 5 of note no.29(Notes to accounts), the payment of managerial remuneration paid in excess is subject to sanction of Govt. authorities.

iii. No Provision has been made for interest in respect of delayed/ non- payment to suppliers/ service providers which are registered under the provisions of The Micro, Small or Medium Enterprises Development Act, 2006 as well as in respect of delayed payments/ outstanding payments in respect various statutory dues such as provident fund, employees'' state insurance, income tax, wealth tax, sales tax, excise duty, cess and other statutory dues;

iv. The company has not made any provision for doubtful debts amounting to Rs.7,41,84,760/- which are considered doubtful of recovery. In our opinion most of the doubtful debts are bad in nature and company should have made the provision for the same;

v. As mentioned in note 15 of the notes to accounts no 29 regarding the balances of some of the sundry creditors and debtors, loans and advances and rebate claims are subject to confirmation / reconciliation and subsequent adjustments if any. As such we are unable to express any opinion as to the effect their of on the financial statements for the year.

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

ANNEXURE TO THE AUDITOR''S REPORT

(The Annexure referred to in our report to the members of LUMAX AUTOMOTIVE SYSTEMS LIMITED ( ''the company'') for the year ended 31st March, 2013.

i . (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. All the fixed assets have not been physically verified by the Management during the year but there is a regular programme of verification which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. We are informed that no material discrepancies were noticed on verification. (b) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

ii. (a) The Management has conducted physical verification of inventory at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

iii. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act.

(b) The company has taken interest bearing unsecured loans from Directors and companies covered in the register maintained u/s 301 of the Act. The number of the parties and maximum amounts involved during the year were eight and Rs.3,55,53,589/- and the year end balance of loans taken from such parties was Rs.3,30,51,530/-. The rate of interest and other terms and conditions of the loans taken are not prima facie prejudicial to the interest of the Company. There is no stipulation in respect of repayment of principal amounts and interest thereon.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the Company, and according to the information and explanation given to us, as per the checking carried out in accordance with the auditing standards generally accepted in India, neither we have observed nor we have been reported for any continuing failure to correct major weaknesses in internal control systems.

v . (a) 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 particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained u/s 301 of the Act.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi . In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act.

vii . The Company has an internal audit system, which in our opinion, is commensurate with its size of the Company and the nature of its business.

viii. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records u/s 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate or complete.

ix . (a) According to the records examined by us, undisputed statutorily 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 have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees'' state insurance, income tax, sales tax, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are Rs. 5,93,61,311/-

(c) According to the information and explanations given to us and the records of the company examine by us, the particulars of dues of Income Tax, Sales Tax, Wealth Tax, Services Tax, Customs duty and Excise Duty as at 31-03-2013, which have not been deposited on account of the dispute are as follows :

S. No Name of the Nature of Amount Period to Forum where the Statute Dues which relate dispute is pending

1. Income Tax Act, Income 1,07,35,896 F.Y. 2008-09 Commissioner 1961 Tax Income Tax (Appeals) New Delhi

2 Income Tax Act, Income Tax 5,48,585 F.Y 2006-07 Review petition 1961 pending with A.O.

x. The company has no accumulated losses and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks or financial institution except the Installment of the Term Loan with HSIIDC of Rs. 76,45,000/- as at the balance sheet date. There were no dues to debenture holders during the year.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv. The Company is not dealing or trading in shares, securities, debentures and other investments. The other provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003, (As amended) are not applicable to the company.

xv . According to the information and explanations given to us the Company has not given guarantee for loans taken by others from bank or financial institutions.

xvi. According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

xvii. Based on examination of documents, records and fund flow statement made available to us and on the basis of information and explanations given to us, the Company has not used funds raised on short term basis for long term investment.

xviii. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained u/s 301 of the Companies Act, 1956.

xix. The Company has neither issued nor had any outstanding debenture during the year.

xx. The Company has not raised any money through a public issue during the year.

xxi. Based upon the audit procedures performed for the purpose of reporting a true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit nor we have been informed of such cases by the management.

FOR R.JAIN & SANJAY ASSOCIATES,

ICAI FIRM REGISTRATION NO.012377N,

CHARTERED ACCOUNTANTS

CA-R.K. JAIN

Place : New Delhi (PARTNER)

Date : 30/05/2013 MEMBERSHIP NO: - 9981


Mar 31, 2012

1. We have audited the attached Balance Sheet of LUMAX AUTOMOTIVE SYSTEMS LIMITED, as at 31st March, 2012 and the annexed Profit & Loss Account and Cash Flow Statement for the year ended on that date in which are incorporated accounts audited by us and branch accounts audited by another auditor. The reports submitted by the branch auditor have been considered by us in the preparation of this report. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform our 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report subject to notes appearing at Note 29, particularly note No.16 of the said note regarding Significant Accounting Policies as under:

3. As required by the Companies (Auditor's Report) Order, 2003, (as amended) issued by the Central Government of India in terms of Section227(4A) ofthe CompaniesAct, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 ofthe said order.

4. Further to our comments, in the Annexure referred to above; 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 the law have been kept by the Company so far as it appears from examination of those books;

c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of accounts;

d) In our opinion, the balance sheet, profit and loss account and cash flow statement comply with the mandatory accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; subject to our observations that

(i) As mentioned / stated in Note-14 of balance sheet and 16

(iii) accounting policies of note no 29 regarding notes to accounts, the company has valued the inventories at cost/ estimated cost inclusive of taxes and duties instead of at Cost or realizable value whichever is lower and exclusive of taxes paid, which is not in compliance with Accounting Standard to valuation of inventories prescribe in the companies (Accounting Standards) Rules 2006. In our opinion the old inventories which are unusable for manufacturing purposes and are in obsolete nature should have been valued at realizable value andprovision for loss in value should have been provided by the company.

(ii) No Provision has been made for interest in respect of delayed/ non payment to suppliers/ service providers which are registered under the provisions of The Micro, Small or Medium Enterprises Development Act, 2006 as well as in respect of delayed payments/outstanding payments in respect various statutory dues such as provident fund, employees ' state insurance, income tax, sales tax, excise duty, cess and other statutory dues,

(iii) The company has not made any provisionfor doubtful debts amounting to Rs.6,98,92,459/- which are considered doubtful of recovery. In our opinion most of the doubtful debts are bad in nature and company should have made the provision for the same.

(iv) As mentioned in note 15 of the notes to accounts no 29 regarding the balances of some of the sundry creditors and debtors, loans and advances and rebate claims are subject to confirmation/reconciliation andsubsequent adjustments if any. As such we are unable to express any opinion as to the effect their of on the financial statements for the year.

e) On the basis of written representations 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 is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required subject to our observations in para. 4(d) above and give a true and fair view:

a) In the case of the balance sheet, of the State of the Company's affairs as at 31st March 2012;

b) In the case of the profit and loss account, of 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.

Annexure referred to in Paragraph 3 of our report of even date on the accounts of Lumax Automotive Systems Limited for the year ended 31st March, 2012.

i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. All the fixed assets have not been physically verified by the Management during the year but there is a regular programme of verification which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. We are informed that no material discrepancies were noticed on verification.

(b) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

ii. (a) The Management has conducted physical verification of inventory at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

iii. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act.

(b) The company has taken interest bearing unsecured loans from Directors and companies covered in the register maintained u/s 301 of the Act. The number of the parties and maximum amounts involved during the year were seven and Rs.3,20,48,159/- and the year end balance of loans taken from such parties was Rs.2,26,86,694/-. The rate of interest and other terms and conditions of the loans taken are not prima facie prejudicial to the interest of the Company. There is no stipulation in respect of repayment of principal amounts and interest thereon.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the Company, and according to the information and explanation given to us, as per the checking carried out in accordance with the auditing standards generally accepted in India, neither we have observed nor we have been reported for any continuing failure to correct major weaknesses in internal control systems.

v. (a) 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 particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained u/s 301 of the Act.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act.

vii. The Company has an internal audit system, which in our opinion, is commensurate with its size of the Company and the nature of its business.

viii. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records u/s 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the records examined by us, undisputed statutorily 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 have not been regularly deposited with the appropriate authorities and there have been delays in large number of cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees' state insurance, income tax, sales tax, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are Rs. 4,21,39,832/-

(c) According to the information and explanations given to us and the records of the company examine by us, the particulars of dues of Income Tax, Sales Tax, Wealth Tax, Services Tax, Customs duty and Excise Duty as at 31-03- 2012, which have not been deposited on account of the dispute are as follows :

S. No Name of the Statute Nature of Dues Amount Period to Forum where the which relate dispute is pending

1. Income Tax Act, 1961 Income Tax 52,37,331 F.Y 2008-09 Commissioner Income Tax (Appeals) New Delhi

2 Income Tax Act, 1961 Income Tax 5,48,585 F.Y 2006-07 Review petition pending with A.O.

x. The company has no accumulated losses and has not incurred cash losses in the current financial year and in the immediately proceeding financial year.

xi. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks or financial institution as at the balance sheet date. There were no dues to debenture holders during the year.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv. The Company is not dealing or trading in shares, securities, debentures and other investments. The other provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003, (As amended) are not applicable to the company.

xv. According to the information and explanations given to us the Company has not given guarantee for loans taken by others from bank or financial institutions.

xvi. According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

xvii. Based on examination of documents, records and fund flow statement made available to us and on the basis of information and explanations given to us, the Company has not used funds raised on short term basis for long term investment.

xviii. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained u/s 301 of the Companies Act, 1956.

xix. The Company has neither issued nor had any outstanding debenture during the year.

xx. The Company has not raised any money through a public issue during the year.

xxi. Based upon the audit procedures performed for the purpose of reporting a true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit nor we have been informed of such cases by the management.

FOR R.JAIN & SANJAY ASSOCIATES,

FIRM REGISTRATION NO.012377N,

CHARTERED ACCOUNTANTS

PLACE : NEW DELHI CA-SANJAY JAIN

DATE : 10/08/2012 (PARTNER)

MEMBERSHIP NO: - 88027


Mar 31, 2010

1. We have audited the attached Balance Sheet of LUMAX AUTOMOTIVE SYSTEMS LIMITED, as at 31 st March, 2010 and the annexed Profit & Loss Account and Cash Flow Statement for the year ended on that date in which are incorporated accounts audited by us and branch accounts audited by another auditor. The reports submitted by the branch auditor have been considered by us in the preparation of this report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform our 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report subject to notes appearing in schedule 23, particularly note No.21 regarding Significant Accounting Policies as under:

3. As required by the Companies (Auditors Report) Order, 2003, (as amended) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

a) We have obtained all 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 the law have been kept by the Company so far as it appears from examination of those books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the mandatory Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; subject to our observations that

(i) A liability as per actuarial valuation on account of earned leaves due to the employees amounting to Rs. 63.07 Lacs has not been provided in the Accounting Statements, which is contrary to AS-15 on Employees Benefits (Revised 2005)(refer note in Para 3 (ii) of schedule 23),

(ii) The company has not provided gratuity liability for the financial years 2008-09 and 2009-10 and in the absence of actuarial valuation, the impact on the profit is not ascertainable,

(iii) Inventories are valued inclusive of taxes and duties which is contrary to the accounting standard AS-2(valuation of inventories), wherein the inventories should be valued at lower of the cost or net realizable value and exclusive of taxes paid which are subsequently recoverable from the taxation authorities,

(iv) No Provision has been made for interest on delayed payments/outstanding payments in respect of various statutory dues such as provident fund, employees state insurance, income tax, sales tax, excise duty, cess and other statutory dues, and

(v) The Branch Auditors D.R. Barve & Company, Chartered Accountants, in their audit report has observed as under in respect of accounts of Aurangabad(Maharashtra) unit audited by them:-

"The Aurangabad(Maharashtra) unit is locked due to labour problem & based on order of Industrial Court since 5th March, 2010. Therefore entire accounting record was not available for preparation & verification of Financial Statements. Based on available information & record the financial statements were prepared & verified. However, the management is confident that the results based on actual record, bills, vouchers etc. will not differ with material amount as compared to the figures mentioned in the financial statements prepared. Also, the true & fair view of state of affairs of the Aurangabad unit as at 31st March, 2010 as well as "Loss" of the unit for the year ended 31st March, 2010 will not differ with material amount based on actual facts & figures.

e) On the basis of written representations 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 is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required subject to our observations in para. 4(d) above and give a true and fair view:

a) In the case of the Balance Sheet, of the State of the Companys affairs as at 31 st March 2010;

b) In the case of the Profit and Loss Account, 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.

Annexure referred to in Paragraph 3 of our report of even date on the accounts of Lumax Automotive Systems Limited for the year ended 31 March, 2010.

1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. All the fixed assets have not been physically verified by the Management during the year but there is a regular programme of verification which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. We are informed that no material discrepancies were noticed on verification.

(b) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

2. (a) The Management has conducted physical verification of inventory at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act.

(b) The company has taken interest bearing unsecured loans from Directors and companies covered in the register maintained u/s 301 of the Act. The number of the parties and maximum amounts involved during the year were seven and Rs.6,14,77,964/- and the year end balance of loans taken from such parties was 6,00,49,045/-. The rate of interest and other terms and conditions of the loans taken are not prima facie prejudicial to the interest of the Company. There is no stipulation in respect of repayment of principal amounts and interest thereon.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the Company, and according to the information and explanation given to us, as per the checking carried out in accordance with the auditing standards generally accepted in India, neither we have observed nor we have been reported for any continuing failure to correct major weaknesses in internal control systems.

5. (a) 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 particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained u/s 301 of the Act.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements 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 deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records u/s 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the records examined by us, undisputed statutorily 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 have not been regularly deposited with the appropriate authorities and there have been delays in large number of cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees state insurance, income tax, sales tax, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are Rs. 2,66,10,474/-.

10. The company has no accumulated losses and has not incurred cash losses in the current financial year and in the immediately preceeding financial year.

11. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks or financial institution. There were no dues to debenture holders during the year.

12. According to the information and explanation given to us and based on the documents and records produced to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

14. The Company is not dealing or trading in shares, securities, debentures and other investments. The other provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003, (As amended) are not applicable to the company.

15. According to the information and explanations given to us the Company has not given guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

17. Based on examination of documents , records and fund flow statement made available to us and on the basis of information and explanations given to us, the Company has not used funds raised on short term basis for long term investment.

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained u/s 301 of the Companies Act, 1956.

19. The Company has neither issued nor had any outstanding debenture during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed for the purpose of reporting a true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit nor we have been informed of such cases by the management.

FOR R.JAIN & SANJAY ASSOCIATES,

CHARTERED ACCOUNTANTS

PLACE: NEW DELHI CA-SANJAY JAIN

DATE: 28th AUGUST, 2010 (PARTNER)

Membership No: - 88027

Firm Registration No.012377N





 
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