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Auditor Report of Mercantile Ventures Ltd.

Mar 31, 2015

We have audited the accompanying Standalone Financial Statements of Mercantile Ventures Limited ("the Company”), which comprises the Balance Sheet as at March 31, 2015, and the Statement of Profit and Loss, 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 Standalone 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 Section 133 of the Companies Act, 2013 ("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

Our responsibility is to express an opinion on these Standalone financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Companies Act, 2013. 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.

Opinion

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

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

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

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

Report on Other Legal and Regulatory Requirements:-

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

2. As required by section 143(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 aforesaid standalone financial statements comply with the Accounting Standards referred to in Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2015, from being appointed as a director in terms of Section (2) of section 164 of the Companies Act, 2013.

Annexure to Independent Auditors' Report

(Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements” of our Report of even date)

As required by the Companies (Auditor's Report) Order, 2015 issued by the Central Government in terms of section 143 (11) of the Companies Act, 2013 and on the basis of such checks of the books and records of the Company, as we considered appropriate and according to the information and explanations given to us during the course of the audit, we report that,

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

b) The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verification.

2. a) Since the company is a service company there is no stock of raw material

b) In light of our comments in sub para (a) above this question is not applicable to the company

c) In light of our comments in sub para (a) above this question is not applicable to the company

3. a) The Company has not given or taken loans from the parties covered in the register Maintained under section 189

of the Companies act of 2013.

b) In the light of (a) we do not comment on the interest or other conditions or security of loans.

c) In the light of (a) we do not comment on the payment of principal or interest.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems and procedures, which are commensurate with the size of the Company, and the nature of its business, for the purchase of assets and for the sale of services. There are no major weaknesses in internal control.

5. The Company has not accepted any deposits from the public. Therefore the provisions of section 73 to Section 76 of the Companies Act, 2013 and rules framed there under are not applicable.

6. The Central Government has not prescribed for the Company maintenance of the Cost Records under subsection (1) of section 148 of the Act.

7. a) According to the records of the Company, the company is regular in depositing undisputed statutory dues relating

to Income Tax, and Service Tax and other statutory dues applicable to it with the appropriate authorities.

b) According to the records of the Company and according to the information and explanations given to us, there are no dues of Income tax and Service Tax.

c) The company is not required to transfer any amount to investor education and protection fund as per the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

8. The Company does not have any accumulated losses at the end of the financial year (Previous year accumulated loss - Rs. 70.43 Lakhs) and has not incurred cash losses in the financial year and in the immediately preceding financial year.

9. According to the records of the company, the Company has borrowed from a Financial Institution during the year. There has, however, been no default in repayment of dues to the Financial Institution.

10. The company has not given guarantee for loans taken by others from Bank or financial institution.

11. Term Loan was applied for the purpose for which they were obtained.

12. According to information and explanations furnished to us no fraud on or by the company has been noticed or reported during the year.

For DPV & Associates., Chartered Accountants FRN011688S

CA Vaira Mutthu K Place : Chennai M.No. 218791 Date : 18 May 2015 Partner




Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

The 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 13 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

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.

Attention of the members is drawn to the following:- Basis of Qualified Opinion:-

The other non-current assets detailed in Note 12 includes the following relating to the NBFC business carried on by the Company prior to the appointment of Official Liquidator (since permanently stayed) :-

a. Lease Parties Balances - Rs. Nil (Rs.476.20 Lakhs)

b. Hire Purchase dues - Rs. Nil (Rs.2,639.41 Lakhs)

c. Advances to Associate Investment Companies - Rs.4,332.34 Lakhs (Rs.5,910.52 Lakhs)

d. Other advances - Rs.9,212.46 Lakhs (Rs.10,738.35 Lakhs)

A comprehensive review of all the receivables relating to the old NBFC business was conducted to determine the quantum of possible realisation from these accounts, with the available records and documents. The company has written off a sum of Rs.6,118.62 lakhs to the profit and loss account and a corresponding reduction from other non-current assets during the year.

Qualified Opinion

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

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India and subject to Note 12:

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 Profit and Loss Account, of the profit for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements:-

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

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

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

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books subject to the Note no.12

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 subject to Note no.12

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 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 subject to Note no.12

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.

Annexure to Independent Auditors'' Report (Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our Report of even date)

In terms of the information and explanation given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

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

b) We are informed that the Management at reasonable intervals has physically verified the Fixed Assets of the Company and that no material discrepancies were noticed on such verification.

c) No substantial part of fixed assets has been disposed off during the year other than that specified in Note 20 to the financial statements. However this does not affect the going concern assumption.

2. The company does not hold movable stock and question of physical verification and procedures does not arise

3. The Company has not granted any loans to parties covered in the register maintained under section 301 of the companies Act, 1956 during the year. Hence the repayment of interest and principal is not applicable. In respect of balances recoverable relating to the NBFC business carried on by the Company prior to appointment of Official Liquidator, the same are classified under Other Non Current Assets. A comprehensive review of the balances in Non-Current Assets relating to old NBFC business was made by the management. The balances considered irrecoverable amounting to Rs. 6118.62 lakhs have been written off as detailed in note 20.2 to the accounts.

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 assets and with regard to the sale of Investments. No instances of continuing failure to correct major weaknesses in Internal Control were noticed.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:-

In our opinion and according to the information and explanations given to us, there were no transactions during the current year with the parties listed in the register required to be maintained under Section 301 of the Companies Act, 1956.

6. The company has not accepted any deposits from the public. The provisions of sections 58 A & 58 AA of the companies Act, 1956, and the Rules framed there under is not applicable.

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

8. The central government has not prescribed the maintenance of cost records u/s.209 (1) (d) of the Companies Act, 1956 to the company.

9. According to the records of the Company, the company is regular in depositing statutory dues relating to Income tax, service tax and other material statutory dues with the appropriate authorities. According to the information and explanation given to us disputed Income Tax amounting to Rs.428.12 Lakhs is outstanding as at 31st March, 2014 out of which company had paid Rs.233.62 lakhs under protest. For the balance amount the company has made an appeal with the CIT (appeals) which is pending disposal.

10. The Company has accumulated losses of Rs.70.43 lakhs at the end of the financial year (Previous year - Accumulated loss of Rs.329.55 Lakhs). The Company has not incurred cash losses in the financial year under report (Previous year - Cash loss of Rs.115.89 lakhs).

11. The Company has not defaulted in repayment of dues to Banks during the year.

12. The Company has not granted any 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 / nidhi / mutual benefit fund / society

14. The company is not dealing in or trading in Shares, Securities, Debentures & other investments.

15. The Company has not given any guarantee for loans taken by others from Bank or financial institutions.

16. The company has not obtained any term loans during the year.

17. As per the records of the company, no funds were raised on short term basis and used for long term investment and vice versa.

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

19. The Company has not issued any debentures, so creation of securities in respect of debentures does not arise.

20. The Company has not raised any money by public issues during the period covered by our audit report.

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

For DPV & Associates Chartered Accountants F.R.No.011688S

CA Desikan G Place: Chennai M.No.219101 Date: May 28 2014 Partner

 
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