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Auditor Report of Prime Securities Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of PRIME SECURITIES LIMITED ("the Company"), which comprises the Balance Sheet as at March 31,2015, the statement of Profit & Loss and the Cash Flow Statement for the period then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (which are deemed to be applicable as per section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014) and other accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

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

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

Basis for Qualified Opinion

1. As referred in Note 23.8 the Company has not provided for interest of Rs. 1,324.15 Lacs on certain secured loans as in the opinion of the management the same is under renegotiations with the lenders. Had the Company made such provision the loss for the period would have been higher by the said amount and the secured loans would have been higher by Rs. 1,704.82 Lacs (including non-provision of interest in earlier year).

2. Reference is invited to Note 23.9 according to which the Company has written back an unsecured loan of Rs. 250 Lacs as in the opinion of the management the same was no longer payable. Accordingly, the loss for the period and the unsecured loans are lower by the said amount.

3. Reference is invited to Note 23.10 according to which unsecured loan of Rs. 1,400.00 Lacs is categorized as interest-free Short-term Borrowing. We have not been able to validate this assertion in absence of confirmation of balance and terms of repayment/interest. Accordingly, we are unable to ascertain the impact on the financial statements of the categorization of the loan and non-provision of interest thereon.

4. Reference is invited to Note 23.11 according to which the management is hopeful of recovery of a capital advance of Rs. 327.50 Lacs in respect of which we are unable to ascertain the impact, if any, that may arise in case if the same, or part thereof, is subsequently determined to be doubtful of recovery.

Qualified Opinion

In our opinion and to the best of our knowledge and according to the information and explanations given to us, except for the effects of the matters described in paragraph 1 to 4 of the Basis for Qualified Opinion paragraph, the said 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 loss for the period ended on that date; and,

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

Emphasis of Matter:

Our opinion is not modified in respect of the following:

1. The accompanying financial statements are prepared on a going concern basis, notwithstanding the circumstances referred in Note 23.3 which casts significant doubt about Company's ability to meet its financial obligations as and when they fall due. The appropriateness of the said basis is interalia dependent on the Company's ability to generate cash from disposing-off investments and from new revenue streams to meet its liabilities in normal course of business. Relying on the above, no adjustments have been made to the carrying value of the assets and liabilities in the accompanying financial statements.

2. As referred to in Note 23.4 the Company's subsidiary Primesec Investments Limited's networth has been eroded but having regard to receipt of share application monies from the Company, for which shares are proposed to be allotted, Primesec Investments Limited has prepared its accounts on a going concern basis. Relying on the above, the Company has not considered making any adjustments to its financial exposure in the subsidiary.

3. As referred to in Note 23.7 in absence of receipt of demand for interest, the Company has not provided for interest on bank liability in respect of which a one-time settlement proposal is submitted by the Company and the same is pending with the bank for disposal.

4. As referred to in Note 23.12 there is a diminution of Rs. 939.47 Lacs in value of non-current investments (other than in subsidiary companies). The Company has not provided for such diminution on the basis that the same is temporary in nature.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 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 Companies Act, 1956, 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 the books;

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

d) In our opinion, except for the effects of matters described in Basis for Qualified Opinion paragraph, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement comply with the dealt with by this report, comply with the Accounting Standards notified under the Companies Act, 1956 [which are deemed to be applicable as per section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014].

e) On the basis of written representation received from the directors as on March 31, 2015 under section 164(2) of the Companies Act, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015, from being appointed as a director in terms of section 164(2) of the Companies Act, 2013 which corresponds to clause (g) of sub-section (1) if section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 1 of report on Other Legal and Regulatory requirement of our report of even date

On the basis of records produced to us for our verification/perusal, such checks as we considered appropriate, and in terms of information and explanations given to us on our inquiries, we state that:

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

b) As explained to us, all the fixed assets were physically verified by the management at reasonable intervals during the period. According to the information and explanations given to us, no discrepancies were noticed on such physical verification.

c) The Company has not disposed off substantial part of its fixed assets during the period.

2. a) The Company does not hold any inventories and therefore Clause 4(ii) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

3. a) The Company has taken unsecured interest-free loans, from three parties listed in the register maintained under section 301 of the Companies Act, 1956. As at the period-end the amount of loan outstanding was Rs. 719.04 Lacs and the maximum amount of loan involved during the period under review was Rs. 839.04 Lacs.

b) As per the information given to us, in our opinion, the terms and conditions of the loan is prima facie non-prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanation 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 and sale of inventories and fixed assets and the sale of services. During the course of our audit no major weaknesses have been observed in the internal controls.

5. a) On the basis of audit procedures performed by us and according to the information and explanation given to us and on our inquiries in this behalf and the records produced to us for our verification, the transactions that need to be entered into the register maintained in pursuance of section 301 of the Companies Act, 1956 have been so entered.

b) As per the information and explanations given to us, the contracts entered into during the period from the parties covered under the register maintained under section 301 of the Companies Act, 1956 are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits within the meaning of the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules framed there under.

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

8. To the best of our knowledge and according to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records for the services rendered by the Company and hence the provisions of clause 4(viii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

9. a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, income tax, sales tax, service tax and other statutory dues applicable to it.

b) Further, according to the information and explanations given to us, the particulars of statutory dues outstanding at the end of the period on account of a dispute are as follows:

Statue Assessment Nature Forum before Rs. Lacs Year Dues whom pending

Income Tax 2006-2007 Income Assessing Officer 13.18 Act 1961 Tax (Rectification Proceedings)

10. The accumulated losses of the Company are not in excess of 50% of its net worth. However it has incurred cash loss during the current period as well as in the immediately preceding financial year.

11. According to the examination of documents and records and the information and explanations given to us, the Company has not defaulted in repayment of any dues to any financial institution or a bank except in case of an unsecured loan of Rs. 1097.64 Lacs due to a bank in respect of which the Company has submitted a proposal for one-time settlement which is pending with the bank for disposal.

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

13. In our opinion, the Company is neither a chit fund nor a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order 2003 are not applicable to the Company.

14. Based on our examination of the records and according to the information and explanation given to us, we are of the opinion that the Company has maintained proper records of transaction and contracts in respect of its investments in shares and securities. The shares and securities have been held in the name of the Company except in case of shares pledged as security for loan taken by the Company.

15. According to the information and explanations given to us and the records of the Company examined by us, the Company has not given any guarantee during the period for loans taken by others from banks or financial institutions.

16. According to the information and explanations given to us and the records of the Company examined by us, term loans, prima facie, have been applied for the purpose for which the loans were obtained.

17. On an overall examination of the balance sheet of the Company, we report that funds to the extent of Rs. 6,431.34 Lacs raised on short term basis have been used for long term investments.

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

19. The Company has not issued debentures.

20. The Company has not raised any money by public issue.

21. On the basis of our examination and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.

For GANDHI & ASSOCIATES Chartered Accountants (Firm Registration No. 102965W)

[MILIND GANDHI] Partner Mumbai, May 27, 2015 Membership No. 043194


Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of PRIME SECURITIES LIMITED ("the Company"), which comprises the Balance Sheet as at 30th September 2013 and the statement of Profit & Loss Account for the period 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"). 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. Basis for Qualified Opinion

1. Reference is invited to Note 27 according to which inter-corporate deposits ofRs. 2,075.00 Lacs is outstanding which are categorized under Short-term Borrowings, as represented by the management. We have not been able to validate this assertion in absence of confirmation of balances, terms of repayments and charge of interest. Accordingly, we are unable to ascertain the impact on the financial statements of the categorization of the deposits and non-provision of interest thereon.

2. As referred in Note 28 the Company has not provided for interest of Rs. 380.67 Lacs on certain secured loans as in the opinion of the management the same is under renegotiations with the lenders. Had the Company made such provision the loss for the period and the amount of secured loans would have been higher by that amount.

3. Reference is invited to Note 29 according to which the management is hopeful of recovery of a capital advance of Rs. 327.50 Lacs in respect of which we are unable to ascertain the impact, if any, that may arise in case if the same, or part thereof, is subsequently determined to be doubtful of recovery.

Qualified Opinion

In our opinion and to the best of our knowledge and according to the information and explanations given to us, except for the effects of the matters described in paragraph 1 to 3 of the Basis for Qualified Opinion paragraph, the said 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 September 30, 2013;

b) In the case of the Profit and Loss Account, of the loss for the period ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flow for the period ended on that date. Emphasis of Matter:

Our opinion is not modified in respect of the following:

1. The accompanying financial statements are prepared on going concern basis, notwithstanding the circumstances referred in Note 26 which casts significant doubt about Company''s ability to meet its financial obligations as and when they fall due. The appropriateness of the said basis is interalia dependent on the Company''s ability to generate cash from disposing-off investments and from new revenue streams to meet its liabilities in normal course of business. Relying on the above, no adjustments have been made to the carrying value of the assets and liabilities in the accompanying financial statements.

2. As referred to in Note 25 the Company''s subsidiary Primesec Investments Limited''s networth has been eroded but having regard to receipt of share application monies from the Company, for which shares are proposed to be allotted, Primesec Investments Limited has prepared its accounts on a going concern basis. Relying on the above, the Company has not considered making any adjustments to its financial exposure in the subsidiary.

3. As referred to in Note 32 there is a diminution of Rs. 1,866.74 Lacs in value of non-current investments (other than in subsidiary companies). The Company has not provided for such diminution on the basis that the same is temporary in nature.

4. Attention is invited to Note 33 in respect of transactions in Company''s demat accounts. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' 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 the books;

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

d) In our opinion, except for the effect of matter described in Basis for Qualified Opinion paragraph, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report, comply in all material respects, with the mandatory Accounting Standards referred to in subsection (3C) of section 211 of the Act.

e) Except for the possible effects of the matter described in the Basis for Adverse Opinion paragraph, In our opinion, the Balance Sheet and the Statement of Profit & Loss, comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act;

f) On the basis of written representations received from the directors as on 30th September 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 30th September 2013 from being a''ppointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

g) 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 Act 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.

Referred to in paragraph 1 of report on Other Legal and Regulatory requirement of our report of even date

On the basis of records produced to us for our verification/perusal, such checks as we considered appropriate, and in terms of information and explanations given to us on our inquiries, we state that:

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

b) As explained to us, all the fixed assets were physically verified by the management at reasonable intervals during the period. According to the information and explanations given to us, no discrepancies were noticed on such physical verification.

c) The Company has not disposed off substantial part of its fixed assets during the period.

2. a) The Company does not hold any inventories and therefore Clause 4(ii) of the Companies (Auditor''s Report) Order 2003 is not applicable to the Company.

3. a) The Company has taken an unsecured interest-free loan, from a party listed in the register maintained under Section 301 of the Companies Act, 1956. As at the period-end the amount of loan outstanding was Rs. 3,000,000 and the maximum amount of loan involved during the period under review was Rs. 3,000,000. b) As per the information given to us, in our opinion, the terms and conditions of the loan is prima facie non-prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanation 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 and sale of inventories and fixed assets and the sale of services. During the course of our audit no major weaknesses have been observed in the internal controls.

5. a) On the basis of audit procedures performed by us and according to the information and explanation given to us and on our inquiries in this behalf and the records produced to us for our verification, the transactions that need to be entered into the register maintained in pursuance of Section 301 of the Companies Act, 1956 have been so entered.

b) As per the information and explanations given to us, the contracts entered into during the period from the parties covered under the register maintained under Section 301 of the Companies Act, 1956 are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits within the meaning of the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Act and rules framed there under.

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

8. To the best of our knowledge and according to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records for the services rendered by the Company and hence the provisions of clause 4(viii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

9. a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, income tax, sales tax, service tax and other statutory dues applicable to it.

b) According to the information and explanations given to us, there are undisputed amounts payable in respect tax deducted at source of Rs. 1,664,269 at the end of the period outstanding for more than six months from the date they became payable.

c) Further, according to the information and explanations given to us, the particulars of statutory dues outstanding at the end of the period on account of a dispute are as follows:

Statue Assessment Year Nature Dues Forum before whom pending Total

2006-2007 Assessing Officer (Rectification Proceedings)

Income Tax Act 1961 Income Tax

2008-2009 Commissioner of Income-tax

10. The Company does not have any accumulated losses at the end of the period. However it has incurred cash loss during the current period as well as in the immediately preceding financial year.

11. According to the examination of documents and records and the information and explanations given to us, the Company has not defaulted in repayment of any dues to any financial institution or bank.

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

13. In our opinion, the Company is neither a chit fund nor a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order 2003 are not applicable to the Company.

14. Based on our examination of the records and according to the information and explanation given to us and subject to Note 31 of the financial statements, we are of the opinion that the Company has maintained proper records of transaction and contracts in respect of its investments in shares and securities. The shares and securities have been held in the name of the Company except in case of (a) shares given as margin for derivative transactions; (b) shares pledged as security for loan taken by the Company and its subsidiary; and (c) given to a party pending completion of a contract.

15. The Company has given corporate guarantee to banks on behalf of its subsidiary company against the credit facilities availed by the subsidiary companies. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

16. According to the information and explanations given to us and the records of the Company examined by us, term loans, prima facie, have been applied for the purpose for which the loans were obtained.

17. On an overall examination of the balance sheet of the Company, we report that funds to the extent ofRs. 916,746,332 raised on short term basis have been used for long term investments.

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

19. The Company has not issued debentures.

20. The Company has not raised any money by public issue.

21. On the basis of our examination and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.

For Gandhi & Associates

Chartered Accountants

Registration No. 102965W

Milind Gandhi

Partner

Mumbai, November 29, 2013 Membership No. 043194


Mar 31, 2011

We have audited the attached Balance Sheet of PRIME SECURITIES LIMITED as at March 31,2011, the Profit & Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

1. Further to our comments in the annexure referred to in paragraph (1) above:

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

ii) 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;

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

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

v) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors are disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

2. Without qualifying our opinion, we draw attention to Note no. 11 in Schedule P relating to the Company's investment in, and loans to, its subsidiary Prime Broking Company (India) Limited in respect of which we are unable to express our opinion in view of the circumstances specified in the said note.

3. We further draw attention to:

- Note no. 5 in Schedule P relating to managerial remuneration which is subject to the approval of the Central Govern- ment and the Shareholders

- Note no. 11 in Schedule P relating to the Company's investment in, and loans to, its subsidiary Primesec Investments Limited in respect of which we are unable to express our opinion in view of the circumstances specified in the said note.

4. Subject to para 3 above, in our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Profit and Loss Account and Cash Flow Statement read with the notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with 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, 2011;

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

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

ANEXURE TO THE AUDITOR Referred to in Paragraph 3 of our report of even date

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

b. As explained to us, the fixed assets were physically verified by the management as at the year end and that discrepancies noticed have been property deaft with in the books of account. In our opinion, such discrepancies were not materia) in nature and that the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets.

c. During the year the Company has not disposed off any substantial part of its fixed assets.

ii) According to the information and explanations given to us, the Company has neither granted nor taken any loan secured or unsecured to/ from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

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

iv) According to the information and explanations given to us, there are no contracts or arrangements that need to be entered into a register maintained in pursuance of section 301 of the Companies Act, 1956. Accordingly, paragraph 4(v)(a) and (b) of the Order is not applicable.

v) The Company has not accepted any deposits within the meaning of the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules framed there under.

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

vii) According to the information and exptanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209 (1 )(d) of the Companies Act, 1956.

viii) a. According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, income tax, sales tax, service tax and other statutory dues applicable to it.

b. According to the information and explanations given to us no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March, 2011 for a period more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no statutory dues outstanding on account of any dispute as of 31 st March, 2011.

ix) The Company does not have any accumulated loss as at the year end. The Company has neither incurred any cash loss during the current financial year nor in the immediately preceding financial year.

x) The Company has not defaulted in repayment of dues to a financial institution or a bank during the year.

xi) The Company has not granted any loans or advances against security by way of pledge of shares, debentures and other securities.

xii) The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company.

xiii) The Company has maintained proper records of the transactions and contracts in respect of the investments and timely entries have been made therein. Further, such investments have been held by the Company in its own name except for those pending transfer in the name of the Company.

xiv) The Company has given corporate guarantee to banks on behalf of its subsidiary company against the credit facilities availed by the subsidiary company. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

xv) According to the information and explanations given to us and the records of the Company examined by us, term loans, prima facie, have been applied for the purpose for which the loans were obtained.

xvi) Based on the overall examination of Balance sheet of the Company, as at 31 st March 2011, we are of the opinion that there are no funds raised on short term basis that has been used for long term application.

xvii) The Company has issued and allotted equity shares under the Employee Stock Option Plan to a party covered in the register maintained under Section 301 of the Companies Act, 1956. As explained to us the price at which the shares have been issued is prima facie not prejudicial to the interest of the Company.

xviii) The Company has not raised any money by public issues during the year.

xix) According to the information and explanations given to us, no fraud on, or, by the Company has been noticed or reported during the year. Looking to the nature of activities being carried on by the Company and also considering the nature of the matters referred to in the said Order, clauses no. (ii) and (xix) of Paragraph 4 of the said Order are, in our opinion, not applicable to the Company.

For Gandhi & Associates

Chartered Accountants

Registration No. 102965W

Milind Gandhi

Partner

Mumbai, May 28, 2011 Membership No. 043194














Mar 31, 2010

We have audited the attached Balance Sheet of PRIME SECURITIES LIMITED as at March 31, 2010, the Profit & Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act 1956, we enclose, in the annexure, a statement on the matters specifed in paragraphs 4 and 5 of the said Order.

1. Further to our comments in the annexure referred to in paragraph (1) above:

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

ii) 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;

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

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

v) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors are disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

2. Without qualifying our opinion, we draw attention to:

Note no. 10 in Schedule P relating to the Companys investment in, and loans to, its subsidiary Prime Broking Company (India) Limited in respect of which we are unable to express our opinion as to whether they are good and recoverable in view of the circumstances specified in the said note.

3. In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Profit and Loss Account and Cash Flow Statement read with the notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with 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, 2010;

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

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

ANNEXURE TO THE AUDITORS REPORT Referred to in Paragraph 3 of our report of even date

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

b. As explained to us, the fixed assets were physically verified by the management as at the year end and that discrepancies noticed have been properly dealt with in the books of account. In our opinion, such discrepancies were not material in nature and that the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets.

c. During the year the Company has not disposed off any substantial part of its fixed assets.

ii) According to the information and explanations given to us, the Company has neither granted nor taken any loan secured or unsecured to

from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. iii) In our opinion and according to information and explanations given to us, there are adequate internal control procedures commensurate

with the size of the Company and nature of its business with regards to purchase of fixed assets and sale of services. During the course of

our audit, no major weakness has been noticed in the internal control. iv) According to the information and explanations given to us, there are no contracts or arrangements that need to be entered into a register

maintained in pursuance of section 301 of the Companies Act, 1956. Accordingly, paragraph 4(v)(a) and (b) of the Order is not applicable.

v) The Company has not accepted any deposits within the meaning of the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules framed there under.

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

vii) According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209 (1)(d) of the Companies Act, 1956.

viii) a. According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, income tax, sales tax, service tax and other statutory dues applicable to it.

According to the information and explanations given to us, income-tax dues amounting to Rs. 13.46 lacs have remained outstanding as at 31st March, 2010 for a period more that six months from the date they became payable.

b. According to the records of the Company, the particulars of statutory dues as at 31st March, 2010 which have not been deposited on account of a dispute are as follows: Statue Form before whom pending Total (Rs In lacs)

Income tax Act, 1961 Commissioner of Income-tax (Appeals), Mumbai. 8.45

ix) The Company does not have any accumulated loss as at the year end. The Company has not incurred any cash loss during the current financial year but had incurred cash loss in the immediately preceding financial year.

x) The Company has not defaulted in repayment of dues to a financial institution or a bank during the year.

xi) The Company has not granted any loans or advances against security by way of pledge of shares, debentures and other securities.

xii) The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company.

xiii) The Company has maintained proper records of the transactions and contracts in respect of the investments and timely entries have been made therein. All investments are held in the name of the Company except shares of Tunip Agro Limited amounting to Rs. 381.50 lacs are yet to be transferred in the name of the Company.

xiv) The Company has given corporate guarantee of Rs. 1,624.64 lacs to banks on behalf of its subsidiary company against the credit facili- ties availed by the subsidiary Company. Read with clause 2 of the audit report, in our opinion, the terms and conditions thereof are not prejudicial to the interests of the Company. According to the information and explanations given to us, the Company has not given any other guarantee for loans taken by others from banks or financial institutions.

xv) According to the information and explanations given to us and the records of the Company examined by us, term loans, prima facie, have

been applied for the purpose for which the loans were obtained. xvi) Based on the overall examination of Balance Sheet of the Company, as at 31st March 2010, short term funds of Rs. 38.48 crores have been

utilized for long term application. The Company has explained that steps are being taken to augment long term funds.

xvii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xviii) The Company has not raised any money by public issues during the year.

xix) According to the information and explanations given to us, no fraud on, or, by the Company has been noticed or reported during the year. Looking to the nature of activities being carried on by the Company and also considering the nature of the matters referred to in the said Order, clauses no. (ii) and (xix) of Paragraph 4 of the said Order are, in our opinion, not applicable to the Company.

For Gandhi & Associates Chartered Accountants Registration No. 102965W

K. V. Sahasrabudhe

Partner Mumbai, May 29, 2010 Membership No.: 106172

 
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