Home  »  Company  »  Scooters India  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Scooters India Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Scooters India Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow for the year then ended and a summary of significant accounting policies and other explanatory information. In light of the observations from the Comptroller and Auditor General of India, to comply with the provision of section 143(5) of the Companies Act 2013 we hereby give our revised report in supersession of our previous report dated 04th May 2015.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to 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 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material 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 have taken into account the provision 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 mis-statement.

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 financial control relevant to the Company's preparation of the financial statements that give true and fair view 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 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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 :

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

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

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

Emphasis of matter

We draw attention to the following matters in the Notes to the financial statements :

(a) Note No.40 and Note No.47 to the financial statements regarding implementation of the restructuring and revival package as per the approval of government of India of Rs. 20,196 lakhs after the sanction of BIFR on June 19 June 2013, whereas draft Rehabilitation scheme (DRS) is under preparation by the operating agency (SBI) and has not been submitted to BIFR for sanction.

(b) Note No.1 Para 7a in the financial statement where the company has made a 0.5% adhoc provision on the value of closing stock of raw material and components, stores spares and consumables for redundancy. In the absence of adequate record for waste and reasonable estimates of its net realizable value, we are unable to comment upon the adequacy of these provisions.

(c) Note No.33 the balances in accounts of parties, contractors, Government Department etc. including those balances appearing under current assets, Loan and Advances and current liabilities are subject to confirmation and reconciliation the financial statement do not include the impact of adjustment, if any, which may arise out of the confirmation and reconciliation process.

Our opinion is not modified in respect of these matters.

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 Section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. We are enclosing our report in terms of Section 143 (5) of the Act, 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, in the Annexure 2 on the directions and sub-directions issued by Comptroller and Auditor General of India.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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, and the Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.

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

(f) With respect to the other matters included in the Auditor's Report in accordance with Rule 11 of the companies (Audit and Auditors) Rules 2014, in our opinion and to our 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 position in its financial statements-Refer Note 30 to the financial statements.

ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any,-Refer Note 10 and 6 to the financial statements;

iii) There were no amounts which required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE 1 TO INDEPENDENT AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF SCOOTERS INDIA LIMITED, LUCKNOW ON THE ACCOUNTS OF

THE COMPANY FOR THE YEAR ENDED 31ST MARCH, 2015

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

(i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(ii) (a) As explained to us, the company has conducted physical verification of the stores (excluding Inventory with third parties) as per the system of continuous physical verification of the Inventory adopted during the year and finished goods and work in progress at the end of the year, which is considered to be reasonable.

(b) In our opinion and according to information and explanations 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) According to information and explanations given to us, the discrepancies notice on physical Verification of inventory conducted by the management from time to time as compared to book Records were not material and have been properly dealt within the books of accounts.

(iii) (a) According to information and explanations given to us, the Company has not granted any loan Secured or unsecured, to the companies, firm or other parties covered in register maintained under section 189 in the Act.

(iv) In our opinion and according to information and explanations given to us, there 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 also for the sale of goods. During the Course of Audit, we have not observed any major weaknesses in control system.

(v) The company has not accepted any deposits from the public.

(vi) The Central Government has not prescribed the maintenance of cost records under section 148 (1) of the Act, for the goods manufactured by the Company.

(vii) (a) As per records, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employee State Insurance, Sales Tax, Wealth tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues, to the extent applicable to it with the appropriate authorities and as informed no undisputed amount were outstanding as at 31st March, 2015 for a period of more than six months from the date of becoming payable, except the following:

Sl. Name of the dues Nature of dues Period Amount No. (in Lakhs Rs.)

1 Kerala sales Tax State Sales Tax 92-93,93-94 & 94-95 4.22

Total 4.22

In compliance with the miscellaneous applications filed by the company as part of the restructuring plan which was been approved by the BIFR the company is not depositing income tax as applicable, Further, the income tax department is yet not been notified regarding the relief.

(b) The disputed statutory dues aggregating Rs. 553.02 lakhs plus interest indeterminate that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl. Name of the dues Nature of Forum where No. the dues dispute is pending

1. (a) State Sales Entry Tax & Comm. of Tax Act Penalty Commercial Taxes

(b) State Sales Entry Tax & Tribunal Tax Act Penalty

(c) State VAT Act VAT & Interest Joint Commissioner (Appeal)

2. (a) Central Excise & Service Tax Commissioner Service Tax (Appeals)

(b) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(c) Central Excise & Central Excise Assistant Service Tax Commissioner

(d) Central Excise & Central Excise Assistant Service Tax Commissioner



(e) Central Excise & Central Excise Additional Service Tax Commissioner

(f) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(g) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(h) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(i) Income Tax Act Income Tax Dy. Commissioner of Income Tax, Rang VI, Luck now

Name of the Dues Period Amount (In lakhs Rs.)

(a) State Sales Tax Act 97-98 to 06-07 113.77

(b) State Sales Tax Act 03-04,04-05 & 10.55 05-06

(c) State VAT Act 2009-10 0.94



(a) Central Excise & Oct.2002- Service Tax Mar.2007 Penalty & Interest Indeterminate (b) Central Excise & Service Tax 2005-06 to 2.16 & 2.16 2008-09 Penalty & Interest Indeterminate (c) Central Excise & Service Tax Apr.2009- 0.80 & 0.80 Sept.2009 Penalty & Interest Indeterminate (d) Central Excise & Service Tax Apr.2010- 0.74 & 0.74 Sept.2010 Penalty & Interest Indeterminate (e) Central Excise & Service Tax 2005-06 to 2.48 & 2.48 2008-09 Penalty & Interest Indeterminate

(f) Central Excise & Service Tax Aug.2008 to 1.32 & 1.32 Mar.2013 Penalty & Interest Indeterminate

(g) Central Excise & Service Tax Aug.2013 to 0.02 & 0.02 Dec.2013 Penalty & Interest Indeterminate (h) Central Excise & Service Tax Mar.2013 to 1.66 & 1.66 Dec.2013 Penalty & Interest Indeterminate

(i) Income Tax FY 2010-11 399.92 & Act 2011-12

Total : 553.02 & Interest Indeterminate

(c) According to the information and explanations given to us no amount were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act.

(viii) The company neither incurred cash losses at the end of the financial year nor in the immediately preceding financial year. The Company has been eroded its net worth and is under reference to BIFR. However BIFR has granted approval to the Miscellaneous Application field by the Company for an early implementation of the Revival Packages envisaging relief and concession as set out therein.

(ix) In our opinion and according to information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or bank or debentures holders, except for the term loan provided by the Government of India which the company has not repaid as the matter is being taken up with the Department of Heavy Industry/ Board of Industrial & Financial Reconstruction for maintaining the status quo.

(x) According to the information and explanations given to us the company has not given any guarantee for the loans taken by others from bank or financial institutions. However, Oriental Bank of Commerce has invoked the company's liability towards default of UP Type & Tubes Ltd.

(xi) According to information & explanation given to us, the Company has not received term loan during the financial year.

(xi) Based upon the audit procedures performed and information given to us, we report that no fraud on or by the company has been noticed or reported during the year by management. However, as explained to us by the management that in the Financial Year 2008-09 Board of Directors revealed that a commercial agreement was executed by the then CMD without the authority of the Board and after due consideration the Board decided to refer the matter of the appropriate authority for future action, however no action on the same was reported to us.



For D.S. Shukla & Co.

Chartered Accountants

Firm Registration No. 000773C



Place : Lucknow

Date : 02-07-2015

Shreeharsh Shukla

Partner

M.No-408990


Mar 31, 2014

We have audited the accompanying financial statements of Scooters India Limited (“the Company”), which comprise the Balance Sheet as at March 31,2014, and the Statement of Profit and Loss and the Cash Flow 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 notified under the Companies Act, 1956 (“the Act”) read with 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 the 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 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 :

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

(b) In the case of the Statement of profit and loss, of the profit for the year ended on that date.

(c) In the case of the cash flow statement, of the cash flow for the year ended on that date. Emphasis of matter

1. Attention is invited to para no.7 to Note No.1 of the Audited financial statement for the year ended 31st March 2014 with regards to adhoc provision of 0.5% on the value of closing stock of raw material and components, stores spares and consumables for redundancy. Our report is not qualified in respect of this matter.

2. Attention is invited to Note No.32 of the Audited financial statement for the year ended 31st March 2014 with regards to non confirmation of most of the balances of debtors and creditors accounts claims recoverable, advances, deposits, materials lying with third parties and the consequent effect on the book balances and the actual balance over the profitability/loss to the company. Our report is not qualified in respect of this matter.

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 Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

(b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from the examination of those books.

(c) The Balance Sheet, and the Statement of Profit and Loss dealt with by this Report are in agreement with the books of accounts.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) As per the Notification No. GSR 829 (E) dated 21.10.2003 issued by the Department of Company Affairs; disqualification of Directors in term of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 is not applicable to the company being a Government Company. ANNEXURE TO INDEPENDENT AUDITORS’ REPORT OF EVEN DATE TO THE MEMBERS OF SCOOTERS INDIA LIMITED. LUCKNOW ON THE ACCOUNTS OF THE COMPANY FOR THE YEAR ENDED 31ST MARCH. 2014

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

(i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As informed, all the fixed assets have not been physically verified by the management during the year but there is a phased programme of verification which in our opinion is reasonable having regards to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.

(c) As informed, the Company has not disposed of substantial part of fixed assets during the year thereby affecting the going concept status of the company.

(ii) (a) As explained to us, the company has conducted physical verification of the stores (excluding Inventory with third parties) as per the system of continuous physical verification of the Inventory adopted during the year and finished goods and work in progress at the end of the year, which is considered to be reasonable.

(b) In our opinion and according to information and explanations 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) According to information and explanations given to us, the discrepancies notice on physical Verification of inventory conducted by the management from time to time as compared to book Records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to information and explanations given to us, the Company has not granted any loan Secured or unsecured, to the companies, firm or other parties covered in register maintained under section 301 in the Act.

(b) According to information and explanation given to us, the Company has not taken any loan, Secured or unsecured, to the companies, firm or other parties covered in register maintained under section 301 in the Act.

(c) In our opinion and according to 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 also for the sale of goods. During the Course of Audit, we have not observed any major weaknesses in control system.

(iv) According to the information and explanations given to us, the company has not made any contracts or arrangements that need to be entered in register referred to in Section 301 of the Act.

(v) As informed and as per records, the company has not accepted any deposits from the public during the year.

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

(vii) We have broadly reviewed the accounts and records maintained by the company pursuant to the order made by the Central Government for the maintenance of Cost Records under Section 209(i) (d) of the Act and are of the opinion that, prima-facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.

(viii) (a) As per records, the Company is regular in depositing undisputed statutory dues

including Provident Fund, Employee State Insurance, Income Tax, Sales Tax, Wealth tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues, to the extent applicable to it with the appropriate authorities and as informed no undisputed amount were outstanding as at 31st March, 2014 for a period of more than six months from the date of becoming payable, except the following:

Sl. Name of the dues Nature of dues Period Amount No. (in Lakhs Rs.)

1 Kerala sales Tax State Sales Tax 92-93,93-94 & 94-95 4.22

2. Assam Sales Tax Act State Sales Tax 98-99 0.03

Total 4.25

(b) The disputed statutory dues aggregating Rs. 158.43 lakhs plus interest indeterminate that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl. Name of the dues Nature of Forum where No. the dues dispute is pending 1. (a) State Sales Sales Tax & Dy.Com.(Appeal) Tax Act Interest

(b) State Sales Entry Tax & Comm. Of Tax Act Penalty Commercial Taxes

(c) State Sales Entry Tax & Tribunal Tax Act Penalty

(d) State VAT Act Entry tax & Additional Interest Commissioner (Appeal)

Name of the dues Period Amount (In lakhs Rs.)

State Sales Tax Act 96-97 0.49

State Sales Tax Act 97-98 to 06-07 113.77

State Sales Tax Act 03-04,04-05 & 10.55

05-06

State VAT Act 08-09 1.91

Sl. Name of the dues Nature of Forum where No. the dues dispute is pending

2. (a) Central Excise & Service Tax Additional Service Tax Commissioner

(b) Central Excise & Service tax Additional Service Tax Commissioner

(c) Central Excise & Central Excise Additional Service Tax Commissioner

(d) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(e) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(f) Central Excise & Central Excise Assistant Service Tax Commissioner

(g) Central Excise & Central Excise Additional Service Tax Commissioner

(h) Central Excise & Central Excise Assistant Service Tax Commissioner

(i) Central Excise & Central Excise Assistant Service Tax Commissioner

Name of the dues Period Amount (In lakhs Rs.)

Central Excise & Service Tax Oct.2002- 3.15 & 6.34 Mar.2007 Penalty & Interest Indeterminate

Central Excise & Service Tax Apr.2007- 0.28 & 0.30 Mar.2008 Penalty & Interest Indeterminate

Central Excise & Service Tax 2005-06 to 1.85 & 1.85 2008-09 Penalty & Interest Indeterminate

Central Excise & Service Tax Apr.2009- 0.41 & 0.41 Sept.2009 Penalty & Interest Indeterminate

Central Excise & Service Tax Oct.2009- 0.12 0.12 Mar.2010 Penalty & Interest Indeterminate

Central Excise & Service Tax Apr. 2010- 1.99 & 1.99 Sept.2010 Penalty & Interest Indeterminate

Central Excise & Service Tax 2005-06 to 6.27 & 6.27 2008-09 Penalty & Interest Indeterminate

Central Excise & Service Tax Oct.2010- 0.12 & 0.12 Mar.2011 Penalty & Interest Indeterminate

Central Excise & Service Tax Apr.2011 to 0.06 & 0.06 Sep.2011 Penalty & Interest Indeterminate

Total : 158.43 & Interest Indeterminate

(ix) The company has not incurred cash losses at the end of the financial year but has incurred cash losses in the immediately preceding financial year. The Company has been declared sick under section 3 (1) (o) of the SICA, by BIFR in its meeting held on February 18, 2010, consequent to the reference made by the Company, due to erosion

of its net worth as on March 31,2009. The Cabinet committee, GOI has approved the revival package of 20,196 lakhs, which inter-alia includes the infusion of fresh funds, conversion of plan & non plan loan in to equity & waiver of interest. The Draft Rehabilitation Scheme (DRS) is under preparation by Operating Agency (SBI) and shall be submitted in due course before BIFR for sanction

(x) In our opinion and according to information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or bank or debentures holders, except for the term loan provided by the Government of India which the company has not repaid as the matter is being taken up with the Department of Heavy Industry/ Board of Industrial & Financial Reconstruction for maintaining the status quo.

(xi) According to the information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xii) In our opinion Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provision of clause 4(xiii) of the Order is not applicable to the company.

(xiii) In our opinion and according to information and explanation given to us, the Company is not dealing or trading in clause 4(xiv) of the order is not applicable to the Company.

(xiv) According to information and explanation given to us the Company has not given any guarantee for the loans taken by others from bank or financial institutions

(xv) According to information and explanations given to us, the company has received a plan term loan amounting to Rs. 2000 lakhs from Government of India in financial year 2013-14, which has since been utilized as per terms of the sanction letter.

(xvi) According to information and explanations given to us, and on an overall examinations of the Balance Sheet, we are of the opinion that funds raised on short term basis have, prima-facie, not been used during the year for long term investment.

(xvii) According to information and explanations given to us, the Company has not made any preferential allotment of shares to parties and Companies covered in the Registered maintained under section 301 of the Act.

(xviii) According to information and explanations given to us, the company has not issued any debentures, thereof; the question of creation of securities or charges in respect of debentures issued is not applicable.

(xix) The Company has not raised any money by way of public issue during the year.

(xx) Based upon the audit procedures performed and information given to us, we report that no fraud on or by the company has been noticed or reported during the year by management. However, as explained to us by the management that in the Financial Year 2008-09 Board of Directors revealed that a commercial agreement was executed by the then CMD without the authority of the Board and after due consideration the Board decided to refer the matter of the appropriate authority for future action, however no action on the same was reported to us.

For D.S. Shukla & Co.

Chartered Accountants

Firm Registration No. 000773C

Place: New Delhi

Date: 16th May, 2014

Shreeharsh Shukla

Partner

M.No-408990


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Scooters India Limited ("the Company"), which comprise the Balance Sheet as at March 31, 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.

Management''s Responsibility for the Financial Statements

2. 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 Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the 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 misstatements, whether due to fraud or error.

Auditors'' Responsibility

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

4. An audit involves performing procedures to obtain audit evidence about the amounts and 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 the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and subject to:

(i) Para no. 3 of Note no.1, regarding non provision of depreciation on assets which have been declared as surplus.

(ii) Para no 7 of Note no.1 regarding adhoc provision of 0.5% on the value of closing stock of raw material and components, stores, spares & consumables for redundancy.

(iii) Para no 15 of Note no.1 regarding valuation of job done for internal use on technical estimate of material than the actual cost incurrence.

(iv) Para no. 16 of Note no.1, regarding non provision of deferred tax on account of timing difference between taxable income and accounting income is provided considering the tax laws enacted or substantively enacted up to the Balance Sheet date.

(v) Para 17 (i) (A) of Note no.1,regarding non consideration of obligations of various show cause notices issued by government authorities the amount of which has neither been considered as disputed obligation nor as contingent liabilities and its consequent effect over the profitability/ loss of the company.

(vi) Note no. 13 regarding deferred tax Assets aggregating of Rs. 4142.69 lakhs has not been recognized by the company in financial statements of current year.

(vii) Note no. 15 regarding inclusion of Stock lying with Third Party/Contractors to the tune of Rs.68.57 lakhs in inventories against which company have no security and its consequent effect over the profitability/ loss of the company.

(viii) Note no. 16(a) regarding realization of outstanding of Rs.85.65 lakhs from Amausi Motors in pursuant to phased arrangement entered into by the company for liquidating the outstanding balance and its consequent effect over the profitability/ loss of the company.

(ix) Note no. 22 regarding consumption of material is not accounted for on actual consumption basis but taken as a differential/ balancing quantity of stock as Opening stock plus purchases deducted by closing stock and its consequent adjustment of abnormal loss (if any) into consumption.

(x) Note no.27 regarding non provision of payment of arrears amounting to Rs.269 lakhs to the workmen who were on roll of the company as on 01.08.2004.

(xi) Note no. 30(i)(a) regarding contingent liability of 11 cases of consumer forum (estimated amount of Rs. 13 lakhs) and 73 other cases (The amount of which is indeterminate.) and its consequent effect over the profitability/ loss of the company.

(xii) Note no.30(i) ( c ) regarding contingent liability of cases of private parties of Rs.122.91 lakhs and its consequent effect over the profitability/ loss of the company.

(xiii) Note no. 30(i)(d) regarding contingent liability of Rs. 431.65 lakhs in connection with guarantee/indemnity given by Company to OBC against which Writ Petition has been filed before High Court, Luck now Bench and its consequent effect over the profitability/ loss of the company

(xiv) Note no. 30(i) ( e) regarding non recognition of liability of Rs. 27.34 lakhs on account of Demand of ESI, the appeal of which is pending before Allahabad High Court, Luck now bench and its consequent effect over the profitability/ loss of the company.

(xv) Note no. 30(i) (f) regarding non recognition of liability of Rs. 213 lakhs raised by Punjab national bank on account of indemnity provided by the company for loan availed by UP tyres/tubes. The case is pending with DRT Luck now and its consequent effect over the profitability/ loss of the company.

(xvi) Note no. 30(i) (g) regarding non recognition of liability of Rs. 74.23 lakhs plus interest & further penalty (indeterminate) on account of demand notice raised by Central Excise and Service Tax authority and its consequent effect over the profitability/ loss of the company.

(xvii) Note no. 30(ii) regarding non recognition of liability of Rs. 23.85 lakhs plus interest thereon on account of unfavorable arbitration in the matter of Ordinance Factory Board and its consequent effect over the profitability/ loss of the company.

(xviii) Note no. 30(iii) on account of non recognition of counter claim of UPSIC as liability of Rs. 9.27 lakhs plus interest thereon and its consequent effect over the profitability/ loss of the company.

(xix) Note no. 30(iv) regarding cases pending of 36 employees in labour courts and 110 other cases pending in other courts, the amount of which is indeterminate and its consequent effect over the profitability/ loss of the company.

(xx) Note no. 30(v) on account of non recognition of Recovery Notice of Tehsildar Luck now, for recovery of Rs.2412 lakhs which is pending with High Court Luck now Bench and its consequent effect over the profitability/ loss of the company.

(xxi) Note no 30 (vi) on account of demand of Rs.2936.96 lakhs raised by Nagar Nigam Luck now against house tax liability, against which company has made no provision and its consequent effect over the profitability/ loss of the company.

(xxii) Note no. 31 regarding non recognition of liability for pending UPVAT & CST cases for the F.Y 2010-11 onwards and its consequent effect over the profitability/ loss of the company.

(xxiii) Note no. 32 regarding non confirmation of most of the balances of Debtors/ Creditors accounts claims recoverable, loans and advances material lying with third parties, various deposits to electricity, custom, court, land lord and other parties and the consequent effect on the book balance and the actual balance over the profitability/ loss to the company.

(xxiv) Note no. 33 regarding non recognition of liability on account of nonpayment of lease rent to M/s Ganesh Flour Mills Ltd. (now HVOC Ltd.) from 1982-83 onwards and its consequent effect over the profitability/ loss of the company.

(xxv) Note no. 38 regarding approval of revival package of Rs.20196 lakhs by cabinet committee of GOI and acceptance of Miscellaneous application by BIFR for early implementation of it on June 19, 2013, and its implementation with retrospective effect 31.03.2013, without finalization of "Draft Rehabilitation Scheme" (DRS) by the operating agency (SBI).

7. Subject to the observation given as per no. (i) to (xxv) referred to above we report that;

(i) In absence of the certainty of the estimates of amount involved in various legal cases, we are unable to comment upon the correctness of amount of the Contingent liabilities as given in Note no. 30 and its consequent effect over the profitability/ losses of the company.

(ii) The company should take stringent action for recovery of outstanding/ Recoverable amount against which 100% provisioning has already been made in the earlier years by deciding an approved policy for the same.

(iii) The Royalty recoverable from Fine White Line Limited (FWL) till 31.03.2012 amounting Rs.91.57 lakhs (Rs.30.37lakhs for F.Y.2010-11 and Rs.61.20 lakhs for F. Y 11-12), against which company has spentRs.98.49 lakhs. (Rs.59.35 laks in F Y12-13, Rs.34.02 lakhs, in F. Y 11-12. and Rs.5.12 in F. Y10-11,) thereby spend Rs.6.92 lakhs more than amount recoverable and entire amount of Rs.91.57 lakhs provided in the books and is still recoverable, thereby added 190.06 lakhs loss to the company.

(iv) There is unfunded liability of Rs.190.10 lakhs on account of retirement benefit according to Actuarial Valuation.

(v) The company is required to maintain the cost record for the manufacturing process but does not maintain the cost of material consumed on actual consumption basis, instead accounted for the difference of Inventory as "presumed to be consumed "against production cost of unit produced, resultantly all the normal and abnormal losses (if any) are adjusted in the production cost.

(vi) The company has implemented the restructuring as per the approval of revival package of government of India of Rs.20196 lakhs after the sanction of BIFR on June 19 June 2013, whereas draft Rehabilitation scheme(DRS) is under preparation by the operating agency (SBI) and has not been submitted to BIFR for sanction.

(vii) The company has in pursuance to comply the approval of implementation of BIFR dated 19.06.2013 increased its authorized capital from 7500 lakhs to 25000 lakhs, retrospectively w.e.f. 31.03.2013 and amended its financial statement accordingly, considering section 18 and 32 A of the Sick Industrial Companies (special provision) Act, 1985 overriding the provision of companies act 1986 and SEBI (ICDR) Regulation 2009 and other process of law.

(viii) The company has converted plan and non-plan loan of government of India of Rs.8521.12 lakhs into equity share capital and further adjusted the same amount of Rs.8521.12 lakhs against accumulated losses of the company by reduction of share capital, simply on the basis of sanction of miscellaneous application by BIFR, without submission of the "draft rehabilitation scheme" by the Operating Agency (SBI) to BIFR.

(ix) The company has waived and written off Interest accrued & due as on 31.03.2012 of Rs.2217.38 lakhs and Interest accrued but not due as on 31.03.2012 of Rs.420.22 lakhs, simply on the basis of sanction of miscellaneous application by BIFR, without submission of the "draft rehabilitation scheme" by the Operating Agency(SBI) to BIFR.

(x) The company has not made any provision for income tax on account of waiver of interest accrued and due as on 31.03.12 of Rs.2217.38 lakhs and interest accrued but not due as on 31.03.12 of Rs.420.22 lakhs claimed as expenses as early years, but written off during the current year.

Give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

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

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

Report on Other Legal and Regulatory Requirements

8. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the

Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

9. 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 purposes 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 Section 211(3C) of the Act.

(e) As per the Notification No. GSR 829 (E) dated 21.10.2003 issued by the Department of Company Affairs; disqualification of Directors in term of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 is not applicable to the company being a Government Company.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

(i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As informed, all the fixed assets have not been physically verified by the management during the year but there is a phased programme of verification which in our opinion is reasonable having regards to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.

(c) As informed, the Company has not disposed of substantial part of fixed assets during the year thereby affecting the going concept status of the company.

(ii) (a) As explained to us, the company has conducted physical verification of the stores (excluding Inventory with third parties) as per the system of continuous physical verification of the Inventory adopted during the year and finished goods and work in progress at the end of the year, which is considered to be reasonable.

(b) In our opinion and according to information and explanations 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) According to information and explanations given to us, the discrepancies noticed on physical Verification of inventory conducted the management from time to time as compared to book Records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to information and explanations given to us, the Company has not granted any loan Secured or unsecured, to the companies, firm or other parties covered in register maintained under section 301 in the Act.

(b) According to information and explanation given to us, the Company has not taken any loan, Secured or unsecured, to the companies, firm or other parties covered in register maintained under section 301 in the Act.

(c) In our opinion and according to 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 also for the sale of goods. During the Course of Audit, we have not observed any major weaknesses in control system.

(iv) According the information and explanations given to us, the company has not made any contracts or arrangements that need to be entered in register referred to in Section 301 of the Act.

(v) As informed and as per records, the company has not accepted any deposits from the public during the year.

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

(vii) We have broadly reviewed the accounts and records maintained by the company pursuant to the other made by the Central Government for the maintenance of Cost Records under Section 209(i) (d) of the Act and are of the opinion that, prima-facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.

(viii) (a) As per records, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Employee State Insurance, Income Tax, Sales Tax, Wealth tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues, to the extent applicable to it with the appropriate authorities and as informed no undisputed amount were outstanding as at 31st March, 2013 for a period of more than six month the date of becoming payable, except the following:

Sl. Name of the Status Nature of dues Period Amount No. (in Lakhs)

1 Kerala sales Tax State sales Tax 92-93, 93-94 & 94-95 4.22

Total 4.22

(b) The disputed statutory dues aggregating Rs. 255 lakhs plus interest & further penalty indeterminate that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl. Name of the dues Nature of Forum where Period Amount No. the dues dispute is pending (In lakhs)

1.(a) State Sales Sales Tax & Dy.Com. (Appeal) 77-78, 86-87, 25.02

Tax Act Interest 87-88, 92-93, 93-94, 96-97 & 98-99

(b) State Sales Entry Tax & Comm. Of 97-98 to 06-07 113.77 Tax Act Penalty Commercial Taxes

(c) State Sales Entry Tax & Tribunal 03-04, 04-05 & 10.55 Tax Act Penalty 05-06

(d) State VAT Act Entry tax & Additional 08-09 18.56 Interest Commissioner (Appeal)

2 (a) Central Sales Interest Dy. Com. 82-83, 86-87 & 5.83 Tax Act (Appeal) 93-94

(b) Central sales Central Deputy 92-93 & 93-94 7.04 Tax Act Sales Tax Commissioner (Appeal)

3 (a) Central Excise & Service Tax Additional Oct.2002- 7.86 7.91 Service Tax Commissioner Mar.2007 Penalty Further penalty Indeter minate

(b) Central Excise & Service tax Additional Apr.2007- 0.69 0.69 Service Tax Commissioner Mar.2008 Penalty

(c) Central Excise & Central Excise Customs, Central Jan. 2006 0.33 Service Tax Excise and Service Tax Appellate Tribunal, New Delhi

(d) Central Excise & Central Excise Assistant 2001-02 2.98 Service Tax Commissioner

(e) Central Excise & Central Excise Joint 2001-02 10.83 Service Tax Commissioner

(f) Central Excise & Central Excise Additional 2005-06 to 10.72 10.72 Service Tax Commissioner 2008-09 Penalty

(g) Central Excise & Central Excise Assistant Apr.2009- 2.19 2.19 Service Tax Commissioner Sept. 2009 Penalty

(h) Central Excise & Central Excise Commissioner Oct.2009- 0.12 0.12 Service Tax (Appeals) Mar.2010 Penalty

(i) Central Excise & Central Excise Assistant Apr.2010- 1.99 1.99 Service Tax Commissioner Sept. 2010 Penalty

(j) Central Excise & Central Excise Additional 2005-06 to 6.27 6.27 Service Tax Commissioner 2008-09 Penalty

(k) Central Excise & Central Excise Assistant Oct.2010 to 0.12 0.12

Service Tax Commissioner Mar.2011 Penalty

(l) Central Excise & Central Excise Assistant Apr.2011 to 0.06 0.06

Service Tax Commissioner Sep. 2011 Penalty

Total : 255 Interest

& Further Penalty Indeter minate

(ix) The company has an accumulated loss of Rs. 1597.94 lakhs at the end of the financial year and has incurred cash losses in the financial year under report and also in the immediately preceding financial year. The Company has been declared sick under section 3 (1) (o) of the SICA, by BIFR in its meeting held on February 18, 2010, consequent to the reference made by the Company, due to erosion of its net worth as on March 31, 2009. The Cabinet committee, GOI has approved the revival package of 20,196 lakhs, which inter-alia includes the infusion of fresh funds, conversion of plan & non plan loan in to equity & waiver of interest. The Draft Rehabilitation Scheme (DRS) is under preparation by Operating Agency (SBI) and shall be submitted in due course before BIFR for sanction

(x) In our opinion and according to information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or bank or debentures holders, except term loan of Government of India, which has been waived and written off by accepting company''s miscellaneous application by BIFR dated June 19, 2013.

(xi) According to the information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xii) In our opinion Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provision of clause 4(xiii) of the Order is not applicable to the company.

(xiii) In our opinion and according to information and explanation given to us, the Company is not dealing or trading in clause 4(xiv) of the order is not applicable to the Company.

(xiv) According to information and explanation given to us the Company has not given any guarantee for the loans taken by others from bank or financial institutions

(xv) According to information and explanations given to us, the company has received a non plan term loan amounting to Rs. 189 lakhs from Government of India in financial year 2012-13, which has since been utilized as per terms of the sanction letter.

(xvi) According to information and explanations given to us, and on an overall examinations of the Balance Sheet, we are of the opinion that funds raised on short term basis have, prime-facial, not been used during the year for long term investment.

(xvii) According to information and explanations given to us, the Company has not made any preferential allotment of shares to parties and Companies covered in the Registered maintained under section 301 of the Act.

(xviii)According to information and explanations given to us, the company has not issued any debentures, thereof; the question of creation of securities or charges in respect of debentures issued is not applicable.

(xix) The Company has not raised any money by way of public issue during the year.

(xx) Based upon the audit procedures performed and information given to us, we report that no fraud on or by the company has been noticed or reported during the year by management. However, checking of minutes of the Board of Directors revealed that a commercial agreement was executed by the then CMD without the authority of the Board and after due consideration the board decided to refer the matter of the appropriate authority for future action.

For, S. Srivastava & Co.

Chartered Accountants

Place: Lucknow

Date: 22nd July 2013

Sanjeev Srivastava

Partner

M.No-073449


Mar 31, 2012

1. We have audited the attached Balance Sheet of Scooters India Limited, as at 31st March, 2012 and also the Profit & Loss Account and cash flow statement for the year ended on that date annexed thereof. 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 have conducted our audit in accordance with auditing and assurance standards generally accepted in India. These 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 amount & disclosure in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to company's preparation and fair representation 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 the management, as well as evaluating overall presentation of financial statements.

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

3. As required by the Companies (Auditor Report) Order, 2003 as amended by the Companies (Audit's Report) (Amendment) Order, 2004 (the 'Order1) issued by the Central Government of India in term of sub Section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 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 purposes of our Audit;

(b) In our opinion, proper books of accounts as required by the law have been kept by the company as far as appears from our examination of those books.

(c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account;

(d) In our opinion, the said Balance Sheet and Profit & Loss Account dealt with by this report comply with the mandatory accounting standards referred to in section 211(3C) of the Companies Act, 1956 to the extent applicable.

(e) As per the Notification No. GSR 829 (E) dated 21.10.2003 issued by the Department of Company Affairs; disqualification of Directors in term of clause (g) of sub-section (1) of Section 274 ofthe Companies Act, 1956 is not applicable to the company being a Government Company.

A. In our opinion and to the best of our information and according to the explanation given to us the said accounts read together with Accounting policies and Notes thereon give the information required by Companies Act, 1956, in the manner so required and subject to:

(i) Para no. 3 of Note no. 1, regarding non provision of depreciation on assets which have been declared as surplus and are shown under current assets at net realizable value.

(ii) Para no. 16 of Note no.1, regarding non provision of deferred tax on account of timing difference between taxable income and accounting income is provided considering the tax laws enacted or substantively enacted up to the Balance Sheet date.

(iii) Para 17 (i) (A) of Note no. 1, regarding non consideration of obligations of various show cause notice issued by government authorities the amount of which has neither been considered as disputed obligation nor as contingent liabilities and its consequent effect over the profitability/loss of the company.

(iv) Note no.4 regarding money received as Advance against Equity Share Capital from Government of India ofRs. 1049 lakhs is classified under the head of "Share Application Money Pending Allotment".

(v) Note no. 13 regarding deferred tax Assets aggregating ofRs. 4643.93 lakhs has not been recognized by the company in financial statement of current year.

(vi) Note no.15 regarding inclusion of stock lying with Third party/ Contractors to the tune ofRs. 116.43 lakhs in inventories against which company have no security and its consequent effect over the profitability/loss ofthe company.

(vii) Note no.16 regarding realization of outstanding ofRs.90.59lakhs from Amausi Motors in pursuant to phased arrangement entered into by the company for liquidating the outstanding balance and its consequent effect over the profitability/loss ofthe company.

(viii) Note no.22 regarding consumption of material is not accounted for on actual consumption basis but taken as a differential/balancing quantity of stock as Opening stock plus purchases deducted by closing stock and its consequent adjustment of abnormal loss (if any) into consumption.

(ix) Note no. 30(i)(a) regarding contingent liability of 10 cases of consumer forum (estimated amount of 10 lakhs) and 78 other cases (The amount of which is indeterminate.)

(x) Note no. 30(i)(d) regarding contingent liability of 404.94 lakhs in connection with guarantee/indemnity given by Company to OBC against which Writ Petition has been filed before High Court, Lucknow Bench and its consequent effect over the profitability/loss of the company.

(xi) Note no.30(i)(e) regarding non recognition of liability ofRs. 66.30 lakhs on account of Demand of ESI, the appeal of which is pending before Allahabad High Court, Lucknow bench and its consequent effect over the profitability/ loss of the company.

(xii) Note no.30(i)(f) regarding non recognition of liability of 213 lakhs raised by Punjab National Bank on account of indemnity provided by the company for loan availed by UP tyres/tubes. The case is pending with DRT Lucknow and its consequent effect over the profitability/loss of the company.

(xiii) Note no. 30(i)(g) regarding non recognition of liability of 70.92 lakhs plus further penalty (indeterminate) on account of demand notice raised by Central Excise and Service Tax authority and its consequent effect over the profitability/loss of the company.

(xiv) Note no.30(ii) regarding non recognition of liability ofRs. 23.85 lakhs plus interest thereon on account of unfavorable arbitration in the matter of Ordinance Factory Board and its consequent effect over the profitability/ loss of the company.

(xv) Note no. 30(iii) on account of non recognition of counter claim of UPSIC as liability of 9.27 lakhs plus interest thereon and its consequent effect over the profitability/loss of the company.

(xvi) Note No. 30 (iv) regarding cases pending of 13 employees in labour courts and 126 other cases pending in other courts, the amount of which is indeterminate and its consequent effect over the profitability/loss of the company.

(xvii) Note no. 30 (v) on account of non recognition of Recovery Notice of Tehsiidar Lucknow, for recovery of Rs.2412 lakhs which is pending with High Court Lucknow Bench and its consequent effect over the profitability/loss of the company.

(xviii) Note no.31 regarding non recognition of liability for pending UPVAT & CST cases for the F Y 2008-2009 onwards and its consequent effect over the profitability/loss of the company.

(xix) Note no. 32 regarding non confirmation of most of the balances of Debtors/ Creditors accounts claims recoverable, loans and advances material lying with third parties, various deposits to electricity, custom, court, land lord and other parties and the consequent effect on the book balance and the actual balance over the profitability/loss to the company.

(xx) Note no.33 regarding non recognition of liability on account of nonpayment of lease rent to M/s Ganesh Flour Mills Ltd. (now HVOC Ltd.) from 1982-83 onwards and its consequent effect over the profitability/ loss of the company.

(xxi) Note no.38regarding complete erosion of most of the net worth of the Company as on 31st March 2009 and consequently being declared sick under Sec 3(1)(o) of SICA by BFR on 18h February 2010.

B. Subject to the observation given as per no. (i) to (xxi) referred to above we

report that;

(i) In absence of the certainty of the estimates of amount involeved in various legal cases, we are unable to comment upon the correctness of amount of the Contingent liabilities as given in Note no.30 and its consequent effect over the profitability/losses of the company.

(ii) As per Note no.2a the company has neither paid nor made any provision for the capital filing fees on account of increase of Authorised Share Capital from 8 Crore to Rs. 75 Crores and consequent interest/ Penalities thereupon. The losses of the company are understated by the same.

(iii) The company should take stringent action for recovery of outstanding/ Recoverable amount against which 100% provisioning has already been made in the earlier years by deciding an approved policy for the same.

(iv) The Company has made 100% provisioning ofRs. 91.57 lakhs (30.37 lakhs for F Y 2010-11 and Rs. 61.20 lakhs for F Y. 2011-12) of royalty recoverable from Fine White Line Limited(FWL) which has resulted into contribution of loss to the company by 91.57 lakhs. Since this amount is outstanding for less than 3 years reasonable efforts should be made to realize this amount before making 100% provision of the same, consequently losses are overstated by the said amount.

(v) The company has defaulted in repaying the term loan installments of Rs.2643.83lakhs as well as interest & penal interest ofRs. 1733.05lakhs & Rs.484.34lakhs respectively thereupon, payable to Government of India as on 31st March 2012.

(v) The company has made statutory contravention by defaulting on Salary & wages amounting to Rs. 128.89 lakhs and therefore not depositing Rs. 38.59 lakhs of P.F./Pension to the trust/P.F. authorities.

(vii) There is unfunded liability of 52.78 lakhs on account of retirement benefit according to Actuarial Valuation.

(viii) Advance against recoverable amount ofRs.316.70 lakhs on account of adhoc payment of wages to employees vide Board Resolution no.179 dated 31.10.06 has been deliberated by the board in light of order passed by "Central Government Industrial Tribunal (CGIT), Lucknow dated 21.01.2010, and accordingly, resolution no.217 dated 15.03.2012 has been passed. Consequently Company provided Rs. 316.70 lakhs as "Exceptional item" in the financial accounts reversing the "Advance against recoverable Advance" from Current Assets ofRs.316.70 lakhs, thereby the current assets has been understated and losses are overstated by the said amount.

Give a true and fair view in conformity with the accounting principles generally accepted in India.

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

(ii) In the case of Profit & Loss Account, of the Loss of the year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows of the year ended on that date.

Place : Lucknow For S. Srivastava & Co.

Date : 9th July 2012 Chartered Accountants


Mar 31, 2011

1. We have audited the attached Balance Sheet of Scooters India Limited, as at 31st March, 2011 and also the Profit & Loss Account and cash flow statement for the year ended on that date annexed thereof. 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 have conducted our audit in accordance with auditing and assurance standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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, significant estimate 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.

3. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Audit's Report) (Amendment) Order, 2004 (the 'Order') issued by the Central Government of India in terms of sub Section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 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 purposes of our Audits;

(b) In our opinion, proper books of accounts as required by the law, have been kept, by the company so far as appears from our examination of those books;

(c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account;

(d) In our opinion, the said Balance Sheet and Profit & Loss Account dealt with by this report comply with the mandatory accounting standards referred to in section 211 (3C) of the Companies Act,1956 to the extent applicable;

(e) As per the Notification No. GSR 829 (E) dated 21.10.2003 issued by the department Company Affairs, disqualification of Directors in term of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 is not applicable to the company being a Government Company.

A. In our opinion and to the best of our information and according to the explanation given to us the said accounts read together with Accounting policies and Notes thereon given in Schedule 20 give the information required by Companies Act, 1956, in the manner so required and subject to;

(i) Para no. 2 (i) of schedule 20 regarding contingent liability of Rs 1073.95 lakhs and indeterminate penalty in respect to various claims against the company which the company has not acknowledged as debts and its consequent effect over profitability/loss of the company.

(ii) Para 2 (ii) of schedule 20 regarding unfavorable arbitration award of Rs 192.98 lakhs against the company, the liability of which has not been provided in books of accounts and its consequent effect over the profitability/ loss of the company.

(iii) Para 2 (iii) of schedule 20 regarding interest payable by the company to UPSIC, the amount of which is indeterminate because of non-availability of information of amount outstanding from UPSIC and its consequent effect over the profitability/loss of the company.

(iv) Para 2 (iv) of schedule 20 relating to cases of 153 employees, the amount of which is indeterminate, not provided in books of accounts and its consequent effect over the profitability/loss of the company.

(v) Para 2(v) of schedule 20 regarding of demand of Rs 2412 lakhs against recovery notice issued by Tehsildar Lucknow which is pending in the High Court, Lucknow and its consequent effect over the profitability/loss of the company.

*(vi) Para 4 (a) and 4 (b) of schedule 20 regarding loss of Rs 15.50 lakhsout of investment of Rs 15.50 lakhs in in the Equity share of U.P. Instrument Ltd. and loss of Rs 52.28 lakhs out of investment of Rs 52.28 lakhs in the equity shares of U.P. Tyres & Tubes Ltd.

(vii) Para 5 of shedule 20 regarding non confirmation of most of the balances of debtors/creditors accounts claims recoverable, loans and advances material lying with this party, various deposit to electricity, custom, court, landlord and other parties and the consequent effect from the book balance and the actual balance over the profitability/loss to the company.

(viii)Para 8 of schedule 20 regarding non provision of lease rent for the period 1983-84 till 2010-11 for land at 64-65, Najafgarh Road, New Delhi which has expired in 1982-83 but still in possession of the company.

(ix) Para 16(i) of schedule 20 the company paid Rs 192.90 lakhs to workmen against revision proposal which was not approved by the Central government, but has been shown as recoverable amount from workers.

(x) Para 16 (ii) of schedule 20 the comapny has not made any provision as per the guidelines for revision of salary & wages with effect from 01.01.2007.

(xi) Para 17(ii) of schedule 20 regarding pending allotment of shares to central government which has been classified and disclosed as "Advance against Share Capital".

(xii) Para 26 of schedule 20 regarding complete erosion of net worth of the company as on 31st March, 2009 and consequently being declared as sick under section 3(1 )(o) of SICA by BIFR on 18th February, 2010.

B. Subject to the observations given as per no. i to vii referred to above we report that;

(i) The Company has neither paid nor made any provision for the capital filing fees on account of increase of Authorized Share Capital from Rs 8 Crore to Rs 75 Crores and consequent interest/penalties thereupon. The losses of the company are understated by the amount of the same.

(ii) In absence of the certainty of the estimates of amount involved in various legal cases, we are unable to comment upon the correctness of amount of the contingent liabilities as given schedule 20 and its consequent effect over the losses of the company.

(iii)The Company should take stringent action for recovery of outstanding/ Recoverable against which 100% provisioning has already been made in the earlier years by deciding a approved policy for the same.

(iv) The company has defaulted in repaying the installment of Term loan of Rs 3731.86 lakhs as well as interest of Rs 941.88 lakhs thereupon, payable to Government of India.

(v) The company has made statutory contravention by defaulting on salary & wages amounting to ^ 294.45 lakhs and therefore not depositing Rs 167.53 lakhs of -P.R/Pension to the trust/P.F. authorities.

(vi) There is unfunded liability of Rs 38.00 lakhs on account of retirement benefit according to actuarial valuation.

(vii) The company has booked minimum royalty due Rs 30.37 lakhs as income, as FWL, Lambretta Trademark licencee of SIL has stopped payment of royalty due & has also stoped providing turnover figure. Accordingly the loss of the Company may be considered as understated by the said amount.

Give a true and fair view in conformity with the accounting principles generally accepted in India.

(i) In the case of the Balance Sheet, of the state of affairs of the Company, as at 31st March, 2011.

(ii) In the case of Profit & Loss Account, of the Loss of the year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows of the year ended on thatdate.

ANNEXURE TO THE AUDITOR'S REPORT OF SCOOTERS INDIA LTD.. LUCKNOW (Refer to in paragraph 3 of our report of even date)

(i) (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As informed, all the fixed assets have not been physically verified by the management during the year but there is a phased programme of verification which in our opinion is reasonable having regards to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.

(c) As informed, the Company has not disposed of substantial part of fixed assets during the year thereby affecting the going concept status of the Company.

(ii) (a) As explained to us, the company has conducted physical verification of the stores * (excluding the inventory with third parties) as per the system of continuous physical verification of the inventory adopted during the year and finished goods and work in progress at the end of the year, which is considered to be reasonable.

(b) In our opinion and according to information and explanations 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) According to information and explanations given to us, the discrepancies noticed on physical verification of inventory conducted by the management from time to time as compared to book records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to information and explanations given to us, the Company has not granted any loan, secured or unsecured, to the companies, firms or other parties covered in the register maintained under section 301 in the Act.

(b) According to information and explanations given to us, the Company has not taken any loan, secured or unsecured to the companies, firms or other parties covered in register maintained under section 301 in the Act.

(iv) In our opinion and according to 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 also for the sale of goods. During the course of Audit, we have not observed any major weaknesses in control system.

(v) According to information and explanations given to us, the company has not made any contracts or arrangements that need to be entered in register referred to in Section 301 of the Act.

(vi) As informed and as per records, the company has not accepted any deposits from the public during the year.

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

(viii) We have broadly reviewed the accounts and records maintained by the company pursuant to the order made by the Central Government for the maintenance of Cost Records under section 209 (i) (d) of the Act and are of the opinion that, prima-facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.

(ix) (a) As per records, the Company is regular in depositing undisputed statutory dues including provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues, to the extent applicable to it, although defaulting on salary & wages amounting to Rs 294.45 lakhs and therefore not depositing Rs 167.53 lakhs of PR/Pension to the trust/PR Authorities, with the appropriate authorities and as informed no undisputed amount were outstanding as at 31st March, 2011 for a period of more than six months from the date of becoming payable, except the following;

SI. Name of the Status Nature of dues Period Amount No. (Rs In Lakhs)

1. Kerala Sales Tax State Sales Tax 92-93, 93-94 & 94-95 4.22

2. Uttar Pradesh Central Sales Tax 07-08 0.12

Total 4.34

(b) The disputed statutory dues aggregating Rs 236.03 lakhs plus further penalty indeterminate that have not been deposited on account of matters pending before appropriate authorities are as under:

SI. Name of the dues Nature of Forum where No. the dues dispute is pending

1.(a) State Sales Tax Sales Tax & Dy. Com. (Appeal) Acts Interest (Appeal)

(b) State Sales Tax Sales Tax Asstt. Com. Acts (Appeal)

(c) State Sales Tax Entry Tax & Comm. of Acts Penalty Commercial Taxes

(d) State Sales Tax Entry Tax & Tribunal ActsPenalty

2 (a) Central Sales Tax Central Sales Dy. Com. (Appeal) Acts Tax & Interest

(b) Central sales Tax Central Sales Asstt. Com. Act" Tax (Appeal) (C.T.)-V

3 (a) Central Excise & Service Tax Commissioner Setvice (Appeals)

(b) Central Excise & Service Tax Commissioner Service Tax (Appeals)

(c) Central Excise & Central Excise Joint Comm. Service Tax (Review)

(d) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(e) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(f) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(g) Central Excise & Central Exicise Commissioner Service Tax (Appeals)

(h) Central Excise & Central Excise Commissioner Service Tax (Appeals)

(i) Central Excise & Central Excise Asst. Comm. Service Tax

(j) Central Excise & Central Excise Commissioner Service Tax (Appeals)

SI. Name of the dues No. Period Amount (Rs In Lakhs)

1. (a) State Sales Tax Acts 77-78,86-87,87-88,92-93, 25.02 93-94,96-97,98-99

(b) State Sales Tax Acts 01-02 0.29

(c) State Sales Tax Acts 97-98 to 06-07 113.77

(d) State Sales Tax Acts 03-04, 04-05, 05-06 10.55

2 (a) Central Sales Tax Acts 82-83 & 86-87 11.30 92-93 & 93-94

(b) Central sales Tax Act 93-94 7.%8

3 (a) Central Excise & Setvice Oct. 2002- 7.91 Mar. 2007 Further Penalty Indeterminate

(b) Central Excise & Service Tax Apr. 2007 0.70 Mar. 2008 Further Penalty Indeterminate

(c) Central Excise & Service Tax Jan. 2006 0.32

(d) Central Excise & Service Tax 2001-02 2.98

(e) Central Excise & Service Tax 2001-02 10.83

(f) Central Excise & Service Tax 2005-06 to 10.72 10.72 2008-09 Penalty

(g) Central Excise & Service Tax Apr. 2009- 2.19 2.19 Sept. 2009 Penalty

(h) Central Excise & Service Tax Oct. 2009- 1.07 1.07 Mar. 2010 Penalty

(i) Central Excise & Service Tax Apr. 2010- 1.99 1.99 Sept. 2010 Penalty

(j) Central Excise & Service Tax 2005-06 to 6.27 6.27 2008-09 Penalty

236.03 Total: Further Penalty Indeterminate

(x) The Company has an accumulated losses of Rs 1,016,261,248 at the end of the financial year and has incurred cash losses in the financial year under report and also in the immediately preceding financial year. The accumulated losses of the Company are more than fifty percent of its net worth.

(xi) In our opinion and according to information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or bank or debentures holders.

(xii) According to information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) In our opinion Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provision of clause 4(xiii) of the Order is not applicable to the company.

(xiv) In our opinion and according to information and explanation given to us, the Company is not dealing or trading in clause 4 (xiv) of the order is not applicable to the Company.

(xv) According to information and explanation given to us the company has not given any guarantee for the loans taken by others from bank or financial institutions.

(xvi) According to information and explanations given to us, the company has received a non plan term loan amounting to Rs 3272.66 lakhs from Government of India in financial year 201,0-11, which has since been utilized as per terms of the sanction letter. ;

(xvii) According to information and explanations given to us, and on an overall examinations of the Balance Sheet, we are of the opinion that funds raised on short terms basis have, prime-facie, not been used during the year for long term investment.

(xviii) According to information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the Registered maintained under section 301 of the Act.

(xix) According to information and explanations given to us, the company has not issued any debentures, thereof; the question of creation of securities or charges in respect of debentures issued is not applicable.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) Based upon the audit procedures performed and information given to us, we report that no fraud on or by the company has been noticed or reported during the year by management. However, checking of minutes of the Board of Directors revealed that a commercial agreement was executed by the CMD without the authority of the Board and after due consideration the board decided to refer the matter of the appropriate authority for further action.

For S. Srivastava & Co. Chartered Accountants

Place: Lucknow Sanjeev Srivastava

Dated : 25.07.2011 Partner

M.No. 073449


Mar 31, 2010

1. We have audited the attached Balance Sheet of Scooters India Limited, as at 31st March, 2010 and also the Profit & Loss Account and cash flow statement for the year ended on that date annexed thereof. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion these financial statements based on our Audit.

2. We have conducted our audit in accordance with auditing and assurance standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 estimate 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.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Audits Report) (Amendment) Order, 2004 (the Order) issued by the Central Government of India in terms of sub Section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 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 purposes of our Audits;

(b) In our opinion, proper books of accounts as required by the law have been kept by the company so far as appears from our examination of those books;

(c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account;

(d) In our opinion, the said Balance Sheet and Profit & Loss Account dealt with by this report comply with the mandatory accounting standards referred to in section 211 (3C) of the Companies Act, 1956 to the extent applicable;

(e) As per the Notification No. GSR 829 (E) dated 21.10.2003 issued by the department Company Affairs, disqualification of Directors in term of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 is not applicable to the company being a Government Company.

A. In our opinion and to the best of our information and according to the explanation given to us the said accounts read together with Accounting policies and Notes thereon given in Schedule 20 give the information required by Companies Act, 1956, in the manner so required and subject to;

1. Para no. 2 of schedule 20 regarding contingent liability of Rs. 473.80 lakhs in respect to various claims against the company which the company has not acknowledged as debts and its consequent effect over profitability/loss of the company.

2. Para 2 (ii) of schedule 20 regarding unfavorable arbitration award of Rs. 177.91 lakhs against the company, the liability of which has not been provided in books of accounts and its consequent effect over the profitability/loss of the company.

3. Para 2 (iii) of schedule 20 regarding interest payable by the company to UPSIC, the amount of which is indeterminate because of non-availability of information of amount outstanding from UPSIC and its consequent effect over the profitability/ loss of the company.

4. Para 2 (iv) of schedule 20 regarding amount relating to employees of 163 cases, not provided in books of accounts against various court cases pending and its consequent effect over the profitability/loss of the company.

5. Para 2 of schedule 20 regarding of demand of Rs. 2412 lakhs against recovery notice issued by Tehsild ¦ -"know which is pending in the High Court, Lucknow and its consequent effect over the profitability/loss of the company.

6. Para 4 (a) of schedule 20 regarding loss of Rs. 15.50 lakhs out of investment of Rs. 15.50 lakhs in U.P.I.L. as equity share capital.

7. Para 4(b) of schedule 20 regarding loss of Rs. 52.28 lakhs out of investment of Rs. 52.28 lakhs in the equity shares of U.P. Tyres & tubes Ltd.

8. Para 5 of shedule 20 regarding non confirmation of most of the balances of debtors/creditors accounts claims recoverable, loans and advances material lying with this party, various deposit to electricity, custom, court, landlord and other parties and the consequent effect from the book balance and the actual balance over the profitability/loss of the company.

9. Para 8 of schedule 20 regarding non provision of lease rent of the property no. 64/65 Nazafgarh road, New Delhi to Ms. Ganesh floor mills Ltd. since 1982-83 onwards and its consequent effect over the profitability/loss of the company.

10. Para 17(ii) of schedule 20 regarding pending allotment of shares to central government which has been classified and disclosed as "Advance against share capital".

11. Para 25 of schedule 20 regarding complete erosion of net worth of the comapny as on 31st March, 2010 and consequent being declared as sick under section 3(1 )(i)(o) of SICA of BIFR on 18th February, 2010.

B. Subject to the observations given as per no. 1 to 11 referred to above we report that;

1. Company has neither paid nor made any provision for the capital filing fees on account of increase of Authorized Share Capital from Rs. 8 Crore to Rs. 75 Crores and consequent interest/penalties thereupon. The losses of the company are understated by the amount of the same.

2. The Company has recognized the Royalty Income on the basis of agreement executed, without authority of the Board of Directors, and its consequent effect if any, over the profitability/loss of the comapny.

3. The Company has made statutory contravention by not depositing Rs. 32,65,998/- of P.F/Pension to the Trust/P.F authorities.

4. There is unfunded liability of Rs. 16.11 crores on account of retirement benefit according to actuarial valuation.

5. In absence of the certainty of the estimates of amount involved in various legal cases and other replacement cost, we are unable to comment upon the correctness of amount of the Contingent liabilities as given schedule 20 and its consequent effect over the losses of the company.

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 318t March, 2010.

(ii) In the case of Profit & Loss Account, of the Loss of the year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows of the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT OF SCOOTERS INDIA LTD.. LUCKNOW

(Refer to in paragraph 3 of our report of even date)

(i) (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As informed, all the fixed assets have not been physically verified by the management during the year but there is a phased programme of verification which in our opinion is reasonable having regards to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.

(c) As informed, the Company has not disposed of substantial part of fixed assets during the year thereby affecting the going concept status of the Company.

(ii) (a) As explained to us, the company has conducted physical verification of the stores (excluding the inventory with third parties) as per the system of continuous physical verification of the inventory adopted during the year and finished goods and work in progress at the end of the year, which is considered to be reasonable.

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

(c) According to information and explanations given to us, the discrepancies noticed on physical verification of inventory conducted by the management fi om time to time as compared to book records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to information and explanations given to us, the Company has not granted any loan, secured or unsecured, to the companies, firms or other parties covered in the register maintained under section 301 in the Act.

(b) According to information and explanations given to us, the Company has not taken any loan, secured or unsecured, from companies, firms or other parties covered in register maintained under section 301 in the Act.

(iv) In our opinion and according to 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 also for the sale of goods. During the course of audit, we have not observed any major weaknesses in control system.

(v) According to information and explanations given to us, the company has not made any contracts or arrangements that need to be entered in register referred to in Section 301 of the Act.

(vi) As informed and as per records, the company has not accepted any deposits from the public during the year.

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

(viii) We have broadly reviewed the accounts and records maintained by the company pursuant to the order made by the Central Government for the maintenance of Cost Records under section 209 (i) (d) of the Act and are of the opinion that, prima-facie, the prescribed accounts and records have been made and maintained.

(ix) a) As per records, the Company is regular in depositing undisputed statutory dues including Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues, except for Provident Fund & Family Pension for the period October 2009 to March 2010 on account of non disbursement of Salary & Wages for said period amounting to Rs. 334.86 lakhs & Rs. 46.41 lakhs respectively including interest thereof. The Salary & Wages for the period October 2009 to March 2010 amounting Rs. 953.11 lakhs has not been disbursed by the Company to the extent applicable to it, with the appropriate authorities and as informed no undisputed amounts were outstanding as 31st March 2010 for a period of more than six months from the date of becoming payable, except the following;

SI.Name of the Statue Nature of the dues Period Amount

No. (In Lakhs)

1. Kerala Sales Tax Act State Sales Tax 92-93, 93-94 & 94-95 4.22

2. Jammu & Kashmir State Sales Tax 2006-07 0.01

3. Madhya Pradesh Entry Tax & Penalty 2005-06, 2006-07 0.30

Total 4.53

(b) The disputed statutory dues aggregating Rs. 169.48 lakhs that have not been deposited on account of matters pending before appropriate authorities are as under.

SI.Name of the Statue Nature of Forum where Period Amount No. the dues dispute is pending (in Lakhs)

1. (a)State Sales Tax Sales Tax & Asst. Com. 77-78,86-87, 87-88,92-93, 25.02 Act Interest (Appeal) 93-94,96-97, 98-99

(b)State Sales Tax Entry Tax and Comm.of 93-94 to 2001-02 0.96 Act Penalty Commercial Taxes 02-03 & 03-04

(c)State Sales Tax Entry Tax & Comm.of 97-98 to 06-07 113.77 Act Penalty Commercial Taxes

(d)State Sales Tax Entry Tax & Tribunal 03-04,04-05,05-06 10.55 Act Penalty

2. Central Sales Tax Central Sales Dy. Com. (Appeal) 82-83 & 86-87 11.30 Act Tax & Interest 92-93 & 93-94

3. Central Sales Tax Central Asstt. Com 93-94 7.88 Act Sales Tax (C.T.) - V

Total: 169.48

(x) The Company has an accumulated losses of Rs. 84,51,47,742.00 at the end of the financial year and has incurred cash losses in the financial year under report and also in the immediately preceding financial year. The accumulated losses of the Company are more than hundred percent of its net worth and the company has been declared as sick company by BIFR vide order no. 501/2010 dated 18th February 2010.

(xi) In our opinion and according to information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or bank or debentures holders.

(xii) According to information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) In our opinion Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the company.

(xiv) In our opinion and according to information and explanation given to us, the Company is not dealing or trading in clause 4 (xiv) of the order and therefore it is not applicable to the Company.

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

(xvi) According to information and explanations given to us, the company has received a non plan term loan amounting to Rs.28.43 Crores from Government of India during the Year 2009-10 which has since been utilized as per terms of the sanction letter.

(xvii) According to information and explanations given to us, and on an overall examinations of the Balance Sheet, we are of the opinion that funds raised on short terms basis have, prime-facie, not been used during the year for long term investment.

(xviii) According to information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the Registered maintained under section 301 of the Act.

(xix) According to information and explanations given to us, the company has not issued any debentures, therefore, the question of creation of securities or charges in respect of debentures issued is not applicable.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) Based upon the audit procedures performed and information given to us, we report that no fraud on or by the company has been noticed or reported during the year by management. However one commercial agreement executed by the then CMD without the authority of the Board has been referred to the appropriate authority for further action.

For S. Srivastava & Co. Chartered Accountants

Sanjeev Srivastava M.No. 073449

Place: Lucknow Dated: 30.07.2010



 
Subscribe now to get personal finance updates in your inbox!