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Auditor Report of Scooters India Ltd.

Mar 31, 2023

INDEPENDENT AUDITORâS REPORT

THE MEMBERS,

SCOOTERS INDIA LIMITED,

LUCKNOW

REPORT ON THETHE STANDALONE Ind AS FINANCIAL STATEMENTS

Opinion

We have audited the standalone financial statements of Scooters India Limited
(âthe Companyâ), which comprise the standalone balance sheet as at 31^st March
2023 and the statement of Profit and Loss, statement of changes in equity and the
standalone statement of cash flows for the year then ended 31^st March 2023, and
notes to the standalone financial statements, including a summary of significant
accounting policies and other explanatory information (together referred to as
âstandalone financial statementsâ).

In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid standalone financial statements give the information
required by the Companies Act 2013 (The Act) in the manner so required and give
a true and fair view in conformity with the Indian accounting standards prescribed
under section 133 of the act read with the companies (Indian Accounting
Standards) rules, 2015, as amended (âInd ASâ) and other accounting principles
generally accepted in India, of the state of affairs of the Company as at March 31,
2023, and profit/loss, changes in equity and its cash flows for the year ended on
that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Companies Act, 2013. Our responsibilities
under those Standards are further described in the Auditorâs Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the
Company in accordance with the Code of Ethics issued by the Institute of
Chartered Accountants of India together with the ethical requirements that are
relevant to our audit of the financial statements under the provisions of the
Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

Emphasis of Matter

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

Emphasis of Matter

1. Kind attention is drawn to Point No. 2(ii) of Note No. 1, The company has ceased
to be a going concern entity and financial statement of company for the current
FY 2022-23 has been prepared on the âNon going concern basisâ.

2. Kind attention is drawn to Point No. 2(x) of Note No. 1, The company has made
no contribution against Provident fund, Gratuity and Leave encashment liability
after 31.03.2021.

3. Kind attention is drawn to Note No. 21 regarding trade payables of Rs. 533.14
lacs, the details of name and respective amount payable is neither ascertainable
nor produced before the auditor by the company.

4. Kind attention is drawn to Note No. 23, regarding advance and deposit (Other
Current Liabilities) of Rs. 33.79 lacs, the details of name and respective amount
payable is neither ascertainable nor produced before the auditor by the company.

5. Kind attention is drawn to Note No. 36, regarding various contingent liabilities and
commitments, the figures and amount involved as on date is neither updated nor
confirmed by the management and its consequent affects over the financial
statement of the company.

6. Kind attention is drawn to Note No. 46 regarding sanction of loan from Govt of India
of Rs. 20.00 crore received during FY 2013-14, against which company has repaid
only 4.00 Crore only and defaulted for balance 16.00 crores. balance 57.00 crore is
payable by the company to Govt. of India.

7. Kind attention is drawn to Note No. 46, company has received loan of 41.00 crores
(@13.50%) on 29.08.2021 (out of total sanction loan of Rs. 65.12 crores) to
discharge the pending liabilities and to repay back from the sales proceeds of the
assets of the company. Rs 41.00 crore along with Interest still to be repaid against
the said loan to Govt of India.

8. Kind attention is drawn to Note No. 51, regarding letter no 3(1)/2020-PE-VI, dated
28.01.2021 issued by the Govt. of India, Ministry of Heavy Industries & Public
Enterprises, Department of Heavy Industry, New Delhi, consequent there upon the
total land about 147.499 acre has been returned back to UPSIDA on 01.12.2022.

Our Opinion is not modified on the above matter.Key Audit matters

Key audit matters are those matters that, in our professional judgment were of
most significance in our audit of the financial statement of the current period.
These matters were addressed in the context of our audit of the financial statement
as a whole, and in forming of our opinion thereon, and we do not provide a
separate opinion on these matters. We have determined the matters described
below to be the key audit matters to be communicated in our report.

1. There are huge balances lying outstanding and recoverable against trade
receivables, advances, security deposits and others receivables, the name wise,
age wise and respective amounts details thereof are not provided by the company,
therefore the possibilities of recovery and amount thereof is indeterminate and its
consequential affect over the financial statement.

Our Opinion is not modified on the above matter
Other Matters

1. The balance lying with the LIC of India is Rs. 8.74 crore against gratuity and leave
encashment but neither the actuarial valuation of the same has been done nor any
maturity valuation certificate of the same has been received from the LIC of India.

2. The Bank Guarantee of Rs. 1,00,000.00 was given by âMaarz Mechatronics Pvt
Ltd.â against vehicle provided by the company to them. The said bank guarantee
expired on 18/12/2019. Neither the said vehicle was returned by Maarz
Mechatronics Pvt Ltd to the company nor company has encashed the Bank
guarantee and recovered the amount.

3. Ministry of Heavy Industries & Public Enterprises, Department of Heavy Industry,
New Delhi letter no 3(1)/2020-PE-VI, dated 28.01.2021 issued by the Govt. of
India, has ordered for the closure of the company but shares of the company has
not yet delisted from Bombay Stock Exchange and trade mark & brand of Vikram
and Vijay super has not yet been sold out till the end of financial year 31.03.2023.

Our opinion is not modified in respect of above matters.Information Other Than the Financial Statements and Auditors Reports Thereon

The company''s Board of Directors is responsible for the other information. The other
information comprises the information included in Board''s Report, Management Discussion
& Analysis Report, Business Responsibility Report, but does not include the financial
statements and our auditor''s report thereon. The Board''s Report, Management Discussion &
Analysis Report, Business Responsibility Report is expected to be made available to us after
the date of this auditors report.

Our opinion on the financial statements does not cover the other information and we will not
express any form of assurance conclusion thereon.

Responsibility of Management and those charged with Governance for the
Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of
the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone
financial statements that give a true and fair view of the financial position, financial
performance, (changes in equity) 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. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions of the Act for safeguarding
of the assets of the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and design, implementation
and maintenance of adequate internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the financial statement that give a true and fair view and
are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, The Board of Directors is responsible for assessing
the Company''s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the company''s financial
reporting process.

Auditorâs Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with SAs
will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of
these Standalone Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also

a) Identify and assess the risk of material misstatement of the Standalone Financial
Statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusions, forgery, intentional omissions, misrepresentations, or
the override of internal control.

b) Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, under section 143(3) (i)
of the Act we are also responsible for expressing our opinion whether the company
has adequate internal financial control system in place and the operating
effectiveness of such controls.

c) Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.

d) Conclude on the appropriateness of management''s use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the company''s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor''s report to the
related disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor''s report.
However, future events or condition may cause the company to cease to continue
as a going concern.

e) Evaluate the overall presentation, structure and content of the Standalone
Financial Statements, including the disclosures, and whether the Standalone
Financial Statements represents the underlying transactions and events in a
manner that achieves fair representation.

Materiality is the magnitude of misstatements in the standalone financial statements that,
individually or in aggregate, makes it probable that the economic decisions of a reasonably
knowledgeable user of the Standalone Financial Statements may be influenced. We
consider quantitative materiality and qualitative factors in (i) planning the scope of our audit
work and in evaluating the results of our work; and (ii) to evaluate the effect of any
identified misstatements in the Standalone Financial Statements.

We communicate with those charged with governance regarding among other matters, the
planned scope and timing of the audit and significant audit finding including any significant
deficiencies in Internal Control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

Report on Other Legal and Regulatory Requirements

1. As required by section 143(3) of the Act, based on our audit, 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
division so far as it appears from our examination of those books.

c) The Balance sheets, the statement of profit and loss dealt with by this report are in
agreement with the books of account.

d) In our opinion, the aforesaid Standalone Financial Statements comply with the
Indian Accounting Standards prescribed under section 133 of the Act, read with Rule
7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on 31
March, 2023 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2023 from being appointed as a director in terms of
Section 164 (2) of the Act

f) As required by the Companies (Auditor''s Report) Order, 2020 (â''the orderâ) issued by
the Central Government of India in terms of sub section (11) Section 143 of the Act,
we give in the Annexure A, statement on the matters specified in paragraphs 3 and
4 of the Order, to the extent applicable.

g) With respect to the other matter to be include in the Auditors'' Report in accordance
with Rule 11 of the Companies (audit and Auditors) Rules, 2014 in our opinion and to
the best of our information and accordance to the explanation given to us:

i. The company has disclosed the impact of pending litigation on its financial
position in its Financial Statements. (Refer note no. 36 to the financial
statements).

ii. The company has not made provisions as required under the applicable
law or accounting standards, for material foreseeable losses, if any, on
long-term controls contracts. The company does not any derivate contract.

iii. There were no amounts which were required to be transferred to the
investor education and Protection Fund by the company.

2. With respect to the adequacy of the internal financial controls over financial
reporting of the company and the operating effectiveness of such controls, refer to
our separate report in âAnnexure Bâ.

3. As required by sub section 143 (5) of the Act, we give in âAnnexure Câ a statement
on the matters specified by the Comptroller and Auditor General of India for the
company.

For S. Srivastava & Co

Chartered Accountants

FRN 004570C

(Sudarshan Kumar Vij)

M.N. 007859

Partner

UDIN NO. 23007859BGRDDU9401

Place: Lucknow

Date: 29/05/2023

Mar 31, 2021

SCOOTERS INDIA LIMITED

REVISED REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

This Audit Report is in supersession of our earlier Audit report Dated 28^th June, 2021 on the standalone financial statements as at 31st March, 2021 of Scooters India Limited has been revised to give effect to the provisional comments on the Supplementary Audit conducted by the Office of the Principal Director of Audit, Industry and Corporate Affairs, New Delhi vide Letter No. A.M.G-IN/2(8)/A/cs Audit-SIL(2020-21)/2021-22/22, Dated 13^th August, 2021.

Qualified Opinion

We have audited the standalone financial statements of Scooters India Limited (âthe Companyâ), which comprise the standalone balance sheet as at 31^st March 2021 and the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (together referred to as âstandalone financial statementsâ).

In our opinion and to the best of our information and according to the explanations given to us, except for the matters described under Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (âActâ) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March 2021, and its profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis of Qualified Opinion

r~ India together with the ethical requirements that are relevant to our audit of the financiafN statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

> Attention has been invited to Note No. 51 of Notes to Financial Statements, where we have come across the of Letter of Shutting down the operation (term as âClosure Letterâ) of the company issued on 28^th January 2021 through Letter No. 3(1)/ 2020-PE-VI by (Department of Heavy Industry (PE-VI Section) Ministry of Heavy Industry & Public Enterprises.

The above letter includes the proper directions and assistance towards of closure of company. However, the said letter may be strictly adhered to guidelines of DPE on time bound closure of sick/ loss making CpSes vide Om dated: 14-06-2018.

With effect from the above Closure Letter -

a) All the operation of the company has been suspended and permanently closed down w.e.f. 28-01-2021.

Comment: Going Concern Assumption ceased to exist with certainty w.e.f. the date 28-01-2021 in relation to the company.

As per Para 25 of Ind AS 1 Preparation of Financial Statement âWhen preparing financial statements, management shall make an assessment of an entityâs ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entityâs ability to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern. â

We have observed that company has prepared the financial statement on going concern basis but not properly disclosed the fact together with the basis relating to assessment of entity''s ability as a going concern.

b) Loan of Rs.65.12 crore (with interest) will be disbursed for closure of the company.

Comment: In pursuance to the same, Government of India has disbursed the amount of Rs.41 crore out of sanctioned amount Rs.65.12 crore (with interest) on Dated 29-03-2021.

We have observed that the sanctioned letter for this amount has not been produce before us for application of amount Rs.41.00 crore in accordance with Department of Heavy Industries.

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c) Separation of regular employees through the implementation of VRS/ VSS

schemes over a period of three months with the completion of assigned tasks to them and that they finish all the ground work required for closure operations, before leaving.

Comment: We have observed that company has planned to provide VRS/ VSS schemes in one go for all the existing employees and accounted for the provision amounting to Rs.14,51,03,968.87 for the same.

While reviewing the details for the closure operations along with relevant minutes of Board Meeting (Dated 11/02/2021), the company has launched the VRS/ VSS Scheme even before completion of necessary operations require for smooth closure of company there are still many necessary ground works required to be done.

d) Return of Land about 147.499 acres to UPSIDA at the mutually agreed rates.

Comment: The company (lessee) has outstanding Lease Liability amounting to Rs.3,18,479.65, company shall made reassessment of Lease Liability.

As per Para 39 of Ind AS 116 Leases âAfter the commencement date, a lessee shall apply paragraphs 40-43 to remeasure the lease liability to reflect changes to the lease payments. A lessee shall recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, a lessee shall recognise any remaining amount of the remeasurement in profit or loss.â

We have observed that company has not initiated the process for returning the leasehold land to UPSIDA. Further, the company should initiate the process in priority thereafter remeasurement of lease liability according to lease agreement with UPSIDA.

e) Delisting of the company shares from listed BSE Stock Exchange

Comment: We reviewed the relevant minutes of Board Meeting relating to process of the delisting of shares of the company in accordance and consolation with Department of Heavy Industries.

During the audit, no information has been provided to us relating to initiation of process of delisting from the stock exchange.

f) Monetization of Trademarks & Brands of SIL

Comment: According to Closure Notice on 28-01-2021 and as per the notice, the company should monetize the Trademark & Brand and utilise the proceeds for closure process, otherwise if company fails to monetize the brand/ trademark it will be vested to GoI.

V_)

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In pursuance to the same we observed that company has floated the Expression

of Interest for Brand Valuation of Vikram and Lambretta on 10-09-2020. Further, company has extended the dates through subsequent corrigendum up to 30-11 -2020, thereafter no action has been taken in this regard. The company should assess the valuation of Intellectual Property in priority and thereafter takes in account in Books.

g) Funds received from the sale proceeds, proceeds of return of land to UPSIDA and sale of Brands & Trademarks shall be utilized to pay back interest free loan of Rs. 16 crore from GOI and the loan with interest of Rs. 65.12 crores.

Comment: During the audit, along-with the discussion with management, company has not yet made any communication with UPSIDA relating return of land till the date of our audit.

We have observed that Government of India has disbursed the loan of Rs.41 crore out sanctioned loan of Rs.65.12 crore (with interest) which is payable from the sale proceeds, proceeds of return of land to UPSIDA along with Brand & Trademarks. We suggest that the company should initiate the process in priority to avoid the unnecessary interest burden on the loan amount i.e., Rs.41 crore. Further, with the availability of the funds company may also be able to return the said loans to GoI.

h) Disposal of Plant/ Machinery and movable assets through e-auction by MSTC Ltd. as per the terms of appointment.

Comment: Plant/ Machinery and movable assets should be valued at their Realisable Value. As per Ind AS-16 Property Plant & Equipment, the company should have to revalued these assets and charge depreciation on the revalued amount as on 31/03/2021. While discussing this issue with the management, it was told to us that such machines could not be revalued by any valuation officer as these machines were bought from Italy with the name of Innocenti Machines and the size of these machines is very heavy.

We have observed that assets had been shown at their cost in financial statement without revaluing the assets at their realisable value. Further, no communication relating to e-auction to MSTC Ltd. has been initiated by company. We suggest that in compliance of the above provisions, company should revalue their Stock, Fixed Assets to accurately describe the true value of the assets at the earliest.

i) Closure in accordance with the Office Memorandum (OM) dated 14.06.2018 and the timeline as per guidelines of DPE.

Comment: During the audit and as per the discussion with management, the company has considered the deviation from timelines as mentioned in above letter due to additional delisting process. However, the company should specify exactly the proposed date for the completion of necessary activities for closure operation.

> Attention has been invited to Note No. 8 of Notes to Financial Statements where Inventory consist of Raw Material, Stores & Spares, Loose Tools and Spares, other stores, WIP & Finished Goods total amounting to Rs. 2654.80 lakhs and at the yearend Company has made provision for Inventory Obsolescence @ 75% and 100% respectively without legitimate valuation.

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Further, due to implementation of the Govt. Order "G.S.R. 881(E) 26th November 2019 BS VI" where Bharat Stage VI Norms had been applicable from 1st April, 2020, vehicles manufactured along-with WIP and Raw Material on Bharat Stage IV norms are no longer marketable with certainty.

In addition to the above, it has come to our notice that Closure Notice has been issued by Department of Heavy Industries (DHI) through Letter No.: 3(1)/2020-PE-VI on Dated 28/01/2021, all operation of the company has been permanently shut down and as per the instruction stated in the said letter, Company shall initiate the delisting procedure with Bombay Stock Exchange as per procedure prescribed by SEBI (Delisting of Equity Shares) Regulations 2009.

With effect of the above two events, the company has held a meeting on 08-06-2021 at 11.30 A.M and made the provision in respect Unsold Inventories as follows: -


Inventories		Book Value (Rs. in Lakhs)	Provision (Rs. in Lakhs)
1.	Raw Material @ 75% (approx.)	1130.45	847.84
2.	Stores & Spares @ 75% (approx.)	241.24	180.93
3.	Loose Tools & Consumables @ 75% (approx.)	450.47	337.85
4.	Other Stores @ 75% (approx.)	20.00	15.00
5.	Other Stores @ 100% (approx.)	0.34	0.34
6.	Finished Goods @ 75%	394.03	295.52
7.	Work in Progress @ 75%	415.25	311.43
Total		2651.78	1988.93

Company''s assessment and measurement of valuation of the inventories due to events

expected to adversely affect the entity in relation to estimation of provision in respect of

Inventories.

Comment: Estimation of Net Realisable value without any reliable evidence.

As per Para 30 of Ind AS 2 Inventories âEstimates of net realisable value are based on the most reliable evidence available at the time the estimates are made, of the amount the inventories are expected to realise. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period.â

Further, as per Para 31 of Ind AS 2 Inventories âEstimates of net realisable value also take into consideration the purpose for which the inventory is held.â

We have observed that: -

i) Consideration of Net Realisable Value (NRV) in respect of inventories has been made by the company without taking into account the best possible estimate and has not provided any reliable evidence on such estimate.

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ii) Company has not made any proper assessment relating to high value

inventory consisting of Raw Material and Work in Progress, along-with effective communication with existing dealer whether the Raw Material component or WIP can be utilised in BS VI Vehicles or saleable at their current market price.

iii) As per the Closure Notice, company is planning for disposal on movable assets through e-auction MSTC, relating to which has not made any communication to provide us the reliable estimates for provisioning.

iv) Company has made provision without conducting proper Physical Verification of Inventory or valuation of Inventory for the quarter ending 31-03-2021. Finished Goods consist of vehicles manufactured on BS-IV norms, some of vehicles at Regional Offices (R.O) -South and D&D (Work Shop) relating to which no proper stock verification report has been produced before us whether actually the vehicles are existing before provisioning the same.

Emphasis of Matter

The Emphasis of Matter included in the auditor''s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor''s judgment, is of such importance that it is fundamental to users'' understanding of the financial statements. Attention is invited to following notes of the standalone financial statements:

1. Mismatch in Paid-up-Share Capital

Attention has been invited to Note No. 13 of Notes to Financial Statements where mismatch has been observed in Paid-up-capital as compared to Books of Account and as per Master Data on Ministry of Corporate Affair website due to share forfeiture amount of Rs.15,637.50.

2. Attention has been invited to Note No. 12 of Notes to Financial Statements where it has been observed by us that âAdvance to LICâ in respect of Leave Encashment amounting to Rs. 3,97,49,669.00 as on 31/03/2020 has been carry forwarded as on 31/03/2021 without any change.

Since, the Actuarial Valuation has not been carried out by the company for the current year as specified in the IND AS-19 âEmployees Benefitsâ.

However, in the context of employee benefits Indian GAAP mandates that a liability is recorded in the financial statements in respect of employee benefit schemes in accordance with AS 15 or Ind AS 19, as applicable. The accounting standards require that a company shall perform an actuarial valuation to estimate the liability and make other disclosures as required by the accounting standard. Further, Actuarial valuations shall be required at the end of every accounting period for the purpose of preparation of financial statements which depict accurate results and financial position.

3. Attention has been invited to Note No. 12 of Notes to Financial Statements where it has been observed by us that the Interest Receivable from UPPCL for the FY 202021 has not been taken in the books of accounts.

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Further, Interest Receivable from UPPCL aggregate amount of Rs. 10,64,758.00 is

pertaining to the 02 previous financial years, i.e., FY 2018-19 & FY 2019-20 and as per the past practice of company is to settle the amount of interest receivable after one year from the end of relevant financial year, against the bill of electricity incurred rather than paying the interest directly to the company whereby: -

> Interest Receivable for FY 2018-19 was amounting to Rs.5,32,379.00 should have settled after one year from the end of relevant financial year i.e., FY 202021. However, we observed that the same has not been settled into their books of account.

> Interest Receivable for F.Y 2019-20 amounting to Rs.5,32,379.00 will be settled after one year from the end of relevant financial year i.e., in FY 2021-22.

4. Attention has been invited to Notes No. 4 of Notes to Financial Statements relating Sundry Debtors (unsecured) were: -

i) that the total debtors outstanding (including North, East, West & South Zones) as on 31.03.2021 amounting to Rs. 393.70 Lakhs against the provision amounting to Rs.324.27 lakhs has been running from earlier years.

ii) No external confirmation regarding any Sundry Debtors outstanding more than a year has been provided.

iii) No Age wise analysis has been maintained by the company in respect of the debtors.

iv) In respect of one of the debtor''s âMaarz Mechatronics Pvtâ a vehicle has been given by the company for Research work, where the said party has provided a Bank Guarantee of Rs.1,00,000 in favour of company. However, it was observed by us that the BG provided expired on 18/12/2019 and no vehicle has been returned by the party.

5. Attention has been invited to the following mentioned Notes to Financial Statements, we couldn''t verify the existence of events were: -

i) Notes No. 5 of Notes to Financial Statements, Deposit was made with others amounting to Rs.10.74 Lakhs and Deposit with Landlord amounting to Rs.2.43 Lakhs.

ii) Notes No. 12 of Notes to Financial Statements relating to Misc. Advance to Staff recoverable amounting to Rs.1.59 Lakhs.

iii) Notes No. 17 of Notes to Financial Statements relating to Advance from Customer amounting to Rs.1.89 Lakhs.

6. Attention has been invited to Note No. 18 of Notes to Financial Statements where it has been observed that SIL Office had transferred 02 Nos. of 3-Wheelers (Electric Vehicle) to Cement Corporation of India on dated 27/01/2021 without receipt of any advance against the same. However, it is general practice of the company to first receive advance from the suppliers against the sale. Thus, it seems that policy of the company has not been followed.

Further, we observed that Cement Corporation of India has returned back the said items to SIL Office during the month of April 2021. However, SIL Office had booked the transfer of 02 Vehicles into their Income as sale by debiting the Sundry Debtors. However, the said transaction was not reversed while finalising their financials for the FY 2020-2021. As a result, sale along with sundry debtors into their books of account were excessively booked.

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7. Attention has been invited to Note No. 21 of Notes to Financial Statements whereby

it has been observed that Rs. 1.50 Crores (Approx.) has been provided by the company into their books of account. All the payment accounted for comes under the purview of deduction of GST -TDS, however, company has neither deducted nor accounted for GST TDS into their books of accounts as a result not deposited the same before the specified due date i.e., 10/04/2021. For said default Company has to paid penal Interest along GST TDS amount.

8. Attention has been invited to Notes No. 21 of Notes to Financial Statements relating to

i) Arrears on Wages payable amounting to Rs.39.79 Lakhs are payable in respect of retired employees which are no more associated with company.

ii) Liability for Adhoc payment amounting to Rs.0.43 lakhs are payable in respect of retired employees which are no more associated with company.

9. Attention has been invited to Notes No. 21 of Notes to Financial Statements relating Sundry Creditors were: -

i) that the total creditors outstanding as on 31.03.2021 amounting to Rs. 1370.88 lakhs in respect of which no age wise analysis has been maintained by the company.

ii) No external confirmation regarding Sundry Creditors outstanding more than a year has been provided.

10. Attention has been invited to Note No. 29 of Notes to Financial Statements where it has been observed by us that salary register of employees has not been updated by the company from January, 2021 and only a salary sheet of employees has been provided to us for the verification. We suggest that Management ensure that salary register should be updated on timely manner. Further, signature of the Account Officer/ Concerned in charge on the Salary Register was missing.

11. Attention has been invited to Notes No. 31 of Notes to Financial Statements relating to payment/ provision for Rent of Warehouse, it was observed by us that expense was charged on approval basis for the region wise warehouse taken on rent, against which no legal deed has been found.

12. Attention has been invited to Note No. 31 of Notes to Financial Statements where it has been observed by us that total expenditure incurred in respect of Research & Development amounting to Rs. 95,45,575.81 is mainly in relation to the Testing/ Dying of EV along with purchase of batteries to be used in production of Electronic Vehicles (EV), the same is not connected to any kind of research & development made by the company.

On further examining the same, it has been informed to us by the management that the competent appropriate authority has not approved the said Product along with appropriate head of expenditure has also not been approved for the booking of said expenditures pertaining to Electronic Vehicles (EV), as a result, the same has been booked under the head Research & Development.

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13. Mismatch in the Directors/ Signatory details

Attention has been invited to Note No. 42 of Notes to Financial Statements where it has been observed by us that there is a mismatch in the details of the Directors/ signatory of the company as per the MCA website and books of accounts. The detail of the same is given below:

As per MCA Website	Begin Date	As per Note No.42 of FY 2020-2021	Begin Date
Mr. Renati Sreenivasulu (CMD)	06/10/2016	Mr. Rupesh Telang (CMD)	25/04/2021
Mr. Sakthimani Seshmani (DF)	04/06/2018	Mr. Mukesh Kumar (DF)	28/08/2020
Mr. Sunil Kumar Singh	15/01/2018	Mr. Sunil Kumar Singh	15/01/2018
Mr. Mahendra Pratap Singh	28/01/2020	Mr. Mahendra Pratap Singh	28/01/2020
Mrs. Rakesh Sharma	28/01/2020	Mrs. Rakesh Sharma	28/01/2020
Mrs. Ritu Pande	13/11/2018	Mr. Rama Kant	12/11/2020
Mr. Raj Shekhar Tiwari	08/02/2018

In context to the above, it has been observed by us that:

a) Rule 8: For the purpose of section 152 for the Companies Act, 2013, the company should have intimated to the Ministry of Corporate Affairs changes in the management (Managing Director, Directors, Manager and Secretary) by filing e-Form DIR-12 along with the applicable Filing fee with the Registrar of Companies (ROC) within thirty (30) days from the date when such change takes place.

b) For the above said non-compliance, Registrar of Companies (ROC) may impose penalty viz., additional fee for the delay in filing of e-Form DIR-12 (Information about Removal or Appointment of Director) based on number of days delayed as follows:

	Period of Delay	Additional Fees
	Up to 30 days	2 times of normal fees
	More Than 30 days & up to 60 days	4 times of normal fees
	More Than 60 days & up to 90 days	6 times of normal fees
	More Than 90 days & up to 180 days	10 times of normal fees
	More Than 180 days	12 times of normal fees

Thus, we are of the opinion that to avoid further penalty and to comply with the above relevant, company should file e-form DIR-12 for the change of Directors/ Signatory as soon as possible.

Our opinion is not modified in respect of the matters emphasized above.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Attention has been invited to the following points: _y

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1. Non-Payment/ Deposition of PF and Pension Contribution

Attention has been invited to Note No. 29 of Notes to Financial Statements where while examining the Provident Fund and Pension contribution details, it has been observed by us that the same has not been deposited by the company to the respective authorities since October, 2020. Details of the same is as under: -


Sr.	Month	Employeeâs PF	Pension
1.	October-2020	17,02,714.00	2,87,500.00
2.	November-2020	16,55,331.00	2,71,871.00
3.	December-2020	15,78,879.00	2,49,581.00
4.	January-2021	11,48,730.00	93,514.00
5.	February-2021	11,18,456.00	78,750.00
6.	March-2021	11,50,801.00	1,10,239.00
Total		83,54,911.00	10,91,455.00

Audit Procedures to address the Key Audit Matter

Our audit approach consisted of testing the design and operating effectiveness of internal controls and substantive procedures and we conclude that in case the contribution is not deposited by the due date as prescribed under the relevant Acts and is deposited late, the employer is not only liable to pay interest on delayed payment but also incur penalties.

Further, as per Section 7Q âAn employer who fails to pay the contribution within the limit specified in the regulation shall be liable to pay simple interest at the rate of 12% p.a. in respect of each day of delay or default in payment of contribution.

Moreover, under Section 14B certain penalties need to be incurred in case of failure in payment of contribution viz,

â¢ 5% interest p.a. for a delay up to 2 months

â¢ 10% interest p.a. for a delay up to 2-4 months

â¢ 15% interest p.a. for a delay up to 4-6 months and

â¢ 25% interest p.a. for a delay of more than 6 months

2. Non-Capitalisation of Assets under inspection

Attention has been invited to Note No. 2 of Notes to Financial Statements regarding non-capitalisation of capital work in progress amounting to Rs.174.07 Lakhs pending since F.Y 2016-17 as assets under inspection.

There is the risk over the company''s estimation about capitalisation of Assets under Inspection were:

â¢ Inherent challenges with accurately predicting the future economic benefit which must be assessed as probable for capitalisation

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Audit Procedures to address the Key Audit Matter

Our audit approach consisted of testing the design and operating effectiveness of internal controls and substantive procedures where we have: -

â¢ Evaluated the design of internal control relating to assets under inspection.

â¢ Carried out a combination of procedure involving enquiry and observation, reperformance and inspection of evidence in relation to these controls obtained that:

i. Assets purchased from HMT International Ltd. dated: 31/03/2017 are specialized assets which required specialised training to company employees to operate the asset. For this, HMT International Ltd. would be sending his experts to excel the employees of company to operate the assets. However, till the date of our audit, no expert has been sent by HMT International Ltd.

3. Material Uncertainty relating to Interest Tax & Penalty

Attention has been invited to Note No. 31 of Notes to Financial Statements were Interest and penalties on taxes amounting to Rs. 116.72 Lakhs relating to material uncertainty regulatory matters under dispute.

There is the risk over the company''s estimation about the provisioned amount of Interest on Taxes & Penalty were:

Â¦ Uncertainties relating appropriate documentation relating to legal precedence for the disputed cases pending at adjudication.

Â¦ Uncertainties relating to management estimation involves significant judgement to determine the possible outcome.

Audit Procedures to address the Key Audit Matter

Based on our audit procedure we reviewed and challenged the management underlying assumption about the provisioning relating to Taxes & Penalty accordingly we have been informed that: -

4. Non-Payment of Long-Term Loan from Government of India

Attention has been invited to Note No. 15 of Notes to Financial Statements where payment has overdue relating to outstanding long-term loan received from Government of India amounting to Rs.53,00 lakhs (Plan Loan of Rs. Rs.12,00 lakhs and loan for VRS/ VSS scheme amounting to Rs. 41,00 lakhs).

5. Non-Compliance of SEBI (LODR) Regulation, 2015

Attention has been invited to Note No. 35 of Notes to Financial Statements were penalty imposed on the company under regulation 30 of SEBI (Listing Obligation and Disclosure Requirements) amounting to 57.29 Lakhs.

Refer Note No. 35 âContingent Liabilities and Commitmentsâ. The Company has material uncertain positions related to penalty imposed which involves significant judgment to determine the possible outcome of these disputes, provisions required, if any.

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Audit Procedures to address the Key Audit Matter

We evaluated the design and tested the operating effectiveness of internal controls related to the assessment of the likely outcome of uncertain positions related to the penalty imposed, the provision made, if any.

We verified the appropriateness of the accounting policies, disclosures related to provisions for subjudice matters and details of contingent liabilities in note no. 35 respectively in the standalone financial statements.

6. Recoverability from disputed and long pending cases from Consumer Forum

Attention has been invited to Note No. 12 along with Note No. 35 of Notes to Financial Statements were recoverability of deposit with Consumer Forum made regarding disputed cases pending at adjudication amounting to Rs.8.94 Lakhs.

There is the risk over the company''s estimation about the recoverability of withholding amount of deposit with authorities were:

Â¦ Uncertainties relating appropriate documentation relating to legal precedence for the disputed cases pending at adjudication.

Â¦ Uncertainties relating to management estimation involves significant judgement to determine the possible outcome.

Audit Procedures to address the Key Audit Matter

Based on our audit procedure we reviewed the nature of the amount recoverable and the sustainability and the likelihood of recoverability upon final resolution accordingly we have been obtained/ informed that: -

â¢ no such notices/ Communication/ or letter (in any kind) relating to cases has been issued to company from the date of filing of such cases by the concerned authorities accordingly neither the letter has been shown before us which has been issued by company for the release of Security Deposit, nor the files relating to cases have been produced before us.

7. Recoverability from disputed and long pending cases from Sales Tax Department

Attention has been invited to Note No. 12 along with Note No. 35 Notes to Financial Statements there are some accounts of previous Indirect tax Regime and deposit with others which are still being reflected on the Assets side of Balance Sheet. While discussing the matter with appropriate authority, it was told to us that the cases under these accounts are pending with concerned tax authorities and therefore these accounts are still reflecting in the books of accounts. For details of such accounts, please refer the table mentioned below:

V_)

/	Sl. No	Ledge r Head No.	Ledger Name	Date of Deposit	Amount as per Financials	Management Reply Regarding the Deposits	\
	1	30510	DEPOSIT WITH SALES TAX
			Deposit with Assam Sales Tax Authority for Dibrugarh Warehouse Security	1997-98 (17-041997)	50,000.00	The case is under Trial. Latest updation is awaited. However, this is not pertaining to the FY 2020-21
			Deposit with Rajasthan as Security (NSC) for Reg. under Entry Tax	2005-06	2,015.00	The case is under Trial. Latest updation is awaited. However, this is not pertaining to the FY 2020-21
			Deposit with J&K as Security	2010-11	45,000.00	The case is under Trial. Latest updation is awaited. However, this is not pertaining to the FY 2020-21
	Total				97,015.00
	2	30520	DEPOSIT WITH OTHERS
			State Consumer Redressal Commission, Haryana	2005-06	25,000.00	The case is under Trial. Latest updation is awaited. However, this is not pertaining to the FY 2020-21
			Secretary, SCBRC Balasor	2005-06	25,500.00	The case is under Trial. Latest updation is awaited. However, this is not pertaining to the FY 2020-21
	Sl. No	Ledge r Head No.	Ledger Name	Date of Deposit	Amount as per Financials	Management Reply Regarding the Deposits
			District Consumer Forum, Osmanabad	2005-06	5,000.00	The case is under Trial. Latest updation is awaited. However, this is not pertaining to the FY 2020-21
			Kalyani Steel Products	2003-04 & 2015-16	8,38,303.00	FD is deposited in court and case is not yet settled.
			Consumer Dispute Redressal Forum Ahmedabad	2005-06	25,000.00	The case is under Trial. Latest updation is awaited. However, this is not pertaining to the FY 2020-21
			ADSL Internet, Alambagh	2005-06	1,700.00	No record available since this is pertaining to FY 2005-06.
			Voice Stream	2003-04	1,500.00	No record available since this is pertaining to FY 2003-04.
			Prabhagiya Vanadhikari (P7145)	2009-10	49,000.00	Deposited as security money in Forest Department in FY 200910.
			BSNL	2010-11, 2011-12, 2017-18	3,000.00	Deposited in BSNL as Security money.
			Hon''ble High Court (H-7091) W.P. No. 1835/M.S.	2015-16	1,00,000.00	Deposited in High Court. Date of Filing - 27.01.2016. Last Listed on - 20.05.2019
	Total				10,74,003.00
						J


	3	30525	DEPOSIT WITH EXCISE	2001-02	6,500.00	This appeal is pertaining to FY 2000-01 & No record is available in this regard.
	4	30538	DEPOSIT WITH EXCISE AUTHORITIES (APPEAL)
			Deposit with Excise Authorities for filing appeal in Tribunal Allahabad	2015-16	11,000.00	Deposited in Jan-2016. Case is still pending as per latest update.
			Deposit with Excise Authorities for filing appeal in Tribunal Allahabad	2017-18	8,050.00	Deposited with Service Tax Authority in FY 2017-18. However, case is still pending.
	Total				19,050.00
	5	30530	DEPOSIT WITH CONSUMAR FORUM
			Deposit with State Consumer Dispute Redressal Commission Patna.	2006	25,000.00	Case decided in favour of SIL. Advocate was asked for withdrawing the said amount in favour of SIL. However, the amount is still with the court.
			Deposit with Consumer Forum	Untraced	12,736.00	Not Traceable
	Sl. No	Ledge r Head No.	Ledger Name	Date of Deposit	Amount as per Financials	Management Reply Regarding the Deposits
			Deposit with District Consumer Dispute Redressal Forum Bhopal.	2014	25,000.00	Appeal is still pending.
			Deposit with State Consumer Dispute Redressal Commission Patna.	2009	12,500.00	Revision is still pending before National Consumer Forum.
			Deposit with Bihar Consumer Dispute Redressal Commission Patna	2011	25,000.00	Appeal is still pending.
			Deposit with State Consumer Dispute Redressal Commission Muzaffarpur	2015	50,000.00	Revision is still pending.
	Total				1,50,236.00
r V

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Information Other than the Financial Statements and Auditorâs Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report and Corporate Governance Report, but does not include the standalone financial statements and our auditor''s report thereon. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, (changes in equity) and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditorâs Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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As part of an audit in accordance with SAs, we exercise professional judgment and maintain

professional scepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

â¢ Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are requir

Mar 31, 2018

Report on the Financial Statements

We have audited the accompanying Ind AS financial statements of Scooters India Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2018 and the Statement of Profit and Loss Account (including Other Comprehensive Income), the Cash Flow Statement and the statement of Changes in Equity for the year then ended, and a summary of Significant Accounting Policies and other explanatory information.

Managementâs Responsibility for the Ind AS Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation and presentation of these Ind AS 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 the Companies (Indian Accounting Standards) rules, 2015, as amended and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent, and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation of the Ind AS financial statements that give a true and fair view and free from material misstatement, whether due to fraud or error.

Auditorsâ Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Acts and 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 Ind AS financial statements are free from material misstatement.

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

Basis of Qualified Opinion

1. Attention is invited to note 41 of âSignificant Accounting Policies & Notes to the Financial Statementâ and note 46 of âSignificant Accounting Policies & Notes to the Financial Statementâ regarding repayment of principal and interest on non plan loan of Rs. 189 lakhs received by the company from the Government of India at an interest rate of 13.50% per annum. The company has not provided interest over it as it has filed an application for freezing of the interest, with the Ministry of Heavy Industry however Ministry approval on the same is pending and has yet not been approved further total interest including the penalty accrued and unpaid is Rs.171.14 lakhs. till 31^st March 2018, since the final outcome is still awaited the therefore the impact is unascertained.

2. Attention is invited to note 43 of âSignificant Accounting Policies & Notes to the Financial Statementâ, where the company has increased its Authorised capital from Rs.7500 lakhs to Rs.25000 lakhs, however share issue expense with respect to payment of fees to the Ministry of Corporate Affairs (âMCAâ) pursuant to rule 12 of the Companies (Registration of Offices and Fees) Rules, 2014, of Rs.131.25 Lakhs plus interest has not been paid nor provided in the books of accounts. The MCA has so far not allowed the increased Authorized and Paid up capital, without payment of requisite fees to MCA, as the company is claiming the exemption for the fees on account of relief given by BIFR in its order dated 19th June 2013, since the final outcome is still awaited with therefore the impact is unascertainable.

Further, the Annual Returns of last four years i.e. from FY 2013-14 to FY 2016-17 and Financial Statements for FY 2016-17 have not been filed with the MCA which is non compliance of Section 92 & 137 respectively of Companies Act 2013, and if the company fails to file its annual return then the company is liable to pay additional fees and further penalty or prosecution may be initiated.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the matters described in Paragraph 1 and 2 of the Basis of Qualified opinion paragraph, the said Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March, 2018, and its profit/loss, total comprehensive income/loss, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to the following matters in the Notes to Significant Accounting Policies & Notes to the financial statements:

(a) Attention is invited to Note No. 35, of âSignificant Accounting Policies & Notes to the Financial Statementâ 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 Ind AS financial Statement do not include the impact of adjustment, if any, which may arise out of the confirmation and reconciliation process.

(b) Attention is invited to Note No. 42, of âSignicicant Accounting Policies & Notes to the Financial Statementâ where the company has bot provided for the arrears to the employees who were on the payroll of the company as on 01.04.2013, as the approval is awaited from GOI and pending outcome of the proceeding before the Central Government Industrial Tribunal, Lucknow.

(c) Attention is invited to Note No. 20, of âSignificant Accounting Policies & Notes to the Financial Statementâ regarding other current liabilities which includes provision for Payment of Bonus to employees of Rs.14.18 lakhs for the year 2014-15 and Rs.14.55 lakhs for 2016-17 in line with Payment of Bonus Act, however said bonus is not paid and contravenes the provision of Section 19 of the said Act.

(d) Attention is invited to Note No. 2, of âSignificant Accounting Policies & Notes to the Financial Statementâ where the company has not recognized any revenue / rent from land usage of Petrol Pump from HPCL in absence of any finalized agreement, the impact is unascertained.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub section (11) of Section 143 of the Act, we give in the âAnnexure- Aâ, a statement on the matters specified in the paragraph 3 and 4 of the order.

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 âAnnexure-Bâ 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 it appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss including other comprehensive income/loss, statement of Cash Flow and Statement of changes in equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rules issued there under;

(e) On the basis of the written representations received from the directors as on 31 March 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure- Câ; our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting.

(g) with respect to the other matters to be included in the Auditorsâ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us :

i) The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements - Refer to Note No. 32 of âSignificant Accounting Policies & Notes to the financial statementsâ.

ii) The Company has made provision, as required under the applicable law or accounting standards, for foreseeable losses, if any,- refer to Note No. 7, 8, 11, 15 and 21 of âSignificant Accounting Policies & Notes to the Financial Statementsâ.

iii) There has been no amount that is required to be transferred to the Investor Education and Protection Fund by the 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) In respect of Companyâs fixed assets:

(a) The company has maintained 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. In accordance with this programme, fixed assets were verified during the year by an external Cost Management Accountants firm and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the company as at the Balance Sheet date.

(ii) As explained to us, the company has a regular program of physical verification of Inventories, the physical verification of the inventory (excluding Inventory with third parties) have been carried out by external Cost Management Accountants firm and no material discrepancies were noticed on such verification.

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

(iv) In our opinion and according to the information and explanations given to us, the Company has not granted any loan investments, guarantees, and security covered under section 185 or 186 of the Act, accordingly clause (iv) of the order are not applicable to the company for the year ended March 2018.

(v) According to the information and explanation given to us, the company has not accepted any deposits during the year in terms of Sections 73 to 76 or any other relevant provisions of Companies Act, 2013.

(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) Accourding to the information and explanation given to us, in respect of statutory dues:

(a) As per records, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employee State Insurance, Sales 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, 2018 for a period of more than six month the date of becoming payable, except the following:

Sl.

No.

Name of the dues

Nature of the dues

Period

Amount (Rs. lakhs)

Kerala sales Tax Act

State sales Tax

92-93,93-94 & 94-95

4.22

Total

4.22

(b) The disputed statutory dues aggregating Rs. 2402.92 lakhs and indeterminate interest that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl No.	Name of the dues	Nature of the dues	Forum where dispute is pending	Period	Amount (Rs. lakhs)
1. (a)	State Sales Tax Act	Entry Tax & Penalty Taxes	Commissioner of Commercial Taxes	97-98 to 06-07	113.77
(b)	State Sales Tax Act	Entry Tax & Penalty	Tribunal	03-04,04-05 & 05-06	10.55
2. (a)	Central Excise & Service Tax	Service Tax	Commissioner (Appeals)	October 2002-March 2007	3.22 & 6.49 Penalty & Indeterminate Interest
(b)	Central Excise & Service Tax	Service Tax	Assistant Commissioner	2014-15	0.74 & 0.74 Penalty & Indeterminate Interest
(c)	Central Excise & Service Tax	Central Excise	Assistant Commissioner	April 2010-September 2010	0.74 & 0.74 Penalty & Indeterminate Interest
(d)	Central Excise & Service Tax	Central Excise	Additional Commissioner	2005-06 to 2008-09	2.48 & 2.48 Penalty & Indeterminate Interest
(e)	Central Excise & Service Tax	Central Excise	Tribunal Allahabad	August 2008 to March 2013	1.10 & 1.10 Penalty & Indeterminate Interest
3.	Income Tax Act	Income Tax	Dy. Commissioner of Income Tax, Range VI, Lucknow	F.Y. 2001-02 to 2008-09, 2013-14 to 2015-16	'' 2258.77
TOTAL					'' 2402.92 Penalty & Indeterminate Interest

(viii) 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 for maintaining the status quo.

(ix) The company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year however the company has raised term loan in earlier year which has been applied for the purpose for which they have been raised.

(x) 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 to the appropriate authority for future action, however no action on the same was reported to us.

(xi) Being a Government Company, pursuant to Notification No. G.S.R. ,463(E) dated 5th June 2015 issued by Government of India Provisions of Section 197 of the Act are not applicable to the company.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are not in compliance with Section 177 of the Act as the company has not formed an audit committee however the company has complied with Section 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into noncash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

Directions under section 143(5) of Companies Act, 2013

1. Whether the Company has clear title/lease deeds for freehold and leasehold land respectively? If not, please state the area of freehold and leasehold for which title/lease deeds are not available.

The company has clear title of lease hold land located in 16, Milestone at Lucknow Kanpur road, ad measuring 147.50 Acres vide lease hold agreement dated 5th Oct 1974 for the land of 125.29 acres and dated 10th August 1976 for the land of 22.209 acres with U.P. state Industrial department corporation, Kanpur for a period of 90 Years.

2. Please report whether there are any cases of waiver/write off of debts/loans / interest etc., if yes, the reasons there of and the amount involved.

As informed, the company has not waived/written off any debts/loans /interest etc. However the company has made provisions for doubtful debt against receivables of Rs.12.53 lakhs the reason for the provision as explained to us is non recovery of the said amounts from the respective parties and the amount is due and unrecovered since long the same is disclosed in Note No. 28 of the âSignificant Accounting Policies & Notes to the Financial Statementâ for the year ended 31st March 2018.

3. Whether proper records are maintained for inventories lying with third parties & assets received as gift from Gov. or other authorities.

Proper records have been maintained for such inventories of '' 31.13 lakh which are lying with the third parties. However they are subject to adjustments, if any on reconciliation as most of the balances have not been confirmed and further physical verification for such inventory was not conducted by the company. The same has been disclosed in Note No. 07 and Note No. 35 of âSignificant Accounting Policies & Notes to the Financial Statementâ for the year ended 31st March 2018.

Sub-Direction under section 143(5) of Companies Act, 2013- Nil

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)

We have audited the internal financial controls over financial reporting of Scooters India Limited (âthe Companyâ) as of 31 March 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managementâs Responsibility for Internal Financial Controls

The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (âICAIâ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditorsâ Responsibility

Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorsâ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that:

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Management and directors of the Company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companyâs assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Dhawan & Madan

Place: Lucknow Chartered Accountants

Date: 29^th May 2018

P. K. Dhawan

(Partner)

M.No.:-074258

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 (Âthe CompanyÂ), 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.

ManagementÂs 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 (Âthe ActÂ) 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.

AuditorsÂ 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 auditorÂs 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 CompanyÂs 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 (AuditorÂs Report) Order, 2003 (Âthe OrderÂ) 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 AUDITORSÂ 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 ÃÂ¦ -"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

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