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Auditor Report of Setco Automotive Ltd.

Mar 31, 2016

To

THE MEMBERS OF

SETCO AUTOMOTIVE LIMITED

Report on the Stand of on a Financial Statement

We have audited the accompanying standalone financial statements of SFTCD AUTOMOTIVE LIMITED ("the company''), which comprise the Balance Sheet as at 31ST March 201B, the Statement of Profit and Loss und the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

- Management Responsibility for the Standalone Financial Statement

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act'') with respect; to the preparation of these standalone financial statements that give a true and lair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles genera My accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Flutes, £014 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 lodgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting record?, relevant to the pre para two a n d presentation of the financial statement s that give a true an d fair view and are free from material misstatement, whether due to fraud or error.

- Auditors'' Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included In the audit report under the provisions of the Act and the Rules made there under We conducted our audit in accordance with the Standards un Auditing specified under section 143(10) of the Act Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free From material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks or material misstatement of the Financial statements, whether due to Fraud or error In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. 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 u basis for our audit opinion on the standalone financial statements.

- Opinion

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 Act in the manner so required and give a true and Fair view in conformity with the accounting principles generally accepted in India. Of the state of affairs of the Company as at 31st March, 201B and its profit and its cash flows for the year ended on that date.

- Emphasis of Matter

We draw attention to the Following matters in the Notes to the standalone financial statements;

i) Trade Payables, Trade Receivables and other debit and credit balances are subject to reconciliation and / or confirmation. (Refer Note No. 33 [i] of Standalone Financial Statements.

ii] The Company has invested Rs. 1 1.55.99,533/- in Equity & Preference shares of wholly owned ultimate foreign subsidiaries and also has outstanding receivables in form of loans & advances and debts [net) aggregating Rs.64,03,46.206/- from them as at 31.03.2016. Apart From company''s direct investments into these wholly owned ultimate foreign subsidiaries referred to above, the company’s ultimate wholly owned subsidiary. M/s Setco Automotive (UK) Ltd has an exclusive investment of Rs.6,46,05,000/- (US $ 15,00,000/- invested in F.Y 2006-07) into equity shares of its step down wholly owned subsidiary. M/s. Setco Automotive (N.A.) Inc. These wholly owned ultimate foreign subsidiaries incurred consolidated accumulated tosses of Rs. 12,34,12,067/- as at 31.032016 resulting into erosion of for portion of their consolidated net worth. The management is of the opinion that this is a temporary phase considering various efforts being made to restructure/stream line the operations of the wholly owned ultimate foreign subsidiaries, more particularly in case of M/a. Setco Automotive (UK) Limited, which is the major contributory subsidiary For consolidated accumulated losses. These being strategic investments made with a very long-term perspective and also in view of the asset base, business plans and projected profitable operations of the wholly owned ultimate foreign subsidiaries, in the opinion of the management, no provision is required to be made For diminution in value of these investments made in, loans & advances B. debts due from the said subsidiaries and they are considered good. (Refer Note Wd. 43(ii) of Standalone Financial Statements!

iii) The company has a set up of recognized Research & Development Centre (R SO Centre) at its Kalol plant. The activities of this R & D Centre are exclusively confined to the product development, particularly development of new products for domestic & international markets. The qualifying product development expenses of the said R & D Centre which satisfy recognition criteria For intangible asset as set cut in Accounting Standard-26 "Intangible Asset'' are capitalized by the company as Intangible Asset and is included under the head ''Intangible Asset under development'' in Note no. 11 ''fixed Assets" and the same shall be amortized as per amortization policy consistently followed by the company. Based on the Accounting Experts opinion obtained by the company, the accounting treatment referred to above is within the purview of Accounting Standajid-26 "Intangible Assets".

Till previous Financial year, such expenses were treated as revenue in nature S. charged off in the statement of Profit S loss since the recognition criteria for intangible asset as set but in Accounting Standard-26 ‘Intangible Assets" were not fully met.

The company had treated these R & ? expenditure as revenue expenditure in its declared Interim financial results for three quarters (Le up to 31.12.15) of E Y 2015-16 submitted to stock exchange. Based on accounting expert''s opinion referred to above, the company has restated said interim financial results incorporating the impact of above revision in accounting treatment & submitted the restated results for above-referred three quarters of FY. 2015-16 to stock exchange for public dissemination. [Refer Note No. 45 of Standalone Financial Statements).

Our opinion is not modified in respect of these matters,

- Report or other Legal and Regulatory requirements

As required by the Companies [Auditors Report] Order, 2016( “the Order"], issued by the Central Government of India in terms of Section 143(3) of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the said Order

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, the 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 o pin ion, the aforesaid standalone financial statements com ply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) In our opinion, the matters described under the Emphasis of Matters paragraph above, prima facie, do not appear to have any adverse impact on the functioning of the Company.

f) On the basis of written representations received from the directors as on 31 March, 2016 and taken on record by the Board of Directors, none of the director is disqualified as on 31 March, 2016. from being appointed as a director in terms of Section 164(2] of the Act.

g) 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 Annexure-B. and

h) With respect to the other matters to be included 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 according to the explanations given to us :

i. The Company has disclosed the impact of pending litigations as at 31st March, 2016 on its financial position in standalone Financial statements. [ Refer Note Na. 32 [ B) of the standalone Financial statements.)

ii. The Company did not have any long-1arm contracts including derivative contracts as at 31st March, 2016 for-which there were any material foreseeable losses:

iii. There has been n o delay in transferring t he amounts, required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE A TO INDEPENDENT AUDITORS'' REPORT

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

i. In respect of its fixed assets :

a] The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b] As per the Information and explanations given to us. there is a phased program of physical verification of fixed assets as adopted by the Company, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. As informed to us. no material discrepancies were noticed on such verification.

c] The title deeds of immovable properties (except self generated immovable properties) are held in the name of the Company.

ii. According to the inform ad ion and explanations given to us, inventories [excluding stocks with third parties) were physically verified during the year by the management at reasonable intervals and no discrepancies were noticed during such verification.

iii. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 103 of the Companies Act, 2013 except loans given to its wholly owned ultimate foreign subsidiary companies.

a. The terms and conditions of such loans are not prima facie prejudicial to the Company'' s interest.

b. No schedule of repayment of principal or interest has been stipulated for such loans.

c. In view of the above, the question of any overcut amount does not arise.

iv. According to the information and explanations given to us. the Company has complied with the provisions of section 185 & 186 of the Act, with respect to Loans & Investments made.

v. According to the information and explanations given to us, the Company has not accepted any deposits under the directives issued by the Reserve Bank of India or within the meaning of section 73 to 78 or any other relevant provisions of the Companies Act. 2013 and the rules [named there under.

vi. We have been informed that company is not required to maintain cost records u/s 148(1) of the Companies Act 2013.

vii. According to the information and explanations given to us and on the basis of our examination of books of account:

a) The Company has been generally regular in depositing undisputed dues including Provident Fund. Employees'' State Insurance, Income Tax. Central Sales-Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess, Professional Tax, Wealth Tax and Tax Deducted at Source with appropriate authorities though there have been few instances of delay in deposition m respect of Employees'' State Insurance. Income Tax. Excise Duty. Service Tax. Tax Deduction at Source and Custom Duty According to the information and explanations given to us, there are no undisputed items outstanding as at 31.03.2016 for more than six months From the date they became payable.

b) According to information and explanations given to us and records of the company examined by us, there were disputed dues of income tax and Value Added Tax as of 31st March. 2016 which have not been deposited except specifically stated:

Sr. No.

Name of the statute

Nature of the dues

Amount. (Rs.)

Period to which the amount relates (A.Y)

Forum where dispute is pending

Remark, if any

1

Income Tax Act, 1961

Penalty u/s 27lft3tc)

12,01,090/-

2004-05

CrTEAJ-4, Vadodara

Refer Note no. 32(B) of Standalone Financial statements.

a

Income Tax Act, 1961

income tax dues

Nil-

Nil’

Nil-

Nil-

2003-04

2004-05

2005-00 200007

ITAT, ? Bench Ahmedabad

3

Income Tax Act. 1901

Income tax dues

16,520/-

2010-11

FTAT, Ahmedabad

4

GVAT Act. 2003

VAT, penalty u/s 60(5) of GVAT Act, 2003

10,88,178/ (deposited)

2010-17

Deputy Commissioner- Appeal. Vedodare

’The Income Tax department has preferred appeals at ITAT, Ahmadabad For A.V 2003-04 to 2007-08. In case of F. Y 2003-04 to 2007-08, CIT(A) Vadodara has allowed the appeals in favour of the Com pony. The ITAT has already passed t he orders For A. Y 2002 - 03 and 2007-08 in favour of t he Company.

viii- In our opinion and according to the information & explanations given to us. the company has not defaulted in repayment of loans from banks and financial institution. The company has neither taken any loan from government nor issued any debentures,

ix. In our opinion and according to the information and explanations given to us and exemption of records of the company, the company has not raised any money by way mitral public offer or Further public offer( including debt instruments) during the year To the best of our knowledge and belief and according to the information and explanations given to us. in our opinion the term Scans raised during the year were applied For the purposes For which those were raised.

x. To the best of cur knowledge and belief and acceding to the information and explanations given to us. no fraud by the Company or on the Company by Its offices or employees were noticed or imported during the year.

xi. In our opinion and as per the information and explanation given to us. managerial remuneration has been paid or provided as per the provisions of section 197 read with Schedule V of the Act.

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

xii. As per the information and explanation given to us,, the transactions with the related parties are m compliance with Section 1 77 and 1 33 at the Act and the details thereof have been disclosed in the standalone financial statements as required under accounting standard (AS) 10. "Related Party transactions" specified under section 130 of the Act. read with rule 7 to the Companies (Accounts) Rules 2014 (Refer Note No. 28 of the Standalone Financial Statements).

xiv. As per the information and explanation given to us, the Company has not made any preferential allotment or private placement of shares or Fully or partly convertible debentures during the year under review

xv As per the Information and explanation given to us. the Company bus not entered into .my non-cash transactions with directors or persons connected with him.

xvi. The Company is not required to be registered d under Section 45 -IA of t he Reserve Bank of India Act, 1934.

ANNEXURE B TO INDEPENDENT AUDITORS’ REPORT

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

We have audited the internal financial contra Is over financial reporting of SETCO Automotive Limited ("the Company") as of 31st March, 2016 in conjunction with our audit of the standalone financial statements of the Company For the year ended on that date.

Management''s Responsibility For Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control aver 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 (ICAI), 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 company''s 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 Act-

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company''s 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 “Guidance Note"] and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act 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 was 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 auditor''s judgment, including the assessment of the risks of material misstatement of the standalone 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 Company''s internal financial controls system over financial reporting.

Mining of Internal Financial Controls Over Financial Reporting

A company''s 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 company''s 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 inflect 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 management and directors of the company: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Intern at 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 controls 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 maternal respects, a reasonably adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as et 31st March, 2016 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 [However. such internal financial controls Over financial reporting need to be improved nr id strengthened.

For MANE5H MEHTA & ASSOCIATES

Chartered Accountants

(Firm Registration No. 115832W)

(Monesh P. Mehta)

Place: Mumbai Partner

Date; May 30. 2016 Membership No. 036032


Mar 31, 2015

We have audited the accompanying standalone financial statements of SETCO AUTOMOTIVE LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March 2015, 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

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 standalone 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 standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters, which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place on adequate internal financial controls system over financial reporting and the operative effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by 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 standalone financial statements.

Opinion

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 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, 2015 and its profit and its cash flows for the year ended on that date.

- Emphasis of Matter

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

Trade Payables, Trade Receivables and other debit and credit balances are subject to reconciliation and/or confirmation (Refer Note No. 34(i) of Financial Statements)

Our opinion is not modified in respect of this matter.

- Report on Other Legal and Regulatory Requirements

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

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, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.

e) In our opinion, the matter described under the Emphasis of Matters paragraph above, prima facie, does not appear to have any adverse impact on the functioning of the Company.

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

g) With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies Act (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 financial statements. (Refer Note No. 33 (B) of the Financial Statements).

ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring the amounts, required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT (Referred to in paragraph under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date)

1. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As per the information and explanations given to us, there is a phased program of physical verification of fixed assets as adopted by the Company, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

2. In respect of its inventories:

a) According to the information and explanations given to us, inventories (excluding stocks with third parties) were physically verified during the year by the management at reasonable intervals.

b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. No material discrepancies were noticed on physical verification of inventories.

3. According to the information and explanations given to us, the Company has not granted any Secured or Unsecured Loans to Companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and sale of goods. The internal control system with regard to inventory management including purchase of inventory needs to be further strengthened. However, in our opinion, there is no continuing failure to correct major weaknesses in such internal controls.

5. According to the information and explanations given to us, the Company has not accepted any deposits, either under the directives issues by the Reserve Bank of India or within the meaning of section 73 to 76 of the Companies Act 2013 and the rules framed there under.

6. We have been informed that company is not required to maintain cost records u/s. 148 (1) of the Companies Act 2013.

7. According to the information and explanations given to us and on the basis of our examination of books of account:

(a) The Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Value Added Tax, Central Sales Tax, Income Tax, Tax Deducted at Source, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess with appropriate authorities though there have been few instances of delay in deposition in respect of Employees State Insurance, Income Tax, Wealth Tax, Custom Duty, Service Tax and Tax Deducted at Source. According to the information and explanations given to us, there are no disputed items outstanding for more than six months as of 31st March 2015.

(b) According to the information and explanations given to us and records of the Company examined by us, no amount has remained unpaid on account of any dispute as of 31st March 2015.

(c) According to the information and explanations given to us there has been no delay in transferring the amounts, required to be transferred to Investor Education and Protection Fund in accordance with the provisions of the Companies Act 1956 (1 of 1956) and rules made there under.

8. The company does not have accumulated losses as at 31st March 2015. The company has not incurred cash losses during the current year and in the immediately preceding financial year.

9. In our opinion and according to the information & explanations given to us, the company has not defaulted in repayment of dues with regard to loans obtained from banks. The company has neither taken any loan from any financial institution nor issued any debentures.

10. The Company has given guarantees for loans taken by its wholly owned ultimate foreign subsidiaries and Indian subsidiary from banks. In our opinion and according to the information and explanations given to us, the terms and conditions of the said guarantees are not, prima facie, prejudicial to the interest of the company.

11. In our opinion and according to the information and explanations given to us, and examination of records of the company, the term loans availed by the Company during the year were applied for the purposes for which the loans were obtained.

12. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year

13. In our opinion and as per the information and explanations given to us, the nature of the Company's business/activities during the year is such that clauses tiii) (a) & tb) of the Companies (Auditor's Report) Order, 2015 are not applicable.

For MANESH MEHTA & ASSOCIATES

Chartered Accountants (Firm Registration No. 115832W)

(Manesh P. Mehta)

Place: Mumbai Partner

Date: May 26, 2015 Membership No. 036032


Mar 31, 2014

* Report on the Financial Statements

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

* Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read: with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error

* Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 the Balance Sheet, of the state of affairs of the Company as at 31 March, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit 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.

* Emphasis of Matter

Trade Payables, Trade Receivables and other debit and credit balances are subject to reconciliation and/or confirmation (Refer Note No. 36[i]).

Our opinion is not qualified in respect of this matter

* Report on Other Legal and Regulatory Requirements

As required by the Companies [Auditor''s Report] Order, 2003 as amended by the Companies (Auditor''s report] (Amendment) Order 2004, issued by the Central Government of India in terms of Section 227[4A] of the Act, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order As required by Section 227(3) of the Act, we report that:

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.

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.

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

In our opinion, the Balance Sheet, the Statement of Profit and Lose, and the Cash Flaw Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

On the basis of the written representations received From the directors as on 31 March 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph under the heading "Report on Other Legal and Regulatory Requirements" of our repart of even date]

1. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets an the basis of available information

b) As per the information and explanations given to us, there is a phased program of physical verification of fixed assets as adopted by the Company, which in our opinion, is reasonable having regard to the size of the company and the nature of the assets. As informed, no material discrepancies were noticed on such verification.

c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

2. In respect of its inventories:

a) According to the information and explanations given to us, inventories [excluding stocks with third parties)were physically verified during the year by the management at reasonable intervals.

b) According ta the information and explanations given to us, the procedures of physical verification of inventories fallowed by the management are reasonable and adequate in relation to size of the Company and the nature of its business

c) In our opinion and according tD the information and explanations given to us, the Company has maintained proper records of its inventories. No material discrepancies were noticed on physical verification of inventory.

3. According to the information and explanations given to us, the Company has neither granted nor taken any loans to/from Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us. there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and sale of goods. The internal control system with regard to inventory management including purchase of inventory needs to be further strengthened. However, in our opinion, there is no continuing failure to correct major weaknesses in such internal controls.

5. According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements that need to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1I956, have been so entered. In our opinion and according to the information explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lacs have been made at prices which prima facie appear reasonable as per information available with the company.

6. According to the information and explanations given ta us, the Company has not accepted any deposits from the public within the meaning of section 58A and 58AA of the Companies Act, 1956 and the rules framed there under

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

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies [Cost Accounting Records] Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. According do the information and explanations given to us and on the basis of our examination of books of account:

a) The Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Value Added Tax, Central Sales Tax, income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess with appropriate authorities though there have been few instances of delay in deposition in respect of Provident Fund, Central Sales Tax, Value Added Tax, Employee State Insurance, Wealth Tax, Service Tax and Tax Deducted at Source. According do the information and explanations given to us, there are no undisputed items outstanding for more than six months as of 31st March, 2014.

b) According to information and explanations given do us and records of the company examined by us, the particulars of dues related to Sales Tax/Value Added Tax which have not been deposited as on 31st March, 2014 on account of dispute are as fallows:

Nature of Nature of Forum where Period to Statute Dues Dispute is which pending amount relates

Central Sales Tax Penalty Joint A.Y 2013-14 Act, 1956 / Value Commissioner Added Tax, 2005 (Appeals), Commercial Tax Department. Uttarakhand

Nature of Amount Statute Involved (Rs.) Central Sales Tax 22,77,634/- Act, 1956 / Value Added Tax, 2005

10. The company does not have accumulated losses as at 31.03.2014. The company has not incurred cash losses during the current year and in the immediately preceding financial year.

11. In our opinion and according to the information & explanations given to us the company has not defaulted in repayment of dues with regard to loans obtained from banks. The company has not taken loan from any financial institution nor issued any debentures

12. The Company has given guarantees for loans taken by its ultimate foreign subsidiaries from banks. In our opinion and according to the information and explanations given to us, the terms and conditions of the said guarantees ere not, prima facie, prejudicial to the interest of the company.

13. In our opinion and according to the information and explanations given to us, the term loans availed by the Company during the year were, prirra facie, applied for the purposes for which the loans were obtained.

14. According to the information and explanations given to us and based on our examination of the balance sheet on an overall basis, we are of the opinion that, prima facie, short-term funds amounting to Rs. 16,24,06,504/- have been used for long-term investment in non-current assets.

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

16. The Company has not issued any debentures during the year.

17. The company has not raised any money from public issue during the year.

18. To the best of our knowledge and belief and according to the information and Explanations given to us, no fraud on or by the Company was noticed or reported during the year.

19. In our opinion and as per the information and explanations given to us, the nature of the Company''s business/activities during the year is such that clauses (xii), (xiii), and (xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable.

For MANESH MEHTA & ASSOCIATES Chartered Accountants (Firm Registration No. 115839W)

(M.P. Mehta) Place: Mumbai: Partner Date: May 30, 2014 Membership No. 036032


Mar 31, 2012

1. We have audited the attached Balance Sheet of Setco Automotive Limited as at 31st March, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan & perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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 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 & 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 & Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the directors as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Sundry debit & credit balances are subject to reconciliation and/or confirmation (Refer Note 41(i) - "Notes forming part of Financial Statements")

g) Attention is invited to the Note No. 35 - "Notes forming part of Financial Statements, on impact of survey proceedings conducted by Income tax Department during the year on MAT credit entitlement of Rs. 9,04,26,348/- forgone.

h) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read with Notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with 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 Statement of Profit and Loss, of the Profit for the year ended on that date, and

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

ANNEXURE

TO THE AUDITORS' REPORT

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

1. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars and situation of fixed assets on the basis of available information.

b) As per the information and explanations given to us, there is a phased program of physical verification of fixed assets as adopted by the Company, which in our opinion, is reasonable having regard to the size of the company and the nature of the assets. As informed, no material discrepancies were noticed on such verification.

c) In our opinion and according to the information & explanations given to us, no substantial part of the fixed assets has been disposed off during the year and hence, going concern status of the company is not affected.

2. In respect of its inventories:

a) According to the information and explanations given to us, inventories (excluding stocks with third parties) were physically verified during the year by the management at reasonable intervals.

b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. No material discrepancies were noticed on physical verification of inventory.

3. According to the information and explanations given to us, the Company has neither granted nor taken any loans to/from Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and sale of goods. We have not observed any continuing failure to correct major weaknesses in such internal controls.

5. According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements that need to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956, have been so entered.

In our opinion and according to the information & explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lacs have been made at prices which appear reasonable as per information available with the company.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of section 58A and 58AA of the Companies Act, 1956 and the rules framed there under.

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

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. According to the information and explanations given to us and on the basis of our examination of books of account:

a) The Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, VAT, Central Sales Tax, Income Tax, Wealth Tax, Custom Duty, Excise Duty and Cess with appropriate authorities though there have been few instances of delay in deposition in respect of Service Tax, Tax Deducted at Source, Tax Collected at Source, Professional Tax and Central Sales Tax. According to the information and explanations given to us, there are no undisputed items outstanding for more than six months as of 31st March, 2012.

b) According to the information and explanations given to us, there were no disputed amounts remaining unpaid in respect of VAT, Central Sales Tax, Excise duty, Service Tax, Income Tax, Wealth Tax, Cess and Custom Duty.

10. The Company does not have accumulated losses as at 31.03.2012. The company has not incurred cash losses during the current year and in the immediately preceding financial year.

11. In our opinion and according to the information & explanations given to us, Company has not defaulted in repayment of dues with regard to loans obtained from banks. The company has not taken loan from any financial institution nor issued any debentures.

12. The Company has given guarantees for loans taken by its foreign subsidiaries from banks. In our opinion and according to the information and explanations given to us, the terms and conditions of the said guarantees are not, prima facie, prejudicial to the interest of the company.

13. In our opinion and according to the information and explanations given to us, the term loans availed by the Company during the year were, prima facie, applied for the purposes for which the loans were obtained.

14. According to the information and explanations given to us and based on our examination of the balance sheet on an overall basis, we report that no funds raised on short-term basis have been used for long- term investment.

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

16. The Company has not issued any debentures during the year.

17. The Company has not raised any money from public issue during the year.

18. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

19. In our opinion and as per the information and explanations given to us, the nature of the Company's business/activities during the year is such that clauses (xii), (xiii) and (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable.

For Manesh Mehta & Associates

Chartered Accountants

(Firm Registration No. : 115832W)

Place : Mumbai (M.P.MEHTA)

Date : 05.07.2012 Partner

(M. No. 036032)


Mar 31, 2011

1. We have audited the attached Balance Sheet of Setco Automotive Limited as at 31st March, 2011 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan & perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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 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, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

e) Central Government has not yet notified the rules relating to the levy & collection of cess from Companies in terms of section 441A of the Companies Act, 1956. We are, therefore, not reporting on this matter as required by section 227 (3) (g) of the Companies Act, 1956.

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

g) Sundry debit & credit balances are subject to reconciliation and/or confirmation (Refer Note 14(a) of Schedule 19 - "Notes forming part of Accounts”)

h) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read with the Significant Accounting Policies and Notes forming part of Accounts, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

ANNEXURE as at 31st March, 2011 Referred to in paragraph 3 of our report of even date)

1. In respect of its fixed assets:

a) The Company has maintained records showing particulars and situation of fixed assets on the basis of available information. However, same is required to be updated under SAP computerized system.

b) As per the information and explanations given to us, there is a phased program of physical verification of fixed assets as adopted by the Company, which in our opinion, is reasonable having regard to the size of the company and the nature of the assets. As informed, no material discrepancies were noticed on such verification.

c) In our opinion and according to the information & explanations given to us, no substantial part of the fixed assets has been disposed off during the year and hence, going concern status of the company is not affected.

2. In respect of its inventories:

a) According to the information and explanations given to us, inventories (excluding stocks with third parties) were physically verified during the year by the management at reasonable intervals.

b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. No material discrepancies were noticed on physical verification of inventory.

3. According to the information and explanations given to us, the Company has neither granted nor taken any loans to/from Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory, fixed assets and sale of goods. We have not observed any continuing failure to correct major weaknesses in such internal controls.

5. According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements that need to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, have been so entered. In our opinion and according to the information & explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lacs have been made at prices which appear reasonable having regard to the prevailing market prices at the relevant times.

6. The Company has not accepted any deposits from the public under section 58A and 58AA of the Companies Act, 1956 and the rules framed there under.

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

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

9. According to the information and explanations given to us and on the basis of our examination of books of account:

a) The Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Sales Tax, Income Tax, Wealth Tax, Custom Duty, Excise Duty and Cess with appropriate authorities though there have been few instances of delay in deposition in respect of Service Tax & TDS. According to the information and explanations given to us, there are no undisputed items outstanding for more than six months as of 31st March, 2011.

b) According to the information and explanations given to us, there were no disputed amounts remaining unpaid in respect of Sales Tax, Excise duty, Service Tax, Income Tax, Wealth Tax, Cess and Custom Duty.

10. The company does not have accumulated losses as at 31.03.2011. The company has not incurred cash losses during the current year and in the immediately preceding financial year.

11. In our opinion and according to the information & explanations given to us, Company has not defaulted in repayment of dues with regard to loans obtained from banks. The company has not taken loan from any financial institution nor issued any debentures.

12. The Company has given guarantees for loans taken by its foreign subsidiaries from banks. In our opinion and according to the information and explanations given to us, the terms and conditions of the said guarantees are not, prima facie, prejudicial to the interest of the company.

13. In our opinion and according to the information and explanations given to us, the term loans availed by the Company during the year were, prima facie, applied for the purposes for which the loans were obtained.

14. According to the information and explanations given to us and based on our examination of the balance sheet on an overall basis, we report that no funds raised on short-term basis have been used for long-term investment.

15. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year and accordingly, the question of whether the price at which the shares have been issued is prejudicial to the interest of the company does not arise.

16. The Company has not issued any debentures during the year and accordingly, the question of creating security in respect thereof does not arise.

17. The company has not raised any money from public issue during the year and in the recent past and accordingly, the question of disclosing the end use of money raised by public issue does not arise.

18. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

19. In our opinion and as per the information and explanations given to us, the nature of the Company's business/activities during the year is such that clauses (xii), (xiii) and (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable.

For MANESH MEHTA & ASSOCIATES

Chartered Accountants

(Firm Registration No. : 115832W)

(B. R. BHATT)

Place: Mumbai Partner

Date: 30th May, 2011 (M. No. 40007)


Mar 31, 2010

1. We have audited the attached Balance Sheet of Setco Automotive Limited as at 31st March, 2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan & perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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 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, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

e) Central Government has yet not notified the rules relating to the levy & collection of cess from Companies in terms of section 441A of the Companies Act, 1956. We are, therefore, not reporting on this matter as required by section 227 (3) (g) of the Companies Act, 1956.

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

g) Sundry debit & credit balances are subject to reconciliation and/or confirmation (Refer Note 13 of Schedule 18 - "Notes forming part of Accounts")

h) Attention is invited to Accounting Policy No. 7(i) in Schedule 17 - "Significant Accounting Policies" and Note No. 10 in Schedule 18 - "Notes forming part of Accounts" for the change in accounting policy made during the year in revenue recognition and its ultimate impact on the Profits and Reserves & Surplus of the company. The current years profits and Reserves & Surplus are lower by Rs. 40,61,284/- on account of the said change.

i) in our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read with the Significant Accounting Policies and Notes forming part of Accounts, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010 (ii) In the case of Profit and Loss Account, of the Profit for the year ended on that date, and (iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date. Annexure to the Auditors Report 1. In respect of its fixed assets:

a) The Company has maintained proper records showing particulars and situation of fixed assets. However, same is required to be refined with the newly implemented SAP computerized system.

b) As per the information and explanations given to us, there is a phased program of physical verification of fixed assets as adopted by the Company, which in our opinion, is reasonable having regard to the size of the company and the nature of the assets. As informed, no material discrepancies were noticed on such verification.

c) In our opinion and according to the information & explanations given to us, no substantial part of the fixed assets has been disposed off during the year and hence, going concern status of the company is not affected.

2. In respect of its inventories:

a) According to the information and explanations given to us, inventories were physically verified during the year by the management at reasonable intervals.

b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. No material discrepancies were noticed on physical verification of inventory.

3. According to the information and explanations given to us, the Company has neither granted nor taken any loans to/ from Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory, fixed assets, sale of goods and services. We have not observed any continuing failure to correct major weaknesses in such internal controls.

5. According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements that need to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, have been so entered. In our opinion and according to the information & explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lacs have been made at prices which are reasonable having regard to the prevailing market prices at the relevant times.

6. The Company has not accepted any deposits from the public under section 58A and 58AA of the Companies Act, 1956 and the rules framed there under.

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

8. According to the information and explanations given to us, the maintenance of cost records has not been prescribed by the Central Government under section 209 (1) (d) of the companies Act, 1956.

9. According to the information and explanations given to us and on the basis of our examination of books of account: a) The Company has been generally regular in depositing undisputed statutory dues including Provident Fund and Employees State Insurance with appropriate authorities though there have been few instances of delay in deposition in respect of Professional Tax, Service Tax, Sales Tax, TCS, etc. However, there have been frequent delays during the year in depositing Tax deducted at Source. According to the information and explanations given to us, there are no undisputed items outstanding for more than six months as of 31st March, 2010.

b) According to the information and explanations given to us, there were no disputed amounts remaining unpaid inrespect of Sales Tax, Excise duty, Service Tax and Custom Duty except following amounts in respect of income tax: Sr. No. Name of the Statue Assessment Year Amount (Rs.) Forum where dispute is pending

Commissioner of Income Tax (Appeals),

1 Income Tax Act, 1961 2006-07 3,02,265/-

Baroda

2 Income Tax Act, 1961 2007-08 10,83,490/ Commissioner of Income (Appears) Baroda

10. The company does not have accumulated losses as at 31.03.2010. The company has not incurred cash losses during the current year and the immediately preceding financial year.

11. In our opinion and according to the information & explanations given to us, Company has not defaulted in repayment of dues with regard to loans obtained from banks. The company has not taken any other loan from any financial institution nor issued any debentures.

12. The Company has given guarantees for loans taken by its subsidiaries from banks. In our opinion and according to the information and explanations given to us, the terms and conditions of the said guarantees are not, prima facie, prejudicial to the interest of the company.

13. In our opinion and according to the information and explanations given to us, the term loans availed by the Company during the year were, prima facie, applied for the purposes for which the loans were obtained.

14. According to the information and explanations given to us and based on our examination of the balance sheet on an overall basis, we report that no funds raised on short-term basis have been used for long-term investment.

15. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year and accordingly, the question of whether the price at which the shares have been issued is prejudicial to the interest of the company does not arise.

16. The Company has not issued any debentures during the year and accordingly, the question of creating security in respect thereof does not arise.

17. The company has not raised any money from public issue during the year and in the recent past and accordingly, the question of disclosing the end use of money raised by public issue does not arise.

18. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

19. In our opinion and as per the information and explanations given to us, the nature of the Companys business/activities during the year is such that clauses (xii), (xiii) and (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable.

For MANESH MEHTA & ASSOCIATES

Chartered Accountants

(Firm Registration No.: 115832W)

(M.P.MEHTA)

Partner (M. No. 36032)

Place: Mumbai Date: 28/06/2010

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