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Auditor Report of SML Isuzu Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of SML Isuzu Limited ('the Company'), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the 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 stated 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 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 and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

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

We 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 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 a 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 an adequate internal financial controls system over financial reporting and the operating 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 the 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, 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.

Report on other legal and regulatory requirements

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

2. 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 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; and

f. with respect to the other matters to be included in the Auditor's 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 financial statements - Refer to Note 27 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 amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in our Independent Auditor's Report to the members of the Company on the financial statements for the year ended 31 March 2015, we report that:

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

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

(ii) (a) The inventory, except materials-in-transit and stock lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stocks and the book records.

(iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under section 189 of the Companies Act, 2013. Accordingly, paragraph 3(iii) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchase of certain items of inventories and fixed assets are for the Company's specialised requirements and therefore suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets, and with regard to sale of goods and services.Considering the size of the Company and the nature of its business, internal control procedures over obtaining comparable quotations for purchase of inventories and fixed assets have been strengthened during the year. We have not observed any major weakness in the internal control system during the course of the audit.

(v) The Company has not accepted any deposits covered under Section 73 to 76 of the Act.

(vi) The Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act for any of the activities carried out by the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees' state insurance, income tax, sles tax, wealth tax,service tax, duty of customs, duty of excise, value added tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. Further, according to the information and explanations given to us, except as stated below, there are no dues of income tax, sales tax, service tax, duty of excise and value added tax which have not been deposited by the Company on account of disputes:

Name of Particulars Amount Amount the statute Disputed Deposited Rs. Lakhs Rs. Lakhs

Central Demand raised for difference 218.23 87.30 Sales Tax in the rate of tax Act, 1956



Punjab VAT Vehicles impounded & 1.57 0.39 Act, 2005 demand raised due to discrepancy in / inadequacy of documents

U P Trade Demand raised due to sales 15.94 7.20 Tax Act, 1948 tax rate difference.

Punjab VAT Wrong input tax credit taken 67.76 67.76 Act, 2005 in the returns

Gujarat Sales return/branch transfers 161.68 Nil Sales Tax documents could not be Act, 1969 produced during the assessment, so the tax on the sales return amount has been charged by the department.

U P Trade Rejection of Form 3D 5.80 0.87 Tax Act, (UPSRTC Department) 1948 2005-2006

Karnataka Rejection of Input Tax credit 1.19 0.36 Value Added against the warranty claim bills Tax Act, 2006-07 2003

Karnataka Rejection of Input Tax credit 1.48 0.44 Value Added against the warranty claim bills Tax Act, 2007-2008. 2003

Kerala Value Rejection of F forms due to 93.40 28.02 Added Tax some clerical error Rules, 2005

Maharashtra Sales return/branch transfers 84.49 45.26 Value Added documents could not be Tax Act-2002 produced during the

assessment, so the tax on the sales return amount more than six months has been charged by the department

Kerala Value Stock Yard Address not 1.42 0.43 Added Tax mentioned on Invoice Rules, 2005

Kerala Value Non-availability Sufficient 2.56 0.77 Added Tax information & documents Rules, 2005

Bihar Value Delay in submission of 2.36 0.45 Added Tax F forms Rules, 2005

Sub Total 657.88 239.25

Central Demand raised to 4.25 2.13 Excise Act, re-determine the assessable (includes 1944 value of components penalty supplied to spare parts Rs. 2.12 lakhs) division under Rule 7 of Valuation Rules

Central Demand raised for non- 3.19 Nil Excise Act, inclusion of cost of publicity (includes 1944 items sold to dealers on penalty trading basis as part of Rs 0.30 Transaction Value lakhs)

Central Inadmissible Service tax 5.70 Nil Excise Act, credit utilized for payment of (includes 1944 service tax liability resulting penalty in short payment of excise & Rs. 2.85 service tax liability lakhs)

Finance Act, Denial of utilization of 5.70 Nil 1994 service tax credit for payment (includes of service tax liability penalty ) Rs 2.85 lakhs

Central Demand raised for non- 1.94 Nil Excise Act, inclusion of cost of publicity 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 1.89 Nil Excise Act, inclusion of cost of publicity 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 5.79 Nil Excise Act, inclusion of cost of publicity (includes 1944 items sold to dealers on penalty trading basis as part of Rs. 2.90 Transaction Value lacs)

Finance Act, Demand raised for Service 4.26 Nil 1994 Tax Credit taken on Canteen (includes services where part of cost of penalty food recovered from employees Rs. 2.13 lacs)

Finance Act, Demand raised for Service 3.36 Nil 1994 Tax Credit taken on Canteen services provided to employees where cost of food borne by the Company.

Central Demand raised for levy of 3.62 Nil Excise Act, Education Cess and (includes 1944 Secondary Higher Education penalty Cess on Automobile Cess Rs. 1.81 lakhs)

Central Demand raised for levy of 4.05 Nil Excise Act, Education Cess and Secon- (includes 1944 dary Higher Education Cess penalty on Automobile Cess Paid Rs.1.83 lakhs

Central Imposition of penalty in 25.00 Nil Excise Act, relation to non compliance 1944 of Rule 10A by body builder

Central Imposition of penalty in 300.00 Nil Excise Act, relation to Classification 1944 dispute of Ambulances fabricated & cleared from premises of body builder

Finance Act, Service Tax credit taken 8.66 Nil 1994 on Freight & Insurance incurred from Place of Removal

Finance Act, Penalty imposed on Service 0.93 Nil 1994 Tax credit wrongly taken

Finance Act, Penalty imposed on wrong 1.15 Nil 1994 availment and reversal of Service Tax Credit on Canteen Service provided to the tune of cost recovered from Employees by the Company

Sub Total 379.49 2.13

Income Tax, Demand raised on 101.55 88.61 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax, Demand raised on 94.79 94.79 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax, Demand raised on 137.10 137.10 Act, 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145A of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax Demand raised under section 50.88 50.88 Act, 1961 271(1)(c) of Income Tax Act, 1961

Income Tax Demand raised on 476.33 476.33 Act, 1961 disallowance of revenue expenditure incurred on expansion of business, excess provision made on account of Warranty, bad debts written off, interest on utilization of loan, Work-in- Progress under section 145A of Income Tax Act, 1961

Income Tax Demand raised on account 42.41 Nil Act, 1961 Excise of Duty not loaded on Work-in-Progress u/s 145A

Income Tax Demand raised u/s 271(1)(c) 82.82 82.82 Act, 1961

Income Tax Demand raised on account of 39.30 Nil Act, 1961 Excise Duty not loaded on Work-in-Progress u/s 145A

Income Tax Demand raised on account 54.64 Nil Act, 1961 of Excise Duty not loaded on Work-in-Progress u/s 145A

Sub Total 1,079.82 930.53

Name of Particulars Period to the statute which the amount relates

Central Demand raised for difference 1st April 2000 Sales Tax in the rate of tax to 30th Act, 1956 September 2000

Punjab VAT Vehicles impounded & August, 2007 Act, 2005 demand raised due to discrepancy in / inadequacy of documents

U P Trade Demand raised due to sales 1993-94 Tax Act, tax rate difference. 1948

Punjab VAT Wrong input tax credit taken 2009-10 Act, 2005 in the returns

Gujarat Sales return/branch transfers 2008-09 Sales Tax documents could not be Act, 1969 produced during the assessment, so the tax on the sales return amount has been charged by the department.

U P Trade Rejection of Form 3D 2005-06 Tax Act, (UPSRTC Department) 1948 2005-2006

Karnataka Rejection of Input Tax credit 2006-07 Value Added against the warranty claim bills Tax Act, 2006-07 2003

Karnataka Rejection of Input Tax credit 2007-08 Value Added against the warranty claim bills Tax Act, 2007-2008. 2003

Kerala Value Rejection of F forms due to 2011-12 Added Tax some clerical error Rules, 2005

Maharashtra Sales return/branch transfers 2008-09 Value Added documents could not be Tax Act-2002 produced during the assessment, so the tax on the sales return amount more than six months has been charged by the department

Kerala Value Stock Yard Address not 2010-11 Added Tax mentioned on Invoice Rules, 2005

Kerala Value Non-availability Sufficient 2011-12 Added Tax information & documents Rules, 2005

Bihar Value Delay in submission of 2012-13 Added Tax F forms Rules, 2005

Sub Total

Central Demand raised to 1 April, 2000 Excise Act, re-determine the assessable to 31 March, 1944 value of components 2004 supplied to spare parts

division under Rule 7 of Valuation Rules

Central Demand raised for non- 1 January, Excise Act, inclusion of cost of publicity 2004 to 30 1944 items sold to dealers on September, trading basis as part of 2004 Transaction Value

Central Inadmissible Service tax 2005-06 Excise Act, credit utilized for payment of 1944 service tax liability resulting in short payment of excise & service tax liability

Finance Act, Denial of utilization of 2005-06 1994 service tax credit for payment of service tax liability



Central Demand raised for non- October-2004 Excise Act, inclusion of cost of publicity to March-2005 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- October-2006 Excise Act, inclusion of cost of publicity to June-2008 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- April-2005 Excise Act, inclusion of cost of publicity to January- 1944 items sold to dealers on 2006 trading basis as part of Transaction Value

Finance Act, Demand raised for Service April-2006 1994 Tax Credit taken on Canteen to December services where part of cost of 2008 food recovered from employees

Finance Act, Demand raised for Service April-2006 to 1994 Tax Credit taken on Canteen December- services provided to 2008 employees where cost of food borne by the Company.

Central Demand raised for levy of April -2008 to Excise Act, Education Cess and June -2009 1944 Secondary Higher Education Cess on Automobile Cess

Central Demand raised for levy of April-2010 to Excise Act, Education Cess and Secon- September- 1944 dary Higher Education Cess 2011 on Automobile Cess Paid

Central Imposition of penalty in Dec.-2008 to Excise Act, relation to non compliance July-2009 1944 of Rule 10A by body builder

Central Imposition of penalty in April 2005 - Excise Act, relation to Classification to Nov-2009 1944 dispute of Ambulances fabricated & cleared from premises of body builder

Finance Act, Service Tax credit taken 01 March 2006 1994 on Freight & Insurance to 28 Feb-2008 incurred from Place of Removal

Finance Act, Penalty imposed on Service 01 Oct. 2009 1994 Tax credit wrongly taken to 30 Sep.2010

Finance Act, Penalty imposed on wrong 01 June 2009 1994 availment and reversal of to 31 March Service Tax Credit on 2011 Canteen Service provided to the tune of cost recovered from Employees by the Company

Sub Total

Income Tax, Demand raised on 2004-05 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax, Demand raised on 2005-06 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax, Demand raised on 2006-07 Act, 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145A of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax Demand raised under section 2005-06 Act, 1961 271(1)(c) of Income Tax Act, 1961

Income Tax Demand raised on 2007-08 Act, 1961 disallowance of revenue expenditure incurred on expansion of business, excess provision made on account of Warranty, bad debts written off, interest on utilization of loan, Work-in- Progress under section 145A of Income Tax Act, 1961

Income Tax Demand raised on account 2008-09 Act, 1961 Excise of Duty not loaded on Work-in-Progress u/s 145A

Income Tax Demand raised u/s 271(1)(c) 2006-07 Act, 1961

Income Tax Demand raised on account of 2009-10 Act, 1961 Excise Duty not loaded on Work-in-Progress u/s 145A

Income Tax Demand raised on account 2010-11 Act, 1961 of Excise Duty not loaded on Work-in-Progress u/s 145A

Sub Total

Name of Particulars Forum where the the statute dispute is pending

Central Demand raised for difference Sales Tax Appellate Sales Tax in the rate of tax Tribunal, Act, 1956 Chandigarh.

Punjab VAT Vehicles impounded & Deputy Excise and Act, 2005 demand raised due to Taxation Commissioner discrepancy in / inadequacy cum Joint Director of documents Enforcement, Patiala.

U P Trade Demand raised due to sales Additional Commissioner Tax Act, tax rate difference. (Appeals), Lucknow 1948

Punjab VAT Wrong input tax credit taken Deputy Excise & Taxation Act, 2005 in the returns Commissioner Appeals, Patiala Gujarat Sales return/branch transfers Joint Commercial Tax Sales Tax documents could not be Commissioner (Appeals) Act, 1969 produced during the assessment, so the tax on the sales return amount has been charged by the department.

U P Trade Rejection of Form 3D Assistant Commissioner Tax Act, (UPSRTC Department) Grade-II 1948 2005-2006

Karnataka Rejection of Input Tax credit Commercial Tax Officer Value Added against the warranty (Audit-2) Tax Act, claim bills 2006-07 2003

Karnataka Rejection of Input Tax Commercial Tax Officer Value Added credit against the (Audit-2) Tax Act, warranty claim bills 2003 2007-2008.

Kerala Value Rejection of F forms due to Assistant Commissioner Added Tax some clerical error Special Circle- Rules, 2005 Trivandrum

Maharashtra Sales return/branch transfers Joint Commercial Tax Value Added documents could not be Commissioner (Appeals) Tax Act-2002 produced during the assessment, so the tax on the sales return amount more than six months has been charged by the department

Kerala Value Stock Yard Address not Assistant Commissioner Added Tax mentioned on Invoice Special Circle- Rules, 2005 Trivandrum

Kerala Value Non-availability Sufficient Assistant Commissioner Added Tax information & documents Special Circle- Rules, 2005 Trivandrum

Bihar Value Delay in submission of Patna Sales Tax Added Tax F forms Tribunal Rules, 2005

Sub Total

Central Demand raised to Custom Excise and Excise Act, re-determine the assessable Service Tax Appellate 1944 value of components Tribunal (CESTAT) supplied to spare parts

division under Rule 7 of Valuation Rules

Central Demand raised for non- Custom Excise and Excise Act, inclusion of cost of publicity Service Tax Appellate 1944 items sold to dealers on Tribunal(CESTAT) trading basis as part of Transaction Value

Central Inadmissible Service tax Commissioner (Appeals) Excise Act, credit utilized for payment of 1944 service tax liability resulting in short payment of excise & service tax liability

Finance Act, Denial of utilization of Custom Excise and 1994 service tax credit for payment Service Tax Appellate of service tax liability Tribunal(CESTAT)



Central Demand raised for non- Hon'able Supereme Court Excise Act, inclusion of cost of publicity of India 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- Custom Excise and Excise Act, inclusion of cost of publicity Service Tax Appellate 1944 items sold to dealers on Tribunal(CESTAT) trading basis as part of Transaction Value

Central Demand raised for non- Custom Excise and Excise Act, inclusion of cost of publicity Service Tax Appellate 1944 items sold to dealers on Tribunal (CESTAT) trading basis as part of Transaction Value

Finance Act, Demand raised for Service Custom Excise and 1994 Tax Credit taken on Canteen Service Tax Appellate services where part of cost of Tribunal(CESTAT) food recovered from employees

Finance Act, Demand raised for Service Custom Excise and 1994 Tax Credit taken on Canteen Service Tax Appellate services provided to Tribunal (CESTAT) employees where cost of food borne by the Company.

Central Demand raised for levy of Custom Excise and Excise Act, Education Cess and Service Tax Appellate 1944 Secondary Higher Education Tribunal (CEsTAt) Cess on Automobile Cess

Central Demand raised for levy of Custom Excise and Excise Act, Education Cess and Secon- Service Tax Appellate 1944 dary Higher Education Cess Tribunal (CEStAt) on Automobile Cess Paid

Central Imposition of penalty in Custom Excise and Excise Act, relation to non compliance Service Tax Appellate 1944 of Rule 10A by body builder Tribunal (CEStAt)

Central Imposition of penalty in Custom Excise and Excise Act, relation to Classification Service Tax Appellate 1944 dispute of Ambulances Tribunal (CEStAt) fabricated & cleared from premises of body builder

Finance Act, Service Tax credit taken Custom Excise and 1994 on Freight & Insurance Service Tax Appellate incurred from Place of Removal Tribunal (CEStAt)

Finance Act, Penalty imposed on Service Commissioner (Appeals) 1994 Tax credit wrongly taken

Finance Act, Penalty imposed on wrong Commissioner (Appeals) 1994 availment and reversal of Service Tax Credit on Canteen Service provided to the tune of cost recovered from Employees by the Company

Sub Total

Income Tax, Demand raised on Income Tax Appellate 1961 disallowance of expenses, Tribunal loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax, Demand raised on Income Tax Appellate 1961 disallowance of expenses, Tribunal loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax, Demand raised on Income Tax Appellate Act, 1961 disallowance of expenses, Tribunal loading of statutory dues on Work-in-Progress under section 145A of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax Demand raised under section Income Tax Appellate Act, 1961 271(1)(c) of Income Tax Act, Tribunal 1961

Income Tax Demand raised on Income Tax Appellate Act, 1961 disallowance of revenue Tribunal expenditure incurred on expansion of business, excess provision made on account of Warranty, bad debts written off, interest on utilization of loan, Work-in- Progress under section 145A of Income Tax Act, 1961

Income Tax Demand raised on account Income Tax Appellate Act, 1961 Excise of Duty not loaded on Tribunal Work-in-Progress u/s 145A

Income Tax Demand raised u/s 271(1)(c) Income Tax Appellate Act, 1961 Tribunal

Income Tax Demand raised on account of Income Tax Appellate Act, 1961 Excise Duty not loaded on Tribunal Work-in-Progress u/s 145A

Income Tax Demand raised on account Commissioner of Income Act, 1961 of Excise Duty not loaded on Tax (Appeals) Work-in-Progress u/s 145A

Sub Total

(c) According to the information and explanations given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time.

(viii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the current year and immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions. In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any debenture holders during the year.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xi) The Company did not have any term loans outstanding during the year.

(xii) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Company Chartered Accountants Firm Registration No.: 128032W



Manish Gupta Place: New Delhi Partner Date : 08 May 2015 Membership No.: 095037


Mar 31, 2014

We have audited the accompanying financial statements of SML Isuzu 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 ended, and a summary of significant accounting policies and other explanatory information.

Management responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''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 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 for the year ended on that date; and

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

Report on other legal and regulatory requirements

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

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

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

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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 subsection (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on 31 March 2014 and 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 clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO AUDITORS'' REPORT (Referred to in our report of even date)

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

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

(c) Fixed asset disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) The inventory, except materials-in-transit and stock lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly adjusted in the books of account.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchase of certain items of inventories and fixed assets are for the Company''s specialised requirements and therefore suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to sale of goods and services. However, considering the size of the Company and the nature of its business, internal control procedures need to be further strengthened with regard to obtaining comparable quotations for purchase of inventories and fixed assets. Other than this, we have not observed any major weakness in the internal control system during the course of the audit.

(v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraph 4(v)(b) of the order is not applicable

(vi) The Company has not accepted any deposits from the public.

(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 books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income tax, Wealth tax, Excise duty, Service tax, Customs duty and other material statutory dues have been regularly deposited by the Company with the appropriate authorities though there have been slight delays in a few cases of Tax deducted at Source and Sales tax.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable except for sales tax amounting to Rs. 134.36 lacs (refer to note 28 of the financial statements). (b) According to the information and explanations given to us, there are no dues of Wealth tax and Customs duty which have not been deposited with the appropriate authorities on account of any dispute. Further, according to the information and explanations given to us, except as stated below, there are no dues of Income tax, Sales tax, Service tax and Excise duty which have not been deposited by the Company on account of disputes:

Name of Particulars Amount Amount the statute Disputed Deposited Rs. Lakhs Rs. Lakhs

Central Demand raised for difference 218.23 87.30 Sales Tax in the rate of tax Act, 1956

Punjab VAT Vehicles impounded & demand raised 1.57 0.39 Act, 2005 due to discrepancy in /inadequacy of documents

Gujarat Demand raised due to 11.78 5.50 Sales Tax discrepancy in documents Act 1969

U P Trade Demand raised due to sales 15.94 7.20 Tax Act, 1948 tax rate difference.

J&K GST Demand raised for 2.42 0.25 Act, 1962 difference in D and F forms

J&K GST Demand raised for 23.36 0.65 Act, 1962 difference in D and F forms

Punjab VAT Wrong input tax credit taken 67.76 67.76 Act, 2005 in returns

Delhi VAT Department has rejected 49.19 1.41 Act, 2004 exemption certificate of vehicles sold to BSES and non submission of F forms

Delhi VAT Department has rejected 2.47 2.47 Act, 2004 exemption certificate of vehicles sold to BSES and non submission of F forms

Gujarat Sales return/branch transfers 161.68 Nil Tax documents could not be produced during Act, 1969 the asses ment so the tax on the sales return amount has been charged by the department.

Sub Total 554.40 172.93

Central Demand raised to 4.25 2.13 Excise Act, re-determine the assessable value of 1944 components Supplied to spare parts division under Rule 7 of Valuation Rules (includes Penalty Rs Lacs ) 2.12 Central Demand raised for non-inclusion of cost 3.19 Nil Excise Act, of publicity items sold to dealers on 1944 trading basis as part of Transaction Value (includes Penalty Rs Lacs ) 0.30

Central Inadmissible Service tax Credit 5.70 Nil Excise Act, utilized for payment of service 1944 tax liability resulting in short payment of excise & service tax liability (includes Penalty Rs Lacs ) 2.85

Finance Act, Denial of utilization of 5.70 Nil 1994 service tax credit for payment of service tax liability (includes Penalty Rs Lacs ) 2.85

Central Demand raised for non- 1.94 Nil Excise Act, inclusion of cost of publicity items 1944 sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 1.89 Nil Excise Act, inclusion of cost of publicity items 1944 sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 5.79 Nil Excise Act, inclusion of cost of publicity items 1944 sold to dealers on trading basis as part Transaction Value (includes Penalty Rs Lacs ) 2.90

Finance Act, Demand raised for Service 4.26 Nil 1994 Tax Credit taken on Canteen services where part of cost of food recovered from employees (includes Penalty Rs Lacs ) 2.13

Finance Act, Demand raised for Service 3.36 Nil 1994 Tax Credit taken on Canteen services provided to employees where cost of food borne by the Company.

Central Demand raised for levy of 3.62 Nil Excise Act, Education Cess and Secondary Higher 1944 Education Cess on Automobile Cess (includes Penalty Rs Lacs ) 1.81

Central Demand raised for levy of 4.05 Nil Excise Act, Education Cess and Secon- dary Higher Education Cess on Automobile Cess Paid (includes Penalty Rs Lacs ) 1.83

Central Imposition of penalty in 25.00 Nil Excise Act, relation to non compliance 1944 of Rule 10A by body builder

Central Imposition of penalty in 300.00 Nil Excise Act, relation to Classification dispute 1944 of Ambulances fabricated & cleared from premises of body builder

Finance Act, Service Tax credit taken 8.66 Nil 1994 on Freight & Insurance incurred from Place of Removal

Finance Act, Penalty imposed on Service 0.93 Nil 1994 Tax credit wrongly taken

Finance Act, Penalty imposed on wrong 1.15 Nil 1994 availment and reversal of Service Tax Credit on Canteen Service provided to the tune of cost recovered from Employees by the Company

Sub Total 379.49 2.13

Income Tax Disallowance of provision 19.01 Nil Act, 1961 for bad and doubtful debts

Income Tax Demand raised for non 28.51 Nil Act, 1961 deduction of TDS on payment of Fee for Technical Services/Royalty

Income Tax Demand raised on 101.55 62.00 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax Demand raised under section 22.02 22.02 Act, 1961 234 B and 234 C of Income Tax Act, 1961 by assessing authority

Income Tax Demand raised on 94.79 Nil Act, 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145A of Income Tax Act, 1961and weighted R&D deduction.

Income Tax Demand raised on 137.10 Nil Act, 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145A of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax Demand raised under section 50.88 5.00 Act, 1961 271(1)(c) of Income Tax Act, 1961

Income Tax Demand raised on 476.33 476.00 Act, 1961 disallowance of revenue expenditure incurred on expansion of business, excess provision made on account of Warranty, bad debts written off, interest on utilization of loan, Work-in- Progress under section 145A of Income Tax Act, 1961

Income Tax Demand raised on account 42.41 Nil Act, 1961 Excise of Duty not loaded on Work-in-Progress u/s 145A

Income Tax Demand raised u/s 271(1)(c) 82.82 Nil Act, 1961

Income Tax Demand raised on account 39.30 Nil Act, 1961 of Excise Duty not loaded on Work-in-Progress u/s 145A

Sub Total 1,094.72 489.02

Name of the statute Period to which Forum where the the amount relates dispute is pending

Central Sales Tax Act, 1956 1st April 2000 Sales Tax Appellate to 30th Tribunal,Chandigarh. September 2000

Punjab VAT Act, 2005 August, 2007 Deputy Excise and Tax- ation Commissioner cum Joint Director Enforce- ment, Patiala.

Gujarat Sales Tax Act 1969 2001-02 Deputy Commissioner (Appeals), Gujarat

U P Trade Tax Act, 1948 1993-94 Additional Commissioner (Appeals), Lucknow

J&K GST Act, 1962 2003-04 Deputy Commercial Taxes (Appeals) (Appellate Authority) Jammu

J&K GST Act, 1962 2004-05 Deputy Commercial Taxes (Appeals) (Appellate Authority) Jammu

Punjab VAT Act, 2005 2009-10 Deputy Excise & Taxation Commissioner Appeals Patiala.

Delhi VAT Act, 2004 2002-03 Special Commissioner-I

Delhi VAT Act, 2004 2003-04 Sales Tax Officer

Gujarat Tax Act, 1969 2008-09 Joint Commercial Tax Sales Commissioner (Appeals)

Central Excise Act, 1944 1 April, 2000 Custom Excise and to 31 March, Service Tax Appellate 2004 Tribunal (CESTAT)

Central Excise Act, 1944 1 January, Custom Excise and 2004 to 30 Service Tax Appellate September, 2004 Tribunal (CESTAT)

Central Excise Act, 1944 2005-06 Commissioner (Appeals)

Finance Act, 1994 2005-06 Custom Excise and Service Tax Appellate Tribunal (CESTAT)

Central Excise Act, 1944 October-2004 Hon''able Supereme to March-2005 Court of India

Central Excise Act, 1944 October-2006 Custom Excise and to June-2008 Service Tax Appellate Tribunal (CESTAT)

Central Excise Act, 1944 April-2005 Custom Excise and to January- Service Tax Appellate 2006 Tribunal (CESTAT)

Finance Act, 1994 April-2006 Custom Excise and to December Service Tax Appellate 2008 Tribunal (CESTAT)

Finance Act, 1994 April-2006 to Custom Excise and December- Service Tax Appellate 2008 Tribunal (CESTAT)

Central Excise Act, 1944 April -2008 to Custom Excise and June -2009 Service Tax Appellate Tribunal (CESTAT)

Central Excise Act, 1944 April-2010 to Custom Excise and September- Service Tax Appellate 2011 Tribunal (CESTAT)

Central Excise Act, 1944 Dec.-2008 to Custom Excise and July-2009 Service Tax Appellate Tribunal (CESTAT)

Central Excise Act, 1944 April 2005 - Custom Excise and to Nov-2009 Service Tax Appellate Tribunal (CESTAT)

Finance Act, 1994 01 March 2006 Custom Excise and to 28 Feb-2008 Service Tax Appellate Tribunal (CESTAT)

Finance Act, 1994 01 Oct. 2009 Commissioner (Appeals) to 30 Sep.2010

Finance Act, 1994 01 June 2009 Commissioner (Appeals) to 31 March 2011

Income Tax Act, 1961 1991-92 High Court of Punjab & Haryana

Income Tax Act, 1961 1986-87 High Court of Punjab & Haryana

Income Tax 1961 2004-05 Income Tax Appellate Act, Tribunal

Income Tax Act, 1961 1997-98 High Court of Punjab & Haryana

Income Tax Act, 1961 2005-06 Income Tax Appellate Tribunal

Income Tax Act, 1961 2006-07 Income Tax Appellate Tribunal

Income Tax Act, 1961 2005-06 Income Tax Appellate Tribunal

Income Tax Act, 1961 2007-08 Income Tax Appellate Tribunal

Income Tax Act, 1961 2008-09 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 2006-07 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 2009-10 Commissioner of Income Tax (Appeals)

(x) The Company does not have any accumulated losses and has not incurred cash losses in the current year and immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions. In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. (xvi) The Company did not have any term loans outstanding during the year.

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

(xviii) The Company has not made any preferential allotment of shares to companies/ firms/ parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Company Chartered Accountants Firm Registration No.: 128032W

Manish Gupta Place: New Delhi Partner Date : 09 May 2014 Membership No.: 095037


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of SML Isuzu Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

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

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

Opinion

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

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

(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 flows for the year ended on that date.

Report on other legal and regulatory requirements

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

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

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

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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 subsection (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on 31 March 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO AUDITORS'' REPORT

(Referred to in our report of even date)

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

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

(c) Fixed asset disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) The inventory, except materials-in-transit and stock lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) of the order is not applicable. (iv) I n o u r o p i ni o n and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories are for the Company''s specialised requirements and therefore suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and sale of goods. As informed to us, the Company does not provide any services. We have not observed any major weakness in the internal control system during the course of the audit. (v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraph 4(v)(b) of the order is not applicable (vi) The Company has not accepted any deposits from the public.

(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 books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records. (ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income tax, Wealth tax, Excise duty, Service tax, Customs duty, Sales tax and other material statutory dues have been regularly deposited by the Company with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income tax, Wealth tax, Service tax, Customs duty, Excise duty, Sales tax and other material statutory dues were in arrears as at 31 March 2013 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues of Wealth tax and Customs duty which have not been deposited with the appropriate authorities on account of any dispute. Further, according to the information and explanations given to us, except as stated below, there are no dues of Income tax, Sales tax, Service tax and Excise duty which have not been deposited by the Company on account of disputes:

Name of Particulars Amount Amount the statute Disputed Deposited Rs. Lakhs Rs. Lakhs

Central Demand raised for difference 218.23 87.30 Sales Tax in the rate of tax Act, 1956

Punjab VAT Vehicles impounded & 1.57 0.39 Act, 2005 demand raised due to discrepancy in / inadequacy of documents

Gujarat Demand raised due to 11.78 5.50 Sales Tax discrepancy in documents Act, 1969

U P Trade Demand raised due to sales 15.94 7.20 Tax Act, tax rate difference. 1948

J&K GST Demand raised for difference 2.42 0.25 Act, 1962 in D and F Forms

J&K GST Demand raised for difference 23.36 0.65 Act, 1962 in D and F Forms

Punjab VAT Wrong Input Tax Credit taken 67.76 67.76 Act, 2005 in the returns

Delhi VAT Department has rejected 49.19 1.41 Act, 2004 exemption certificate of vehicles sold to BSES and non-submission of F Forms

Delhi VAT Department has rejected 2.47 2.47 Act, 2004 exemption certificate of vehicles sold to BSES and non-submission of F Forms

Gujarat Sales Return/Branch 161.68 Nil Sales Tax transfers documents could Act, 1969 not be produced during the assessment, so the tax on the sales return has been charged by the Department.

Sub Total 554.40 172.93

Central Demand raised to 4.25 (include 2.12 Excise Act, re-determine the assessable penalty 1944 value of components Rs. 2.12 supplied to spare parts lakhs) division under Rule 7 of Valuation Rules

Name Period to Forum where the which the dispute is pending amount relates

Central 1st April 2000 Sales Tax Appellate Tribunal, to 30th Chandigarh. September 2000

Central August, 2007 Deputy Excise and Taxation Commissioner cum Joint Director Enforcement, Patiala.

Central 2001-02 Deputy Commissioner (Appeals), Gujarat

1993-94 Additional Commissioner (Appeals), Lucknow

2003-04 Deputy Commercial Taxes (Appeals) (Appellate Authority) Jammu

Central 2004-05 Deputy Commercial Taxes (Appeals) (Appellate Authority) Jammu 2009-10 The Assistant Excise and Taxation Officer-cum- Designated Officer

2002-03 SPL. Commissioner-I

2003-04 Sales Tax Officer

2008-09 Joint Commercial Tax Commissioner (Appeals)

Central 1st April, 2000 Custom Excise and Service to 31st March, Tax Appellate Tribunal 2004 (CESTAT)

Name of Particulars Amount Amount the statute Disputed Deposited Rs. Lakhs Rs. Lakhs

Finance Act, Demand raised in context 9.92 (includes Nil 1994 with Service tax on royalty penalty received on account of use Rs 6.62 lakhs) of brand name of SML

Central Demand raised for non- 3.19 (includes Nil Excise Act, inclusion of cost of publicity penalty 1944 items sold to dealers in Rs 0.30 lakhs) trading basis as part of Transaction Value

Central Inadmissible Service tax 5.70 (includes Nil Excise Act, credit utilized for payment of penalty 1944 service tax liability resulting Rs. 2.85 lakhs) in short payment of Excise & service tax liability

Finance Act, Denial of utilization of 5.70 (includes Nil 1994 service tax credit for the penalty payment of service tax Rs. 2.85 lakhs) liability

Finance Act, Demand raised for Service 1.85 Nil 1944 Tax Credit taken on Canteen services provided to employees where cost of food borne by the Company and part of the same recovered from employees.

Central Demand raised for non- 1.94 Nil Excise Act, inclusion of cost of publicity 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 1.89 Nil Excise Act, inclusion of cost of publicity 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 5.79 (includes Nil Excise Act, inclusion of cost of publicity penalty 1944 items sold to dealers on Rs 2.90 lakhs) trading basis as part of Transaction Value

Finance Act, Demand raised for Service 4.26 (includes Nil 1994 Tax Credit taken on Canteen penalty services where part of cost Rs 2.13 lakhs) of food recovered from employees.

Name Period to Forum where the which the dispute is pending amount relates

Central April 200z2 to Custom Excise and Servic March 2005. Tax Appellate Tribunal (CESTAT)

Central 1st January, Custom Excise and Service 2004 to 30th Tax Appellate Tribunal September, (CESTAT) 2004

Central 2005-06 Commissioner (Appeals)

Central 2005-06 Custom Excise and Service Tax Appellate Tribunal (CESTAT)

Central Nov 2009 to Custom Excise and Service May 2010 Tax Appellate Tribunal (CESTAT)

Central October 2004 Hon''able Supreme Court to March 2005 of India

Central October 2006 Custom Excise and Service to June 2008 Tax Appellat Tribunal (CESTAT)

Central April 2005 to Custom Excise and Service January 2006 Tax Appellate Tribunal (CESTAT)

Central April 2006 to Custom Excise and Service December Tax Appellate Tribunal 2008 (CESTAT)

Name of Particulars Amount Amount the statute Disputed Deposited Rs. Lakhs Rs. Lakhs

Finance Act, Demand raised for Service 3.36 Nil 1994 Tax Credit taken on Canteen services provided to employees where cost of food borne by the Company.

Finance Act, Demand raised for Service 3.98 (includes Nil 1994 Tax Credit taken on Canteen penalty services provided to Rs 1.98 lakhs) employees where cost of food borne by the Company and part of the same recovered from employees.

Finance Demand raised for Service 1.88 (includes Nil Act,1994 Tax Credit taken on penalty Insurance cover of Rs 0.03 lakhs) employees

Central Demand raised for levy of 3.62 (includes Nil Excise Act, Education Cess and penalty 1944 Secondary Higher Education Rs. 1.81 lakhs) Cess on Automobile Cess

Central Demand raised for levy of 3.18 (includes Nil Excise Act, Education Cess and penalty 1944 Secondary Higher Education Rs. 1.59 lakhs Cess on Automobile Cess

Central Demand raised for levy of 3.66 (includes Nil Excise Act, Education Cess and penalty 1944 Secondary Higher Education Rs. 1.83 lakhs Cess on Automobile Cess

Central Imposition of penalty in 300.00 Nil Excise Act, relation to Classification 1944 dispute of Ambulances fabricated & cleared from the premises of body builder

Central Cenvat Penefit taken on 129.18 (include Nil Excise Act, Input/Capital & Services penalty 1944 used for R&D purposes. Rs.64.59 October 2006 to March 2011 lakhs)

Finance Act, ST credit taken in respect of 0.54 Nil 1994 "Rent a Cab" services used for transportation of employees from their residence to factory. January 2010 to September 2010.

Name Period to Forum where the which the dispute is pending amount relates

Finance Act, April 2006 to Custom Excise and Service December Tax Appellate Tribunal 2008 (CESTAT)

Finance Act, January 2009 Custom Excise and Service to October Tax Appellate Tribunal 2009 (CESTAT)

Finance Act, September Custom Excise and Service 2004 to Tax Appellate Tribunal December (CESTAT) 2008

Finance Act, April 2008 to Custom Excise and Service June 2009 Tax Appellate Tribunal (CESTAT)

Finance Act, July 2009 to Commissioner (Appeals) March 2010

Finance Act, April 2010 to Commissioner (Appeals) Dec 2010

Finance Act, Apr 2005 to Custom Excise and Service

Finance Act, Nov 2009 Tax Appellate Tribunal (CESTAT)

Finance Act, Oct 2006 to Custom Excise and Service

Finance Act, Dec 2011 Tax Appellate Tribunal (CESTAT)

Finance Act, Jan 2010 to Commissioner (Appeals) Sep 2010

Name of Particulars Amount Amount the statute Disputed Deposited Rs. Lakhs Rs. Lakhs

Finance Act, ST credit taken in respect of 2.64 Nil 1994 "Rent a Cab" services used for transportation of employees from their residence to factory. (July 07 to December 09)

Finance Act, ST credit taken in respect of 0.94 Nil 1994 "Rent a Cab" services used (include for commutation of penalty employees from their resi- Rs. 0.47 lacs) dence to factory and back.

Central Imposition of penalty in 25.00 Nil Excise Act, relation to non compliance of 1944 Rule 10A by body builder

Finance Act, Service tax credit taken 8.66 Nil 1994 on Freight & Insurance incurred from Place of Removal

Sub Total 531.13 2.12



(x) The Company does not have any accumulated losses and has not incurred cash losses in the current year and immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions. In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

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

(xvi) According to the information and explanations given to us, the Company did not have any term loans outstanding during the year.

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

(xviii) As stated in paragraph (v) above, there are no companies/firms/parties covered in the register required to be maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by way of public issues during the year. Utilization of money during the year for the money raised by public issue in earlier years has been disclosed by the management in note 43. We have verified such end use.

(xxi) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Company

Chartered Accountants Firm Registration No.: 128032W

Rajesh Arora

Place: Gurgaon Partner

Date : 07 May 2013 Membership No.: 076124


Mar 31, 2012

A) We have audited the attached Balance Sheet of SML Isuzu Limited ("the Company") as at 31 March 2012, 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.

b) We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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

d) Further to our comments in the Annexure referred to above, we report that:

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

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

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

(v) on the basis of written representations received from the Directors of the Company as on 31 March 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 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;

(vi) in our opinion and to the best of our information and according to the explanations given to us, the said 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 the affairs of the Company as at 31 March 2012;

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

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

ANNEXURE TO AUDITORS' REPORT

(Referred to in our report of even date)

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

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

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

2. (a) Inventories, except goods-in transit and stock lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) of the Order is not applicable.

4. In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories are for the Company's specialised requirements and therefore suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and sale of goods. As informed to us, the Company does not provide any services. We have not observed any major weakness in the internal control system during the course of the audit.

5. In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraph 4(v) (b) of the Order is not applicable.

6. The Company has not accepted any deposits from the public.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

9. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Wealth tax, Excise duty, Service tax, Customs duty, Sales tax and other material statutory dues have been regularly deposited by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Wealth tax, Service tax, Customs duty, Excise duty, Sales tax and other material statutory dues were in arrears as at 31 March 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Wealth tax and Customs duty which have not been deposited with the appropriate authorities on account of any dispute. Further, according to the information and explanations given to us, except as stated below, there are no dues of Income tax, Sales tax, Service tax and Excise duty which have not been deposited by the Company on account of disputes:

Name of Particulars Amount Amount the statute Disputed Deposited Rs. Lakhs Rs. Lakhs

Central Demand raised for difference 218.23 87.30 Sales Tax in the rate of tax Act, 1956

Punjab VAT Vehicles impounded & 1.57 0.39 Act, 2005 demand raised due to discrepancy in / inadequacy of documents

Gujarat Demand raised due to 11.78 5.50 Sales Tax discrepancy in documents Act

U P Vat Vehicles impounded & 12.09 12.09 Act, 2008 demand raised due to discrepancy in / inadequacy of documents.

U P Trade Demand raised due to sales 15.94 7.20 Tax Act, tax rate difference. 1948

Gujarat Demand raised due to Non 6.12 6.12 Sales Tax Submission of Form-F for Act vehicle stock transferred from Pune to Ahmedabad during FY 2007-08.

Karnataka Demand raised due to 3.93 3.93 Sale Tax objection E-sugam form is Act (Hubli) valid for 10 days.

Sub Total 269.66 122.53

Central Demand raised to 4.25 (include 2.12 Excise Act, re-determine the assessable penalty of 1944 value of components Rs. 2.12 supplied to spare parts lakhs) division under Rule 7 of Valuation Rules

Finance Act, Demand raised in context 9.92 (includes Nil 1994 with Service tax on royalty penalty of received on account of use Rs 6.62 lakhs) of brand name of SML

Central Demand raised for non- 3.19 (includes Nil Excise Act, inclusion of cost of publicity penalty 1944 items sold to dealers on amounting to trading basis as part of Rs 0.30 lakhs) Transaction Value

Central Inadmissible Service tax 5.70 (inclusive Nil Excise Act, credit utilized for payment of of penalty 1944 service tax liability resulting Rs. 2.85 lakhs) in short payment of Excise & service tax liability

Finance Act, Denial of utilization of 5.70 (inclusive Nil 1994 service tax credit for the of penalty payment of service tax Rs. 2.85 lakhs) liability

Finance Act, Demand raised for Service 1.85 Nil 1944 Tax Credit taken on Canteen services provided to employees where cost of food borne by the Company and part of the same recovered from employees.

Central Demand raised for non- 1.94 Nil Excise Act, inclusion of cost of publicity 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 1.89 Nil Excise Act, inclusion of cost of publicity 1944 items sold to dealers on trading basis as part of Transaction Value

Central Demand raised for non- 5.79 (includes Nil Excise Act, inclusion of cost of publicity penalty of 1944 items sold to dealers on Rs 2.90 lakhs) trading basis as part of Transaction Value

Finance Act, Demand raised for Service 4.26 (includes Nil 1994 Tax Credit taken on Canteen penalty of services where part of cost Rs 2.13 lakhs) of food recovered from employees.

Finance Act, Demand raised for Service 3.36 Nil 1994 Tax Credit taken on Canteen services provided to employees where cost of food borne by the Company.

Finance Act, Demand raised for Service 3.98 (includes Nil 1994 Tax Credit taken on Canteen penalty of services provided to Rs 1.99 lakhs) employees where cost of food borne by the Company and part of the same recovered from employees.

Finance Demand raised for Service 1.88 (includes Nil Act,1994 Tax Credit taken on penalty of Insurance cover of Rs 0.03 lakhs) employees

Central Demand raised for levy of 3.62 (includes Nil Excise Act, Education Cess and penalty of 1944 Secondary Higher Education Rs. 1.81 lakhs) Cess on Automobile Cess

Central Demand raised for levy of 3.18 (includes Nil Excise Act, Education Cess and penalty of 1944 Secondary Higher Education Rs. 1.59 lakhs Cess on Automobile Cess

Central Imposition of penalty in 300.00 Nil Excise Act, relation to Classification 1944 dispute of Ambulances fabricated & cleared from M/s. Sita Singh

Central Cenvat benefit taken on 129.18 (include Nil Excise Act, Input/Capital & Services penalty of Rs. 1944 used for R&D purposes. 64.59 lakhs) October 2006 to March 2011

Finance Act, ST credit taken in respect of 0.54 Nil 1994 "Rent a Cab" services used for transportation of employees from their residence to factory. January 2010 to September 2010

Finance Act, ST credit taken in respect of 2.64 Nil 1994 "Rent a Cab" services used for transportation of employees from their residence to factory. (July 07 to December 09)

Central Imposition of penalty in 25.00 Nil Excise Act, relation to non compliance of 1944 Rule 10A by body builder

Sub Total 517.88 2.12

Income Tax Disallowance of provision for 19.01 Nil Act, 1961 bad and doubtful debts

Income Tax Demand raised for non 28.51 Nil Act, 1961 deduction of TDS on payment of Fee for Technical Services/ Royalty

Income Tax Demand raised on 101.55 62.00 Act, 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145(A) of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax Demand raised under section 22.02 22.02 Act, 1961 234 B and 234 C of Income Tax Act, 1961 by assessing authority

Income Tax Demand raised on 94.79 Nil Act, 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145A of Income Tax Act, 1961and weighted R&D deduction.

Income Tax Demand raised on 137.10 Nil Act, 1961 disallowance of expenses, loading of statutory dues on Work-in-Progress under section 145A of Income Tax Act, 1961 and weighted R&D deduction.

Income Tax Demand raised under section 50.88 Nil Act, 1961 271(1)(c) of Income Tax Act, 1961

Income Tax Demand raised on 664.05 200.00 Act, 1961 disallowance of revenue expenditure incurred on expansion of business, excess provision made on account of Warranty , bad

debts written off ,interest on utilization of loan, Work-in- Progress under section 145A of Income Tax Act, 1961

Sub Total 1,117.91 284.02



Name of Period to Forum where the the statute which the dispute is pending amount relates

Central 1st April 2000 Sales Tax Appellate Tribunal, Sales Tax to 30th Chandigarh. Act, 1956 September 2000

Punjab VAT August, 2007 Deputy Excise and Taxation Act, 2005 Commissioner cum Joint Director Enforcement, Patiala.

Gujarat 2001-02 Deputy Commissioner Sales Tax Act (Appeals), Gujarat

U P Vat 2009-10 Additional Commissioner Act, 2008 (Appeals), Lucknow

U P Trade 1993-94 Additional Commissioner Tax Act 1948 (Appeals), Lucknow

Gujarat Sales 2010-11 Deputy Commissioner of Tax Act Commercial Tax Range-I, Ahmedabad

Karnataka 2011-12 Commercial Tax Officer, Sale Tax Hubli Act (Hubli)

Central 1st April, 2000 Custom Excise and Service Excise Act, to 31st March, Tax Appellate Tribunal (CESTAT) 1944 2004

Finance Act, April- 2002 to Custom Excise and Service 1994 March- 2005. Tax Appellate Tribunal (CESTAT)

Central 1st January, Custom Excise and Service Excise Act, 2004 to 30th Tax Appellate Tribunal 1944 September, 2004 (CESTAT)

Central 2005-06 Commissioner (Appeals) Excise Act, 1994

Finance Act, 2005-06 Custom Excise and Service 1994 Tax Appellate Tribunal (CESTAT)

Finance Act, Nov -2009 to Custom Excise and Service 1994 May -2010 Tax Appellate Tribunal (CESTAT)

Central October-2004 Hon'rable Supreme Court Excise Act, to March-2005 1944

Central October-2006 Custom Excise and Service Excise Act, to June-2008 Tax Appellate Tribunal (CESTAT) 1944

Central April-2005 to Custom Excise and Service Excise Act, January-2006 Tax Appellate Tribunal (CESTAT) 1944

Finance Act, April-2006 to Custom Excise and Service 1994 December 2008 Tax Appellate Tribunal (CESTAT)

Finance Act, April-2006 to Custom Excise and Service 1944 December 2008 Tax Appellate Tribunal (CESTAT)

Finance Act, January -2009 Custom Excise and Service 1994 to October- Tax Appellate Tribunal 2009 (CESTAT)

Finance Act, September- Custom Excise and Service 1994 2004 to Tax Appellate Tribunal December 2008 (CESTAT)

Central April -2008 to Custom Excise and Service Excise Act, June -2009 Tax Appellate Tribunal (CESTAT) 1944

Central March -2008 to Commissioner (Appeals) Excise Act, August' 2008 1944

Central April 2005 to Custom Excise and Service Excise Act, Nov'2009 Tax Appellate Tribunal 1944 (CESTAT)

Central Oct'2006 to Custom Excise and Service Excise Act, Dec'2011 Tax Appellate Tribunal (CESTAT) 1944

Finance Act, Jan'2010 to Commissioner (Appeals) 1994 Sep'2010

Finance Act, July'2007 to Custom Excise and Service 1994 Dec'2009 Tax Appellate Tribunal (CESTAT)

Central December 2008 Custom Excise and Service Excise Act, to July - 2009 Tax Appellate Tribunal (CESTAT) 1944

Income Tax 1991-92 High Court of Punjab & Act, 1961 Haryana

Income Tax 1986-87 High Court of Punjab & Act, 1961 Haryana

Income Tax 2004-05 Income Tax Appellate Act, 1961 Tribunal

Income Tax 1997-98 High Court of Punjab & Act, 1961 Haryana

Income Tax 2005-06 Income Tax Appellate Act, 1961 Tribunal

Income Tax 2006-07 Income Tax Appellate Act, 1961 Tribunal

Income Tax 2005-06 Commissioner of Income Tax Act, 1961 (Appeals)

Income Tax 2007-08 Commissioner of Income Tax Act, 1961 (Appeals)

10. The Company does not have any accumulated losses and has not incurred cash losses in the current year and immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any financial institution or debenture holders during the year.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

14. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

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

16. According to the information and explanations given to us, the Company did not have term loans outstanding during the year.

17. According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we are of the opinion that funds raised on short-term basis have not been used for long-term investment.

18. As stated above, there are no companies/firms/parties covered in the register required to be maintained under Section 301 of the Companies Act, 1956.

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

20. The Company has not raised any money by way of public issues during the year. Utilization of money during the year for the money raised by public issue in earlier years has been disclosed by the management in note 42. We have verified such end use.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Company

Chartered Accountants

Firm Registration No.: 128032W

Rajesh Arora

Place: New Delhi Partner

Date : 25 May 2012 Membership No.: 076124


Mar 31, 2011

1. We have audited the attached Balance Sheet of SML ISUZU LIMITED (the "Company") as at March 31, 2011, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 (together the "Order"), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956' of India (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the 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 and 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 and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) Attention is invited to non provision ofRs.488 lacs in respect of MODVAT credit receivable as explained in Note 2 of Schedule N. Had the said amount been provided, loans and advances and profit for the year would have been lower by the corresponding amount.

The matter referred above was also the subject matter of qualification in our audit report on the financial statements for the year ended March 31,2010.

(g) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, and subject to our comments in para (f) above, 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 March 31, 2011;

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

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



ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of the Auditors' Report of even date to the members of SMLISUZU Limited (formerly Swaraj Mazda Limited) on the financial statements for the year ended March 31, 2011

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year.

In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3 (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

(b) The Company has not taken any loans,secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause

(d) of sub-section (1) of Section 209 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 or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, except dues in respect of income-tax where there have been delays during the year, though the delay in deposit have not been serious, the Company is regular in depositing undisputed statutory dues including investor education and protection fund, employees' state insurance, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the appropriate authorities. The extent of the arrears of statutory dues outstanding as at March 31, 2011, for a period of more than six months from the date they became payable are as follows:

Name of the Nature of dues Amount (Rs.) Period to which Due date Date of statute the amount Paym ent relates

Income Witholding 45,000 April-June 2010 July 07, 2010 May 05 ,2011 Tax Act, 1961 Tax on Royalty

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty and cess as at March 31, 2011 which have not been deposited on account of a dispute are as follows:

Name of Nature of Amount Amount Period to which Forum where the the statute dues (Rs. lacs) Deposited under the amount dispute is pending Protest (Rs. Lacs) relates

Central Sales Sales Tax 218.23 87.30 2000-01 Sales Tax Appellate Tax Act, 1956 Tribunal, Chandigarh.

Punjab VAT Penalty 3.67 0.92 2007-08 Deputy Excise and Act, 2005 Taxation Commissioner cum Joint Direc tor Enforcement, Patiala.

Gujrat Sales Penalty 11.78 2.37 2001-02 Deputy Commissioner Tax Act (Rs. 9.25 lacs has (Appeals), Gujarat. been given as bank guarantee by the company)

Uttar P radesh Sales Tax 15.94 7.19 1993-94 Additional Comm issioner Trade Tax (Appeals), Lucknow. Act,1948

Central Excise Excise Duty 81.17 2.12 2000-01 to Commissioner (Appeals)/ Act, 1944 Interest and 2008-09 Custom Excise and Penalty Service Tax Appellate Tribunal (CESTAT)/ Supre me Court.

Income Tax Income Tax, 380.96 62.00 1986-87, 1991-92 High Court of Punjab & Act, 1961 Interest and 2004-05, 2005-06 Haryana/lncome Tax Penalty 2006-07 Appellate Tribunal/ Commissioner of Income Tax (Appeals).

Finance Service Tax 35.23 1.30 2002-2008 Commissioner (Appeals)/ Act, 1994 and penalty Custom Excise and Service Tax Appellate Tribunal (CESTAT)

10. The Company has no accumulated losses as at March 31, 2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. The Company has not obtained any term loans.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long- term investment.

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

19. The Company has not issued any debentures during the year and there are no debentures outstanding as at the year end.

20. The Company has not raised any money by public issues during the year. The Management has disclosed the end use of monies during the year, out of public issue raised in the earlier year (Refer Note 25 of Schedule N) which has been verified by us.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year except that we have been informed by the management of certain instances of theft of components from stores during the year under audit. Loss due to theft amounting to Rs. 7.95 lacs (approx) has been reported to investigating agencies and the Company is conducting its own assessment. Pending the outcome of these actions the loss has been adjusted in the books of account and further adjustments, if any, will be made once the investigations are completed.

For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants

V.Nijhawan New Delhi Partner May 26, 2011 Membership Number: F87228

 
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