India Lease Development Ltd

INDIA LEASE DEVELOPMENT LIMITED

We have audited the attached Balance Sheet of India Lease Development Limited asat March 31, 2011, the Profit & Loss Account and also the Cash Flow Statement for theyear ended on that date, annexed thereto. These financial statements are theresponsibility of the Company's Management. Our responsibility is to express an opinion onthese financial statements based on our audit.

We conducted our audit in accordance with auditing standards, generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes, examining on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

1. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued bythe Central Government of India, in terms of sub-section (4A) of section 227 of theCompanies Act, 1956, we enclose, in the Annexure, a statement on the matters specified inparagraphs 4 & 5, of the said Order.

2. Attention is drawn to Note No. 2 of Schedule-14 "Notes toAccounts", regarding the accumulated losses of the Company as at March 31, 2011. TheCompany has also discontinued fresh hire purchase / leasing business. The management is ofthe view that the realization of the assets will be sufficient to pay off its entireliabilities. In view of the above the accounts have been prepared on the assumption thatthe Company will continue as a going concern.

3. Further to our comments in the Annexure referred to in paragraph 1, we report that:

c) There is non-compliance of the provisions of Non Banking Financial CompaniesPrudential Norms (Reserve Bank) Directions 1998 with regard to maintenance of CapitalAdequacy and Credit/Investment exposure in excess of the prescribed limits (Refer Note No.3).

4. We further report that: -

(a) We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany, so far as appears from our examination of those books;

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

(d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash FlowStatement dealt with by this report comply with the Accounting Standards, referred to insub-section (3C) of section 211 of the Companies Act, 1956 subject to our comments in ourparagraphs 3(a) & (b) above;

(e) On the basis of written representations received from the Directors, as at March31, 2011, and taken on record by the Board of Directors, we report that none of theDirectors is disqualified as at March 31, 2011 from being appointed as a Director, interms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

We further report that, without considering the observations made in paragraphs 3 (b)& (c) above the effect of which could not be determined, had the observation made byus in paragraph 3(a) above been considered, the profit for the year would have beenRs.384.11 Lacs (as against the reported figure of Rs.388.84 Lacs) and the carry forwardloss would have been Rs.2172.02 Lacs (as against the reported figure of Rs.2167.29 Lacs).

In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with the Significant Accounting Policies andNotes to Accounts give the information required by the Companies Act, 1956, in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31, 2011;

(b) in the case of the Profit & Loss Account, of the profit of the Company for theyear ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE ON ACCOUNTS OF INDIALEASE DEVELOPMENT LIMITED FOR THE YEAR ENDED 31st MARCH, 2011

I) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets except for assets on lease andfurniture and fixtures at offices.

(b) As per information and explanations given to us the fixed assets other than assetson lease have been physically verified by the management, during the year. In our opinion,the frequency of verification is reasonable and no material discrepancies were noticed onsuch verification except in the case of furniture and fixtures at offices wherein thephysical balance not reconciled with the book balance (refer to our comments in (a)above). In respect of assets on lease, confirmations from lessees, as regards theirphysical existence, were not available.

(c) The Company has not disposed off a substantial part of its fixed assets during theyear.

ii) The Company does not have any inventory. Therefore, the provisions of clause 4(ii)(a), (b) & (c) of the Order are not applicable.

iii) (a) The Company has granted, during the year, unsecured Inter Corporate Deposit toa company covered in the register maintained under Section 301 of the Companies Act, 1956.The Company had also granted an unsecured Inter Corporate Deposit in earlier yearsamounting to Rs.65.50 Lacs to a company which has since ceased to be covered under Section301 of the Companies Act. The maximum amount involved during the year was Rs. 395.50 Lacsand the year-end balance of such deposits was Rs.395.50 Lacs.

(b) In our opinion, the rate of interest, wherever charged, and other terms andconditions of such loans are not, prime facie, prejudicial to the interest of the Company.

(c) According to the information and explanations given to us, the Inter CorporateDeposit given during the year is repayable on demand. The repayment of interest isregular.

(d) As explained to us, in respect of outstanding Inter Corporate Deposit granted inearlier years amounting to Rs. 65.50 Lacs, where from recoveries are not forthcoming, fullprovision has been made.

(e) The Company has not taken any loan secured or unsecured from companies, firms orother parties listed in the register maintained under Section 301 of the Companies Act,1956. Accordingly, provisions of clause 4(iii) (f) to (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business with regard to purchase of fixed assets. As explained, there wasneither purchase of inventories nor sale of goods and services during the year. During thecourse of our audit we have not come across any continuing failure to correct majorweaknesses in the internal control systems.

v) (a) According to the information and explanations given to us, we are of the opinionthat the particulars of contracts or arrangements that need to be entered into theregister maintained under Section 301 of the Companies Act 1956 have been so entered.

(b) According to the information and explanations given to us, the transactions made inpursuance of contracts or arrangements entered in the register maintained under Section301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect ofany party during the year have been made at prices which are reasonable having regard toprevailing market prices at the relevant time, except for items stated to be of aspecialized nature where no comparison is possible.

vi) The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance ofDeposits) Rules, 1975.

vii) The Company has an in-house internal audit system commensurate with the size andnature of its business.

viii) According to the information and explanations given to us, the Central Governmenthas not prescribed the maintenance of cost records under Section 209(1) (d) of theCompanies Act, 1956.

ix) (a) According to the information and explanations given to us and according to therecords produced before us, the Company is generally regular in depositing, withappropriate authorities the undisputed statutory dues including Provident Fund, InvestorEducation and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax and anyother material statutory dues applicable to it.

Further, since the Central Government has till date not prescribed the amount of cesspayable under Section 441A of the Companies Act, 1956, we are not in a position to commentupon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amountspayable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax were in arrears as at31st March, 2011 for a period of more than six months from the date they become payable.

(c) According to the information and explanations given to us, there are no dues ofIncome Tax, Sales Tax, Wealth Tax and Service Tax which have not been deposited on accountof any dispute, other than the following:-

x) The accumulated losses of the Company are more than 50% of the net worth of theCompany. The Company has not incurred any cash losses during the financial year covered byour audit and in the immediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, theCompany has no outstanding dues in respect of a financial institution or bank or debentureholders. Therefore, the provisions of clause 4(xi) of the Order are not applicable.

xii) The Company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities. Therefore, the provisions of clause4 (xii) of the Order are not applicable.

xiii) In our opinion and according to the information and explanations given to us theCompany is not a Chit Fund or Nidhi / Mutual Benefit Fund / Society. Therefore, theprovisions of clause 4(xiii) of the Order are not applicable.

xiv) In our opinion the Company is not dealing or trading in shares, securities,debentures or other investments. Therefore, the provisions of clause 4 (xiv) of the Orderare not applicable.

xv) The Company has not given any guarantees for loans taken by others from banks orfinancial institutions. Therefore, the provisions of clause 4(xv) of the Order are notapplicable.

xvi) The Company has not taken any term loans. Therefore, the provisions of clause4(xvi) of the Order are not applicable.

xvii) According to the information and explanations given to us, and an overallexamination of the Balance Sheet of the Company, we report that no funds raised on shortterm basis have been used for long term investments.

xviii) According to the information and explanations given to us, the Company has notmade any preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Companies Act, 1956.

xix) The Company has not issued any debentures during the year.

xx) The Company has not raised any money through public issue during the year.

xxi) To the best of our knowledge and belief and according to the information andexplanations given to us, no fraud on or by the Company has been noticed or reportedduring the course of our audit.