To the members of
Khandwala Securities Limited
1 We have audited the attached Balance Sheet of Khandwala Securities Limited asat March 31, 2013 and also the Profit and Loss Account and the Cash Flow Statement for theperiod from April 1, 2012 to March 31, 2013 annexed thereto (all together referred to asfinancial statements). These financial statements are the responsibility ofthe Companys management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.
2 We conducted our audit in accordance with the auditing standards generally acceptedin India. 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 management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3 (i) The Company had advanced application money towards purchase of shares of Rs. 216.69 lacs, which is outstanding for a period of 132 months as at the end of the year. In theabsence of information regarding the status of the allotment or the net worth of theentities in which the Company made applications, we are unable to ascertain the extent towhich an amount of Rs. 216. 69 lacs is recoverable and accordingly, the effect thereof onthe financial statements cannot be ascertained. The company has already initiated legalproceeding against the investee for the recovery of the share application money. Pleaserefer note no. 21 of Notes forming part of financial statements.
(ii) Long-term deposits from companies of Rs 100. 00 lacs as subject to confirmationand consequential adjustments, if any. Please refer note no. 22 of Notes forming part offinancial statements.
(iii) Long-term deposits to companies of Rs. 530. 00 lacs together with interestaccrued thereon Rs. 135. 80 lacs (included in loans and advances) are subject toconfirmation and subsequent adjustments, if any. Please refer note no. 23 of Notes formingpart of financial statements.
We are unable to assess the extent to which the amounts indicated in paragraphs(iii) are recoverable and the amount in paragraph (ii) is payable, and accordingly, theeffect thereof on the financial statements cannot be ascertained..
4 As required by the Companies (Auditors Report) Order, 2003 issued by theCentral Government of India in terms of sub-section (4A) of section 227 of the CompaniesAct, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4and 5 of the said Order.
5 Further to our comments in the Annexure referred to above, we report that:
a Except for the matters stated in paragraph 3 above, we have obtained all theinformation and explanations, which to the best of our knowledge and belief were necessaryfor 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 and loss account and the cash flow statement dealt with bythis 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;
e On the basis of written representations received by the Company from its directors,we report that as on March 31, 2013 none of the directors is disqualified from beingappointed as a director in terms of clause (g) of subsection (1) of section 274 of theCompanies Act, 1956;
f Except for our comments in paragraph 3 above, in our opinion and to the best of ourinformation and according to the explanations given to us, the financial statements readtogether with the notes thereon, give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
1 In the case of the balance sheet, of the state of affairs of the Company as at March31, 2013;
2 In the case of the profit and loss account, of the Loss of the Company for the periodended on that date; and
3 In the case of the cash flow statement, of the cash flows of the Company for theperiod ended on that date.
For Udyen Jain & Associates
Mr. Udyen Jain
Mem. No: 101201
Firm Registration No. 116336W
Date: -27th May, 2013
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 4 of our report of even date to the members of KhandwalaSecurities Limited on the financial statements for the period from April 1, 2012 to March31, 2013)
1 The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. Discrepancies have been identified andadjusted/rectified in the records relating to fixed assets.
2 According to the information & explanations given to us and having regard to thesize of the Company and the nature of its business, in our opinion the frequency ofphysical verification of fixed assets is reasonable.
3 None of the fixed assets have been revalued during the year.
4 No substantial part of the fixed, assets was disposed off during the year.
5 The Company is a service company primarily engaged in the business of renderingmerchant banking services. Accordingly, it does not hold any physical inventories. Thus,paragraph 4(ii) of the Order is not applicable.
6 The company has not granted any loans, secured or unsecured during the period.
7 The rate of interest and the other terms and conditions are prima facie notprejudicial to the interest of the company
8 As the company has not taken any loans, secured or unsecured, from companies coveredu/s 301 of the Companies Act 1956, during the period, the clause no. 4(iii)(b) and4(iii)(c) of the Companies (Auditors Report) Order, 2003 are not applicable to thecompany.
9 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 and with regards to sale ofservice. The activities of the Company do not involve any purchase of inventory and saleof goods. In our opinion and according to the information and explanations given to us,there is no continuing failure to correct major weaknesses in internal control system.
10 To the best of knowledge and belief, and according to the information andexplanations given to us, we are of the opinion that transactions that need to be enteredinto the register maintained under Section 301 of the Companies Act, 1956 have been soentered.
11 No transactions have been entered during the period in the register maintained inpursuance of section 301 of the Companies Act, 1956 and based on the audit proceduresapplied by us and according to the information and explanations given and therepresentations made to us, we have not come across any transaction that need to beentered into the register maintained in pursuance of section 301 of the Companies Act,1956. Accordingly, sub-clause (b) is not applicable.
12 In our opinion and according to information and explanations given to us, theCompany has not accepted any deposits from the public to which the provisions of Section58A or Section 58AA of the Companies Act, 1956 apply.
13 According to the information and explanations given to us, the Company has aninternal audit system. In our opinion, the internal audit system is adequate with regardsto the size of the company and the nature of its business.
14 According to the information and explanations given to us, the Central Governmenthas not prescribed maintenance of cost records under Section 209(1) (d) of the CompaniesAct, 1956 for any of the activities of the Company.
15 According to the information and explanations given to us, during the period theCompany was generally regular in depositing with appropriate authorities, undisputedstatutory dues.
16 According to the information and explanations given to us, no undisputed amountspayable in respect of Provident Fund, Employees State Insurance, Income tax, Salestax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dueswere in arrears as at 31 March 2013 for a period of more than six months from the date thebecame payable.
17 According to the information and explanations given to us, no personal expenses havebeen charged to revenue account.
18 As at the balance sheet date, the Company does not have accumulated losses. TheCompany has incurred cash losses in the current year.
19 According to the information and explanations given to us, though the company hasnot defaulted in the repayment of dues to financial institutions and banks.
20 In our opinion, and according to the information and explanations given to us, theCompany is not a chit f fund or a nidhi / mutual benefit fund / society.Therefore the provisions of paragraph 4(xiii) of the Companies (Auditors Report)Order, 2003 are not applicable to the Company.
21 In respect of the Companys dealings or trading in shares, securities,debentures and other investments, proper records have been maintained on a timely basis inrespect of the transactions and contracts during the period under report. According to theinformation and explanations given to us, shares and other securities held as investmentsare in the Companys name, except in cases where the same are in the process of beingtransferred in its name.
22 According to the information and explanations given to us, the company has not givenguarantees for loans taken by others from banks which are prima facie prejudicial to theinterest of the company.
23 According to the information and explanations given to us, the Company had appliedterm loans availed for the purpose for which they were obtained.
24 In our opinion and according to the information and explanations given to us, and onan overall examination of the balance sheet of the Company, prima facie, no funds raisedon short-term basis have been applied for long-term investments and vice versa.
25 According to the information and explanations given to us, during the period underreport, the Company has not made preferential allotments of equity shares to personslisted in the register maintained under Section 301 of the Companies Act, 1956.
26 As the company did not have any debentures outstanding during the year, the clauseno. 4(xix) of Companies (Auditor's Report) Order, 2003 is not applicable to the company.
27 The Company has not made any public issue of shares or debentures during the period;accordingly, the question of disclosure of end use of proceeds of public issues does notarise.
28 The company is not a sick industrial company within the meaning of clause (o) ofsub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act,1985(1 of 1986).
29 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 andaccording to the information and explanations given to us, we have neither come across anyinstance of material fraud on or by the Company, noticed or reported during the period,nor have we been informed of such case by the management.
For Udyen Jain & Associates
Mr. Udyen Jain
Mem. No: 101201
Firm Registration No. 116336W
Date; -27th May, 2013