Indiabulls Financial Services Ltd Merged Auditor Reports

INDIABULLS FINANCIAL SERVICES LIMITED ANNUAL REPORT 2011-2012 AUDITORS REPORT To The Members of Indiabulls Financial Services Limited 1. We have audited the attached Balance Sheet of INDIABULLS FINANCIAL SERVICES LIMITED(the Company) as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors Report) Order, 2003 (CARO)issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: 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 it 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 are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956; v. 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, 1 956 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 March 31, 2012; (b) In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and (c) In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2012 taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2012 from being appointed as a director in terms of Section 274(1 )(g) of the Companies Act, 1956. For Deloitte Haskins & Sells Chartered Accountants (Registration No.: 117366W) A. Siddharth Partner (Member ship No.: 031467) Mumbai, April 27, 2012. i. Having regard to the nature of the Companys business/activities/result, clauses ii, viii and xiii of CARO are not applicable. ii. In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) Some of the fixed assets were physically verified during the year by the Management in accordance with a program of verification which in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. iii. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has granted loans to five Companies during the year. At the year-end, the outstanding balances of such loans granted aggregated to Rs.Nil from five Companies and the maximum amount involved during the year was Rs. 4,319,150,000 from five Companies. (b) The rate of interest and other terms and conditions of such loans, wherever stipulated, are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The receipts of principal amounts and interest have, during the year, been regular/as per stipulations. (d) There are no overdue amounts in excess of Rs. 1 lakh in respect of loans granted to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has taken loans from four Companies during the year. At the year-end, the outstanding balance of such loan taken aggregated Rs. Nil from four Companies and the maximum amount involved during the year was Rs.626,200,000 from four Companies. (b) The rate of interest and other terms and conditions of such loans, wher-ever stipulated, are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The payments of principal amounts and interest in respect of such loans are regular/as per stipulations. iv. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining 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 purchases of fixed assets and the sale of services. There were no transactions in respect of purchase of inventory and sale of goods during the year. During the course of our audit, we have not observed any major weakness in such internal control system. v. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1 956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered. (b) Where each of such transaction is in excess of Rs. 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time except that in respect of certain purchase and sale of services, for which comparable quotations are not available and in respect of which we are unable to comment. vi. According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956. vii. In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. viii. According to the information and explanations given to us, in respect of Statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Employees State Insurance, Income-Tax, Wealth Tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Cess and other material statutory dues in arrears as at March 31, 2012 for a period of more than six months from the date they became payable. (c) There are no disputed dues payable in respect of Wealth Tax, Service Tax and Cess which have not been deposited as on March 31, 2012. Details of dues of Income-tax which have not been deposited as on March 31, 201 2 on account of disputes are given below: Statute Nature of Forum where Period to Amount Dues Dispute is which the involved pending amount (Rs.) relates The Disallowance Commissioner of Year ended 33,821,339 Income-Tax u/s 14A Income tax March 31, Act, 1961 (Appeals)- 2008 XV, New Delhi. The Income-Tax Disallowance Commissioner of Year ended 12,301,239 Act, 1961 u/s 14A Income tax March 31, (Appeals)-XV, 2009 New Delhi. ix. The Company does not have any accumulated losses as at the end of the financial year. The Company has not incurred cash losses in the financial year covered by our audit and the immediately preceding financial year. x. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions and debenture holders. xi. In our opinion the Company has maintained adequate records where it has granted loans and advances on the basis of security by way of pledge of shares. The Company has not granted loans and advances on the basis of security by way of pledge of debentures and other securities. xii. Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in securities, debentures and other investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name. During the year, the Company has not dealt in shares. xiii. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks, are not prima facie prejudicial to the interests of the Company. During the year, the Company has not provided guarantees for loans taken by others from financial institutions. xiv. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application. xv. According to the information and explanations given to us, and on the basis of the maturity profile of assets and liabilities with a residual maturity of one year, as given in the Asset Liability Management Report, funds raised on short term basis have, prima facie, not been used during the year for long term investment. xvi. According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956. xvii. According to the information and explanations given to us, in respect of Secured Redeemable, Non-Convertible Debentures (NCDs) issued by the Company during the period covered by our . report, the Company has issued 25,940 debentures of Face value Rs 1,000,000 each. The Company has created security in respect of the debentures issued except, as at the year end, the Company was in the process of creating the charge/security on assets for 9,430 NCDs of Face value Rs. 1,000,000 each amounting to Rs.9,430,000,000. Subsequent to the year end, the said charge has been created. xviii. The Company has not raised any money by way of public issues during the year. xix. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year. For Deloitte Haskins & Sells Chartered Accountants (Registration No.: 117366W) A. Siddharth Partner (Member ship No.: 031467) Mumbai, April 27, 2012