Lumax Automotive Systems Ltd Under Liquidation Auditor Reports

To the Members of

LUMAX AUTOMOTIVE SYSTEMS LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of LUMAX AUTOMOTIVE SYSTEMS LIMITED (‘the Company’) which comprise the balance sheet as at 31 March 2014, the statement of profit and loss and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

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") read with the General Circular 15/2013 dates 13^th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal 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 company’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 subject to our observations in para. 2(d) below (Report on other legal and regulatory requirements) and give a true and fair view in conformity with the accounting principles generally accepted in India:

I. in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2014;

II. in the case of the statement of profit and loss, of the loss 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.

Report on Other Legal and Regulatory Requirements

1. Subject to the audit observations as under and as required by the Companies (Auditor’s Report) Order, 2003 ("the Order"), as amended, 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 and subject to observations as under, 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 read with General Circular 15/2013 dated 13^th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013, subject to our following observations that

i. As mentioned / stated in Note No.-14(Balance sheet) and Para 16 (iii) (accounting policies) of Note No. 29 regarding notes to accounts, the company has valued the inventories at cost/estimated cost inclusive of taxes and duties instead of at Cost or realizable value whichever is lower and exclusive of taxes paid, which are subsequently recoverable from the taxing authorities, which is not in compliance with Accounting Standard to valuation of inventories prescribe in the companies (Accounting Standards) Rules 2006. In our opinion the old inventories which are unusable for manufacturing purposes and are in obsolete nature should have been valued at realizable value and provision for loss in value should have been provided by the company. Further stock in transit in hand valuing ‘4,73,43,592/- is imported raw material and was lying with the Central Warehousing Corporation. The company has not obtained confirmation of the material lying in the Warehouse from Central Warehousing Corporation.

ii. No Provisions have been made in the financial statements in respect of the following items:-

(a) Provision for Interest in respect of delayed/ non- payment to suppliers/ service providers which are registered under the provisions of The Micro, Small or Medium Enterprises Development Act, 2006 as well as in respect of delayed payments/outstanding payments in respect various statutory dues such as provident fund, employees’ state insurance, income tax, wealth tax, sales tax, excise duty, cess and other statutory dues;

(b) Provision for doubtful debts and loans and advances amounting to ‘181927873/- and ‘5826525/- respectively which are considered doubtful of recovery. In our opinion most of the doubtful debts and loan and advances are bad in nature and the company should have made the provision for the same.

(c) Short provision of labour compensation payable to workers with whom the settlements were made during the year by ‘8 lakhs. Consequent to the above observations the loss is under stated.

(d) Provision of ‘2,79,72,000/- and interest thereon on non-payment on account of enhanced cost raised by HSIIDC in respect of factory plot No.46, Sector-3, IMT, Manesar, Gurgaon, Haryana.

iii. As mentioned in note 15 of the notes to accounts no 29 regarding the balances of some of the sundry creditors and debtors, loans and advances, price variance and rebate claims are subject to confirmation / reconciliation and subsequent adjustments if any. As such we are unable to express any opinion as to the effect their of on the financial statements for the year.

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.

	For R. Jain & Sanjay Associates
	Chartered Accountants
	ICAI Firm Registration No. 012377N
	(CA. R.K.JAIN)
Place : New Delhi	Partner
Date : 30th May 2014	M. No. 9981

ANNEXURE TO THE AUDITOR’S REPORT

(The Annexure referred to in our report to the members of LUMAX

AUTOMOTIVE SYSTEMS LIMITED (‘the company’) for the year ended 31^st March, 2014.

i. (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. However fixed assets have not been physically verified by the management during the year, hence we are unable to comment on the discrepancies, if any.

(b) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

ii. (a) The Management has conducted physical verification of inventory in respect of its working units at Manesar, Gurgaon and 12/2, Mathura Road, Faridabad at reasonable intervals. However no physical verification has been carried out in respect of the closed units at Plot No.78, Sector-6, Faridabad, Aurangabad unit and two Pune Units. The stock values in respect of the closed units have been taken as per values declared in the earlier financial statements.

(b) In our opinion and according to the information and explanation given to us the procedures of physical verification of inventory followed by the management at working units referred to above 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 records of inventory and subject to observation made in paras ii(a) and (b), we are of the opinion that the Company is maintaining proper records. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

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

(b) The company has taken interest bearing unsecured loans from Directors and companies covered in the register maintained u/s 301 of the Act. The number of the parties and maximum amounts involved during the year were eight and Rs.4,27,02,465/- and the year end balance of loans taken from such parties was Rs.3,76,48,433/-. The rate of interest and other terms and conditions of the loans taken are not prima facie prejudicial to the interest of the Company. There is no stipulation in respect of repayment of principal amounts and interest thereon. v. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the Company, and according to the information and explanation given to us, as per the checking carried out in accordance with the auditing standards generally accepted in India, neither we have observed nor we have been reported for any continuing failure to correct major weaknesses in internal control systems.

v. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained u/s 301 of the Act.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act.

vii. The Company has an internal audit system, which in our opinion, is not adequate and needs to be enlarge to be commensurate with the size of company and the nature of its business.

viii. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records u/s 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the records examined by us, undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees’ state insurance, income tax, sales tax, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are Rs. 13,34,55,488/-

(c) 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, Services Tax, Customs duty and Excise Duty as at 31-03-2013, which have not been deposited on account of the dispute are as follows :

S.No	Name of the Statute	Nature of Dues	Amount(Rs.)	Period to which relate	Forum where the dispute is pending
1.	Income Tax Act, 1961	Income Tax	5,48,585	F.Y 2006-07	Review petition pending with A.O.
2.	Haryana Value added tax (Local)	VAT including interest	25.78 Lakhs	F.Y. 2009-10	On account of non submission of statutory forms
3.	Central Sales Tax Act, 1956	CST including interest	67.09 Lakhs	F.Y. 2008-09	On account of non submission of statutory forms
			73.65 Lakhs	F.Y. 2009-10

x. The company has no accumulated losses. However the company has incurred cash losses in the current financial year and no cash losses were incurred in the immediately preceding financial year.

xi. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks or financial institution except the following:- (a) installments of the term loan and interest with HSIIDC amounting to ‘5,53,29,060/- as at the date of balance sheet (b) default during the year with IDBI Bank of two installments of ‘20 lakh each for a period of 6 and 3 months which were re-paid in the accounting year. There were no dues to debenture holders during the year.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The Company is not a chit-fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003(As Amended) are not applicable to the Company.

xiv. The Company is not dealing or trading in shares, securities, debentures and other investments. The other provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003, (As amended) are not applicable to the company.

xv. According to the information and explanations given to us the Company has not given guarantee for loans taken by others from bank or financial institutions.

xvi. According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

xvii. Based on examination of documents, records and fund flow statement made available to us and on the basis of information and explanations given to us, the Company has not used funds raised on short term basis for long term investment.

xviii. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained u/s 301 of the Companies Act, 1956.

xix. The Company has neither issued nor had any outstanding debenture during the year.

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

xxi. Based upon the audit procedures performed for the purpose of reporting a true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit nor we have been informed of such cases by the management.

	FOR R.JAIN & SANJAY ASSOCIATES,
	ICAI FIRM REGISTRATION NO.012377N,
	CHARTERED ACCOUNTANTS
PLACE: NEW DELHI	CA-R.K. JAIN
DATE: 30TH MAY 2014	(PARTNER)
	MEMBERSHIP NO: - 9981

CFO & Managing Director certification under clause 41 & 49(V) of the listing agreement to be placed before the board along with audited annual accounts for the year ended March 31, 2014.

(a) We certify to the board that we have reviewed financial statements and the cash flow statement for the year and that to the best of their knowledge and belief:

(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) these statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) There are, to the best of their knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that they have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and they have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies.

(d) We have indicated to the auditors and the Audit committee

(i) significant changes in internal control over financial reporting during the year;

(ii) significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

(iii) instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company’s internal control system over financial reporting.

Place: Delhi	A.K. Goel	Nitin Jain
Date : 26/08/2014	Chief Financial Officer	Managing Director

DECLARATION BY MANAGING DIRECTOR PURSUANT TO CLAUSE 49(1)(D)(ii) OF LISTING AGREEMENT

As the Managing Director of Lumax Automotive Systems Ltd and as required by Clause 49 (1)(D) (ii) of the Listing Agreement, I hereby declare that the all the Board Members and Senior Management Personnel of the Company have affirmed compliance with Company’s Code of Business Conduct and Ethics for the financial year 2013-14.

For Lumax Automotive Systems Limited

Nitin Jain

Managing Director

Place: New Delhi

Date: 26/08/2014

CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

To the Members of Lumax Automotive Systems Limited.

We have examined the compliance of conditions of Corporate Governance by Lumax Automotive Systems Limited for the year ended March 31, 2014 as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedures and implementation thereof adopted by the Company for ensuring compliance with the conditions of Corporate Governance as stipulated in the said clause. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and based on the representations made by the directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the above-mentioned Listing Agreement.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For R. Jain & Sanjay Associates

Chartered Accountants

Firm Registration No.- 012377N

R. K. Jain

Partner

Membership no. 9981

Place: New Delhi

Date: 26/08/2014