1. We have audited the attached Balance Sheet of MOTILAL OSWAL
FINANCIAL SERVICES LIMITED (the Company) as at March 31, 2011 and
also the Profit and Loss Account and the Cash Flow Statement for the
year ended on that date 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 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 (Auditors Report) Order, 2003, as
amended by the Companies (Auditors Report) (Amendment) Order, 2004,
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 said Order.
4. Further to our comments in the paragraph 3 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, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
iv. 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
Companies Act, 1956.
v. On the basis of the written representations received from the
directors, as on March 31, 2011, and taken on record by the Board of
Directors, we report that 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 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;
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2011;
b) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
c) in the case of 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 MOTILAL OSWAL FINANCIAL SERVICES LIMITED on the financial
statements for the year ended March 31, 2011
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The fixed assets of the Company have been physically verified by
the management during the year and no material discrepancies between
the book records and the physical assets have been noticed. In our
opinion, the frequency of verification is reasonable.
(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.
(ii) (a) As informed to us, the inventories (shares) which are held in
dematerialized form, have been verified by the management. In our
opinion, the frequency of verification is reasonable.
(b) The procedures of verification of inventories (shares) 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 (shares). We
are informed that no material discrepancies were noticed on physical
verification between the dematerialised stocks and the book records.
(iii) (a) The Company has granted unsecured loan to seven subsidiary
companies covered in the register maintained under Section 301 of the
Companies Act, 1956. The maximum amount involved during the year was
Rs. 866,189.58 (in thousands) and the year-end balance of loans granted
to such parties was Rs. Nil.
(b) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not, prima facie, prejudicial to the interest of the
Company.
(c) The loans are repayable on demand and whenever the loans are called
for the Company has received the principal amount and interest
accordingly.
(d) Since there is no stipulation as regards repayment schedule, clause
4(iii)(d) is not applicable.
(e) As informed, 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 Companies Act, 1956.
Consequently sub-clause (f) and (g) of clause 4(iii) are not
applicable.
(iv) In our opinion and according to the information and explanations
given to us, there exists an adequate internal control system
commensurate with the size of the Company and the nature of its
business with regard to purchase of inventory (shares) and fixed assets
and for the sale of service. During the course of our audit, we have
not observed any continuing failure to correct major weakness in
internal control system of the Company.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the particulars of contracts or arrangements
referred to in Section 301 of the Companies Act, 1956 that need to be
entered into the register maintained under Section 301 have been so
entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five lakhs have been entered
into during the financial year at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) 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
thereunder.
(vii) In our opinion, the Company has an adequate internal audit system
commensurate with the its size and nature of its business.
(viii) Since the Company is engaged in service sector, clause 4(viii)
in respect of maintenance of Cost records is not applicable to Company.
(ix) (a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident fund,
investor education and protection fund, employees state insurance,
income-tax, wealth-tax, service tax, customs duty, cess and other
material statutory dues applicable to it. As explained to us, the
provisions regarding sales-tax and excise duty are presently not
applicable to the Company.
Further, since the Central Government has till date not prescribed the
amount of cess payable under section 441A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the Company in depositing the same.
(b) 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, cess and other undisputed
statutory dues were outstanding, at the year end, for a period of more
than six months from the date they became payable.
(c) According to the records of the Company, the dues outstanding of
income-tax, wealth-tax, service tax, customs duty, and cess on account
of any dispute, are as follows:
Name of the statute Nature of dues Amount
(Rs. in Thousands)
Income Tax Act, 1961 Income Tax Rs. 656.17
Name of the statute Period to which the Forum where
amount relates dispute is pending
Income Tax Act, 1961 A.Y. 2007-08 CIT (Appeal)
(x) There are no accumulated losses as at March 31, 2011. Further, the
Company has not incurred cash losses during the financial year covered
by our audit and the 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 a
financial institution, bank or debenture holders.
(xii) We are of the opinion that the Company has maintained adequate
records where the Company has granted loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
are not applicable to the Company.
(xiv) According to the information and explanation given to us, we are
of the opinion that the Company has maintained proper records in
respect of trading transactions and contracts of shares, securities,
debentures and other investments and timely entries have been made
therein. Further, the investments have been held by the Company, in its
own name.
(xv) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantee given by the
Company, for one of its subsidiaries for obtaining loan from banks or
financial institutions during the year, is not prejudicial to the
interest of the Company.
(xvi) The Company has not obtained any term loans.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that funds amounting to Rs. 155,443.26 (in thousands) raised on
short-term basis have been used for long-term investment. The Companys
short term liabilities and provisions are increased to the extent of
the stated amount. In the absence of relevant details, we are unable to
comment upon their utilisation.
(xviii) 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.
(xix) According to the information and explanations given to us, during
the year the Company had issued and redeemd unsecured non convertible
debentures.
(xx) During the year, the Company has not raised any money by way of
public issue.
(xxi) 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, nor
have we been informed of such case by the management.
For Haribhakti & Co.
Chartered Accountants
Firms Registration No. 103523W
Rakesh Rathi
Partner
Membership No. 45228
Place: Mumbai
Date : April 30, 2011
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