We have audited the attached Balance Sheet of PRIME SECURITIES LIMITED
as at March 31, 2012, the Profit & Loss Account and also 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.
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 misstatements. 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
As required by the Companies (Auditors Report) Order, 2003 issued by
the Central Government 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.
1. Further to our comments in the annexure referred to in paragraph
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
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
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 written representations received from the directors
and taken on record by the Board of Directors, we report that none of
the directors are disqualified as on March 31, 2012 from being
appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Companies Act, 1956.
2. We draw attention to:
â€˘ Note No. 24 relating to managerial remuneration which is subject to
the approval of the Central Government; and,
â€˘ Note No. 25 relating to non-provision of Companys investment in,
and loans to, its subsidiary Primesec Investments Limited whose net
worth has been eroded in view of the circumstances specified in the
said note, in respect of which we are unable to express our opinion.
3. Subject to para 2 above, in our opinion and to the best of our
information and according to the explanations given to us, the Balance
Sheet, Profit and Loss Account and Cash Flow Statement read 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 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 Profit and Loss Account, of the loss for the year
ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT
Referred to in Paragraph 3 of our report of even date
i) a. The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b. As explained to us, the fixed assets were physically verified by
the management as at the year end and that discrepancies noticed have
been properly dealt with in the books of account. In our opinion, such
discrepancies were not material in nature and that the frequency of
verification is reasonable having regard to the size of the Company and
the nature of its assets.
c. During the year the Company has not disposed off any substantial
part of its fixed assets.
ii) According to the information and explanations given to us, the
Company has neither granted nor taken any loan, secured or unsecured,
to/from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956.
iii) In our opinion and according to information and explanations given
to us, there are adequate internal control procedures commensurate with
the size of the Company and nature of its business with regards to
purchase of fixed assets and sale of services. During the course of our
audit, no major weakness has been noticed in the internal control.
iv) According to the information and explanations given to us, there
are no contracts or arrangements that need to be entered into a
register maintained in pursuance of section 301 of the Companies Act,
1956. Accordingly, paragraph 4(v)(a) and (b) of the Order is not
v) The Company has not accepted any deposits within the meaning of the
directives issued by the Reserve Bank of India and the provisions of
Section 58A and 58AA of the Companies Act, 1956 and rules framed there
vi) In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
vii) According to the information and explanations given to us, the
Central Government has not prescribed maintenance of cost records under
Section 209 (1)(d) of the Companies Act, 1956.
viii) a. According to the information and explanations given to us and
the records of the Company examined by us, the Company is generally
regular in depositing with the appropriate authorities undisputed
statutory dues including provident fund, income tax, sales tax, service
tax and other statutory dues applicable to it.
b. According to the information and explanations given to us no
undisputed amounts payable in respect of aforesaid dues were
outstanding as at 31st March, 2012 for a period more than six months
from the date they became payable.
c. According to the information and explanations given to us, there
are no statutory dues outstanding on account of any dispute as of 31st
ix) The Company does not have any accumulated loss as at the year end.
However, the Company has incurred cash loss during the current
financial year but there was no cash loss in the immediately preceding
x) The Company has not defaulted in repayment of dues to a financial
institution or a bank during the year.
xi) The Company has not granted any loans or advances against security
by way of pledge of shares, debentures and other securities.
xii) The provisions of any Special Statute applicable to Chit Fund,
Nidhi or Mutual Benefit Fund/Societies are not applicable to the
xiii) The Company has maintained proper records of the transactions and
contracts in respect of the investments and timely entries have been
made therein. Further, such investments have been held by the Company
in its own name except in case of (a) shares given as margin for
derivative transactions; (b) shares pledged as security for loan taken
by the Company and its subsidiary; and (c) given to a party pending
completion of a contract.
xiv) The Company has given corporate guarantee to banks on behalf of
its subsidiary company against the credit facilities availed by the
subsidiary company. According to the information and explanations given
to us, we are of the opinion that the terms and conditions thereof are
not prima facie prejudicial to the interest of the Company.
xv) Based on the overall examination of Balance sheet of the Company,
as at 31st March 2012, we are of the opinion that there are no funds
raised on short term basis that has been used for long term
xvi) The Company has not made any preferential allotment of shares
during the year to parties or companies covered in the register
maintained under Section 301 of the Companies Act, 1956.
xvii) The Company has not raised any money by public issues during the
xviii) According to the information and explanations given to us, no
fraud on, or, by the Company has been noticed or reported during the
year. Looking to the nature of activities being carried on by the
Company and also considering the nature of the matters referred to in
the said Order, clauses no. (ii), (xvi) and (xix) of Paragraph 4 of the
said Order are, in our opinion, not applicable to the Company.
For Gandhi & Associates
Flegistration No. 102965W
Membership No. 043194
Mumbai, May 25, 2012