We have audited the attached Balance Sheet of Tata Finance Limited as
at March 31, 2004 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 Company's
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 mis-statement. 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 (Auditor's Report) Order, 2003, (the
Order) issued by the Central Government of India in terms of
sub-section (4A) of section 227 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.
Further to our comments in the Annexure referred to above, we report
(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
(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
as on March 31, 2004 and taken on record by the Board of Directors, we
report that none of the directors is disqualified as on March 31, 2004
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 case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2004;
(b) In case of the Profit and Loss Account, of the Profit for the year
ended on that date; and
(c) In case of the Cash Flow Statement, of the cash flows for the year
ended on that date.
For N.M.Raiji & Co.,
Mumbai, May 17, 2004. Partner
Membership No: 37924
ANNEXURE TO THE AUDITOR'S REPORT
Annexure to the Auditor's Report of even date to the Members of Tata
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and the situation of its
b) The Company has a phased programme of verification and accordingly
certain leased assets and owned assets have been physically verified by
the management during the year. In our opinion, the frequency of
verification of the fixed assets by the management is reasonable having
regard to the size of the Company and the nature of its assets. The
discrepancies noticed have been properly dealt with in the books of
(c) The assets disposed off during the year are not significant and
therefore do not affect the going concern assumption.
(ii) The Company is in the business of financing and hence it does not
hold any finished goods, stores, spare parts and raw materials.
(iii) (a) During the year, the Company has taken inter corporate
unsecured loan from five companies listed in the register maintained
under section 301 of the Companies Act. The aggregate amount of the
loan taken is Rs. 24,410 lakhs out of which Rs. 22,910 lakhs have been
repaid during the year.The Company has not granted any loans to parties
listed in the Register maintained under section 301 of the Companies
(b) The rate of interest and other terms and conditions of the loan
taken by the Company covered under sub-para (a) above, are not, prima
facie, prejudicial to the interests of the Company.
(c) The repayment of principal amount and payment of interest are made
(d) There are no overdue amounts in respect of such loans.
(iv) In our opinion and according to the information and explanations
provided to us there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of plant and machinery, equipment and
other assets and for the sale of power.
(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 transactions that need to be entered into the
register maintained under section 301 have been properly entered in the
(b) In our opinion and according to the information and explanations
given to us/the transactions entered in the registers maintained under
section 301 and exceeding during the year by Rupees five lakhs in
respect of each party have been made at prices which are reasonable
having regard to prevailing market prices at the relevant time.
(vi) During the year the Company has not accepted deposits from the
public. For deposits accepted in the earlier years the Company has
complied with the directions issued by the Reserve Bank of India under
the Non Banking Financial Companies Acceptance of Public Deposits
(Reserve Bank) Directions, 1998. As per the information provided to us,
the Company has not received any order from the Company Law Board with
regard to the deposits.
(vii) The Company has a system of internal audit which, in our opinion,
is commensurate with its size and nature of its business.
(viii) The Company is in the business of financing and hence
maintenance of cost records under clause (d) of sub-section (1) of
section 209 of the Act is not applicable.
(ix) (a) According to the records, information and explanations
provided to us, the Company is generally regular in depositing with
appropriate authorities undisputed amount of provident fund, investor
education and protection fund, employees' state insurance, income-tax,
sales tax, wealth-tax, custom duty, excise duty, cess and other
statutory dues applicable to it and no undisputed amounts payable were
outstanding as at March 31,2004 for a period of more than six months
from the date they became payable.
(b) As per the information and explanation given to us, the following
are the details of disputed income-tax, excise duty, custom duty and
sales tax that have not been paid to the concerned authorities:
Sr. NATURE OF THE Unpaid Amount
No. STATUTORY DUES FORUM WHERE DISPUTE IS PENDING (Rs. in Lakhs)
1 Income-tax CIT (Appeals) 282.37
2 Interest-tax Income Tax Appellate Tribunal 150.35
3 Interest-tax CIT (Appeals) 7.78
4 Interest-tax Assessing Officer 0.56
5 Sales tax Commissioner of Appeals 321.44
6 Sales tax Appellate Tribunal 36.07
(x) The accumulated loss of the Company as at 31st March, 2004, is more
than 50% of its net worth before such loss. The Company, has however,
not incurred a cash loss in the current year and the immediately
preceding financial year.
(xi) Based on our audit procedures and on the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to any financial institution or bank.
(xii) Based on our examination and according to the information and
explanations given to us, the Company has maintained adequate documents
and records for loans and advances secured by way of shares, debentures
and other securities.
(xiii) As explained to us.the provisions of any special statute
applicable to Chit Fund, Nidhi or Mutual Benefit Society are not
applicable to the Company.
(xiv) The Company has generally kept adequate records of its
transactions in securities.debentures and other investments and timely
entries have been made therein. All the shares and securities owned by
the. Company are held in the Company's name.
(xv) On the basis of the information and explanations given to us the
Company has not given any guarantee for loans taken by others from
banks or financial institutions in the current year.
(xvi) According to the information and explanations given to us and
records of the Company examined by us, all term loans were applied for
the purpose for which the loans were obtained. Loans might have been
taken to repay other loans, which are considered as applied for the
purpose for which the loans were obtained.
(xvii) During the year, the Company has utilized short-term loans for
financing vehicles of a tenure exceeding 1 year. In the opinion of the
management, the utilization is for the operational activities and hence
not for long term investments.
(xviii) During the year, the Company has made a preferential allotment
of shares to companies covered in the Register maintained under section
301 of the Act and the price at which shares have been issued is not
prejudicial to the interest of the Company.
(xix) According to the information and explanations given to us and
records of the Company examined by us, securities have been created in
respect of debentures issued.
(xx) The Company has not raised any money by public issues during the
(xxi) Based on the audit procedures performed and information and
explanations given to us by the management, we give below the details
of frauds on the Company noticed and detected by the management during
Sr. Nature of fraud Rs. in lakhs
a) Unauthorised collection of instalments from customers,
not remitted to the Company 6.62
b) Collection from customers misappropriated by 2 dealers
out of which, Rs.47 lakhs has been recovered subsequently. 48.57
For N.M. Raiji & Co.,
Mumbai, May 17, 2004. Partner
Membership No: 37924