1. We have audited the attached Balance Sheet of V. B. DESAI FINANCIAL
SERVICES LIMITED as at 31 st March, 2012, and also the State- ment of
Profit and Loss of the Company for the year ended on that date annexed
thereto and cash-flow statement for the year ended on that date. 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.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
per- form 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, issued
by the Central Government of India in terms of subsection (4A) of
section 227 of the Companies Act, 1956,(the Act) and on the basis of
such checks, as we considered appropriate, we give in the Annexure, '' a
statement on the matters specified in paragraphs 4 and 5 of the said
4. Further to our comments in the Annexure referred to above, we
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
b) In our opinion, proper books of accounts as required by law have
been kept by the company so far as appears from our examination of
c) The Balance Sheet and the Profit and Loss Account dealt with by this
report are in agreement with the books of account.
d) In our opinion, the Balance Sheet and Profit and Loss Account and
Cash Flow Statement dealt with by this report are, subject to our
observations in Para 5 below, in compliance with the Accounting
Standards referred to in sub-section (3C) of Section 211 of the Com-
ponies Act, 1956to the extent applicable;
e) On the basis of written representations received from the directors,
as on 31 st March 2012, and taken on record by the Board of Direc-
tors, we report that none of the directors are disqualified as on 31st
March, 2012 from being appointed as a director in terms of clause (g)
of sub-section(1 )of section 274 of the Companies Act, 1956.
5. In our opinion and to the best of our information and according to
the explanations given to us, and subject to:
i. Provision of Gratuity/Leave encashment not being provided on
actuarial basis, which is in non-compliance with the requirements of
Accounting Standard 15 ''Employee Benefits issued by the ICAI. In the
absence of an actuarial valuation being made, we are unable to quantify
the effect, if any, on the profits of the company for the year ended
31st March, 2012. (Refer Note No.27)
ii. Note No.26 regarding recognition in the current period, of revenue
pertaining to Professional Fees, the bills in respect of which have
been raised for future periods. In our opinion, the said recognition is
notin compliance with Accounting Standard 9 ''Revenue Recogni-
tion''as issued by the ICAI. Such policy has resulted in an apparent
overstatement of revenue byt32.50 lac. Had such recognition not been
made, the income and profit before tax for the year would have been
lower by the said amount.
iii. Note No.28 regarding non-provision in respect of debtors amounting
tot 25.83 lac which are considered to be doubtful of recovery. Had
such a provision being made, the amount of debtors and profit before
tax for the year would have been lower by the said amount.
iv. Managerial remuneration amounting to Rs. 1,86,631/-is paid in excess
of the limits specified under section 309 of the Companies Act, 1956.
The excess managerial remuneration so claimed for the financial year
2011-2012 has been refunded by the director in the financial year
2012-13 on 22nd May 2012. Nonetheless, had the managerial remuneration
been paid within the limits specified in the Act, the profit before tax
of the company would have been higherbyt 1,86,631Mhe said accounts read
with the Significant Accounting Policies and noteson accounts annexed
thereto, 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:
i) In the case of the Balance Sheet, of the state of affairs of the
Company, as at 31 st March, 2012,
ii) In the case of the Statement of Profit and Loss, of the profit for
the year ended on that date.
iii) In the case of cash flow statement, of the cash flow, for the year
ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
Re : V.B. Desai Financial Services Limited Referred to in Paragraph 3
of our report of even date
I. (a) The Company has maintained proper records showing fall
particulars including quantitative details and situation affixed
(b) The fixed assets have been physically verified by the management
during the year. As explained to us no discrepancies were noticed on
Z (a) The inventories of shares/stockpiling in physical Somtshave been
verified by the management. In our opinion, the residency of verifica-
tion is reasonable;
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to size of the
Company and the nature of its business;
(c) The Company is maintaining proper records of inventories. No
material discrepancy was noticed between physical: verification of
stocks and book records.
3. (a) During the year, the Company has granted interest free
unsecured loan to six parties listed in the Register mainteMnied under
section 301 of the Companies Act, 1956 amounting to Rs.13.85 lac. The
yearend balance of such loans was Rs.22.61 iac-Mawmum amount
outstanding during the year was Rs.22.61 lac). The interest free
unsecured loans granted earlier to two parties is*ed in the Register
maintained under section 301 of the Companies Act, 1956 amounted to
Rs.7.70 lac. The yearend balance of such taaos was Rs.S.80 lac. (Maximum
amount outstanding during the year was Rs.7 70 lac).
(b) Since the unsecured loans granted are interest free, the same are
prima-facie prejudicial to the interest of the Company. However, there
are no covenants in regards to other terms and conditions of such
(c) Since the unsecured loans granted are interest free, there is no
receipt of interest. No stipulations have been made regarding receipt
of the principal amount.
(d) Since there is no stipulation made regarding receipt of principal
amount, the question of there being an overdue amount of more than
rupees one lac does not arise.
(e) During the year, the Company has not taken any loans, secured or
unsecured, from the companies, firms or other parties covered in the
Register maintained under section 301 of the Companies Act, 1956. Hence,
clauses (iii.e) to (iii.g) of paragraph of the Order are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of fixed assets and sale of services. During
the course of our audit, we have neither come across nor have we been
informed of any major weaknesses in the aforesaid internal conM
5. Based on the audit procedures applied by us and according to the
information and explanations given to us, there are no contracts that
need to be entered into the Register maintained under Section 301 of the
Companies Act, 1956.
6. The Company has not accepted any deposits from the public during the
year and hence the directives issued by the Reserve Bank of India and
the provisions 58A & 58AA or any other relevant provisions of the
Companies Act, 1956 and the rules framed there under, are not ap-
pliable to the Company.
7. In our opinion, the Company has an internal audit system
commensurate with the size of the company and nature of Hs business.
8. We are informed that the Central Government has not prescribed
maintenance of cost records u/s.209(1)(d) of the Companies Act, 1956
for any of the services rendered by the Company.
9. (a) According to the information and explanations given to us and
the records of the company examined by us the company has general
ally been regular in depositing with the appropriate authorities
undisputed dues, including provident fund, investor education and
protection fund, employees'' state insurance, income-tax, sales tax,
wealth tax, service tax, customs duty, excise duty, cess and other
material statutory dues as applicable to it
(b) According to the information and entoiatons given to us by the
Management and the records of the Company examined by us, no undisputed
amounts payable in respect of the aforesaid dues were outstanding as at
31s'' March, 2012 for a period of more than six months from the date
they became payable.
(c) According to the information and explanations given to us and the
records of the Company examined by us, there were no disputed amounts
in respect of the afore said dues which have not been deposited as at
31st March 2012.
10. The company does not have any accumulated tosses at the end of the
financial year and has not incurred cash losses during the financial
year covered by our audit and in the immediately precedmg financial
II. The Company has not availed of any loans either from bank or
financial institutions nor did the Company has any debenture holders.
12. As per the books and records of the company examined by us, the
Company has not granted any loans and advances on the basts of security
by way of pledge of shares, debentures and other securities.
13. 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 order are not applicable to the company.
14. In our opinion the Company has maintained proper leconds of
transactions and contracts in respect of dealing and trading in shares,
securi- ties, debentures and other investments during the year and
timely entries have been generally made therein. All shares, debentures
and other investments have been held by the company in its own name.
15. As informed to us. the Company has not given any guarantee for
loans taken by others from bank or financial institutions.
16. On the basis of our review and related information and explanation
as made available to us the company has not taken any term loans during
17. Account filling *o the information and explanations given to us and
on an overall examination of the balance sheet of the Company, we
report that no funds raised on short term basis have been used for long
18. The Oasnpaisy has not made any preferential allotment of shares
during the year and therefore, paragraph 4(18) of the Order is not
19. The Company has not issued any debentures during the year and
therefore paragraph 4(19) of the Order is not applicable.
20. The Company has not raised any money by way of public issue during
the year and therefore paragraph 4(20) of the Order is no applicable.
21. Account Srig tote information to and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of theater.
For APTE & CO.
Firm Reg. No: 111925W
Dr. JAYANT APTE
Membership No. 035494
Date: 25th May, 2012