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
 Order.
 
 4.  Further to our comments in the Annexure referred to above, 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 purposes of our
 audit;
 
 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
 those books;
 
 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
 assets.
 
 (b) The fixed assets have been physically verified by the management
 during the year. As explained to us no discrepancies were noticed on
 such verification.
 
 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
 loans.
 
 (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
 procedures.
 
 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
 year.
 
 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
 the year.
 
 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
 term investments.
 
 18.  The Oasnpaisy has not made any preferential allotment of shares
 during the year and therefore, paragraph 4(18) of the Order is not
 applicable.  -
 
 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.
 
                                                CHARTERED ACCOUNTANTS 
 
                                                Firm Reg. No: 111925W
 
                                                      Dr. JAYANT APTE
 
                                                              PARTNER
 
                                                Membership No. 035494
 
 Mumbai
 
 Date: 25th May, 2012