Report on the Financial Statements for the year ended 31st March, 2013
We have audited the accompanying financial statements of Action Financial
Securities (India) Limited (the Company) which comprise the balance
sheet as at 31st March 2013, the Statement of Profit and Loss and the
Cash Flow Statement for the year then ended and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements Management is
responsible for the preparation of these financial statements that give
a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the Accounting
Standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956 (the Act). This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement,
whetherdue to fraud or error. Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion. Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
1. in the case of the balance sheet, of the state of affairs of the
Company as at 31st March 2013; ii. in the case of the statement of
profit and loss, of the profit for the year ended on that date; and
iii. in the case of the cash flow statement, of the cash flows for the
year ended on that date. Report on Other Legal and Regulatory
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order), as amended, issued by the Central Government of India in terms
of sub-section (4A) of section 227 of the Act, we give in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the
2. As required by section 227(3) of the Act, 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 purpose 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 those
iii. the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
iv. in our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956; and
v. on the basis of written representations received from the directors
as on 31 March 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
Annexure to the Auditors'' Report
[Referred to in paragraph pertaining to Report on Other Legal and
Regulatory Requirement of our Report of even date to the members of
Action Financial Services (India) Limited on the financial statements
for the year ended 31st March, 2013]
1. a) The Company is maintaining proper records showing full
particulars including quantitative details and situation of fixed
b) Fixed Assets have been physically verified by the management during
the year and no material discrepancies between the book records and the
physical inventory 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
off by theCompanyduringtheyear.
2. The Company does not have any stock of raw materials, store, spare
parts and finished goods. However the Company has stock of shares on
hand. The management has conducted physical verification of shares on
hand at reasonable intervals. The procedure of physical verification of
stock on hand followed by the management is reasonable and adequate in
relation to the size of the Company and the nature of its business. The
Company is maintaining proper records of stock on hand and no
discrepancies were noticed on physical verification.
3. a) The Company has not granted any loans, secured or unsecured
to/from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956. Hence clause
b, c & d of the order is not applicable.
b) The Company had taken unsecured loans from parties covered in the
register maintained under Section 301 of the Companies Act, 1956. The
No of parties are two (PY NIL) and amount outstanding at
c) The loan was interest free and there were no stipulation as to
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 shares and fixed asset and for providing
services. During the course of our audit, no major weakness has been
noticed in the internal control system in respect of these areas.
5. According to the information and explanations given to us by the
management we are of the opinion that the transactions that need to be
entered into the register maintained under Section 301 of the Companies
Act, 1956 have been so entered.
6. 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
7. The Company has appointed independent Chartered Accountant to
carryout the internal audit of the company. In our opinion, the Company
internal audit system is commensurate with its size and nature of its
8. The Central Government has not prescribed maintenance of cost
records under section 209 (1) (d) of the Companies Act, 1956.
9. a) According to the records and information and explanations
obtained from the management, the Company is generally regular in
depositing undisputed statutory dues including Provident fund, Employee
State Insurance, Income Tax and other statutory dues applicable to it
with appropriate authorities. However in some cases there has been
delay in depositing the government dues. b) In our opinion and
according to information and explanations obtained, there are no
disputed dues outstanding in respect of Sales tax, Wealth tax, Income
tax, Service tax and Cess as at 31st March, 2013 that have not been
deposited on account of dispute except the following:
No Name of dues Forum where Dispute Period to which Amount
is pending amount involved
1 Income Tax ITAT Mumbai A.Y. 2008-09 10,130,835/
2 Tax Deducted Commissioner of
Income A.Y. 2010-11 129,990/-
at Sources (Appeals), Mumbai
3 Tax Deducted Commissioner of
Income A.Y. 2011-12 143,056/-
at Sources (Appeals), Mumbai
1. The Company had contested Income Tax demand of Rs 10,130,835/- for
Assessment Year 2008-09. The Company has paid Rs.5,400,000/- and
balance amount is in abeyance till disposal of the case . The company
has preferred an appeal in the ITAT against the CIT(A) order.
2. The Company had contested Income Tax Deducted at Sources of Rs
129,990/- and Rs 143,056/- for Assessment Year 2010-11 and 2011- 12.
The company has preferred an appeal in CIT(A).
10. The company is registered for over 5 years and has accumulated
losses at the end of the financial year of Rs. 49.20 Lakhs (previous
year Rs. 58.76 Lakhs) which is less than 50% of its net worth. It has
not incurred any cash losses in the current as well as in the
immediately preceding financial year
11. According to the information and explanations given to us and
records of the Company examined by us the company has not defaulted in
repayment of dues to any financial institution or bank or debenture
holders as at the Balance Sheet date.
12. According to the information and explanations given to us the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit fund and
nidhi /mutual benefit fund/societies are not applicable to the Company.
14. The Company has dealing/trading in shares and debentures during the
year. In respect of dealing in securities and other investments, in our
opinion and according to the information and explanations given to us,
proper records have been maintained of the transactions and contracts
and timely entries have been made therein. The securities and other
investments have been held by the Company in its own name.
15. According to the information and explanations given to us the
Company has not given any guarantees for loans taken by others from
banks or financial institution during the year.
16. The term loans taken were applied for the purpose for which they
17. On the basis of an overall examination of the Balance Sheet of the
Company, in our opinion and according to information and explanations
given to us, we report that no funds obtained on short - term basis
have been used by the company for long term investments.
18. During the year the company has issued 2,446,300 Equity shares on
preferential basis to promoters & other investors. In addition Company
has issued 12,30,000 warrants convertible into equity shares on
preferential basis to promoters at a rate of Rs 38/- each (Face Value
Rs.10/- plus Premium Rs.28/-) Paid up amount up to 31st March 2013 is
Rs.9.5 per warrant. The prices at which the warrants and shares have
been issued are not prima facie prejudicial to the interest of the
19. The Company has not issued any debentures.
20. The Company has not raised any money through a public issue during
21. Based upon the audit procedures performed and information and
explanations given by the management, we report that we have not come
across any instances of fraud on or by the Company, noticed or reported
during the year, nor have we been informed of such case by management.
For Ford, Rhodes, Parks & Co.
Firm Registration NO.102860W
Place: Mumbai Partner
Date: 30* May, 2013 Membership No.11549