We have audited the accompanying standalone financial statements of
Kailash Auto Finance Limited (''the Company''), which comprise the
Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss,
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 Standalone Financial Statements
The Company''s Board of Directors are responsible for the matters stated
in section 134 (5) of the Companies Act, 2013 (the Act) with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flow of the company in accordance with the accounting policies
generally accepted in India, including the Accounting Standards
specified under section 133 of the Act , read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with provision
of the Act for safeguarding of the assets of the Company and for
preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making Judgments and
estimates that are reasonable and prudence ; and design, implementation
and maintenance of adequate internal financial controls, that are
operating effectively for ensuring the adequacy and completeness of the
accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into accounts the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and rules made
We have conducted our audit in accordance with the Standards on
Auditing specified under section 143(10) of the Act. 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 the disclosures in the financial statements. The
procedures selected depend on the auditors''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 consider internal financial control relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the company has in place an adequate internal
financial control system over financial reporting and the operating
effectiveness of such control. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by Company''s directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone 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 India, of the state of affairs of the company as
at 31st March, 2015, its profit or loss and its cash flows for the year
ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 ( the
order) issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in the paragraph 3 and 4 of the
order, to the extent applicable.
2. As required by section 143 (3) of the Act, we report that:
a. We have sought and obtained all the information and explanations
which to the best of our knowledge and belief, were necessary for the
purpose of our audit;
b. In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
c. The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
d. In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
e. On the basis of written representations received from the directors
as on 31st March, 2015, taken on record by the Board of Directors, none
of the directors is disqualified as on 31st March, 2015, from being
appointed as a director in terms of section 164(2) of the Act; and
f. With respect to the other matters to be included in the Auditor''s
Reports in accordance with Rule 11 of the companies (Audit and Auditors
) rules, 2014 , in our opinion and to the best of our information and
according to the explanation given to us:
i. The Company has disclosed the impact of pending litigation on its
financial position in its financial statements - refer Note 23 of the
ii. The Company did not have any long term contracts including
derivatives contracts for which there were any material foreseeable
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company
ANNEXURE TO INDEPENDENT AUDITORS'' REPORT
With reference to the Annexure referred to in paragraph 1 in Report on
Other Legal & Regulatory Requirements of the Independent Auditors
Report to the members of the Company on the standalone financial
statements for the year ended 31 March 2015, we report that:
i. a The company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
b The company has a regular programme of the physical verification of
its fixed assets by which all fixed assets are verified in the phased
manner. In our opinion, this periodicity of physical verification in
reasonable having regard to the size of the company and the nature of
its assets. According to the information and explanation given to us,
no material discrepancies were noticed on such verification.
ii. a The inventories have been physically verified by the management
during the year. In our opinion, the frequency of such verification is
b The procedures for the physical verification of inventories followed
by the management are reasonable and adequate in relation to the size
of the company and the nature of its business.
c The Company is maintaining proper records of inventories. There was
no material discrepancies noticed on verification between the physical
stock and the book records.
iii. The Company has not granted any loans secured or unsecured, to
companies, firms or other parties covered in the Register maintained
under section 189 of the Companies Act , 2013
iv. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and the nature of the business with regard
to purchase of inventories and fixed assets and with regard to the sale
of goods and services. We have not observed any major weakness in the
internal control system during the course of the audit.
v. According to the information and explanations given to us, the
company has not accepted any deposits from the public during the year
and accordingly the question of complying with section 73 and 76 of the
Companies Act 2013 does not arise.
vi. The Central Government has not prescribed the maintenance of cost
records under section 148(1) of the Act for the Company.
vii. a According to the information and explanations given to us and on
the basis of our examination of the records of the company, amounts
deducted/accrued in the books of account in respect of undisputed
statutory dues including Provident fund, Employees State Insurance,
Income- tax, sales tax, Wealth tax, Service tax, Duty of excise, Value
added tax and any other material statutory dues have been generally
regularly deposited during the year by the company with the appropriate
b According to the information and explanations given to us, the dues of
Income- tax, sales tax, Wealth tax, Service tax, Duty of customs, Duty
of excise, Value added Tax and any other material statutory dues which
were not deposited on account of any disputes are as follows
1 . Interest Tax:
Assessment Year 1998-99, 1999-2000 and 2000-2001 cases are pending
before Allahabad High Court by the Income Tax Department against the
order of ITAT where in it is held that the Finance Charges on Hire
Purchase is not interest but a profit.
2. Income Tax:
a. Assessment Year 2001 -2002 and 2002-2003 are pending before
Allahabad High Court (by the Deptt.) against the order of the ITAT
wherein depreciation is allowed at the rate of 40% on leased vehicles.
b. Assessment Year 1996-1997 is pending before Allahabad High Court
against the penalty order passed by the ITAT.
c. Assessment Year 2004-05: Case is pending before ITAT (u/s 254) and
before High Court against the legal ground that case cannot be opened
u/s 148 before completion of 12 months in which return of income was
d. Assessment Year 2006-07: Case is pending before CIT (Appeals)
Kanpur against the order of the Assessing Officer.
e. Assessment Year 2007-08: Case is pending for assessment before DCIT
- 6 Kanpur.
f. Assessment Year 1 995-96: We have filed a Writ Petition before
Lucknow High Court under the KAR VIVAD SAMADHAN SCHEME and matter is
pending before Lucknow High Court.
g. Assessment Year 1992-93: Application is pending for appeal effect
to be given before the Assessing Officer.
The quantification of above liabilities has not been done on account of
cases pending before the authority.
3. Legal Cases:
a. Disputed Case of Bhubaneswar Branch for recovery of Rs. 4.45/- Lacs
deposited in court.
b. Disputed Case of Citi Corp for recovery of Rs. 3.04/- Lacs of Alwar
c. Disputed Case liabilities of Rs 3.08/- Lacs repayable if claimed by
c According to the information and explanations given to us there was
no amount which were required to be transferred to the Investor
Education and Protection Fund in accordance with the relevant
provisions of the companies Act, 1956 and rules framed there under.
viii. The company has accumulated losses of Rs. 204.29 lacs at the end
of the financial year and has not incurred cash losses in the financial
year covered by our Audit and in the immediately preceding financial
ix. In our opinion and according to the information and explanations
given to us, the company does not have any outstanding dues to any bank
or financial institution or debenture holders.
x. In our opinion and according to the information and explanations
given to us, the company has not given any guarantee for loans taken by
others from banks or financial institutions.
xi. According to the information and explanations given to us the
Company has not taken any term loan during the year.
xii. According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
For Anil Agrawal
Membership No: 79054
Date: May 30, 2015