We have audited the attached Balance Sheet of MOTILAL OSWAL FINANCIAL
SERVICES LIMITED (the Company) as at 3 1st March, 2010, 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 Companys management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We have 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 misstatements. 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 presentation of
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 and amended
by the Companies (Auditors Report) (Amendment) Order, 2004, issued by
the Central Government of India in terms of Section 227(4A) of the
Companies Act, 1956, on the basis of such checks of the books and
records as we considered appropriate and the information and
explanations given to us during the course of the audit, we annex
hereto a statement on the matters specified in paragraphs 4 and 5 of
the said Order, to the extent they are applicable to the Company.
Further to our comments in the Annexure referred to above, we report
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 account as required by law have been
kept by the Company so far as appears from our examinations of those
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
d) In our opinion, the Balance Sheet, the Profit and Loss Account and
Cash Flow Statement compiy, in all material respect, with the
accounting standards referred to in sub-section (3C) of section 21 I of
the Companies Act, 1956 to the extent they are applicable to the
e) On the basis of the written representations received from the
directors as on 31st March, 2010 and taken on record by the Board of
Directors of the Company, we report that none of the directors are
disqualified as on 31 st March, 2010 from being appointed as a director
in terms of clause (g) of sub-section (I) of section 274 of the
Companies Act, 1956.
f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
significant accounting policies and the notes thereon 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 case of the Balance Sheet, of the state of affairs of the
Company as at 31 st March 2010;
ii. in case of Profit and Loss Account, of the profit of the Company
for the year ended on that date.
iii. in case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure to Auditors Report
ANNEXURE REFERRED TO IN PARAGRAPH I OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF MOTILAL OSWAL FINANCIAL SERVICES LIMITED ON THE FINANCIAL
STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
i) a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b) All the fixed assei:s were physically verified by the management in
the previous year in accordance with a planned Programme of verifying
them once in three years which, in our opinion, is reasonable having
regard to the size of the company and nature of its assets. As informed
to us, no material discrepancies were noticed on such verification.
c) Based on the information and explanation given by the management and
on the basis of audit procedures performed by us, we are of the opinion
that ne Company has not disposed off substantial part of its fixed
assets during the year.
ii) a) As informed to us;, the inventories (shares), which are held in
dematerialized form, have been verified by the management with the
supporting eviderce during the year. In our opinion, the frequency of
verification is reasonable.
b) The procedures of verification of inventory (shares) followed by the
management are reasonable and adequate in relation to size of the
company and the nature of its business.
c) On the basis of our examination of the records of inventory
(shares), we are of the opinion that the Company is maintaining proper
records of inventory (shares). We are informed that no discrepancies
were noticed on verification between the dematerialized stocks and the
iii) a) As informed to us, the Company has granted unsecured loans to
seven Subsidiary Companies listed in the register maintained under
Section 301 of Companies Act, 1956. The maximum amount involved during
the year is Rs. 39.74 crores and the year-end balance of loan obtained
from such parties was Rs. 4.34 crores.
b) In our opinion and according to the information and explanation
given to us, the rate of interest and other terms and condition for
such loans are not prima facie prejudicial to the interest of the
c) The loans given are repayable on demand and Company has received the
principal amount and interest accordingly.
d) Since there is no stipulation as regards repayment schedules clause
4 (iii) (d) is not applicable.
e) As informed to us, the Company has not taken any loan, secured or
unsecured from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Consequently sub clause (f) and (g) of clause (iii) are not applicable.
iv) In our opinion and according the information and explanations given
to us, there are adequate internal control procedures commensurate with
the size of the Company and nature of its business with regard to
purchase and sale of fixed asset and inventory (securities). During the
course of audit, wb have not observed any continuing failure to correct
major weaknesses in internal controls.
v) a) According to the information and explanations given to us, we are
of the opinion that the particulars of contract or arrangement refered
to in Section 301 of the Companies Act, 1956 that need to be entered
into the register maintained under that section have been so entered.
b) In our opinion ami according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements exceeding value of rupees five lakhs have been entered
into during the financial year at prices which are reasonable having
regard to :he prevailing market price at the relevant time.
vi) During the year the Company has not accepted any public deposit
consequently clause 4 (vi) is not applicable.
vii) In our opinion, the Company has an adequate internal audit system
commensurate with the size of the Company and nature of its business.
viii) The Company belongs to the service sectors industry therefore
clause 4(viii) of the Companies (Auditors Report) Order, 2003 (as
amended) in respect of maintenance of Cost records is not applicable to
ix) a) According to the records of the Company and according to the
information and explanations provided to us, the Company has been
regular in depositing undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,
Excise Duty, Cess and any other statutory dues with the appropriate
authorities as applicable.
b) According to the information and explanations given to us, there are
no undisputed amounts payable in respect of Provident Fund, Investor
Education Protection Fund, Sales Tax, Wealth Tax, Income Tax, Custom
Duty, Excise Duty, Service Tax, Cess and other
statutory dues which are outstanding as at March 31, 2010 for the
period of more than six months from the date they become payable.
c) According to the information and explanations given to us, there are
no disputed amounts payable in respect of Income tax, Sales tax, Wealth
tax, Service tax, Custom duty, Excise duty and Cess as on March 31,
x) There are no accumulated losses as at March 31, 2010. The Company
has not incurred any cash losses during the current and immediately
preceding financial year.
xi) Based on our audit procedures and as per the information and
explanations given to us we are of the opinion that Company has not
defaulted in the repayment of dues to a financial institution, banks,
or debenture holder.
xii) Based on our examination of documents and records, we are of the
opinion that the Company has maintained adequate records where the
company has granted loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.
xiii) In our opinion, the Company is not a chit fund or nidhi / mutual
benefit fund / society therefore clause 4(xiii) of the Companies
(Auditors report) Order, 2003 (as amended) is not applicable to
xiv) Based on our audit procedures and according to the information and
explanations provided to us by the management, we are of the opinion
that the Company has maintained proper records in respect of the
trading transactions and contracts of shares, securities, debentures
and other investment. Also, the Company has accounted such transaction
on date of transactions further, the investments have been held by the
Company in its own name.
xv) According to the information and explanations given to us, the
Company has given corporate guarantees of Rs. 392,000,000 to various
banks for two of its subsidiary companies for margin requirement with
Stock Exchange, fron, banks or financial institutions, the terms and
conditions thereof, in our opinion, are not prejudicial to the interest
of the Company.
xvi) The Company did not have any term loan outstanding during the
xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet and cash flow of the
company, prima facie no fund raised on short term basis have been used
for long term investment.
xviii) The Company has not made any preferential allotment of shares to
parties and companies covered in the registers maintain under section
301 of the Companies Act, 1956.
xix) According to the information and explanations given to us, during
the period covered by our audit report, the Company had issued 585
debentures of Rs. I crore each. Debentures issued were unsecured. All
the above debentures have been redeemed during the year.
xx) During the year Company had not raised any money by way of Public
xxi) Based upon the audit procedures performed and the information and
explanations provided to us by the management, we report that no fraud
on or by the Company has been noticed or reported during the course of
For HARIBHAKTI & CO.
FRN No. I03523W
Membership No. 045228
Date: 27th April, 2010