Dewan Tyres Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2014

We have audited the accompanying financial statements of DEWAN TYRES LIMITED, which comprise the Balance Sheet as at 31st March 2014 and the Statement of Profit and Loss for the year 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 and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 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, whether due 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 judgement, 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 the management, 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 forour audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the accounts; subject to the remarks as contained in Note No, 2.4 regarding non-confirmation of balance of secured loans, parties and bankers and Note No. 2.14 regarding non deposit of amount lying incredit in Investor Education & Protection fund of the Notes to theAccounts and read with other Notes forming part of the accounts appearing thereon; 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:

(a) In the case of the Balance Sheet, of the state of affairs of the company as at March 31,2014;

(b) In the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and;

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") 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 Order.

2. As required by section 227(3) of the Act, we report that:

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthepurposeofouraudit;

b. 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 books;

c. The Balance Sheet and Statement of profit and Loss dealt with by this Report are in agreement with the books of account;

d. In our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. On the basis of the written representations received from the directors as on March 31,2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2014, 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 1 of our report of even date) Re: DEWAN TYRES LIMITED

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that;

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets of the Company have been physically verified by the management of the Company during the year which in our opinion is reasonable having regard to the size and nature of business of the Company. According to the information and explanations given to us, no material discrepancies between book records and the physical inventory of fixed assets have been noticed.

(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 the Company during the year.

2. (a) As explained to us, inventories were physically verified during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of 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.

3. (a) In our opinion and according to the information and explanations given to us, The Company has not granted any loans, secured or unsecured, to the Companies, Firms or other parties covered in the register maintained underSection 301 of the Act.

(b) The Company has taken unsecured Loans from Companies covered in register maintained under Section 301 of the Companies Act, 1956. The maximum balance outstanding at any point of time during the year was Rs. 231,692,385.00 from 11 parties.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which loans have been taken from Companies covered in the register maintained under Section 301 of the Companies Act 1956 are not prima-facie prejudicial to the interest of the Company.

(d) The Company is not regular in repaying the principal amount and has not been regular in payment of interest.

4. 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 its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us there are no contracts or arrangements referred to in Section 301 of the Companies Act 1956, which need to be entered into the register in pursuance of Section 301 of the Act.

( b) Thus the question of the reasonableness of the prices having regard to the prevailing market prices at the relevant time does not arise in the case of the Company. .

6. The Company has not accepted any deposits from the public within the meaning of Section 58A, 58A Aor any other relevant provisions of the Act and the rules framed thereunder.

7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the books of account maintained by the Company in respect of the products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and of the opinion that prima facie records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with appropriate authorities the undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and any other material statutory dues as applicable to it, except that the amount lying in Credit in Investor Education and Protection Fund on 31st March 2014 of Rs. 326,635 has not yet been deposited with the Central Government.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess were in arrears, at year end for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty or cess outstanding at the year end on account of any dispute; other than those stated on the Balance Sheet; annexed herewith.

10. The Company has accumulated losses as at 31 st March 2014 of more than fifty percent of its net worth and the Company has incurred cash losses in such financial year and in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has defaulted in repayment of dues to financial institution or bank (PICUP, IDBI and Bank of Baroda, Dena Bank) the whole amount outstanding as on 31st March 2014 amounting to Rs. 572,682,435.00 has already become overdue for repayment; and the default is continuing forThirteen years.

12. According to the information and explanations given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities and hence the question of maintenance of adequate records for this purpose does notarise.

13. In our opinion, and according to information and explanations given to us, the Company is not a chitfund/nidhi/mutual benefit fund/society. Therefore the provisions of Clause 4(xiii) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

14. In our opinion, and according to information and explanations given to us. the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

15. The Company has given Corporate Guarantees of Rs. 7,653 Lacs in respect of financial facilities sanctioned by the various Financial Institutions/Banks to the Group Companies. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

16. According to the information and explanations given to us, the term loan has been applied for the purpose for which they were raised.

17. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, the Company has not utilised the funds raised on short-term basis for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued debentures hence the question of creating security or charge in respect of debentures does notarise in the case of the Company.

20. The Company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For S. S. Gupta & Co., Chartered Accountants,

PLACE: MEERUT DATED : 02nd Sep, 2014 Partner