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INDEPENDENT AUDITORS' REPORT
To the Members of Faze Three Limited.
Report on the Financial Statements
1. We have audited the accompanying financial statements of Faze Three Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and 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
2. 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 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 principles 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 the provisions of the Act for safeguarding 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 prudent; design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy 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.
3. Our responsibility is to express an opinion on these financial statements based on our audit.
We have taken into account 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 the Rules made thereunder.
We 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.
4. 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 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Emphasis of Matter
6. The Financial Statements have been prepared on a going concern basis.
Attention is drawn to Note No. 37 of the Notes forming part of the Financial Statements stating the reasons and background for the Company preparing the financial statements on a going concern basis. Our opinion is not modified in respect of this matter.
Basis of Qualified Opinion
As referred Note No. 36 of the Notes forming part of the Financial Statements the Company has not ascertained the useful life of its Fixed Assets and not worked out depreciation as per Schedule II of the Companies Act, 2013. The depreciation charged in the books is as per Schedule XIV of the Companies Act, 1956. The impact on the results for the year ended 31st March 2015 and the impact, if any, on the retained earnings has not been ascertained.
7. In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis of Qualified Opinion paragraph above, the aforesaid 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 loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements.
8. 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 section143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.
9. 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 those books;
c. the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;
d. in our opinion, the aforesaid financial statements comply with the applicable 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 March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of Section 164(2) of the Act
f. With respect to other matters to be included in the Auditor's Report 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 explanations given to us:
i). As per the management on the basis of opinion taken, the Company is of the view that the ongoing litigations which are not of material nature as at the reporting date would not have a material impact on its financial position;
ii) The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
iii) There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.
ANNEXURE TO INDEPENDENT AUDITORS' REPORT REFERRED TO IN PARAGRAPH 7 UNDER THE HEADING OF "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENT" OF OUR REPORT OF EVEN DATE.
i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its Fixed Assets. The records for the financial year 2014–15 are in the process of being updated.
(b) As explained to us the major Fixed Assets have been physically verified by the Management at reasonable intervals during the year. As per the information given to us no material discrepancy has been noticed on such verification.
ii. (a) The inventory has been physically verified by the management during the year. In our opinion the frequency of verification is reasonable.
(b) In our opinion the procedure of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of inventory records in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed during the physical verification have been property dealt with in the books of accounts.
iii. (a) Based on the audit procedures applied by us and according to the information and explanations given to us, 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.
(b) In view of our comment in (a) above Clause (iii) (a) and (b) of the Order are not applicable to the Company.
iv. 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 with regard to purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.
v. In our opinion, and according to the information and explanations given to us, the Company has not accepted any deposits. Consequently, the directives issued by Reserve Bank of India and the provisions of Section 73 to 76 of the Act and the rules framed there under are not applicable.
vi. We have broadly reviewed the books of accounts maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under sub–section (1) of Section 148 of the Companies Act 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us and based on the records of the Company examined by us, the Company is regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income– Tax, Sales–Tax, Wealth– tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess, Service Tax and other material statutory dues, as applicable, with the appropriate authorities in India;
(b) According to the information and explanation given to us there are no dues of Sales Tax, Income Tax, Service Tax, Duty of Custom, Wealth Tax, Duty of Excise, Value Added Tax and cess which have not been deposited on account of dispute other than the following:–
(c) There has been no delay in transferring amount, required to be transferred to Investor Education and Protection Fund, by the Company.
viii. The accumulated loss at the end of the financial year exceeded the Company's net worth. The Company has not incurred cash loss during the year and in the immediately preceding financial year.
ix. Based on our audit procedures carried out by us and on the basis of the information and explanations provided by the management we are of the opinion that the Company has not defaulted in repayment of dues to banks or financial institutions.
x. The Company had given a guarantee for a loan taken by a subsidiary from a bank. In our opinion the terms and conditions of the guarantee are not prejudicial to the interest of the Company.
xi. According to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company for the purpose for which the loans were obtained.
xii. During the course of our examination of the books and records of the Company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the management.
For THAKUR VAIDYANATH AIYAR & CO.
Firm Registration No. 000038N
Dated: 30th May 2015