Auditor Report of Action Financial Services (India) Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Action Financial Services (India) Ltd ("the Company") which comprise the balance sheet as at 31st March 2015, 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

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of the 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; and 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.

Auditor's Responsibility

Our responsibility is to express an opinion on the 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.

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 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 controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the 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.

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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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, and its profit 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"), as issued by Central Government of India in terms of sub section (11) of section 143 of Companies Act, 2013 (18 of 2013) we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

i. 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;

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 books;

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 account;

iv. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 ; and

v. on the basis of written representations received from the directors as on 31st March 2015, and 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 sub section (2) of section 164 of the Companies Act, 2013.

3. With respect to the 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. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 24 to the financial statements;

ii. As represented by the company, there are no foreseeable material losses in respect of long-term contracts including derivative contracts

iii. As represented by the company, there are no amounts required to be transferred to Investor Education and Protection Fund by the Company.

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) Ltd on the financial statements for the year ended 31st March, 2015]

1. a) The Company is maintaining proper records showing full

particulars including quantitative details and situation of fixed assets.

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.

2. The Company does not have any stocks of raw materials, stores, spares parts and finished goods. Hence clause (ii) of the Order does not apply to the company.

3. The Company has not granted any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

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. 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 weakness in the aforesaid internal control system.

5. The Company has not accepted any deposits from the public, within the meaning of Sections 73 to 76 of Companies Act 2013 and the rules framed there under.

6. The Central Government has not prescribed maintenance of cost records under Section 148 of the Companies Act 2013.

7. a)According to the information and explanations given to us and records of the Company examined by us, in our opinion, the Company is generally 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 material statutory dues as applicable with the appropriate authorities. There are no undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March, 2015.

b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth tax, service tax, customs duty and cess as at 31st March 2015, which has not been deposited on account of dispute, except the following:-

Sr. Name of dues Forum where No. Dispute is pending

1 Income Tax ITAT Mumbai

2 Tax Deducted Commissioner of Income at Sources (Appeals), Mumbai

3 Tax Deducted Commissioner of Income at Sources (Appeals), Mumbai

4 Tax Deducted ITO/TDS - Rectification at Sources file / to be filed

Sr. Name of dues Period to which Amount No. amount relates involved Rs.

1 Income Tax A.Y. 2008-09 10,130,835/-

2 Tax Deducted A.Y. 2010-11 129,990/- at Sources

3 Tax Deducted A.Y. 2011-12 143,056/- at Sources

4 Tax Deducted Various Years 344,290/- at Sources

Note:-

1. The Company had contested Income Tax demand of Rs 10,130,835/- for Assessment Year 2008-09. The Company has paid Rs. 87, 51,819/-. The company has preferred an appeal in the ITAT against the CIT (A) order.

2. a. 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).

3. During the year company received notice u/s 131 of the Income Tax Act -1961 and the company officials attended to the notice survey carried out at the premises of the company on 13th June, 2014. No further notice has yet been received from the Income tax Department with regards to this matter.

c) According to the information and explanations given to us and records of the Company examined by us, in our opinion, there are no amounts payable to Investor Education and Protection Fund u/s 125 of the Companies Act, 2013.

8. The Company is registered over 5 years. The Company has not incurred any cash losses in the current financial year or in the immediately preceding financial year. The company does not have accumulated losses at the end of the financial year (PY accumulated loss of Rs.13.01 Lakhs).

9. According to the information and explanations given to us and records of the Company examined by us the company does not have any Borrowing from any financial institution or bank or by way of debenture as at the Balance Sheet date.

10. 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.

11. The Company has not obtained any term loans.

12. 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. Chartered Accountants ICAI Firm Registration No.102860W

A.D. Shenoy Place:Mumbai Partner Date: 29th May, 2015 Membership No.11549

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Mar 31, 2014

We have audited the accompanying financial statements of Action Financial Services (India) Limited ("the Company") which comprise the balance sheet as at 31st March 2014, 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") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. 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 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 statements.

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 India:

i. in the case of the balance sheet, of the state of affairs of the Company as at 31st March 2014;

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 Requirements

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 Order.

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 audit;

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 books;

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 account;

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 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

v. on the basis of written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 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 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, 2014]

1. a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

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 the Company during the year.

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. The Company has neither granted nor taken 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 3 of the order is not applicable.

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 thereunder.

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 business.

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, 2014 that have not been deposited on account of dispute except the following :

Sr. Name of dues Forum where Dispute Period to which No 1 Income Tax ITAT Mumbai A.Y. 2008-09

2 Tax Deducted Commissioner of A.Y. 2010-11 at Sources Income(Appeals),Mumbai

3 Tax Deducted Commissioner of A.Y. 2011-12 at Sources Income(Appeals),Mumbai

Name of dues Amount

Income Tax 10,130,835/-

Tax Deducted at Sources 129,990/-

Tax Deducted at Sources 143,056/-

Note:- 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. 13.01 Lakhs (previous year Rs. 49.20 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 were obtained.

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. The Company has not made any preferential allotment of shares to an parties or companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money through a public issue during the year.

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. Chartered Accountants Firm Registration No.102860W

A.D. Shenoy Place: Mumbai Partner Date: 30th May, 2014 Membership No. 11549

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Mar 31, 2012

1. We have audited the attached Balance Sheet of Action Financial Services (India) Limited as at 31st March, 2012, the Statement of Profit and Loss and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above in paragraph

3, we report that:

a) We have 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 accounts as required by law have been kept by the Company so far as appears from our examinations of those books.

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 account.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956.

5. In our opinion, and to the best of our information and according to the explanations given to us, the accounts read with 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 the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2012

ii) In the case of the Statement of Profit and Loss, of the loss 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.

Annexure referred to in paragraph (3) of our report of even date for the year 3lst March, 2012

Re: Action Financial Services (India) Limited

1. a) The Company has maintained proper records showing full particulars

including quantitative details and situation of fixed assets.

b) All fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.

c) During the year the Company has not disposed off any substantial part of fixed assets so as to affect the going concern.

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. As informed to us, the Company has neither granted nor taken 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 iii of the order is not applicable.

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. Based on the audit procedures applied by us and according to the information and explanations provided 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 has been so entered.

6. The Company has not accepted any deposits from the public during the year.

7. The Company has no internal auditor. However in our opinion, the Company has an adequate internal control system commensurate with the size and nature of its business.

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. According to the information and explanations given to us undisputed amounts payable in respect of Income Tax outstanding at the end of the year for a period of more than six months from the date they became payable amounted to Rs. 25.88 lakhs (previous year Rs. 21.66 lakhs).

(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 that have not been deposited on account of dispute except the following:

(Rupees in Lacs)

Sr.No. Name of dues Forum where Dispute is pending Period to which Amount involved amount relates

1 Income Tax ITAT Mumbai A.Y. 2008-09 101 Less: amount deposited (54) 47

2 Tax Deducted Commissioner of Income A.Y. 2010-11 1.30/- at Sources (Appeals), Mumbai

3 Tax Deducted Commissioner of Income A.Y. 2011-12 1.43/- at Sources (Appeals), Mumbai

10. The company is registered for over 5 years and has accumulated losses at the end of the financial year of Rs.58.76. Lakhs (previous year Rs. 72.82 Lakhs) which is less than 50% 0f its networth. It has not incurred any cash losses in the current as well as in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that Company has not defaulted in repayment of dues to banks. The Company does not have any borrowing by way of debentures.

12. Based on our examination of documents and records the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statutes applicable to chit fund and nidhi/mutual benefit fund/societies.

14. The Company has dealing/trading in shares 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 associates from banks.

16. The term loans taken were applied for the purpose for which they were obtained.

17. We have been informed by the management that the funds raised on short term basis have not been used for long term investment.

18. During the year has issued 77,200 Equity shares against warrant issued to promoters. The price at which the warrants and shares have been issued are not prima facie prejudicial to the interest of the company.

19. The Company does not have any debentures.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Ford, Rhodes, Parks & Co.

Chartered Accountants

Firm Registration No.102860W

A. D. Shenoy

Partner

Membership No.11549

Place : Mumbai

Date: 1st August 2012

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Mar 31, 2011

1. We have audited the attached Balance Sheet of Action Financial Services (India) Limited as at 31st March, 2011, the Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

a) We have 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 accounts as required by law have been kept by the Company so far as appears from our examinations of those books.

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, Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956.

5. In our opinion, and to the best of our information and according to the explanations given to us, the accounts read with 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 the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2011

ii) in the case of the Profit and Loss Account, 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.

Annexure referred to in paragraph (3) of our report of even date for the period 31st March, 2011.

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

b) All fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.

c) During the year the Company has not disposed off any substantial part of fixed assets so as to affect the going concern.

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. As informed to us, the Company has neither granted nor taken 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 iii (a) (b) (c) of the order is not applicable.

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. Based on the audit procedures applied by us and according to the information and explanations provided 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 has been so entered.

6. The Company has not accepted any deposits from the public during the year.

7. The Company has no internal auditor. However in our opinion, the Company has an adequate internal control system commensurate with the size and nature of its business.

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. According to the information and explanations given to us undisputed amounts payable in respect of Income Tax outstanding at the end of the year for a period of more than six months from the date they became payable amounted to Rs.21.66 lakhs (previous year Rs.21.23 lakhs).

(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 that have not been deposited on account of dispute except the following:

(Rupees in Lac)

Sr. Nature of Forum where Dispute Period to Amount No. Dues is Pending which amount Involved relates (Rs.)

1 Income Tax Commissioner of income A.Y. 2008-09 101 Tax (Appeals)

Less: Amount deposited 36 Balance 65

10. The Company has accumulated losses at the end of the financial year of Rs.70.04 Lakhs (previous year Rs.77.34 Lakhs) and it has not incurred any cash losses in the current as well as in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that Company has not defaulted in repayment of dues to banks. The Company does not have any borrowing by way of debentures.

12. Based on our examination of documents and records the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statutes applicable to chit fund and nidhi/mutual benefit fund/ societies.

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 associates from banks.

16. The Company has taken term loans from ICICI Bank Limited and the outstanding balance as at 31st March, 2011 is Rs.68.87 lakhs (previous year Rs.84.31 Lakhs). The term loans have been applied for the purpose for which they were obtained.

17. We have been informed by the management that the funds raised on short term basis have not been used for long term investment.

18. During the year has issued 11,71,000 Equity shares to its promoters and other investors at a rate of Rs.29/- (Face value Rs.10/- plus Premium Rs.19/-) and has issued 77,200 Warrants to the promoters at a rate of Rs.29/- (Face value Rs.10/- plus Premium Rs.19/-), the price at which the warrants and shares have been issued are not prima facie prejudicial to the interest of the company.

19. The Company did not have any debentures issued during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Ford, Rhodes, Parks & Co. Chartered Accountants Firm Registration No.102860W



A.D. Shenoy Partner Membership No.11549

Place : Mumbai Date : 15th July, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Action Financial Services (India) Limited as at 31" March, 2010, the Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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 financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of ouraudit.

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examinations of those books.

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, Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors, as on 31" March, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31" March, 2010 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956.

5. In our opinion, and to the best of our information and according to the explanations given to us, the accounts read with 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 the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2010

ii) in the case of the Profit and Loss Account, 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.

Annexure referred to in paragraph (3) of our report of even date

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

b) All fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.

c) During the year the Company has not disposed off any substantial part of fixed assets so as to affect the going concern.

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. As informed to us, the Company has neither granted nor taken 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 iii (a) (b) (c) of the order is not applicable.

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. Based on the audit procedures applied by us and according to the information and explanations provided 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 has been so entered.

6. The Company has not accepted any deposits from the public during the year.

7. The Company has no internal auditor. However in our opinion,the Company has an adequate internal control system commensurate with the size and nature of its business.

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. According to the information and explanations given to us undisputed amounts payable in respect of Income Tax outstanding at the end of the year for a period of more than six months from the date they became payable amounted to Rs. 21.23 lakhs.

b) In our opinion and according to information and explanations obtained, there are no undisputed dues outstanding in respect of Sales tax, Wealth tax, Income tax, Service tax and Cess that have not been deposited on account of dispute.

10. The Company has accumulated losses at the end of the financial year of Rs.77.34 Lakhs and it has not incurred any cash losses in the current however it has incurred cash loss in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that Company has not defaulted in repayment of dues to banks. The Company does not have any borrowing by way of debentures.

12. Based on our examination of documents and records the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statutes applicable to chit fund and nidhi/mutual benefit fund/societies.

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 associates from banks.

16. The Company has taken term loans from ICICI Bank Limited and the outstanding balance as at 31" March, 2010 is Rs. 84.31 lakhs. The term loans have been applied for the purpose for which they were obtained.

17. We have been informed by the management that the funds raised on short term basis have not been used for long term investment.

18. During the year 360,000 warrants have been converted into equity shares. In addition the Company issued 125,000 warrants on preferential basis to investors at a rate of Rs. 19.25 (Face value Rs. 10/-plus Premium Rs. 9.25/-) and The price at which the warrants and shares have been issued are not prima facie not prejudicial to the interest of the company.

19. The Company did not have any debentures issued during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For FORD, RHODES, PARKS & CO.

Chartered Accountants

Firm Registration No. 102860W



A.D. Shenoy

(Partner) Membership No.11549

Date: 20lh August 2010.

Place: Mumbai