2. We conducted our audit in accordance with the 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 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 financial statement presentation. We believe that our audit provides a resonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, as amended, 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 in paragraph 3 above :

[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] The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with books of account.

The net worth of the Company is negative. The accounts of the Company has been prepared on "Going Concern' basis and the assets and liabilities continue to appear at their book value without any adjustments to the amounts and classification that may be necessary, if the entity is unable to continue as a Going Concern. [Refer Note No.(a) of Notes to Accounts - Schedule 16] and item no(s) of note 16 regarding non-confirmation of small balance amounting to Rs. 22488/- lying with Banks.

[iii] In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of the books except our observations under Para 4[iii] above.

[iv] In our opinion the Balance SJieet, Profit and Loss Account and Cash Flow Statements dealt with by this report comply with the requirements of Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 except our observations under para 4[iii] and [iv] above which are not in accordance with Accounting Standard (AS-1) "Disclosure of Accounting Policies" issued by the Institute of Chartered Accountants of India.

[v] Attention is drawn to

a) the discontinuance of leasing and hire purchase business under NBFC Registration which has since been cancelled (Refer Note No.(n) of Note -16).

b) non-compliance of sections 58A & 58AA of the Companies Act, 1956 and other relevant provisions of the Act to the extent applicable to the company and the provisions of the Non-Banking Financial Companies (Reserve Bank of India) Directions 1977 in so far as it relates to repayment of overdue public deposit together with interest (Refer Para 6 of Annexure).

c) The minimum Capital Adequacy Ratio (CAR) of 12% as prescribed by the Reserve Bank of India has not been maintained throughout the year on an ongoing basis.

d) As per instruction of RBI the company has opened an Escrow Accouni. (Refer Note No.(g) of Notes to Accounts),

5. Regarding company's application before the Hon'ble Calcutta High Court for extension of time for repayment of matured fixed deposits and reconsideration of the rate of interest payable to the deposit holders. Pending judicial pronouncements we are unable to express an opinion as to the disqualification of all the directors of the company as on 31.03.2012 in terms of Clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. (Refer Note No.(b) of Notes to Account - Note 16).

6. Subject to our comments in Paragraphs in 4(iii), (iv), (v), (vi), and 5 in our opinion and to the best of our information and according to explanation given to us, the accounts, give the information required by the Companies Act, 1956, in the manner so required and also give a true and fair view in conformity with accounting principles generally accepted in India :

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2012.

b) In the case of the statement of Profit and Loss Account of the Company of the Loss for the year ended on that date.

and

c) In the case of the Cash Flow Statements of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS' REPORT

Annexure referred to in paragraph 3 of the Auditors' Report to the Members of YULE FINANCING

AND LEASING COMPANY LIMITED on the Accouns for the year ended 31st March, 2012.

i. (a) The company is maintaining proper records showing full particulars including

quantitative details and situation of fixed assets. Pursuant to the programme, a portion of the fixed assets other than assets given on lease has been physically verified by the management in a phased manner and no major discrepancies between physical inventory and book records have been noticed. In our opinion the frequency of verification is reasonable having regard to the size of the company and nature of its business. In respect of assets given on lease confirmations from some of the lessees have not been received.

(b) In our opinion and according to the information and explanations given to us no fixed assets has been disposed off by the company during the year. Hence, paragraph 4(1 )(c) of the Companies (Auditor's Report) Order, 2003 (hereinafter referred to as the 'Order1 as amended) is not applicable.

ii. During the year, the company did not have any inventories under the head 'Stock on Hire'. Hence, the question of physical verification, procedure of physical verification and discrepancies, if any, does not arise.

iii. According to the information and explanations given to us, the company has neither taken nor granted any loans to any party in pursuance of the register maintain u/s 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii)(b), (c) and (d) of the order is not applicable.

iv. According to the information and explanations given to us there are adequate internal control procedures commensurate with the size and nature of its business with regard to purchases of inventory, fixed assets and with regard to lease and hire purchase business. During the course of our audit the company did not purchase inventory, fixed assets and also did not lease and enter into any hire purchase agreement and therefore question of continuing failure to correct major weaknesses in Internal Control System does not arise.

v. In our opinion and according to information and explanations given to us there were no transactions made in pursuance of any contract or arrangement entered into the register maintained u/s.301 of Companies Act, 1956 exceeding the value of Rs.5.00 lakh in respect of any party during the year. Accordingly paragraph 4(v)(b) of the order is not applicable.

vi. The company did not accept any deposits from the public during the year. However, the directives issued by Reserve Bank of India and the provisions of Sections 58A & 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and rules framed there under have not been complied with in so far as it relates to the repayment of

principal and interest thereon. The order passed by the Company Law Board has also not been complied with. The company however, has preferred an appeal before the Hon'ble Calcutta High Court for revision. Hon'ble High Court has since disposed of the company's appeal directing CLB to re-hear the matter, order from CLB is awaited since long.

vii. In our opinion, the company has an Internal Audit System commensurate with the size and nature of its business and effective steps should be taken for improvement.

viii. The Central Government has not prescribed maintenance of cost records under section 209(i)(d) of the Companies Act, 1956.

ix. (a) As explained to us the statutory dues comprised of Income Tax, Wealth Tax,

Service Tax, Provident Fund, Sales Tax, Investor Protection & Education Fund and other material statutory dues are payable by the company. According, to the record of the company and information and explanations given to us the company is regular in depositing the aforesaid statutory dues with the appropriate authority. There are no undisputed statutory dues as referred to above as at 31st March, 2012 outstanding for more than six months from the date they become payable.

(b) According to the records of the company and information and explanations given to us there are dues of Income Tax and Sales Tax amounting to Rs.4,57,58,453.00 and Rs.5,60,716.00 respectively which have not been deposited on account of various disputes which are under consideration of Appellate Authority, the details of which are set out in Note No.(e) of Notes to Accounts - Note 16.

(c) According to the information and explanations given to us there are no dues of Sales Tax, Income Tax, Wealth Tax, Service Tax, Investor Protection and Education Fund, which have not been deposited on account of any disputes.

x. In our opinion the accumulated losses of the company are more than 50% of the net worth of the company and it has not incurred cash losses during the financial year ended 31st March, 2012 and also in the immediately preceding financial year.

xi. The Company has not defaulted in repayment of dues to a financial institution or Banks.

xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities; paragraphs 4(xiii) of the Order is not applicable.

xiii. In our opinion the Company is not a Chit Fund/Nidhi/Mutual Benefit Fund/Society to which the provisions are of special statue relating to chit fund are applicable, paragraphs 4(xiii) of the Order is not applicable.

xiv. The Company is not dealing or trading in shares, securities, debenture and other investments, paragraphs 4(xiv) of the Order is not applicable.

xv. The Company has not given any guarantee in respect of ioans taken by others from banks, paragraph 4(xv) of the Order is not applicable.

xv i. In our opinion and according to the information and explanations given tc us term loans has been applied for the purpose for which i` was raised

xvii. On the basis of an overall examination o` the Balance Sheet of the company, in our ' opinion and according to information and explanations given to us, there are no fundraised on a short-term basis, which 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 register under section 301 of the Companies Act, 1956, paragraphs 4(xviii) of the Order is not applicable.

xix. As the Company has not issued any debentures, paragraphs 4(xix) of the Orde;- is not applicable

xx. As the Company has not raised money by way of public issue, paragraphs 4(xx) of the Order is not applicable.

xxi. 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 explanations given to us we have neither come across any instance of material fraud on nor by the company noticed or reported during the year, nor have we been informed of such case by the management.

Kolkata,                          For NANDY, HALDER & GANGULI
                                  Chartered Accountants,

July 31, 2012                    (S N Bandyopadhya)

                                  Partner

                                  Membership No.052246 
                                  Firm Registration No. 302017E