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Auditor Report of Aarti Industries Ltd.

Mar 31, 2016

To the Members of AARTI INDUSTRIES LIMITED Report on the financial statements

We have audited the accompanying financial statements of AARTI INDUSTRIES LIMITED ("the company"), which comprise the Balance sheet as at 31st March 2016, the Statement of Profit and Loss, 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 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.

These responsibilities also include the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the company and for preventing and detecting the 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 control, that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, 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.

Auditors'' responsibility

Our responsibility is to express an opinion based on our audit of these financial statements.

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 there under.

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 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 true and fair view 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 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 2016, 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, 2016 issued by the Central Government of India in terms of Section 143 (11) of the Companies Act 2013, we give in the "Annexure A", a statement on the matters specified in paragraph 3 & 4 of the order.

2. 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 purposes of our audit.

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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) I n our opinion, the aforesaid financial statements comply with the 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 31st March 2016, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016, from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B".

g) With respect to the other matters included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our

opinion and to our best of our information and according to the explanations given to us :

i. The Company has disclosed the impact of pending litigations as at 31st March 2016 on its financial position in its financial statements. Refer Note no: 25 of the Financial Statements.

ii. The Company did not have any long-term contracts including derivatives 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.

In the Annexure, as required by the Companies (Auditor''s Report) Order, 2016 issued by the Central Government in terms of Section 143 (11) of the Companies Act 2013, on the basis of checks, as we considered appropriate, we report on the matters specified in paragraph 3 and 4 of the said order to the extent applicable to the Company.

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

b. The Company has phased programme of physical verification of fixed assets by which all fixed assets are verified over a period of three years. In our opinion, periodicity of physical verification is reasonable having regard to the size of the Company and nature of the assets. We have been informed that no material discrepancy was noted on such physical verification.

c. According to the information and explanations given to us and on the basis of examination of the records of the Company, title deeds of immovable properties other than self constructed immovable property (buildings) are held in the name of the Company except leasehold plots nos 1430/1 (Kutch, Gujarat), D-53/55/56/57/59/60 MIDC (Dombivali, Thane, Maharashtra), plot No. Z/103/H at Dahej SEZ, Gujarat are in the name of erstwhile entities which are merged with the Company. According to explanation obtained from management, in view of merger through court scheme, leasehold rights are deemed to be transferred to the Company and procedure for transferring in the name of the Company is in progress.

ii) The stock of inventory has been physically verified during the year by the Management at reasonable intervals, except stock lying with third parties, confirmation of such stocks with the third parties has been obtained by the Company. In our opinion, the procedures 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. The discrepancies noticed on physical verification of stocks as compared to book records were not material; however the same have been dealt with the books of account.

Name of the Statutes/ Nature of Dues

Financial Year

Forum where dispute is pending ('' in crores)

Total ('' in Crores)

Commissioner ate

Appellate Authorities and Tribunals

The Central Excise Act, 1944/Customs Duty/Service Tax/Interest & Penalty

FY 2001-02 to FY 2013-14

44.73

10.46

55.19

Income Tax Act/Tax Interest & Penalty

FY 2008-09, FY 2009-10, FY 2010-11 FY 2011-12 FY 2012-13

10.15

6.64

16.79

Total ('' in Crores)

54.88

17.10

71.98

iii) The Company had granted unsecured loan to its one wholly owned subsidiary covered in the register maintained under Section 189 of the Companies Act.

a) In our opinion, terms and conditions of such loan was not prejudicial to the interest of the Company.

b) The schedule of principal amount and interest has been stipulated and it is regular.

c) There is no overdue amount in respect of such loan granted.

iv) I n our opinion and according to the information and explanations given to us, the Company has complied with provisions of Section 185 and 186 of the Act, with respect to loans and investments made.

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

vi) The Company has maintained cost records as required under sub section (1) of Section 148 of the Companies Act, 2013. We have not, however, carried out a detailed examination of such records.

vii) a. The Company is regular in depositing with

appropriate authorities undisputed statutory dues including the Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, duty of Customs, duty of Excise, Value added tax, cess and any other statutory dues applicable to it.

b. According to the information and explanation given to us, there are no dues of income tax, sales tax, service tax, custom duty, excise duty and value added tax which have not been deposited on account of any dispute except the following:

viii) I n our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of dues for loan taken from financial institutions or bank or debenture holders.

ix) I n our opinion and according to the information and explanation given to us, the term loans raised during the year were applied for the purpose for which the loans were obtained. The Company did not raise any money by way of public offer or further public offer (including debt instruments) during the year.

x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

xii) In our opinion and according to information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii) According to the information and explanation given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where

Report on the Internal Financial Controls under Clause

(i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act")

We have audited the internal financial controls over financial reporting of AARTI INDUSTRIES LIMITED ("the Company") as of 31st March 2016 in conjunction with our audit of financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv) According to the information and explanation given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv) According to the information and explanation given to us, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the

Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For GOKHALE & SATHE

CHARTERED ACCOUNTANTS

Firm Registration Number: 103264W

Sd/-

CA TEJAS J. PARIKH

PARTNER

Membership No. 123215

Place: Mumbai

Date: May 6, 2016


Mar 31, 2015

Report on the Financial Statements

We have audited the accompanying financial statements of AARTI INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 control, 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.

Auditors'' Responsibility

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 there under.

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 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 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 accounting policies used and the reasonableness of the accounting estimates made by 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 issued by the Central Government of India in terms of Section 143 (11) of the Companies Act, 2013, we give in the annexure a statement on the matters specified in paragraphs 3 & 4 of the order.

2. 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 purposes of our audit.

(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, 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 aforesaid financial statements comply with the 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 31st March, 2015, 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 Section 164(2) of the Act.

(f) With respect to the other matters included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to our best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31st March, 2015 on its financial position in its financial statements Refer Note 25 of the Financial Statements.

ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amount, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditors’ Report

In the Annexure, as required by the Companies (Auditor''s Report) Order, 2015 issued by the Central Government in terms of Section 143 (11) of the Companies Act, 2013, on the basis of checks, as we considered appropriate, we report on the matters specified in paragraphs 3 and 4 of the said order to the extent applicable to the Company.

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

b) The Company has phased programme of physical verification of fixed assets by which all fixed assets are verified over a period of three years. In our opinion, periodicity of physical verification is reasonable having regard to the size of the Company and nature of the assets. We have been informed that no material discrepancy was noted on such physical verification.

(ii) The stock of inventory has been physically verified during the year by the Management at reasonable intervals, except stock lying with third parties, confirmation of such stocks with the third parties has been obtained by the Company. In our opinion, the procedures 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. The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to book records were not material; however the same have been dealt with the books of account.

(iii) 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. Therefore provisions of Clause 3 (iii) of the CARO are not applicable.

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. In our opinion, there is no continuing failure to correct major weaknesses in internal control.

(v) The Company has not accepted any deposits from public during the year and accordingly the provisions of Sections 73 to 76 of the Act, and Rules framed there under and any directive issued by the Reserve Bank of India are not applicable to the Company.

(vi) The Company has maintained cost records as required under sub-section 1 of Section 148 of the Companies Act, 2013. We have not, however, carried out a detailed examination of such records.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including the

Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, value added tax, cess and any other statutory dues applicable to it.

(b) According to the information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess which have not been deposited on account of any dispute except the following:

(RS. in Lakhs)

Name of the Financial Forum where dispute is Total Statutes/ Year pending Nature of Dues Commissionerate Appellate Authorities and Tribunals

The CentralExcise FY 2001-02 Act, 1944/ Custom to 3,630.77 NIL 3,630.77 Duty/Service Tax/ FY2013-14 Interest & Penalty

Income Tax Act/Tax Interest & FY 2008-09, Penalty FY 2009-10, 689.65 535.38 1,225.03 FY 2010-11

TOTAL 4,320.42 535.38 4,855.80

(c) In our opinion and according to the information and explanation given to us, during the year, no amount was pending to be transferred to Investor Education and Protection Fund.

(viii) The Company does not have accumulated losses as at 31st March, 2015 and it has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(ix) In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of dues for loan taken from financial institutions or bank or debenture holders.

(x) In our opinion and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are not prejudicial to the interest of the Company.

(xi) In our opinion and according to the information and explanation given to us, the term loans were applied for the purpose for which the loans were obtained.

(xii) According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.



For GOKHALE & SATHE CHARTERED ACCOUNTANTS Firm Registration Number: 103264W



Sd/- (TEJAS J. PARIKH) PARTNER M. No. 123215

Place: Mumbai Date: May 13, 2015


Mar 31, 2014

We have audited the accompanying financial statements of AARTI INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, and 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

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 notified under 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.

Auditors'' 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 but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. 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:

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

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

(c) 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") 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 sub-section (3) Section 227 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 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 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

e. On the basis of the written representations received from the directors as on 31st 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 Act.

Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our report of even date.

(i) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. The Company has phased programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, periodicity of physical verification is reasonable having regard to the size of the Company and nature of its assets. We have been informed that no material discrepancies were noticed on such physical verification. Substantial part of fixed assets has not been disposed of during the year.

(ii) The stock of inventory has been physically verified during the year by the Management at reasonable intervals, except stock lying with third parties, confirmation of such stocks with third parties has been obtained by the Company. In our opinion, the procedures 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. The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to book records were not material; however, the same have been properly dealt with the books of account.

(iii) (a) The Company has not granted loans to Companies covered in register maintained under section 301 of the Companies Act, 1956.

(b) The Company has taken a loan from a party covered in the register maintained under section 301 of the Companies Act, 1956. The year end as well as maximum outstanding balance during the year of loan taken was Rs 659.56 lakhs.

(c) In our opinion, the rate of interest and other terms and conditions on which the loans have been taken from the Companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. In our opinion, there is no continuing failure to correct major weaknesses in internal control.

(v) In case of transactions exceeding the value of the five lakhs rupees in the financial year in respect of any party -

(a) The transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered.

(b) In our opinion, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has accepted deposits from the public. In our opinion, the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under, where applicable, have been complied with. National Company Law Tribunal has not passed any order in respect of public deposits accepted by the Company.

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

(viii) The Company has maintained cost records as required under Section 209 (1)(d) of the Companies Act, 1956. We have not, however, carried out a detailed examination of such records.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities,

(b) The following statutory dues have not been deposited on account of dispute:

Name of the Statute/ Period to Forum where Appellate Total Nature of Dues wich the disputes is Authorities Rsin amount pending & Tribunals lakhs) relates (Rs in lakhs) Commissionerate The Central Excise Act, 1944/Custom From Fy2001-02 1,414.16 1,096.97 2,511.13 Duty/Service to Tax/Interest & penalty 2013-14

Income Tax Act/Tax Interests Penalty FY 2008-09 & 663.70 NIL 663.70 2009-10

Total 2,077.86 1,096.97 3,17487

(x) The Company has no accumulated losses. The Company has not incurred cash losses in the financial year under report and in the financial year immediately preceding such financial year.

(xi) The Company has not defaulted in repayment of dues to financial institutions or banks.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) The Company has not given guarantee for loans taken by others from banks or financial institutions and in our opinion, the terms and conditions of such guarantee are not, prima facie, prejudicial to the interests of the Company.

(xiv) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiv) are not applicable to the Company.

(xv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xv) of the Order are not applicable to the company.

(xvi) Term loans availed by the Company were, prima facie, applied for the purposes for which the loans were obtained.

(xvii) On an overall basis, the funds raised on short-term basis have, prima facie, not been used for long term investment.

(xviii) The Company has not made preferential allotment of shares during the year to parties and companies covered in the Register, maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4(xviii) of the companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

(xix) The Company has not issued debentures during the year, hence requirement of reporting regarding creation of security in respect of debentures does not arise.

(xx) According to the information and explanations given to us, during the period covered by our audit report, the company has not raised any money by public issues. Therefore, the provisions of clause 4(xx) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

(xxi) During the audit carried out by us, any fraud on or by the Company has not been noticed or reported during the year.

For PARIKH JOSHI & KOTHARE CHARTERED ACCOUNTANTS Firm Registration Number: 107547W

Sd/- (TEJAS J. PARIKH) PARTNER M. No. 123215 Place: Mumbai Date: 30th May, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of AARTI INDUSTRIES LIMITED ("the Company")'' which comprise the Balance Sheet as at 31st March'' 2013'' and the Statement of Proft and Loss and Cash Flow Statement for the year then ended'' and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position'' fnancial performance and cash fows 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"). This responsibility includes the design'' implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement'' whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment'' including the assessment of the risks of material misstatement of the fnancial 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 fnancial 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 fnancial statements.

We believe that the audit evidence we have obtained is sufcient 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 fnancial 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:

(a) In the case of the Balance Sheet'' of the state of afairs of the Company as at 31st March'' 2013;

(b) In the case of the Statement of Proft and Loss'' of the proft for the year ended on that date; and

(c) In the case of the Cash Flow Statement'' of the cash fows 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") 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 specifed in paragraphs 4 and 5 of the Order.

2. As required by sub-section (3) Section 227 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 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 appears from our examination of those books.

c. The Balance Sheet'' the Statement of Proft 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 Balance Sheet'' the Statement of Proft and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

e. On the basis of the written representations received from the directors as on 31st March'' 2013'' and taken on record by the Board of Directors'' none of the directors is disqualifed as on 31st March'' 2013'' from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our report of even date.

(i) The Company has maintained proper records showing full particulars including quantitative details and situation of its fxed assets. These fxed assets were physically verifed by the Management during the year. We have been informed that no material discrepancies were noticed on such physical verifcation. Substantial part of fxed assets has not been disposed of during the year'' which will afect its status as a going concern.

(ii) The stock of inventory has been physically verifed during the year by the Management at reasonable intervals'' except stock lying with third parties'' confrmation of such stocks with third parties has been obtained by the Company. In our opinion'' the procedures of physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. The company is maintaining proper records of inventory. The discrepancies noticed on physical verifcation of stocks as compared to book records were not material; however'' the same have been properly dealt with the books of account.

(iii) (a) The Company has granted loans to two parties covered in register maintained under section 301 of the Companies Act'' 1956. The year end balance of loans given was Rs. 371.48 lakhs and maximum outstanding balance during the year was Rs. 499.00 lakhs.

(b) The Company has not taken loans from Companies covered in the register maintained under section 301 of the Companies Act'' 1956.

(c) In our opinion'' the rate of interest and other terms and conditions on which the loans have been given to the companies listed in the register maintained under section 301 of the Companies Act'' 1956 are not'' prima facie'' prejudicial to the interest of the Company.

(iv) In our opinion'' there are adequate internal control procedures commensurate with the size of the company and the nature of its business'' for the purchase of inventory and fxed assets and for the sale of goods. In our opinion'' there is no continuing failure to correct major weaknesses in internal control.

(v) In case of transactions exceeding the value of the fve lakhs rupees in the fnancial year in respect of any party – (a) The transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered. (b) In our opinion'' each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has accepted deposits from the public. In our opinion'' the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under'' where applicable'' have been complied with. National Company Law Tribunal has not passed any order in respect of public deposits accepted by the Company.

(vii) In our opinion'' the Company has an internal audit system commensurate with its size and nature of its business.

(viii) The Company has maintained cost records as required under Section 209 (1)(d) of the Companies Act'' 1956. We have not'' however'' carried out a detailed examination of such records.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund'' Investor Education and Protection Fund'' Employees'' State Insurance'' Income-tax'' Sales-tax'' Wealth Tax'' Custom Duty'' Excise Duty'' Cess and any other statutory dues with the appropriate authorities''

(b) The following statutory dues have not been deposited on account of dispute:

Name of the Statute/ Nature of Dues Period to which the Forum where disputes is pending Total amounts relates (in lakhs) (in Lakhs) Commisss ionerate Appellate Authorities & Tribunals

The Central Excise Act''1944/ Custom From 2001-02 to 2''099.09 251.92 2''351.01 Duty/Service Tax/ Interest & penalty 2012-13

Income Tax Act/Tax Interest & Penalty From 2004-05 to 535.38 535.38 2010-11

Total 2''634.47 251.92 2''886.39

(x) The Company has no accumulated losses. The Company has not incurred cash losses in the fnancial year under report and in the fnancial year immediately preceding such fnancial year.

(xi) The Company has not defaulted in repayment of dues to fnancial institutions or banks.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares'' debentures or other securities.

(xiii) The Company has not given guarantee for loans taken by others from banks or fnancial institutions and in our opinion'' the terms and conditions of such guarantee are not'' prima facie'' prejudicial to the interests of the Company.

(xiv) The Company is not a chit fund or a nidhi/mutual beneft fund/society. Therefore'' the provisions of clause 4(xiv) are not applicable to the Company.

(xv) The Company is not dealing in or trading in shares'' securities'' debentures and other investments. Accordingly the provisions of clause 4(xv) of the Order are not applicable to the company.

(xvi) Term loans availed by the Company were'' prima facie'' applied for the purposes for which the loans were obtained.

(xvii) On an overall basis'' the funds raised on short-term basis have'' prima facie'' not been used for long term investment.

(xviii) The Company has not made preferential allotment of shares during the year to parties and companies covered in the Register'' maintained under section 301 of the Companies Act'' 1956. Accordingly the provisions of clause 4(xviii) of the companies (Auditors'' Report) Order'' 2003 are not applicable to the company.

(xix) The Company has not issued debentures during the year'' hence requirement of reporting regarding creation of security in respect of debentures does not arise.

(xx) According to the information and explanations given to us'' during the period covered by our audit report'' the company has not raised any money by public issues. Therefore'' the provisions of clause 4(xx) of the companies (Auditors'' Report) Order'' 2003 are not applicable to the company.

(xxi) During the audit carried out by us'' any fraud on or by the Company has not been noticed or reported during the year.

For PARIKH JOSHI & KOTHARE

CHARTERED ACCOUNTANTS

Firm Registration Number: 107547W

Sd/-

(TEJAS J. PARIKH)

PARTNER

M. No. 123215

Place: Mumbai

Date: 16th May'' 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of AARTI INDUSTRIES LIMITED, as at 31st March, 2012 and also the Statement of Profit and Loss 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 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 reasonable 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, 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:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, the Company has kept proper books of account as required by law so far as appears from our examination of those book,

(iii) The Balance Sheet and Statement of Profit and Loss dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet and Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) 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 prima-facie disqualified as on 31st March, 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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;

(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, of the Profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Annexure to The Auditors' Report

(This is the Annexure referred to in our Report to the Members of AARTI INDUSTRIES LTD. of even date)

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

(i) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. These fixed assets were physically verified by the Management during the year. We have been informed that no material discrepancies were noticed on such physical verification. Substantial part of fixed assets has not been disposed of during the year, which will affect its status as a going concern.

(ii) The stock of inventory has been physically verified during the year by the Management at reasonable intervals, except stock lying with third parties, confirmation of such stocks with third parties has been obtained by the Company. In our opinion, the procedures 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. The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to book records were not material, however, the same have been properly dealt with the books of account.

(iii) (a) The Company has not granted loans, secured or unsecured to Companies, covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken loans from Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. In our opinion, there is no continuing failure to correct major weaknesses in internal control.

(v) In case of transactions exceeding the value of the five lakhs rupees in the financial year in respect of any party -

(a) The transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered.

(b) In our opinion, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has accepted deposits from the public. In our opinion, the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under, where applicable, have been complied with. National Company Law Tribunal has not passed any order in respect of public deposits accepted by the Company.

(vii) In our opinion, the Company has an Internal Audit System commensurate with its size and nature of its business.

(viii) The Company has maintained cost records as required under Section 209(1)(d) of the Companies Act, 1956. We have not, however, carried out a detailed examination of such records.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities,

(b) The following statutory dues have not been deposited on account of dispute:

(Rs in Lakhs)

Name of the Statute/Nature of dues Period to which Forum where disputes is pending Total the amounts relates Commission erate Appellate Authorities & Tribunals

The Central Excise Act,1944/Tax From 2001-02 to Interest & Penalty 2010-11 506.99 234.09 741.08

Various State Sales Tax Act and 2002-03 14.35 - 14.35

Central Sales Tax Act,1956/Tax 2006-07 10.91 - 10.91

Interest and Penalty 2007-08 79.60 - 79.60

TOTAL 611.85 234.09 845.94

(x) The Company has no accumulated losses. The Company has not incurred cash losses in the financial year under report and in the financial year immediately proceeding such financial year.

(xi) The Company has not defaulted in repayment of dues to Financial Institutions or Banks.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) The Company has not given guarantee for loans taken by others from banks or financial institutions and in our opinion, the terms and conditions of such guarantee are not, prima facie, prejudicial to the interests of the Company.

(xiv) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiv) are not applicable to the Company.

(xv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xv) of the Order are not applicable to the Company.

(xvi) Term loans availed by the Company were, prima facie, applied for the purposes for which the loans were obtained.

(xvii) On an overall basis, the funds raised on short-term basis have, prima facie, not been used for long term investment.

(xviii)The Company has made preferential allotment of shares, on conversion of convertible warrants to parties and companies covered in the Register, maintained under section 301 of the Companies Act, 1956, during the year. The prices at which shares have been issued is as per the letter of offer made to them at the time of issuance of warrants and are not in our opinion prejudicial to the interests of the Company.

(xix) The Company has not issued debentures during the year, hence requirement of reporting regarding creation of security in respect of debentures does not arise.

(xx) In relation to the allotment of shares mentioned in clause (xviii), the Company has raised money on conversion of convertible share warrants during the year and we have verified the end use of the funds raised during the year with the necessary documents and in our opinion the Company has made adequate disclosure regarding the same.

(xxi) During the audit carried out by us, any fraud on or by the Company has not been noticed or reported during the year.

For PARIKH JOSHI & KOTHARE

CHARTERED ACCOUNTANTS

Firm Registration Number: - 107547W

Sd/-

(YATIN R. VYAVAHARKAR)

Place: Mumbai PARTNER

Date: 25th May, 2012 M. No. 33915


Mar 31, 2011

1. We have audited the attached Balance Sheet of AARTI INDUSTRIES LIMITED, as at 31st March, 2011 and also the Profit and Loss Account 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 disclosures in the financial statement. 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, 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:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, the Company has kept proper books of account as required by law so far as appears from our examination of those books;

(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) 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 prima facie disqualified as on 31st March, 2011 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

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

(c) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date;

Annexure to The Auditors' Report

(This is the Annexure referred to in our Report to the Members of AARTI INDUSTRIES LTD. of even date)

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

(i) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. These fixed assets were physically verified by the Management during the year. We have been informed that no material discrepancies were noticed on such physical verification. Substantial part of fixed assets has not been disposed of during the year, which will affect its status as a going concern.

(ii) The stock of inventory has been physically verified during the year by the Management at reasonable intervals, except stock lying with third parties, confirmation of such stocks with third parties has been obtained by the Company. In our opinion, the procedures 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. The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to book records were not material, however, the same have been properly dealt with the books of account.

(iii) (a) The Company has not granted loans, secured or unsecured to Companies, covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has taken loans from three Companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 783.05 Lakhs and the year-end balance of the loans taken was Rs. 0.03 Lakhs.

(c) In our opinion, the rate of interest and other terms and conditions on which the loans have been given by or taken from the Companies listed 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 regular in repaying the principal amount as stipulated and has been regular in the payment of the interest.

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. In our opinion, there is no continuing failure to correct major weaknesses in internal control.

(v) In case of transactions exceeding the value of the five lakhs rupees in the financial year in respect of any party – (a) The transactions that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956 have been so entered. (b) In our opinion, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has accepted deposits from the public. In our opinion, the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under, where applicable, have been complied with. National Company Law Tribunal has not passed any order in respect of public deposits accepted by the Company.

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

(viii) The Company has maintained cost records as required under Section 209(1)(d) of the Companies Act, 1956. We have not, however, carried out a detailed examination of such records.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities.

(b) The following statutory dues have not been deposited on account of dispute:

(Rs. in Lakhs)

Name of the Statute/ Nature of dues Period to which Forum where disputes is pending Total the amounts relates

Commission -erate Appellate Authorities & Tribunals

Service Tax Act/ Tax & Cess 2006-07 30.91 - 30.91

The Central Excise Act,1944/ 2001-02 to 253.06 147.48 400.53 Tax Interest & Penalty 2010-11

Various State Sales Tax Act and Central Sales Tax Act, 1956/ Tax Interest & Penalty 2002-03 14.36 - 14.36

2004-05 - 259.20 259.20

Total 298.33 406.68 705.00

(x) The Company has no accumulated losses. The Company has not incurred cash losses in the financial year under report and in the financial year immediately preceding such financial year.

(xi) The Company has not defaulted in repayment of dues to financial institutions or banks.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) The Company has not given guarantee for loans taken by others from banks or financial institutions and in our opinion, the terms and conditions of such guarantee are not, prima facie, prejudicial to the interests of the Company.

(xiv) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiv) are not applicable to the Company.

(xv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xv) of the Order are not applicable to the Company.

(xvi) Term loans availed by the Company were, prima facie, applied for the purposes for which the loans were obtained.

(xvii) On an overall basis, the funds raised on short-term basis have, prima facie, not been used for long term investment.

(xviii) The Company has issued preferential equity share warrants to parties and Companies covered in the Register, maintained under section 301 of the Companies Act, 1956, during the year. In our opinion, the price at which preferential share warrants have been issued is not prejudicial to the interests of the Company.

(xix) The Company has not issued debentures during the year, hence requirement of reporting regarding creation of security in respect of debentures does not arise.

(xx) The Company has raised money by preferential issue of partly paid convertible equity share warrants during the year and we have verified the end use of the funds raised with the necessary documents.

(xxi) During the audit carried out by us, any fraud on or by the Company has not been noticed or reported during the year.

For PARIKH JOSHI & KOTHARE

CHARTERED ACCOUNTANTS

Firm Registration Number: - 107547W

Sd/-

(YATIN R. VYAVAHARKAR)

PARTNER

Place: Mumbai M. No. 33915

Date: 30th May, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of AARTI INDUSTRIES LIMITED, as at 31st March, 2010 and also the Profit and Loss Account 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 disclosures in the financial statement. 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 (Auditors Report) Order, 2003, issued by the Central Government of India in terms of subsection (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:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, the Company has kept proper books of account as required by law so far as appears from our examination of those book;

(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31 st March, 2010, and taken on record by the Board of Directors, we report that none of the directors is prima-facie disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; and

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

(c) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date;

Annexure to The Auditors Report (This is the Annexure referred to in our Report to the Members of AARTI INDUSTRIES LTD. of even date)

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

(i) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. These fixed assets were physically verified by the Management during the year. We have been informed that no material discrepancies were noticed on such physical verification. Substantial part of fixed assets have not been disposed of during the year, which will affect its status as a going concern.

(ii) The stock of inventory has been physically verified during the year by the Management at reasonable intervals, except stock lying with third parties, confirmation of such stocks with third parties have been obtained by the Company. In our opinion, the procedures 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. The Company is maintaining-proper records of inventory.The discrepancies noticed on physical verification of stocks as compared to book records were not material, however, the same have been properly dealt with the books of account.

(iii) (a) The Company has granted loans, secured or unsecured to two Companies, covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 119.30 Lakhs and the year-end balance of the loans given was NIL.

(b) In our opinion, the rate of interest and other terms and conditions on which the loans have been given to the companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(c) The Company has received the principal amount and interest as stipulated.

(d) There were no overdue amounts of principal or interest.

(e) The Company has taken loans from three Companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 700.44 Lakhs and the year-end balance of the loans taken was Rs. 257.87 Lakhs.

(f) In our opinion, the rate of interest and other terms and conditions on which the loans have been given by or taken from the companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(g) The Company is regular in repaying the principal amount as stipulated and has been regular in the payment of the interest.

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. In our opinion, there is no continuing failure to correct major weaknesses in internal control.

(v) In case of transactions exceeding the value of the five lakhs rupees in the financial year in respect of any party - (a) The transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered, (b) In our opinion, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has accepted deposits from the public. In our opinion, the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under, where applicable, have been complied with. National Company Law Tribunal has not passed any order in respect of public deposits accepted by the Company.

(vii) In our opinion, the company has an internal audit system commensurate with its size and nature of its business.

(viii) The Company has maintained cost records as required under Section 209(1 )(d) of the Companies Act, 1956. We have not, however, carried out a detailed examination of such records.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities.

(b) The following statutory dues have not been deposited on account of dispute:

Sr. No. Nature of Disputed Statutory Dues Amount in Rs. Forum where the dispute is Pending

A. Income Tax Dues

1. A.Y. 2002-03 3,77,39,778 Asst. CIT 10(3), Mumbai

2. A.Y. 2005-06 2,41,87,626 Asst. CIT 10(3), Mumbai

3. A.Y. 2006-07 3,60,18,634 Asst. CIT 10(3), Mumbai

TOTAL 9,79,46,038

B. TDS Dues

1. A.Y. 2007-08 10,46,533 ITO (TDS), Valsad

2. A.Y. 2008-09 12,14,791 ITO (TDS), Valsad

3. A.Y. 2009-10 23,82,142 ITO (TDS), Valsad

4. A.Y. 2010-11 10,43,234 ITO (TDS), Valsad

TOTAL 56,86,700

C. Central Excise Dues

1. RKS/250/DAMAN/2003 /105/2005 1,72,066 Appeal Filed by Commissioner in High Court, Mumbai

2. V/CH28.29/3.43/DEM/2002 14,94,708 Appeal Filed with CESTAT 5,00,000/-as pre-Deposit.

3. V/CH28/15.5/OA/06 dated 05.09.06 15,22,006 Appeal Filed by Commissioner Appeal, Vapi

4. 11/DEM/VAPI/2007 15,00,831 Appeal Filed with CESTAT

5. O-IO No. 20/OA/Adj. /BA-Addl/2009 70,75,566 Appeal Filed by Comm. C. Ex.

6. F.No.-V/Adj/SCN/l 5-29/Alchemie—1/07/2915 42,04,897 Appeal Filed with Commissioner, Mumbai (13.06.2007)

7. C.Ex/R-lll/K-lll/Alchemie /SCN/07 (13.06.2007) 1,03,247 Appeal Filed with Commissioner, Mumbai

8. Order Sr. No. 42/DIVANK -II/ST/2008-09 4,41,332 Appeal filed with Commissioner, Surat Dated 02.01.09

9. V-Adj (SCN) 15-151 /Aarti/BSR-1/7/1078 7,06,244 Appeaj Filed with Commissioner, Mumbai Boisar Dt. 23/3/09

10. V (Ch-29) 3-28/dem/06-07 dated 14.12.06 66,55,190 Appeal filed with CESTAT 5,00,000/-as pre-Deposit.

11. AKP/108/DIVN VAPI-l /DAMAN/09-10 Dt. 20.11.09 72,43,084 Appeal filed with CESTA

TOTAL 3,11,19,171

D. Sales Tax Dues

1. F.Y. 2005-06 - CST Gujarat-Vapi 23,58,602 Jt. Comm. Of Commercial Tax 2, Baroda

2. F.Y. 2004-05 - CST Gujarat-Vapi 3,00,25,000 Jt. Comm. Of Commercial Tax 8, Thane TOTAL 3,23,83,602

TOTAL(A+B+C+D) 16,71,35,511

(x) The Company has no accumulated losses.The Company has not incurred cash losses in the financial year under report and in the financial year immediately proceeding such financial year.

(xi) The Company has not defaulted in repayment of dues to financial institutions or banks.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) The Company has not given guarantee for loans taken by others from banks or financial institutions and in our opinion, the terms and conditions of such guarantee are not, prima facie, prejudicial to the interests of the Company.

(xiv) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiv) are not applicable to the Company.

(xv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xv) of the Order are not applicable to the Company.

(xvi) Term loans availed by the company were, prima facie, applied for the purposes for which the loans were obtained.

(xvii) On an overall basis, the funds raised on short-term basis have, prima facie, not been used for long term investment.

(xviii) The company has made preferential allotment of shares, on conversion of convertible warrants to parties and companies covered in the Register, maintained under section 301 of the Companies Act, 1956, during the year. The prices at which shares have been issued is as per the letter of offer made to them at the time of issuance of warrants and are not in our opinion prejudicial to the interests of the Company.

(xix) The Company has created charge by way of hypothecation on movable fixed assets and on the leasehold immovable properties of the Company for privately placed 1,000 Non-Convertible Debentures of Rs 10,00,000/- each aggregating to Rs. 100 Crores.

(xx) In relation to the allotment of shares mentioned in clause (xviii), the Company has raised money on conversion of convertible share warrants during the year and we have verified the end use of the funds raised during the year with the necessary documents and in our opinion the Company has made adequate disclosure regarding the same.

(xxi) During the audit carried out by us, any fraud on or by the company has not been noticed or reported during the year.

For PARIKH JOSHI & KOTHARE

CHARTERED ACCOUNTANTS Firm Registration Number:- 107547W

Sd/- (YATIN R.VYAVAHARKAR)

PARTNER M. No. 33915

Place: Mumbai,

Date: 26th May, 2010

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