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Auditor Report of AI Champdany Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of AI Champdany Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, 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:

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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

Our responsibility is to express an opinion on 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 control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

Qualified Opinion:

We report that the year''s loss, and consequently, the net asset position at the end of the year might have been affected by the following, the net impact of which cannot at this stage be ascertained:

non-provision/ascertainment of liability for gratuity on actuarial basis from the year commencing from 1.4.1997 to 31.03.2007 in respect of one unit of the company as referred to in note 44 to the Accounts,*

*Relates to erstwhile Anglo India Jute Mills Company Limited.

Opinion:

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 Act in the manner so required and subject to our foregoing observations in Qualified Opinion 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 31 March, 2015 and

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

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

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor''s Report) Order, 2015("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a) subject to our observations set out in Qualified Opinion above, 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) further subject to our observations set out in Qualified Opinion above, in our opinion, proper books of accounts as required by law have been maintained 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, subject to our observations set out in Qualified Opinion above ,the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules,2014;

e) on the basis of written representations received from the directors as on 31 March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015, from being appointed as a director in terms of Section 164(2) of the Companies Act, 2013;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 25 to the financial statements;

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

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

ANNEXURE TO AUDITOR''S REPORT

The Annexure referred to in Paragraph 1 of our Report of even date to the members of AI CHAMPDANY INDUSTRIES LIMITED ("the Company") for the year ended on March 31,2015. We report that:

1. (a) The company has maintained proper records showing full particulars including original and revalued costs, quantitative details and situation of fixed assets.

(b) We have been informed that the Fixed Assets of the Company have been physically verified during the year by the management and no material discrepancies have been noticed. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

2. (a) Inventory of the Company at all its locations have been physically verified by the management at reasonable intervals during the year. In the case of stocks lying with third parties, certificates confirming stocks held by them have been received. In our opinion, the frequency of verification is reasonable.

(b) In our opinion the procedures for verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) In our opinion the inventory records are being properly maintained by the Company. No material discrepancies were noticed on physical verification.

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

4. In our opinion and according to the information and explanations given to us, taking into consideration the explanation that some purchases are special in nature for which comparative quotations from suitable alternative sources is not available, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal control system.

5. The Company has not accepted any deposits from the public.

6. Cost records and accounts as prescribed by the Central Government under sub-section (1) of section 148 of the Act, prima-facie is being maintained by the company. Though we have examined such books and records, we have not made any detailed examination with a view to determine whether they are accurate or complete.

7. (a) According to the information and explanations given to us and as per the records of the company examined by us, we are of the opinion that the company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, custom duty, cess, service tax and any other material statutory dues with the appropriate authorities. There are no outstanding undisputed amounts in respect of such statutory dues as at 31 March, 2015 for a period of more than six months from the date they became payable. As explained to us the company has no overdue liability towards investor education and protection fund, wealth tax and excise duty.

(b) The disputed statutory dues have not been deposited on account of matters pending before appropriate authorities are as under:

Name of the Statute Nature of Dues Amount (Rs Lakhs)

Bhatpara Municipality Municipal Taxes & Land Revenue 256.10

ESI Act ESI dues 275.22

Central Sales Tax 1956 & West 2.10 Bengal Slate Tax /Act 1994 Sales Tax 482.64

18.37

Income Tax Act 1961 Income Tax 1554.52

Service Tax Service Tax 202.13

Name of the Statute Forum where the dispute is pending

Bhatpara Municipality REVIEW BOARD

ESI Act ESI COURT

Central Sales Tax 1956 & West ACCT

Bengal Sales Tax Act, 1994 WBCTA & RB SJCCT

Income Tax Act 1961 CIT (Appeal)

Service Tax CESTAT

(c ) According to the information and explanations given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time.

8. The company has no accumulated loss and has incurred Cash Loss during the financial year covered by our audit but there was no Cash Loss in the immediately preceding financial year.

9. According to explanations and information obtained and based on our examination of the records the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

10. The company has not given any guarantee for loans taken by others from Banks or Financial Institutions during the year.

11. According to information and explanations obtained and on the basis of examination of the books and records, we report that the company has taken term loan during the financial year 2014-2015 has been applied for the purpose for which the loan was obtained from Bank.

12. According to all information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For D. P. Sen & Co Chartered Accountants FRN 301054

E S. K. Nayak Kolkata, Partner Dated: 30 May 2015 Membership No.58711


Mar 31, 2014

We have audited the accompanying financial statements of AI Champdany Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31 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 :

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility :

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Qualified Opinion :

We report that the year''s profit, and consequently, the net asset position at the end of the year might have been affected by the following, the net impact of which cannot at this stage be ascertained :

i) pending assessment of losses in respect of stocks of finished goods damaged by fire, no adjustment has been made to the accounts as referred to in note 46 to the Accounts;

ii) non-provision/ascertainment of liability for gratuity on actuarial basis from the year commencing from 1.4.1997 to 31.03.2007 in respect of one unit of the company as referred to in note 47 to the Accounts (relates to erstwhile Anglo India Jute Mills Company Limited).

Opinion :

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 subject to our foregoing observations in Qualified Opinion 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 31 March, 2014 and

(b) in the case of Statement of Profit & Loss, of the Profit of the Company for the year ended on that date, and

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

Emphasis of Matter :

We draw attention to Note 48 to the Accounts on recognition of remission of taxes by Sales Tax Authority (relates to erstwhile Anglo India Jute Mills Company Limited).

Report on Other Legal and Regulatory Requirements :

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

a) subject to our observations set out in Qualified Opinion above, 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) further subject to our observations set out in Qualified Opinion above, in our opinion, proper books of accounts as required by law have been maintained 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 Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f) since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO AUDITOR''S REPORT

(Referred to in Paragraph 1 of our Report of even date)

1. (a) At Jagatdal units proper records showing full particulars including quantitative details and situation of fixed assets have been maintained from the year 1970-1971. As explained to us that the Company has also identified fixed assets acquired in earlier periods, upto the year 1962-1963, and has built up records with aggregate value showing quantitative details and locations of the same but not the individual cost, and consequently such aggregate values could not be reconciled with the values of individual items acquired prior to 1970-1971 and recorded in the fixed assets register.

At other units the company has maintained proper records showing full particulars including original and revalued costs, quantitative details and situation of fixed assets except for certain items of fixed assets acquired prior to 1 April 1962, which have been recorded on the basis of physical verification conducted during the year ended 31 March 1978 and values as estimated by the Management in the absence of original cost.

(b) We have been informed that the Fixed Assets of the Company other than certain items of underground electrical installations have been physically verified during the year by the management, and in respect of items for which proper records have been maintained, no material discrepancies have been noticed.

(c) No substantial part of the fixed assets has been disposed off during the year except Fixed Assets of Rs. 2.29 lacs have been transferred to Stock-in-Trade in respect of Building at Narayanpur unit of the Company. The Company has taken approval of shareholders to sell Anglo India Jute Mill – Middle Mill Unit which is under process.

2. (a) Inventory of the Company at all its locations have been physically verified by the management at reasonable intervals during the year. In the case of stocks lying with third parties, certificates confirming stocks held by them have been received. In our opinion, the frequency of verification is reasonable.

(b) In our opinion the procedures for verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) In our opinion the inventory records are being properly maintained by the Company. Shortage found between the physical and book stocks, of 33 MT, valued Rs.211.29 lacs of flax yarn during the year has been adjusted in the books.

3. The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956. Accordingly, clauses 4(iii) (b) to (d) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, taking into consideration the explanation that some purchases are special in nature for which comparative quotations from suitable alternative sources is not available, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal control system.

5. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act 1956 have been duly entered in the register required to be maintained in pursuance of Section 301 of the Companies Act 1956. The transaction made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices of such goods, or prices of which transactions for similar items have been made with other parties.

6. The Company has not accepted any deposits from the public falling within the purview of Section 58A and 58AA or any other relevant provisions of the Act.

7. The Company has an internal audit system commensurate with its size and nature of its business.

8. Cost records and accounts as prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, prima-facie is being maintained by the company. Though we have examined such books and records, we have not made any detailed examination with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and as per the records of the company examined by us, we are of the opinion that the company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, custom duty, cess, service tax and any other material statutory dues with the appropriate authorities. There are no outstanding undisputed amounts in respect of such statutory dues as at 31 March, 2014 for a period of more than six months from the date they became payable. As explained to us the company has no overdue liability towards investor education and protection fund, wealth tax and excise duty.

(b) The disputed statutory dues have not been deposited on account of matters pending before appropriate authorities are as under :

Name of the Statute Nature of Dues Amount (Rs Lakhs) Forum where the dispute is pending

Bhatpara Municipality Municipal Taxes & 225.23 REVIEW BOARD Land Revenue

ESI Act ESI dues 260.70 ESI COURT

Central Sales Tax Sales Tax 2.10 ACCT 1956 & West Bengal 454.01 WBCTA & RB Sales act 1994 18.37 SJCCT

Income Tax Act 1961 Income Tax 218.62 CIT (Appeal)

10. The company has no accumulated loss and has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11. According to explanations and information obtained and based on our examination of the records the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

12. On the basis of our examination of the books and records of the company and according to information and explanations given to us the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. No provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are applicable to the company.

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

15. The company has not given any guarantee for loans taken by others from Banks or Financial Institutions during the year.

16. According to information and explanations obtained and on the basis of examination of the books and records, we report that the company has taken term loan during the financial year 2013-2014 has been applied for the purpose for which the loan was obtained from Bank.

17. An overall examination of the balance sheet of the company and as per information and explanations obtained, no funds raised on short-term basis have been used for long-term investments.

18. The company has allotted 2683045 nos of Equity Shares of face value of Rs. 5/- each on conversion of 2683045 nos of convertible share warrants at a price of Rs. 20.50 (including premium of Rs. 15.50 per warrant), 25% paid during the previous year and 75% paid during the year with the right to convert each warrant into one fully paid up Equity share of face value of Rs. 5/- not before 31.03.2013 and not later than 18 months from the date of allotment of convertible warrants i.e. within 25.03.2014. These shares on conversion were allotted on 15.05.2013 to companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued any debentures during the year and neither does it have any debentures outstanding at the year-end.

20. The company has not raised any money by way of public issue during the year.

21. The Company has detected a shortage of Stock of 45 MT, valued Rs.128.13 lacs of Flax Yarn during the year 2012-13 which has been adjusted in the books during the previous year and a shortage of stock of 33 MT, valued Rs.211.29 lacs of Flax Yarn during the year which has been adjusted in the books. According to all information and explanations given to us, we have not come across any fraud by the Company, noticed or reported during the year.

For D. P. Sen & Co Chartered Accountants FRN 301054 E

S. K. NAYAK Partner Kolkata, Membership No.58711 Dated: 30 May 2014.


Mar 31, 2013

We have audited the accompanying financial statements of AI Champdany Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31 2013, 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 is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act").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.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

A. We report that: -

I) The year''s profit, and consequently, the net asset position at the end of the year might have been affected by the following, the net impact of which cannot at this stage be ascertained:

i) non ascertainment of profit / loss on outstanding commodity hedging materials as at the end of the year, referred to note 45 to the Accounts.

ii) pending assessment of losses in respect of stocks of finished goods damaged by fire, no adjustment has been made to the accounts as referred to in note 46 to the Accounts,

iii) non-provision/ascertainment of liability for gratuity on actuarial basis from the year commencing from 1.4.1997 to 31.03.2007 in respect of one unit of the company as referred to in note 47 to the Accounts,*

iv) recognition of remission of taxes by Sales Tax Authority in the accounts as referred to in Note 48(a) to the Accounts,*

v) non-ascertainment/provision of possible loss which may arise for non-recovery of interest free loans and advances in the nature of loans as referred to in note 48 (b) to the Accounts,*

* relates to erstwhile Anglo India Jute Mills Company Limited.

II) 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 subject to our foregoing observations in para A(I) 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 31 March 2013 and

b) in the case of Statement of Profit & Loss, of the Profit of the Company for the year ended on that date, and

c) in the case of the Cash Flow Statement, of the cash flows of the company for the year ended on that date.

B. 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.

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

a) subject to our observations set out in para A(I) above, 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) further subject to our observations set out in para A(I) above, in our opinion, proper books of accounts as required by law have been maintained 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 Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on 31 March 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2013, from being appointed as a director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

f) since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO AUDITOR''S REPORT

(Referred to in Paragraph C of our Report of even date)

1. a) At Jagatdal units proper records showing full particulars including quantitative details and situation of

fixed assets have been maintained from the year 1970-1971. As explained to us that the Company has also identified fixed assets acquired in earlier periods, upto the year 1962-1963, and has built up records with aggregate value showing quantitative details and locations of the same but not the individual cost, and consequently such aggregate values could not be reconciled with the values of individual items acquired prior to 1970-1971 and recorded in the fixed assets register.

At other units the company has maintained proper records showing full particulars including original and revalued costs, quantitative details and situation of fixed assets except for certain items of fixed assets acquired prior to 1 April 1962, which have been recorded on the basis of physical verification conducted during the year ended 31 March 1978 and values as estimated by the Management in the absence of original cost.

b) We have been informed that the Fixed Assets of the Company other than certain items of underground electrical installations have been physically verified during the year by the management, and in respect of items for which proper records have been maintained, no material discrepancies have been noticed.

c) No substantial part of the fixed assets has been disposed off during the year.

2. a) Inventory of the Company at all its locations have been physically verified by the management at reasonable intervals during the year. In the case of stocks lying with third parties, certificates confirming stocks held by them have been received. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures for verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion, the inventory records are being properly maintained by the Company. Shortage found between the physical and book stocks, of 45 MT, valued Rs.128.13 lacs of flax yarn has been adjusted in the books; the matter is under investigation.

3. The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956. Accordingly, clauses 4(iii) (b) to (d) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, taking into consideration the explanation that some purchases are special in nature for which comparative quotations from suitable alternative sources is not available, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal control system.

5. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act 1956 have been duly entered in the register required to be maintained in pursuance of Section 301 of the Companies Act 1956. The transaction made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices of such goods, or prices of which transactions for similar items have been made with other parties.

6. The Company has not accepted any deposits from the public falling within the purview of Section 58A and 58AA or any other relevant provisions of the Act.

7. The Company has an internal audit system commensurate with its size and nature of its business.

8. Cost records and accounts as prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, prima-facie is being maintained by the company. Though we have examined such books and records, we have not made any detailed examination with a view to determine whether they are accurate or complete.

9. a) According to the information and explanations given to us and as per the records of the company examined by us, we are of the opinion that the company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, custom duty, cess, service tax and any other material statutory dues with the appropriate authorities. There are no outstanding undisputed amounts in respect of such statutory dues as at 31 March 2013 for a period of more than six months from the date they became payable. As explained to us the company has no over due liability towards investor education and protection fund, wealth tax and excise duty.

10. The company has no accumulated loss and has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11. According to explanations and information obtained and based on our examination of the records the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

12. On the basis of our examination of the books and records of the company and according to information and explanations given to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. No provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are applicable to the company.

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

15. The company has not given any guarantee for loans taken by others from Banks or Financial Institutions during the year.

16. According to information and explanations obtained and on the basis of examination of the books and records, we report that the company has taken term loan during the financial year 2012-2013 has been applied for the purpose for which the loan was obtained from Bank.

17. An overall examination of the balance sheet of the company and as per information and explanations obtained, no funds raised on short-term basis have been used for long-term investments.

18. The company has made preferential allotment of 2204786 nos of Equity Shares of face value of Rs. 5 each of at a price Rs. 20.50 (including premium Rs. 15.50) per share and 2683045 nos of convertible share warrants at a price of Rs. 20.50 (including premium of Rs. 15.50) per warrant, 25% paid up during the year with the right to convert each warrants into one fully paid up Equity share of face value of Rs.5 not before 31.03.2013 and not later than 18 months from the date of allotment of convertible warrants i.e. within 25.03.2014 to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued any debentures during the year and neither does it have any debentures outstanding at the year-end.

20. The company has not raised any money by way of public issue during the year.

21. While conducting an examination of the books and records of the company in accordance with the generally accepted auditing practices in India, and according to all information and explanations given to us, we have not come across any fraud on or by the company, noticed or reported during the year.

For D. P. Sen & Co

Chartered Accountants

FRN 301054 E

S. K. NAYAK

Place : Kolkata, Partner

Dated: 30 May 2013. Membership No.58711


Mar 31, 2012

A. We have audited the attached Balance Sheet of AI Champdany Industries Limited as at 31 March 2012, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. 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.

B. 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 reasonable basis for our opinion.

C. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956' and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order (to the extent applicable to the company).

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

I) the year's profit, and consequently, the net asset position at the end of the year might have been affected by the following, the net impact of which cannot at this stage be ascertained:

i) non ascertainment of profit/loss on outstanding commodity hedging materials as at the end of the year, referred to note 45 to the Accounts.

ii) pending assessment of losses in respect of stocks of finished goods damaged by fire, no adjustment has been made to the accounts as referred to in note 46 to the Accounts,

iii) non-provision/ascertainment of liability for gratuity on actuarial basis from the year commencing from 1.4.1997 to 31.03.2007 in respect of one unit of the company as referred to in note 47 to the Accounts,*

iv) recognition of remission of taxes by Sales Tax Authority in the accounts as referred to in Note 48(a) to the Accounts,*

v) non-ascertainment/provision of possible loss which may arise for non-recovery of interest free loans and advances in the nature of loans as referred to in note 48 (b) to the Accounts,

II) subject to our observations set out in para D(I) above, 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 ;

III) further subject to our observations set out in para D(I) above, in our opinion, proper books of accounts as required by law have been maintained by the Company, so far as appears from our examination of those books ;

IV) the Balance Sheet, Profit & Loss Account and Cash Flow dealt with by this report are in agreement with the books of account;

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 are disqualified as on 31st March, 2012 from being appointed as a director under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 ;

VI) in our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement comply with the mandatory accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 except D(I)(i), D(I)(ii) and D(I)(iii) above ;

VII) 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 subject to our foregoing observations in para D(I) 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 31 March, 2012 and

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

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

ANNEXURE TO AUDITOR'S REPORT

(Referred to in Paragraph C of our Report of even date)

1. (a) At Jagatdal units proper records showing full particulars including quantitative details and situation of fixed assets have been maintained from the year 1970-1971. As explained to us that the Company has also identified fixed assets acquired in earlier periods, upto the year 1962-1963, and has built up records with aggregate value showing quantitative details and locations of the same but not the individual cost, and consequently such aggregate values could not be reconciled with the values of individual items acquired prior to 1970- 1971 and recorded in the fixed assets register.

At other units the company has maintained proper records showing full particulars including original and revalued costs, quantitative details and situation of fixed assets except for certain items of fixed assets acquired prior to 1 April 1962, which have been recorded on the basis of physical verification conducted during the year ended 31 March 1978 and values as estimated by the Management in the absence of original cost.

(b) We have been informed that the Fixed Assets of the Company other than certain items of underground electrical installations have been physically verified during the year by the management, and in respect of items for which proper records have been maintained, no material discrepancies have been noticed.

(c) No substantial part of the fixed assets has been disposed off during the year.

2. (a) Inventory of the Company at all its locations have been physically verified by the management at reasonable intervals during the year. In the case of stocks lying with third parties, certificates confirming stocks held by them have been received. In our opinion, the frequency of verification is reasonable.

(b) In our opinion the procedures for verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) In our opinion the inventory records are being properly maintained by the Company. Discrepancies between the physical and book stocks, which were not significant, have been properly dealt with in the books of accounts.

3. The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956. Accordingly, clauses 4(iii) (b) to (d) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, taking into consideration the explanation that some purchases are special in nature for which comparative quotations from suitable alternative sources is not available, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal control system.

5. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act 1956 have been duly entered in the register required to be maintained in pursuance of Sec. 301 of the Companies Act 1956. The transaction made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices of such goods, or prices of which transactions for similar items have been made with other parties.

6. The Company has not accepted any deposits from the public falling within the purview of Section 58A and 58AA or any other relevant provisions of the Act.

7. The Company has an internal audit system commensurate with its size and nature of its business.

8. Cost records and accounts as prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, prima-facie is being maintained by the company. Though we have examined such books and records, we have not made any detailed examination with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and as per the records of the company examined by us, we are of the opinion that the company is regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, custom duty, cess, service tax and any other material statutory dues with the appropriate authorities. There are no outstanding undisputed amounts in respect of such statutory dues as at 31st March, 2012 for a period of more than six months from the date they became payable. As explained to us the company has no over due liability towards investor education and protection fund, wealth tax and excise duty.

(b) The disputed statutory dues have not been deposited on account of matters pending before appropriate authorities are as under:



Name of the Nature of Amount Forum where the Statute Dues (Rs. dispute is Lakhs) pending

Bhatpara Municipality Municipal Taxes 53.10 REVIEW BOARD

Land Revenue 82.46

ESI Act ESI dues 260.65 ESI COURT

Central Sales Sales Tax 27.11 ACCT Tax 1956 & West Bengal Sales Tax Act, 0.52 HIGH COURT 1994 1.12 DCCT

456.95 WBCTA & RB

36.88 SJCCT

10. The company has no accumulated loss and has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11. According to explanations and information obtained and based on our examination of the records the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

12. On the basis of our examination of the books and records of the company and according to information and explanations given to us the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. No provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/ societies are applicable to the company.

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

15. The company has not given any guarantee for loans taken by others from Banks or Financial Institutions during the year.

16. According to information and explanations obtained and on the basis of examination of the books and records, the company has taken term loan during the financial year 2011-2012 and applied for the purpose for which the loan was obtained from Bank.

17. An overall examination of the balance sheet of the company and as per information and explanations obtained, no funds raised on short-term basis have been used for long-term investments.

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

19. The company has not issued any debentures during the year and neither does it have any debentures outstanding at the year-end.

20. The company has not raised any money by way of public issue during the year.

21. While conducting an examination of the books and records of the company in accordance with the generally accepted auditing practices in India, and according to all information and explanations given to us, we have not come across any fraud on or by the company, noticed or reported during the year.

For D. P. Sen & Co. Chartered Accountants FRN 301054 E

S. K. Nayak Partner Membership No. 58711

Place : Kolkata

Dated: August 13th 2012.

 
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