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Auditor Report of Ashapura Minechem Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Ashapura Minechem 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 the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financial position and financial performance 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 of 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.

Auditors' Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors' 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 auditors consider 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 control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 of the loss and its cash flows for the year ended on that date.

Other Matters

We did not audit the financial statements of three branches included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs.412,240,612 as at 31st March 2015 and total revenues of Rs. 72,986,563 for the year ended on that date, as considered in the standalone financial statements. The financial statements of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not modified in respect of this matter.

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 terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in clause 3 and 4 of the Order, to the extent possible.

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 purpose of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The reports on the accounts of three branch offices of the Company audited under section 143 (8) of the Act by branch auditors have been sent to us and have been properly dealt with by us in preparing this report.

d) 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;

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

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

g) With respect to the other matters to be included in the Auditors' 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 explanation given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements. Refer note no. 25, 26 and 36;

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 the amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO AUDITORS' REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that:

1 In respect of fixed assets:

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

b. The fixed assets were physically verified by the management at reasonable intervals in a phased manner in accordance with a programme of physical verification. No discrepancies were noticed on such verification.

2 In respect of inventories:

a. The inventories were physically verified by the management at reasonable intervals during the year.

b. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification carried out by the management of the Company.

3 The Company has granted unsecured loans to the companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

Since no terms and conditions of these loans are stipulated, we cannot offer any comments as to the repayment of principal amount or overdue amounts, if any. The receipts of interest on these loans are regular.

4 There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. However, the same needs to be strengthened in certain functional areas. During the course of our audit, no major weakness has been noticed in the internal controls.

5 The Company has not accepted any deposits within the meaning of section 73 to 76 of the Companies Act, 2013 and the rules framed thereunder.

6 We have broadly reviewed the cost records maintained by the Company pursuant to Section 148(1) of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7 In respect of statutory and other dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other statutory dues, to the extent applicable, with the appropriate authorities during the year. There are no undisputed statutory dues outstanding for a period of more than six months from the date they became payable.

b. There are no statutory dues, which have not been deposited on account of dispute except for the followings:

Nature of Statute in lacs Dues

Value Added Tax Kerala VAT Act 8.23

Value Added Tax Andhra Pradesh 16.12

Value Added Tax Act

Value Added Tax Gujarat Value Added Tax Act 30.57

Service Tax Service Tax Rules 6.05

141.79

Income Tax Income Tax Act 1,403.32

Nature of Relevant Forum where dispute Dues Year is pending

Value Added Tax 2007-08 Appellate Tribunal

Value added Tax 2006-07 to The Commercial Tax Officer 2009-10

Value Added Tax 2009-10 to The Assistant Commissioner 2013-14 of VAT

Service Tax 2008-09, 2009-10 CESTAT - Ahmedabad

Income Tax 2007-08 Gujarat High Court 2008-09 2010-11 The Commissioner of Income Tax (Appeals)

c. The amounts required to be transferred to Investor tEducation and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

8 The Company has accumulated losses as at the end of the financial year exceeding its entire net worth. The Company has incurred cash losses during the current year, but not in the immediately preceding financial year.

9 The Company has not defaulted in repayment of dues to banks and financial institutions except for the dues of certain banks in respect of losses and liabilities for foreign currency derivatives transactions which are disputed by the Company as stated in note no. 25 and to the extent the amounts stated under note no. 6 and 7. The Company has not obtained any borrowings from any financial institutions or by way of debentures.

10 The terms and conditions on which the Company has given guarantees for loans taken by its subsidiaries, associates and a joint venture company from banks are, prima facie, not prejudicial to the interest of the Company.

11 Terms loans obtained by the Company have been applied for the purpose for which they were obtained.

12 To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For SANGHAVI & COMPANY

Chartered Accountants FRN : 109099W

sd/-

MANOJ GANATRA

Partner

Membership No. 043485

Mumbai 26th May, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Ashapura Minechem Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2014 and the statement of Profit & 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 recognition and measurement principles laid down in the Companies (Accounting Standards) Rules, 2006 [which continue to be applicable in respect of section 133 of the Companies Act, 2013 in terms of general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs] as per Section 211(3C) 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.

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 auditors'' 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 auditors consider 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 company''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 qualified audit opinion.

Basis for Qualified Opinion

Reference is invited to -

* note no. 25(ii) in respect of write-back and non-provision for losses on foreign currency derivatives transactions and certain loans in connection thereto in the earlier years aggregating to Rs. 22,686.91 (27,779.75) lacs;

* note no. 25(iii) in respect of non-provision of foreign currency derivatives losses of Rs. Nil (611.49) lacs; and thereby overstatement of the net profit in the financial statements by Rs. Nil (611.49) lacs and overstatement of reserves and surplus by Rs. 22,686.91 (28,391.24) lacs.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, give the information required by the Act in the manner so required 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 Profit and Loss Statement, 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 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) 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 reports of Branch Auditors on the accounts of the branches not audited by us have been forwarded to us as required by clause (c) of sub-section (3) of section 228 and the same have been adequately dealt with while preparing this reports;

d) 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;

e) 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 [which continue to be applicable in respect of section 133 of the Companies Act, 2013 in terms of general circular 15/ 2013 dated 13th September 2013 of the Ministry of Corporate Affairs];

f) On the basis of 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 Companies Act, 1956;

g) 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 to be paid, no cess is due and payable by the Company.

ANNEXURE TO AUDITORS'' REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date) On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that:

1 In respect of fixed assets:

a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. Fixed assets were physically verified during the year by the management at reasonable intervals in a phased manner in accordance with a programme of physical verification. According to information and explanations given to us, no material discrepancies were noticed on such verification.

c. There was no substantial disposal of fixed assets during the year.

2 In respect of inventories:

a. The inventories were physically verified by the management at reasonable intervals during the year.

b. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c. The company has maintained proper records of its inventories and as informed to us, no material discrepancies were noticed on physical verification carried out by the company.

3 In respect of loans granted or taken to/from companies, firms or other parties in the register maintained under section 301 of the Companies Act, 1956:

a. The company has granted unsecured loans (excluding trade advances) to the companies covered in the register maintained under section 301 of the Companies Act, 1956. The number of companies to which loans are granted, are three and the amount involved in the transactions is Rs. Nil and the year-end balances were Rs. 6,117.39 lacs.

b. The rate of interest and other terms and conditions of loans given by the company, wherever stipulated, are prima facie not prejudicial to the interest of the company.

c. Since no stipulations as to the recovery of principal amount as well as payment of interest are made for the loans granted as stated in (a) above, we cannot offer any comments for regularity of payments or overdue amounts, if any.

d. The company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4 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 and services. During the course of our audit, no major weakness has been noticed in the internal controls. There are, however, certain operational areas, which needs improvement in respect of internal controls.

5 In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956:

a. Based on the audit procedures applied by us and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section.

b. According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are prima facie, reasonable having regard to the prevailing market prices at the relevant time, wherever such comparison is possible.

6 The company has not accepted any deposits within the meaning of section 58A and 58AA of the Companies Act 1956 and the rules framed there under.

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

8 We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9 In respect of statutory and other dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education & Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other statutory dues, to the extent applicable, with the appropriate authorities during the year.

b. There are no undisputed statutory dues outstanding for a period of more than six months from the date they became payable except for tax deducted at source Rs. 0.16 lacs.

c. There are no statutory dues as prescribed under the clause, which have not been deposited on account of any dispute except for the followings:

Nature of Name of the Statute Rs. in lacs Relevant Dues Year

Value Added Tax Kerala Commercial Tax Act 5.67 2007-08

Value Added Tax Andhra Pradesh 16.12 2006-07 to Value Added Tax Act 2009-10

Service Tax Service Tax Rules 6.05 2008-09, 2009-10

Income Tax Income Tax Act 1,403.32 2010-11

Nature of Forum where dispute Dues is pending

Value Added Tax The Dy Commissioner of Sales Tax (Appeals)

Value Added Tax The Commercial Tax Officer

Service Tax CESTAT - Ahmedabad

Income Tax The Commissioner of Income Tax (Appeals)

10 The company has accumulated losses as at the end of the financial year exceeding its entire net worth. The company has not incurred cash losses during the current year or in the immediately preceding financial year.

11 Based on our audit procedures and the information and explanations given to us, the company has not defaulted in repayment of dues to banks and financial institutions except for the dues of certain banks in respect of losses on foreign currency derivatives transactions and certain loans in connection thereto are unpaid and being disputed by the company as stated in note no. 25 and to the extent the amounts stated under notes no. 6 and 7. The company has not obtained any borrowings by way of debentures.

12 The company has not granted loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13 In our opinion, the company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) are not applicable to the company.

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

15 The terms and conditions on which the company has given guarantees for loans taken by the subsidiary, associates and joint venture companies from banks and financial institutions are, prima-facie not prejudicial to the interest of the company.

16 In our opinion, the term loans raised have been applied for the purpose for which they were raised.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the company, funds raised on short-term basis including increase in current liabilities have been used for long-term investment.

18 The company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act 1956 except for allotment of 4,000,000 equity shares on preferential basis upon conversion of equity warrants to a company in which some of the directors are interested in accordance with the guidelines issued by the Securities and Exchange Board of India in this regard.

19 The company did not have any outstanding debentures during the year.

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

21 To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year except for a fraud on the company by an employee against whom the company has initiated necessary legal actions, the amount of the said fraud is unascertainable.

For SANGHAVI & COMPANY Chartered Accountants FRN : 109099W

sd/- MANOJ GANATRA Partner Membership No. 043485 Mumbai 29th May, 2014


Mar 31, 2012

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

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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors' 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 & 5 of the said order.

2. Further to our comments in the annexure referred to in paragraph (I) 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 purpose of our audit;

(ii) In our opinion, proper books of accounts as required by the law have been kept by the company so far as appears from our examination of those books;

(iii) The reports of Branch Auditors on the accounts of the branches not audited by us have been forwarded to us as required by clause (c) of sub-section (3) of section 228 and the same have been adequately dealt with while preparing this report;

(iv) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(v) In our opinion, the Balance Sheet, Profit & 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, to the extent applicable;

(vi) Based on the written representations received from the directors of the Company and taken on the record by the Board of Directors, we report that no director is disqualified as on 31st March, 2012 from being appointed as director under clause (g) of sub-section (I) of section 274 of the Companies Act 1956;

(vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to -

- note no. 25 (i) in respect of write-back and non- provision for losses on foreign currency derivatives transactions and certain loans in connection thereto in the earlier years aggregating to Rs. 39,436.76 lacs;

- note no. 25(H) in respect of non-provision of foreign currency derivatives losses of Rs. 3,925.27 lacs; and

- note no. 25(iii) in respect of non-provision for losses on foreign currency derivatives transactions by marking them to market (MTM) aggregating to Rs. 3,131.20 lacs (previous year Rs. 3,084.28), and thereby overstatement of the net profit in the financial statements by Rs. 13,972.19 lacs and overstatement of reserves and surplus by Rs. 43,408.95 lacs.

and read with all the notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(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 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 cash flows of the Company for the year ended on that date.

Annexure referred to in paragraph I of the report of even date of the Auditors to the members of ASHAPURA MINECHEM LIMITED on the accounts for the year ended 31n March, 2012.

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that:

1 In respect of fixed assets:

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

b. Fixed assets were physically verified during the year by the management at reasonable intervals in a phased manner in accordance with a programme of physical verification. According to information and explanations given to us, no material discrepancies were noticed on such verification.

c. There was no substantial disposal of fixed assets during the year.

2 In respect of inventories:

a. The inventories were physically verified by the management at reasonable intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company has maintained proper records of its inventories and as informed to us, no material discrepancies were noticed on physical verification carried out by the Company.

3 In respect of loans granted or taken to/from companies, firms or other parties in the register maintained under section 301 of the Companies Act, 1956:

a. The Company has granted unsecured loans (excluding trade advances) to the companies covered in the register maintained under section 301 of the companies Act, 1956. The number of companies to which loans are granted, are four and the amount involved in the transactions is t 1,215.80 lacs and the year-end balances were Rs. 7,141.50 lacs.

b. The rate of interest and other terms and conditions of loans given by the company, wherever stipulated, are prima facie not prejudicial to the interest of the company except that no interest is charged on the loans to a wholly owned subsidiary company, aggregating to Rs. 1,979.06 lacs.

c. Since no stipulations as to the recovery of principal amount as well as payment of interest are made for the loans granted as stated in (a) above, we can not offer any comments for regularity of payments or overdue amounts, if any.

d. The Company has taken unsecured loans from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. The number of parties from whom such loans are taken were one and the amount involved in the transactions and the year-end balance are Rs. 2,000.00 lacs and t Nil respectively.

e. The rate of interest and other terms and conditions of loans taken by the company, are prima facie not prejudicial to the interest of the company.

f. The repayments of the loans taken by the Company were regular.

4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory and 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 controls. There are certain operational areas, which needs improvement for which the company is taking necessary steps.

5 In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956:

a. Based on the audit procedures applied by us and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section.

b. According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are prima facie, reasonable having regard to the prevailing market prices at the relevant time, wherever such comparison is possible.

6 The company has not accepted any deposits within the meaning of section 58A and 58AA of the Companies Act 1956 and the rules framed there under.

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

8 The Companies (Cost Accounting Records) Rules 2011 have been applicable to the Company w.e.f. the financial year 2011-2012. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed cost records have been maintained.

We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9 In respect of statutory and other dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education & Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other statutory dues, to the extent applicable, with the appropriate authorities during the year.

b. There are no undisputed statutory dues outstanding for a period of more than six months from the date they became payable.

c. There are no statutory dues as prescribed under the clause, which have not been deposited on account of any dispute except for the followings:

Nature of Name of the Statute Rs. in lacs Relevant Forum where dispute Dues Year is pending

Value Added Tax Kerala Commercial Tax Act 5.67 2007-08 The Dy Commissioner of Sales Tax (Appeals)

Value Added Tax Andhra Pradesh Value Added Tax Act 16.12 2006-07 to 2009-10 The Commercial Tax Officer

Custom Duty Central Excise & Custom 28.75 2009-2010 The Custom Officer

Service Tax Service Tax Rules 6.05 2008-09, 2009-10 CESTAT - Ahmedabad

Baraya Gram Panchayat Tax Gram Panchayat 15.00 2010-11 District Development Officer -Kutch

10 The Company has accumulated losses as at the end of the financial year exceeding its entire net worth. The Company has not incurred cash losses during the current year. However, the Company has incurred cash losses in the immediately preceding financial year.

11. Based on our audit procedures and the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions except for the dues of certain banks in respect of losses on foreign currency derivatives transactions and certain loans in connection thereto are unpaid and being disputed by the Company as stated in note no. 25 and to the extent the amounts stated under notes no.4 and 6. The Company has not obtained any borrowings by way of debentures.

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

13 In our opinion, the company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) are not applicable to the company.

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

15 In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by the subsidiary, associates and joint venture companies from banks and financial institutions are, prima-facie not prejudicial to the interest of the company.

16 In our opinion, the term loans raised have been applied for the purpose for which they were raised.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short-term basis including increase in current liabilities have been used for long-term investment.

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

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

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

21 To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For SANGHAVI & COMPANY

Chartered Accountants

FRN: I09099W

sd/-

MANOJ GANATRA

Partner

Membership No. 043485

Place: Mumbai

Date : 30th May, 2012


Mar 31, 2011

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

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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors' 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 & 5 of the said order.

2. Further to our comments in the annexure referred to in paragraph (I) 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 purpose of our audit;

(ii) In our opinion, proper books of accounts as required by the law have been kept by the company so far as appears from our examination of those books;

(iii) The reports of Branch Auditors on the accounts of the branches not audited by us have been forwarded to us as required by clause (c) of sub-section (3) of section 228 and the same have been adequately dealt with while preparing this report;

(iv) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(v) In our opinion, the Balance Sheet, Profit & 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, to the extent applicable;

(vi) Based on the written representations received from the directors of the Company and taken on the record by the Board of Directors, we report that no director is disqualified as on 31st March, 2011 from being appointed as director under clause (g) of sub-section (I) of section 274 of the Companies Act 1956;

(vii) Attention is invited to:

- Note no. 3 regarding the status of the pending litigation in respect of Contracts of Affreightment (COA) with few shipping companies and consequent provision of t 56,202.88 lacs against these claims.

(viii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to -

- note no. 2(i), 2 (ii) and 2 (iii) in respect of write- back and non-provision for losses on foreign currency derivatives transactions and certain loans in connection thereto in the earlier years aggregating to t 9,766.98 lacs as well as in the current year X. 10,697.53 lacs; and

- note no. 2 (iv) in respect of non-provision for losses on foreign currency derivatives transactions by marking them to market (MTM) aggregating to t 3,084.28 lacs.

and thereby understatement of the net loss in the financial statements by K. 13,781.81 lacs and overstatement of reserves and surplus by * 23,548.79 lacs.

and read with all the notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) In the case of the 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 cash flows of the Company for the year ended on that date.

ANNEXURE TO AUDITORS' REPORT

Annexure referred to in paragraph I of the report of even date of the Auditors to the members of ASHAPURA MINECHEM LIMITED on the accounts for the year ended 31n March, 2011.

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that:

1 In respect of fixed assets:

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

b. Fixed assets were physically verified during the year by the management at reasonable intervals in a phased manner in accordance with a programme of physical verification. According to information and explanations given to us, no material discrepancies were noticed on such verification.

c. There was no substantial disposal of fixed assets during the year.

2 In respect of inventories:

a. The inventories were physically verified by the management at reasonable intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company has maintained proper records of its inventories and as informed to us, no material discrepancies were noticed on physical verification carried out by the Company.

3 In respect of loans granted or taken to/from companies, firms or other parties in the register maintained under section 301 of the Companies Act, 1956:

a. The Company has granted unsecured loans (excluding trade advances) to the companies covered in the register maintained under section 301 of the companies Act, 1956. The number of companies to which loans are granted, are four and the amount involved in the transactions is Rs. 804.72 lacs and the year-end balances were t 5,246.42 lacs.

b. The rate of interest and other terms and conditions of loans given by the company, wherever stipulated, are prima facie not prejudicial to the interest of the company except that no interest is charged on the loans to a wholly owned subsidiary company, aggregating to t 1,939,.88 lacs.

c. Since no stipulations as to the recovery of principal amount as well as payment of interest are made for the loans granted as stated in (a) above, we cannot offer any comments for regularity of payments or overdue amounts, if any.

d. The Company has taken unsecured loans from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. The number of parties from whom such loans are taken are two (subsidiary companies) and the amount involved in the transactions and the year-end balance are t 550.00 lacs and t 590.00 lacs respectively.

e. The rate of interest and other terms and conditions of loans taken by the company, are prima facie not prejudicial to the interest of the company.

f. Since there are no stipulations as to the repayment of principal amount for the loans taken, we cannot offer any comments for regularity of payments.

4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory and 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 controls. There are certain operational areas, which needs improvement for which the company is taking necessary steps.

5 In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956:

a. Based on the audit procedures applied by us and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section.

b. According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are prima facie, reasonable having regard to the prevailing market prices at the relevant time, wherever such comparison is possible.

6 The company has not accepted any deposits within the meaning of section 58A and 58AA of the Companies Act 1956 and the rules framed there under.

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

8 As informed to us, the Central Government has not prescribed maintenance of cost records under section 209 (I) (d) of the Companies Act, 1956.

9 In respect of statutory and other dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education & Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other statutory dues, to the extent applicable, with the appropriate authorities during the year.

b. There are no undisputed statutory dues outstanding for a period of more than six months from the date they became payable except for service tax payments of t. II 5.46 lacs, which are outstanding for a period of more than six months from the date they became payable as the company is in the process of seeking legal opinion as to the applicability of the service tax to its transactions.

c) There are no statutory dues as prescribed under the clause, which have not been deposited on account of any dispute except for the followings :

Nature of Name of the Statute Rs in lacs Relevant Dues Year

Income Tax (TDS) Income Tax Act 141.78 2008-09

2009-10

Value Added Tax Kerala Commercial Tax Act 8.74 2006-07

Value Added Tax Tamilnadu Value Added Tax Act 215.61 2009-10

Value Added Tax Andhra Pradesh Value Added Tax Act 16.12 2006-07 to 2009-10

Custom Duty Central Excise & Custom 28.75 2009-2010

Service Tax Serive Tax Rules 6.05 2008-09, 2009-10

Baraya Gram Panchayat Tax Gram Panchayat 15.00 2010-11

Nature of Dues Forum where dispute is pending

Income Tax (TDS) The Commissioner of Income Tax (TDS)

Value Added Tax The Sales Tax Appellate Tribunal

Value Added Tax The Commercial Tax Officer

Value Added Tax The Commercial Tax Officer

Custom Duty The Custom Officer

Service Tax CESTAT - Ahmedabad

Baraya Gram Panchayat Tax District Development Officer -Kutch

10 The Company has accumulated losses as at the end of the financial year exceeding its entire net worth. The Company has incurred cash losses during the current year as well as in the immediately preceding financial year (excluding exceptional items).

11 Based on our audit procedures and the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions except for the dues of certain banks in respect of losses on foreign currency derivatives transactions and certain loans in connection thereto are unpaid and being disputed by the Company as stated in note no. 2 of Schedule - P. The Company has not obtained any borrowings by way of debentures.

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

13 In our opinion, the company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) are not applicable to the company.

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

15 In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by the subsidiary, Associates and joint venture companies from banks and financial institutions are, prima-facie not prejudicial to the interest of the company.

16 In our opinion, the term loans raised during the year have been applied for the purpose for which they were raised.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short-term basis, prima facie, have not been used during the year for long-term investment.

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

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

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

21 To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For SANGHAVI & COMPANY

Chartered Accountants FRN: I09099W

sd/- MANOJ GANATRA

Partner Membership No. 043485

Place : Mumbai Date : 30th May, 2011

 
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