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Auditor Report of Bajaj Hindusthan Sugar Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of BAJAJ HINDUSTHAN SUGAR LIMITED

("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the Financial Statements

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, 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 provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of the appropriate accounting policies; making judgements 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 fair presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made 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 disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of 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 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 March 31, 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of matter

1. We draw attention to note 36 (I) (a) (iv) and note 40 of the accompanying financial statements in respect of contingency related to recompense payable in lieu of bank sacrifice, the outcome of which is materially uncertain and cannot be determined currently.

2. As stated in note 42 of the accompanying financial statements, the Company carries investment of Rs. 693.72 crore by way of beneficial interest in trust. Also, Company has investment of Rs. 720.52 crore in Preference shares and Debentures of Phenil Sugars Limited. The realisable value of these investments has reduced substantially. For the reasons stated in the notes and in view of long term nature of these investments, management does not expect any provision for permanent diminution in value of these investments.

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.

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

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

d. In our opinion, the aforesaid financial statements comply with the accounting standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

f. With respect to the other matters to be included in the Auditor's Report in accordance with Rules 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 36(I)(a) to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts that require provision under any law or accounting standards for which there were any material foreseeable losses.

iii. There were no amounts which are required to be transferred to the Investor Education and Protection Fund by the Company during the year.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE

i) In respect of its Fixed Assets :

a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

ii) In respect of its inventories:

a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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 inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii) On the basis of the audit procedures applied by us, and according to the information and explanations given to us on our enquiries on this behalf and records produced to us for our verification, the Company has not given loans and advances to companies covered in the register maintained under Section 189 of the Act.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business for the purchases of inventories and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control system.

v) According to the information and explanations given to us, the Company has not accepted any deposits within the meaning of provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. Therefore, the provisions of Clause (v) of paragraph 3 of the Order are not applicable to the Company.

vi) To the best of our knowledge and as explained, the Company has maintained the cost records specified under Companies (Cost Records and Audit) Rules, 2014 issued under sub Section (1) of Section 148 of the Act, in respect of Company's product to which the said rules are made applicable and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate.

vii) In respect of Statutory dues :

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues applicable to it have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2015 for a period of more than six months from the date of becoming payable.

b) On the basis of our examination of accounts and documents on records of the Company and information and explanations given to us upon enquiries in this regard, the disputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and Excise Duty/Cess not deposited with the appropriated authorities are as under:

Name Nature Amount Period Forum where dispute is of statute of dues Rs in pending crore) Central Sales Tax, 2.80 Various Deputy/ Joint Sales Tax VAT & Years from Commissioner/ Act, 1956, Entry Tax 1997-98 to Commissioner and Sales 2013-14 (Appeals) TaxAct/ 57.50 Various Sales Tax VAT Act of Years Appellate Various 1982-83 to Tribunal states 2013-14 3.52 Various High Court Years from 1989-90 to 2010-11 Central Excise and 1.26 Various Commissioner Excise Service Years from of Central Act, 1944 Tax 1981-82 to Excise (Appeals) 2012-13 18.74 Various Central Excise Years from and Service tax 2002-03 to Tribunal 2012-13 0.31 Various High Court Years from 1981-82 to 2010-11 5.59 Various Supreme Court Years from 2004- 05 to 2005- 06

Income Income 9.59 Assessment Commissioner Tax Tax Years 2006-07 of Income Tax Act, 1961 & 2007-08 (Appeal) 8.90 Various Commissioner Assessment of Income Tax Years from (Appeal) 2010-11 to 2015-16 (TDS)

Total 108.21

c) There were no amounts which are required to be transferred to the Investor Education and Protection Fund by the Company during the year.

viii) The Company's accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

ix) Based on our audit procedures, information and explanations given by the management and considering the corrective action plan for restructuring of existing credit facilities of the Company approved under JLF route in accordance with the applicable framework and guidelines issued by RBI, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks. The Company has not issued debentures.

x) In our opinion and according to the information and explanations given to us, the Company has given guarantee for loans taken by subsidiary/ associate from Banks. The terms and conditions where of in our opinion are not prima facie prejudicial to the interest of the Company.

xi) Based on the information and explanation given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we have not come across any instance of material fraud on or by the Company, noticed or reported during the period, nor have been informed of such case by the management.

For Chaturvedi & Shah Chartered Accountants Registration No.: 101720W Amit Chaturvedi Partner Membership No. 103141

Place: Mumbai Dated: May 28, 2015




Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of BAJAJ HINDUSTHAN LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Prof t and Loss and Cash Flow Statement for the eighteen months period then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

b) in the case of the Statement of Prof t and Loss, of the loss of the Company for the period ended on that date; and

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

Report on Other Legal and Regulatory Requirements

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

2. As required by 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 Balance Sheet, Statement of Prof t 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 Prof t 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, read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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

ANNEXURE REFERRED TO IN INDEPENDENT

AUDITOR''S REPORT

RE: BAJAJ HINDUSTHAN LIMITED (''THE COMPANY'')

[Referred to in paragraph (1) under the heading ("Report on Other Legal and Regulatory Requirements") of our Report of even date.]

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

b) As explained to us, all the foxed assets have been physically verified by the management in a phased periodical manner as per regular programme of verification, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification;

c) In our opinion, the Company has not disposed off substantial part of its fixed assets during the period and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) As explained to us, the inventory has been physically verified by the management at reasonable intervals, during the period;

b) As explained 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) According to the inventory records produced to us for our verification, we are of the opinion that the Company is maintaining proper records of inventory. The differences between the physical verification of inventories, as compared to book records, though not material, have been properly dealt with in the books of account.

3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has given unsecured loans to three subsidiary companies. In respect of the said loans, the maximum amount outstanding at any time during the period is Rs. 1097.56 crore and the year end balance is Rs. 1097.56 crore;

b) In our opinion and according to information and explanations given to us, the rate of interest, where applicable and the other terms and conditions of the loans given by the Company, are not, prima facie prejudicial to the interest of the Company;

c) The principal amounts are repayable on demand and there is no repayment schedule. The interest is payable on demand;

d) In respect of said loans, the interest is payable on demand and therefore the question of overdue amount doesn''t arise;

e) The Company has not taken any loan during the period from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system 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. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. In respect of contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) On the basis of the audit procedures applied by us, and according to the information and explanations given to us on our enquiries on this behalf and the records produced to us for our verification, the contracts or arrangements that need to be maintained under Section 301 of the Companies Act, 1956 have been so entered;

b) The transaction so entered, aggregating in excess of Rs. 5,00,000/- in respect of each party during the period, have been, in our opinion, as per the information and explanations given to us, made at prices, which are reasonable having regard to the prevailing market prices available at which transactions for similar goods have been made with other parties at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued under Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposit accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of Company''s product to which the said rules are made applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate.

9. In respect of statutory dues:

a) According to the records of the Company, the Company has been generally regular in depositing with statutory authorities, undisputed statutory dues, including provident fund, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding, as at March 31, 2014 for a period of more than six months from the date they became payable.

b) On the basis of our examination of documents on records of the Company and information and explanations given to us upon our inquiries in this regard, the disputed amounts payable in respect of Income tax, Sales tax, Wealth tax, Service tax, Customs duty and Excise Duty/Cess not deposited with the appropriate authorities are as under:

Name Nature Amount Period Forum where of the of ( Rs. in for dispute is Statute Dues crore) which pending amount relates

Central Sales 15.57 Various Deputy/Joint Sales Tax, years from Commissioner/ Tax Act, VAT 1997-98 Commissioner 1956 and to (Appeals) and Entry 2012-13

Sales Tax Tax Act/VAT Act of various states

44.36 Various Sales Tax years from Appellate 1982-83 Tribunal to 2012-13

1.80 Various High Court years from 1989-90 to 2009-10

Central Excise 5.30 Various Commissioner Excise and years from of Central Act, Service 1981-82 to Excise 1944 Tax 2012-13 (Appeals)

19.29 Various Central Excise years from and Service 1981-82 to Tax Appellate 2011-12 Tribunal

0.93 Various High Court years from 1989-90 to 2009-10

12.42 Various Supreme Court years from 2004-05 to 2005-06

Total 99.67

10. The Company has accumulated losses at the end of the financial period, which are less than fifty percent of its net worth. The Company has incurred cash losses during the period covered under the audit, but has not incurred cash losses in the immediately preceding financial year.

11. Based on the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks. The Company has not issued debentures

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

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

14. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

15. The Company has given guarantee for loans taken by its erstwhile subsidiary/associate from banks. The terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the Company.

16. Based on the information and explanation given to us by the management, the term loans were applied for the purpose for which the loans were raised.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made during the period any preferential allotment of shares to Companies, firms, parties covered under register maintained under Section 301 of the Companies Act, 1956.

19. In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during the period covered by our report. Accordingly, provisions of clause (xix) of paragraph 4 of the Order are not applicable.

20. The Company has not raised any money by public issues during the period.

21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we have not come across any instance of material fraud on or by the Company, noticed or reported during the period, nor have been informed of such case by the management.



For and on behalf of

CHATURVEDI & SHAH

Firm Registration No. 101720W

Chartered Accountants



Amit Chaturvedi

Partner

Membership No. 103141

Place: Mumbai

Date: May 16, 2014


Sep 30, 2012

We have audited the attached Balance Sheet of BAJAJ HINDUSTHAN LIMITED (''the Company'') as at September 30, 2012, the Statement of Profit and Loss and the Cash Flow Statement 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.

1. We have 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.

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

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

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

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

c) The Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the mandatory 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 September 30, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on September 30, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f) 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 present a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2012;

(ii) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE RE: BAJAJ HINDUSTHAN LIMITED (THE COMPANY'')

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

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner as per regular programme of verification, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification;

c) In our opinion, the Company has not disposed of substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) As explained to us, the inventory has been physically verified by the management at reasonable intervals, during the year;

b) As explained 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) According to the inventory records produced to us for our verification, we are of the opinion that the Company is maintaining proper records of inventory, if any, referred to above, as compared to book records, though not material, have been properly dealt with in the books of account.

3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has given unsecured loans to three subsidiary companies of which one of the subsidiary company was merged with the Company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 1,018.73 crore and the year end balance is Rs.740.70 crore;

b) In our opinion and according to the information and explanations given to us, the rate of interest, where applicable and the other terms and conditions of the loans given by the Company, are not, prima facie prejudicial to the interest of the Company;

c) The principal amounts are repayable on demand and there is no repayment schedule. The interest is payable on demand;

d) In respect of said loans, the same is repayable on demand and therefore the question of overdue amount doesn''t arise;

e) The Company has not taken any loan during the year from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system 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. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956:

a) On the basis of the audit procedures applied by us, and according to the information and explanations given to us on our enquiries on this behalf and the records produced to us for our verification, the contracts or arrangements that need to be maintained under Section 301 of the Companies Act, 1956 have been so entered;

b) The transaction so entered, aggregating in excess of Rs. 5,00,000/- in respect of each party during the year, have been, in our opinion, as per the information and explanations given to us, made at prices, which are reasonable having regard to the prevailing market prices available at which transactions for similar goods have been made with other parties at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued under section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposit accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of Company''s product to which the said rules are made applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate.

9. In respect of statutory dues:

a) According to the records of the Company, the Company has been generally regular in depositing with statutory authorities, undisputed statutory dues, including Provident Fund, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding, as at September 30, 2012 for a period of more than six months from the date they became payable;

b) On the basis of our examination of documents on records of the Company and information and explanations given to us upon our inquiries in this regard, the disputed amounts payable in respect of Income tax, Sales tax, Wealth tax, Service tax, Customs duty and Excise Duty/Cess not deposited with the appropriate authorities are as under:

Name Nature Amount Period Forum where of the of (Rs. in for dispute is Statute Dues crores) which pending amount relates

Central Sales 25.34 Various Deputy/Joint Sales Tax, years from Commissioner/ Tax Act, VAT 1997-98 Commissioner 1956 and to 2011- (Appeals) and Entry 12 State Tax Sales Tax Act/VAT Act of various states

1.23 Various Sales Tax years from Appellate 1982-83 Tribunal to 2011-12

0.43 Various High Court years from 1989-90 to 2006-07

Central Excise 3.02 Various Commissioner Excise and years from of Central Act, Service 1981-82 to Excise 1944 Tax 2011-12 (Appeals)

26.38 Various Central Excise years from and Service 1981-82 to Tax Appellate 2010-11 Tribunal

Total 56.40

10. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year

11. Based on the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

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

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order 2003, (as amended) are not applicable to the Company

14. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

15. The Company has given guarantee for loans taken by its one subsidiary company from banks; the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the Company

16. Based on the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

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

19. In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during the period covered by our report. Accordingly, provisions of clause (xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable.

20. The Company has raised monies by way of right issue of equity shares during the year. We have verified the end use of monies raised by rights issues of equity shares and the same has been disclosed in Note 41.

21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we have not come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have been informed of such case by the management.

For and on behalf of

CHATURVEDI & SHAH

Firm Registration Number : 101720W

Chartered Accountants

Amit Chaturvedi

Partner

Membership No. 103141

Place: Mumbai

Date: November 26, 2012

 
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