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Auditor Report of Cals Refineries Ltd.

Mar 31, 2016

Report on the Financial Statements

We have audited the accompanying financial statements of CALS REFINERIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2016, 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 management and Board of Directors of the Company are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (''the act'') with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with rule 7 of Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 management and Board of 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.

Basis of Qualified Opinion

Attention of the matters is invited to note no.27(d) of the notes to accounts regarding the financial statements of the company having been prepared on a Going Concern basis, not withstanding that due to continuous losses incurred by the company during the past years and current year, the accumulated losses of the Company have far exceeded its Net Worth resulting in negative net worth on Balance Sheet date. The company has written-off a substantial part of its Fixed Asset during the previous year. This situation indicates the existence of a material uncertainty that may cast a significant doubt on the company''s ability to continue as going concern.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the basis of Qualified Opinion paragraph 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:-

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2016;

b) in the case of the statement of Profit and Loss, of the loss for the period ended on that date; and

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

Emphasis of matter

Without qualifying our opinion we draw attention to:

(a) The Securities Exchange Board of India (SEBI) has initially put restriction on any further issue of equity shares or any other instruments convertible into equity shares or any other security by the Company for a period of ten years vide its interim order dated 21st September, 2011. In its final order dated 23rd October, 2013 the same order was upheld. The Company as on date of the final order has undergone such prohibition for approximately two years thus the restriction will be reduced effectively to eight years from the date of the final order. The Company is in appeal against the order of SEBI Dated 31st December, 2014 alleging siphoning of funds in Securities Appellate Tribunal (SAT). The matter is sub-judice and the impact, if any, of the outcome of the same cannot be ascertained at this stage.

(b) The company has share application money pending allotment for a period of more than two years and cannot issue shares in view of the Order of SEBI as aforesaid.

(c) Trade payables appearing in the books of accounts are subject to confirmation and reconciliation, if any. Consequent impact if any will be considered as and when determined.

(d) Re-opening of Assessment for F.Y 2007-08 (A.Y. 2008-09) U/s 148 of Income Tax Act, 1961, was initiated against the Company. The Company is contesting the case and the assessment proceedings under process. The matter is referred to Transfer Pricing Officer to determine the Arm length price for the International Transaction. The final order from the A.O as well the Transfer Pricing officer is awaited. The impact on the order will be considered as and when order received from the department.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of subsection (11) of section143 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 further 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 appears from our examination of those books;

c. the balance sheet, the statement of profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account;

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

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

(i) The Company has disclosed the impact of pending litigations on its financial positions in its standalone financial statements- Refer Note 19 to the financial Independent statements;

(ii) The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise

(iii) There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise

The Annexure referred to in our Independent Auditors'' Report of even date to the members of CALS REFINERIES LIMITED on the accounts of the company for the year ended 31st March, 2016.

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

(b) As explained to us, fixed assets have been physically verified by the management at regular intervals; as informed to us no material discrepancies were noticed on such verification;

(c) In our opinion and according to the information and explanations given to us, the title deeds of immovable property are held in the name of the company;

(ii) The nature of business of the Company does not require it to have any inventory. Hence, the requirement of clause (ii) of paragraph 3 of the said Order is not applicable to the Company;

(iii) As informed to us, the Company has not granted loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Hence clauses 3(iii) (a) to (c) of the order are not applicable to the Company.

(iv) In our opinion, and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security.

(v) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

(vi) As informed to us, the maintenance of cost records has not been specified by the Central Government under sub-section (1) of Section 148 of the Act, in respect of the activities carried on by the company.

(vii) (a) According to the information and explanations given to us and based on the records of the company examined by us, the company is regular in depositing the 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 any other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31, 2016 for a period of more than six months from the date on when they become payable;

(b) According to the information and explanations given to us and based on the records of the company examined by us, there are no dues of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty and Excise Duty which have not been deposited on account of any disputes.

(viii) According to the records of the company examined by us and as per the information and explanations given to us, the company has not taken any loans from any financial institutions, banks or debenture holder and hence the question of defaulting in repayment of dues does not arise.

(ix) According to the records of the company examined by us and as per the information and explanations given to us, the company has not raised moneys by way of initial public offer or further public offer including debt instruments and term Loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

(x) According to the records of the company examined by us and as per the information and explanations given to us, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion, the Company has not paid any managerial remuneration. Therefore, the provisions of clause 4 (xi) of the Order are not applicable to the Company.

(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

(xiii) According to the records of the company examined by us and as per the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) According to the records of the company examined by us and as per the information and explanations given to us, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.

(xv) According to the records of the company examined by us and as per the information and explanations given to us, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

(xvi) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

For VATSS & Associates,

Regn. No.017573N

Chartered Accountants

Suresh Arora

Place : New Delhi Partner

Date : 27.05.2016 Membership No: 90862


Mar 31, 2015

We have audited accompanying financial statements of CALS REFINERIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31,2015 and the Statement of Profit and Loss and Cash Flow Statement for the period then ended, and a summary of significant accounting policies and other explanatory information.

Management' Responsibility for the Financial Statements

The Company's Board of Directors are responsible for the matters stated in Section 134(5) of Companies Act, 2013 ("the Act") with respect to the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the provisions of the Act, the Accounting and Auditing standards and the matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

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

Basis of Qualified Opinion

Attention of the matters is invited to note no. 30 (d) of the notes to accounts regarding the financial statements of the company having been prepared on a Going Concern basis, not withstanding that due to continuous losses incurred by the company during the past years and current year, the accumulated losses of the Company have far exceeded its Net Worth resulting in negative net worth on Balance Sheet date. The company has written-off a substantial part of its Fixed Asset during the year. This situation indicates the existence of a material uncertainty that may cast a significant doubt on the company's ability to continue as a going concern.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the basis of Qualified Opinion paragraph, 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 31,2015;

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

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

Emphasis of matter

Without qualifying our opinion we draw attention to:

(a) In absence of any development in the project and withdrawal of the permissive possession of land. Cost of leasehold land Rs. 990.71 million (including cost of land development Rs. 196.91 million), civil work of factory building (included in capital work in progress) Rs.49.64 million, expenses incurred on the project which are 'Preoperative Expenses Pending Allocation' Rs. 432.51 million, 'Consultancy Fees' Rs. 65.62 million shown under 'Capital Work in Progress' and 'Capital Advances' Rs. 4,723.59 million shown under 'Loan and Advances' are written off.

(b) The Securities Exchange Board of India (SEBI) has issued a final order dated October 23, 2013 against the Company in the matter of "Market Manipulation using GDR Issues", which imposes a restriction on any further issue of equity shares or any other instruments convertible into equity shares or any other security by the Company for a period of ten years. As on date of order, the Company has undergone such prohibition as laid down in the order for approximately two year which means the restriction will be reduced effectively to eight years from the date of order. Further SEBI vide order dated 31/12/2014 has also raised a question of siphoning of funds for the benefit of promoters of the Company. The Company is in appeal against the aforesaid order of SEBI in Securities Appellate Tribunal (SAT). The matter is sub-judice and the impact, if any, of the outcome of the same cannot be ascertained at this stage.

(c) The Company had deferred expenses related to equity and GDR issues amounting to Rs. 246.24 million, which forms part of other non-current assets. With reference to the aforementioned order of SEBI and the embargo on the further issuance of equity or any equity convertible instruments by the Company, since there is no future economic benefit arising out of such expenses incurred during the previous years the expense has been written off in the current year.

(d) The company has share application money pending allotment for a period of more than one year and cannot issue shares or refund the money as instructed by SEBI in its order as mentioned in point (b) above.

(e) Trade payables appearing in the books of accounts are subject to confirmation and reconciliation, if any. Consequential impact, if any, will be considered as and when determined.

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 subsection (11) of 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the order, to the extent applicable.

2. As required by section 143(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 Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors, as on March 31,2015 and taken on record by the Board of Directors, we report that 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; and

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

1) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 22 to the financial statements;

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

3) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31st March 2015.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 1 of 'Report on other Legal and Regulatory Requirements' in our Report of even date on the accounts of CALS REFINERIES LIMITED for the year ended March 31,2015

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

(b) As explained to us, all fixed assets have been physically verified by the management at reasonable intervals during the year and no material discrepancies were noticed on such verification.

ii. The Company's nature of operations does not require it to hold inventories. Consequently, clause (ii) of the order is not applicable.

iii. As informed to us, the Company has not granted loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Act. Hence clauses 3(iii), (iii) (a) & (iii) (b) of the order are not applicable to the Company.

iv. 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 with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal control system.

v. During the year, the Company has not accepted any deposits. As such, the compliance with directives issued by the Reserve Bank of India and the provisions of section 73 and 78 the Act and the rules framed there under are not applicable.

vi. We have been informed that the Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Act.

vii. (a) According to the information and explanations given to us and on the basis of records produced before us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it, though there has been a slight delay in few cases. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at March 31,2015 for a period of more than six months from the date they became payable.

(b) There are no dues in respect of Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise duty, and cess that have not been deposited with appropriate authorities on account of any dispute.

(c) There is no dividend outstanding hence; clause 3 (vii) c is not applicable.

viii. The Company has accumulated losses at the end of the financial year exceeding fifty percent of its net worth. Further, the Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

ix. In our opinion and according to the information and explanations given to us, the Company has not taken any loans from any financial institutions, banks or debenture holders and hence the question of defaulting in repayment of dues does not arise.

x. According to the information and explanations given to us and the record examined by us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xi. There were no term loans taken during the year.

xii. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For Kanu Doshi Associates Chartered Accountants Firm Registration Number: 104746W

Jayesh Parmar Place : Mumbai Partner Date : 30.05.2015 Membership No: 45375


Mar 31, 2014

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

Management'' 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 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of 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.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 Profit and Loss, of the loss for the period ended on that date; and

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

Emphasis of matter

Without qualifying our opinion we draw attention to:

(a) We have considered the adequacy of disclosure made in Note No.30 in the notes to financial statements concerning the Company''s ability to continue as a going concern. The ability of the Company to continue to be a going concern significantly depends upon its ability to successfully arrange the balance funding and achieve financial closure to fund the refinery project.

(b) As better elucidated in Note 30 (c), in the view of the mutual non-fulfillment of contractual obligations arising out of company''s contracts with certain suppliers/contractors, a liabilities amounting to Rs. 477.49 million has not been accrued.

(c) As better elucidated in Note 30 (a), an advance of Rs. 4583.44 million was paid to a supplier of plant and machinery. The ability of the company to fulfill its contractual obligations cannot be presently determined and no adjustment with respect to such advance, that may result, has been made in the financial statements. The Company has also given advances amounting to Rs. 140.15 million to various suppliers/contractors in terms of agreements executed by the Company for implementation of refinery project. Such advances may not be recoverable in the event of non-fulfillment of contractual obligations by the Company,

(d) As better elucidated in Note 30 (d), the acquisition rights of the leasehold land, depends upon the arrangement of funds to meet company''s obligations and successful negotiation with WBIDC. The Company has entered into a tripartite agreement along with Haldia Development Authority (HDA) and West Bengal Industrial Development Corporation Limited (WBIDC). The Company was given permissive possession of the said land for a period of six months from the date of agreement, for the purpose of implementing the project. Since the company was not in the position to comply with these conditions it had requested WBIDC to extend the time limit. WBIDC had not acceded to the Company''s request and had withdrawn the permissive possession of land. The company has again requested WBIDC to allow time for clearance of the dues and extend the permissive possession till March 2014. However, the company, on going concern basis, has reflected land under fixed assets and lease payment liability towards the same under trade payables. The expenses incurred on land development (Rs. 196.91 million) and civil work (Rs. 49.64 million) which is included in cost of leasehold land and capital work in progress may not be recoverable.

(e) Expenses to the tune of Rs. 498.13 million reflected in Capital work in progress have been incurred by the Company apart from the expenses as mentioned above. We are unable to comment on the recoverability and future economic benefit from such expenses.

(f) The Securities Exchange Board of India (SEBI) has issued a final order dated October 23, 2013 against the Company in the matter of "Market Manipulation using GDR Issues", which imposes a restriction on any further issue of equity shares or any other instruments convertible into equity shares or any other security by the Company for a period of ten years. As on date of order, the Company has undergone such prohibition as laid down in the order for approximately two year which means the restriction will be reduced effectively to eight years from the date of order. Further, the aforesaid order has also raised a question of siphoning of funds for the benefit of promoters of the Company. The Company is in appeal against the aforesaid order of SEBI in Securities Appellate Tribunal (SAT). The matter is sub-judice and the impact, if any, of the outcome of the same cannot be ascertained at this stage.

(g) The Company had deferred expenses related to equity and GDR issues amounting to Rs. 246.24 million, which forms part of other non-current assets. With reference to the aforementioned order of SEBI and the embargo on the further issuance of equity or any equity convertible instruments by the Company, we are unable to comment on the future economic benefit arising out of such expenses incurred during the previous years.

The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003,("the order") as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said 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 Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of Companies Act, 2013.

e) On the basis of the written representations received from the directors, as on March 31, 2014 and taken on record by the Board of Directors, we report that 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 TO THE AUDITORS'' REPORT

Referred to in paragraph 1 of ''Report on other Legal and Regulatory Requirements'' in our Report of even date on the accounts of CALS REFINERIES LIMITED for the year ended March 31, 2014.

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

(b) As explained to us, all fixed assets have been physically verified by the management at reasonable intervals during the year and no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off a substantial part of the fixed assets.

ii. The Company''s nature of operations does not require it to hold inventories. Consequently, clause 4(ii) of the order is not applicable

iii. As informed to us, the Company has neither granted nor taken any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained, under section 301 of the Companies Act, 1956. Hence clauses (iii) (a) to (iii) (g) of paragraph 4 of the order are not applicable to the Company,

iv. 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 with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal control system.

v. The Company has not entered into contracts or arrangements referred to in section 301 of the Act. Accordingly, the provisions of clause (v) of paragraph 4 of the order are not applicable to the Company.

vi. During the year, the Company has not accepted any deposits from the public. As such, the compliance with directives issued by the Reserve Bank of India and the provisions of section 58A, 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

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

viii. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

ix. (a) According to the information and explanations given to us and on the basis of records produced before us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it, though there has been a slight delay in few cases. The Company has opted to pay its service tax dues under the VCES scheme of Service Tax. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at March 31, 2014 for a period of more than six months from the date they became payable.

(b) There are no dues in respect of Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise duty, and cess that have not been deposited with appropriate authorities on account of any dispute.

x. The Company'' has accumulated losses at the end of the financial year exceeding fifty percent of its net worth. Further, the Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

xi. According to the records of the Company examined by us and information and explanation given to us, the Company has not defaulted in repayment of dues to financial institution, bank or debenture holders as at the Balance Sheet date.

xii. According to the information and explanations given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company,

xiv. In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments hence the provisions of the clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company,

xv. According to the information and explanations given to us and the record examined by us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has not taken any term loan during the year,

xvii. On the basis of an overall examination of the Balance Sheet of the Company and according to the information and explanations given to us, in our opinion there are no funds raised on short-term basis, which have been used for long- term investment.

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

xix. The Company has not issued debentures during the financial year and hence, the question of creating securities in respect thereof does not arise.

xx. During the year, the company has not raised any money through Public Issue. Hence the clause 4(xx) of the order is not applicable.

xxi. On the basis of our examination and according to the information and explanation given to us, no fraud, on or by the Company, has been noticed or reported during the course of our audit.

For Kanu Doshi Associates

Chartered Accountants Firm Registration Number: 104746W Ankit Parekh Place : Mumbai Partner Date : 30th May, 2014 Membership No: 114622


Mar 31, 2013

Report on the Financial Statements

We have audited accompanying financial statements of CALS REFINERIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss and Cash Flow Statement for the period then ended, and a summary of significant accounting policies and other explanatory information. The financial statements for the year ended March 31, 2012 have been audited by another firm of Chartered Accountants. We have relied upon the same for the purpose of this report.

Management 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"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s 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 control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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, 2013;

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

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

Emphasis of matter

Without qualifying our opinion we draw attention to:

(a) We have considered the adequacy of disclosure made in Note No.30 in the notes to financial statements concerning the Company''s ability to continue as a going concern. The ability of the Company to continue to be a going concern significantly depends upon its ability to successfully arrange the balance funding and achieve financial closure to fund the refinery project.

(b) As better elucidated in Note 30 (c), in the view of the mutual non-fulfillment of contractual obligations arising out of company''s contracts with certain suppliers/contractors, a liabilities amounting to Rs. 432.12 million has not been accrued.

(c) As better elucidated in Note 30 (a), an advance of Rs. 4583.44 million was paid to a supplier of plant and machinery. The ability of the Company to fulfill its contractual obligations cannot be presently determined and no adjustment with respect to such advance, that may result, has been made in the financial statements. The Company has also given advances amounting to Rs. 140.15 million to various suppliers/ contractors in terms of agreements executed by the Company for implementation of refinery project. Such advances may not be recoverable in the event of non- fulfillment of contractual obligations by the Company.

(d) As better elucidated in Note 30 (d), the acquisition rights of the leasehold land, depends upon the arrangement of funds to meet company''s obligations and successful negotiation with WBIDC. The Company has entered into a tripartite agreement along with Haldia Development Authority (HDA) and West Bengal Industrial Development Corporation Limited (WBIDC). The Company was given permissive possession of the said land for a period of six months from the date of agreement, for the purpose of implementing the project. Since the Company was not in the position to comply with these conditions, it had requested WBIDC to extend the time limit. WBIDC had not acceded to the Company''s request and had withdrawn the permissive possession of land. The Company has again requested WBIDC to allow time for clearance of the dues and extend the permissive possession till March, 2014. However, the Company, on going concern basis, has reflected land under fixed assets and lease payment liability towards the same under trade payables. The expenses incurred on land development (Rs. 196.91 million) and civil work (Rs. 49.64 million) which is included in cost of leasehold land and capital work in progress may not be recoverable.

(e) Expenses to the tune of Rs. 433.84 million reflected in capital work in progress have been incurred by the Company apart from the expenses as mentioned above. We are unable to comment on the recoverability and future economic benefit from such expenses.

The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003,("the order") as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said 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 Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

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

Referred to in paragraph 1 of ''Report on other Legal and Regulatory Requirements'' in our Report of even date on the accounts of CALS REFINERIES LIMITED for the year ended March 31, 2013.

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

(b) As explained to us, all fixed assets have been physically verified by the management at reasonable intervals during the year and no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off a substantial part of the fixed assets.

ii. The Company''s nature of operations does not require it to hold inventories. Consequently, clause 4(ii) of the order is not applicable

iii. As informed to us, the Company has neither granted nor taken any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence clauses (iii) (a) to (iii) (g) of paragraph 4 of the order are not applicable to the Company.

iv. 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 with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal control system.

v. The Company has not entered into contracts or arrangements referred to in section 301 of the Act. Accordingly, the provisions of clause (v) of paragraph 4 of the order are not applicable to the Company.

vi. During the year, the Company has not accepted any deposits from the public. As such, the compliance with directives issued by the Reserve Bank of India and the provisions of section 58A, 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

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

viii. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

ix. (a) According to the information and explanations given to us and on the basis of records produced before us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it, though there has been a slight delay in few cases. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at March 31, 2013 for a period of more than six months from the date they became payable except as mentioned below:

Sr. Name of the Statute Nature of Amount in No. the dues Rs. (in million)

1. Finance Act, 1994 Service tax and 11.98 interest thereon

(b) There are no dues in respect of Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise duty, and cess that have not been deposited with appropriate authorities on account of any dispute.

x. The Company has accumulated losses at the end of the financial year exceeding fifty percent of its net worth. Further, the Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

xi. According to the records of the Company examined by us and information and explanation given to us, the Company has not defaulted in repayment of dues to financial institution, bank or debenture holders as at the Balance Sheet date.

xii. According to the information and explanations given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments hence the provisions of the clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xv. According to the information and explanations given to us and the record examined by us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has not taken any term loan during the year.

xvii. On the basis of an overall examination of the Balance Sheet of the Company and according to the information and explanations given to us, in our opinion there are no funds raised on short-term basis, which have been used for long- term investment.

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

xix. The Company has not issued debentures during the financial year and hence, the question of creating securities in respect thereof does not arise.

xx. During the year, the Company has not raised any money through Public Issue. Hence the clause 4(xx) of the order is not applicable.

xxi. On the basis of our examination and according to the information and explanation given to us, no fraud, on or by the Company, has been noticed or reported during the course of our audit.



For Kanu Doshi Associates Chartered Accountants

Firm Registration Number: 104746W

Ankit Parekh

Place : Mumbai Partner

Date : May 31, 2013 Membership No: 114622


Mar 31, 2012

1. We have audited the attached Balance Sheet of Cals Refineries Limited, (the 'Company') as at March 31, 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.

2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Without qualifying our opinion, we draw attention to:

a) Note No. 29 in financial statements which indicate that the Company has not yet tied up financing for balance funding of the project and has not been able to meet it contractual obligations under the project contracts. These conditions along with other matters as set forth in Note no. 29 indicates the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is significantly dependent on its ability to successfully arrange the balance funding and achieve financial closure to fund its refinery project, to fulfil all its contractual obligation and the successful implementation of the project.

b) Note No. 29a of Significant Accounting Policies and Notes to accounts : In view of the mutual non-fulfilment of contractual obligations arising out of the Company's contracts with certain suppliers/contractors, the Company has not accrued liability amounting to Rs. 406.44 million (net of Rs. 5,007.22 million, refer note no. 29 b). The ultimate performance of such contractual obligations and their impact on current liabilities cannot presently be determined and no adjustment that may result has been made in the financial statements for the year ended March 31, 2012. Our opinion on financial statements for the year ended March 31, 2011 included an emphasis on the same matter and such items aggregated to Rs. 5,361.96 million as on March 31, 2011.

c) Note No. 29c of Significant Accounting Policies and Notes to accounts : The Company has given advances amounting to Rs. 141.48 million (net of Rs. 169.92 million, refer note no. 29b and 29d) (as on March 31, 2011: Rs. 311.40 million)to various suppliers/contractors in terms of the agreements executed by the Company for the implementation of its refinery project. Such advances may not be recoverable in the event of non-fulfilment of the contractual obligations by the Company. The ability of the Company to fulfil its contractual obligations cannot presently be determined and no adjustment with respect to such advances, that may result, has been made in the financial statements for the year ended March 31, 2012. Our opinion on financial statements for the year ended March 31, 2011 included an emphasis on the same matter and such items aggregated to Rs. 8,250.77 million as on March 31, 2011.

d) Note No. 29d of Significant Accounting Policies and Notes to accounts : An advance of Rs. 4,583.44 million was paid to a supplier of Plant and Machinery. Subsequently the Company had entered in to a "Deed of Novation" with an affiliate of Hardt Group, who assumed the contractual obligations envisaged on the supplier under erstwhile agreement of plant and machinery. The ability of the Company to fulfil its contractual obligations cannot presently be determined and no adjustment with respect to such advance, that may result, has been made in the financial statements for the year ended March 31, 2012.

e) The Company entered into a tripartite agreement along with Haldia DevelopmentAuthority (HDA) and West Bengal Industrial Development Corporation Limited (WBIDC). The Company was given permissive possession of the said land for a period of six months from the date of the agreement, for the purpose of implementing the project. Since the Company was not in a position to comply with these conditions, it had requested WBIDC to extend the time limit. WBIDC had not acceded to the Company's request and had withdrawn the permissive possession of land. The Company has again requested WBIDC to allow time for clearance of the dues and extend the permissive possession till September 30, 2012.

The acquisition of rights in the leasehold land depends on the arrangement of funds to meet the Company's obligations and successful negotiation with WBIDC. The expenses incurred on land development and civil work amounting to Rs. 198.31 million and Rs. 49.64 million respectively is included in the cost of leasehold land and capital work in progress which may not be recoverable.

5. Further to our comments in the Annexure referred to in paragraph 4 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 financial statements dealt with by this report are in agreement with the books of account;

d. On the basis of written representations received from the directors, as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act;

e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act and the Rules framed there under and 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:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 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 to the Auditors' Report of even date to the Members of Cals Refineries Limited, on the financial statements for the year ended March 31, 2012

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) The Company does not have any inventory. Accordingly, the provisions of clause 4(ii) of the Order are not applicable.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii) (b) to (d) of the Order are not applicable.

(b) The Company has taken interest-free loan from one company covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year was Rs. 4.9 million and the year-end balance was Rs. 4.9 million.

(c) In our opinion, the terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(d) In respect of loans taken, the principal amount and interest amount are payable on demand in accordance with the terms and conditions.

(iv) There are no transactions pertaining to purchase of inventory and sale of goods and services during the year. In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets.

(v) The Company has not entered into contracts or arrangements referred to in Section 301 of the Act. Accordingly, the provisions of clause 4(v) of the Order are not applicable.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) The Company is not presently engaged in production, procuring and manufacturing of crude oil, gases (including Compressed Natural Gas or Liquefied Natural Gas and re- gasification thereof) or any other petroleum product and is accordingly not required to maintain cost records as prescribed by the Central Government under notification no G.S.R 686(E) dated October 8, 2002.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service-tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have been regularly deposited with the appropriate authorities. Undisputed amounts payable in respect thereof, which were outstanding at the year end for a period of more than six months from the date they became payable are as follows:

Name of Nature of Amount Period to Due Date Date of the statute the dues (Rs.in which the payment million) amount relates

Finance Service tax 44.52 upto June 5th of each Not paid Act, 1994 payable 2011 subsequent (Service month tax)

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) In our opinion, the Company's accumulated losses at the end of the financial year are less than fifty per cent of its net worth. Further the Company has incurred cash losses during the financial year covered by our audit however there was no cash loss in the immediately preceding financial year.

(xi) In our opinion, the company has not defaulted in repayment of dues to a bank. The Company has no dues payable to a financial institution or debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, the Company has not dealt in or trading in shares, securities, debentures and other investments during the year. However in respect of investments, the company has maintained proper records of the transactions and contracts and timely entries have been made therein. The investments have been held by the company in its own name

(xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

(xvi) The Company has not taken any term loans during the year.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii)The Company has made preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Arun K. Gupta & Associates

Chartered Accountants

Firm Registration No: 000605N

Sachin Kumar

New Delhi Partner

May 29, 2012 Membership No. 503204


Mar 31, 2011

1. We have audited the attached Balance Sheet of Cals Refineries Limited, (the 'Company') as at March 31, 2011, and also the Cash Flow Statement for the year ended on that date annexed thereto (collectively referred as the 'financial statements'). These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Without qualifying our opinion, we draw attention to:

a) Note 1 of Schedule 11 to the financial statements which indicates the existence of significant uncertainty about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is significantly dependent on its ability to successfully arrange the balance funding and achieve financial closure to fund its refinery project.

b) Note 2 of Schedule 11 to the financial statements. In view of the mutual non- fulfillment of contractual obligations arising out of the Company's contracts with certain suppliers/contractors, the Company has not accrued liability amounting to Rs. 5,361,960,970. The ultimate performance of such contractual obligations and their impact on current liabilities cannot presently be determined and no adjustment that may result has been made in the financial statements for the year ended March 31, 2011. Our opinion on financial statements for the year ended March 31, 2010 included an emphasis on the same matter and such items aggregated to Rs. 5,153,656,980 as on March 31, 2010.

c) Note 2 of Schedule 11 to the financial statements which indicates that the Company is in the process of negotiating an extension from the supplier for compliance of terms related to supply of plant and machinery and certain process units in respect of its refinery project. The Company has given advances amounting to Rs. 3,355,930,000 to such supplier in terms of the agreement executed by the Company for the said supply which will not be recoverable if the necessary extension is not granted by the supplier. In view of the ongoing negotiations with the supplier as mentioned above, the ultimate performance of the contractual obligations under the said agreement cannot presently be determined and no adjustment with respect to this advance, that may result, has been made in the financial statements for the year ended March 31, 2011.

d) Note 2 of Schedule 11 to the financial statements. The Company has given advances amounting to Rs. 311,400,048 to various suppliers/contractors in terms of the agreements executed by the Company for the implementation of its refinery project. Such advances may not be recoverable in the event of non-fulfillment of the contractual obligations by the Company. The ability of the Company to fulfill its contractual obligations cannot presently be determined and no adjustment with respect to such advances, that may result, has been made in the financial statements for the year ended March 31, 2011. Our opinion on financial statements for the year ended March 31, 2010 included an emphasis on the same matter and such items aggregated to Rs. 8,360,400,558 as on March 31, 2010.

5. As more fully explained in Note 13 of Schedule 11 to the financial statements, the Company has derecognized the provision for income-tax, service tax payable and tax deducted at source payable amounting to Rs. 56,165,790, Rs. 5,437,653 and Rs. 6,001,848 respectively and has not accrued interest for non-payment of tax deducted at source and income tax amounting to Rs. 218,407 and Rs. 2,389,182 respectively. In our opinion, these amounts should have been recognised as liabilities in the financial statements.

6. As more fully explained in Note 18 of Schedule 11 to the financial statements, the Company has included the exchange differences arising on reporting monetary assets and liabilities at closing rate, interest on outstanding statutory dues and certain indirect expenses not directly attributable to construction up to the year ended March 31, 2011 aggregating to Rs. 837,817,270 in the carrying amount of capital work in progress. In our opinion, these items are revenue in nature and accordingly should be recognized in the Profit and Loss Account. Our audit opinion on financial statements for the year ended March 31, 2010 was qualified on the same matter and such items aggregated to Rs. 814,931,602 up to the year ended March 31, 2010.

We further report that had the observations made by us in paragraph 5 and 6 above been considered, the net profit after tax for the year ended March 31, 2011 would have increased by Rs. 547,062,100 and the net profit after tax for the year ended March 31, 2010 would have increased by Rs. 502,958,525, reserves and surplus as of March 31, 2011 would have increased by Rs.614,528,840 and reserves and surplus as of March 31, 2010 would have increased by Rs.570,425,264, capital work in progress as of March 31, 2011 would have increased by Rs.899,984,884 and capital work in progress as of March 31, 2010 would have increased by Rs. 814,931,602, current liabilities as of March 31, 2011 would have increased by Rs.11,439,501 and current liabilities as of March 31, 2010 would have increased by Rs. Nil, provisions as of March 31, 2011 would have increased by Rs.346,920,936 and provisions as of March 31, 2010 would have increased by Rs.311,973,077, loans and advances as of March 31, 2011 would have increased by Rs. 5,437,653 and loans and advances as of March 31, 2010 would have increased by Rs.Nil and earnings per share for the year ended March 31, 2011 would have increased by Rs. 0.07 and earnings per share for the year ended March 31, 2010 would have increased by Rs.0.05.

7. Subject to our comments in paragraph 5 and 6 above and 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 financial statements dealt with by this report are in agreement with the books of account;

d. On the basis of written representations received from the directors, as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act;

e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act and the Rules framed there under and 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, in the case of:

i) the Balance Sheet, of the state of affairs of the Company as at March 31, 2011; and

ii) the Cash Flow Statement, of the cash flows for the year ended on that date

ANNEXURE TO AUDITORS’ REPORT

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) The Company does not have any inventory. Accordingly, the provisions of clause 4(ii) of the Order are not applicable.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to (d) of the Order are not applicable.

(b) The Company had taken interest-free loan from one company covered in the register maintained under section 301 of the Act. The maximum amount outstanding during the year was Rs. 187,871,035 and the year-end balance was Rs. Nil.

(c) In our opinion, the terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(d) In respect of loans taken, the principal amount and interest amount are payable on demand in accordance with the terms and conditions.

(iv) There are no transactions pertaining to purchase of inventory and sale of goods and services during the year. In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets.

(v) The Company has not entered into contracts or arrangements referred to in section 301 of the Act. Accordingly, the provisions of clause 4(v) of the Order are not applicable.

(vi) The Company has not accepted any deposits from the public within the meaning of sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) The Company is not presently engaged in production, procuring and manufacturing of crude oil, gases (including Compressed Natural Gas or Liquified Natural Gas and re-gasification thereof) or any other petroleum product and is accordingly not required to maintain cost records as prescribed by the Central Government under notification no G.S.R 686(E) dated October 8, 2002.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales- tax, wealth-tax, service-tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year end for a period of more than six months from the date they became payable are as follows:

Name of Nature of Amount Period to Due Date Date of the statute the dues (Rs.) which Payment the amount relate

Finance Act, Service tax 57,756,586 September 5th of Not paid 1994 - payable and 2007 to each Service tax interest September subseque thereon 2010 -nt month

Note: The above table excludes the amounts derecognized and not accrued referred to in paragraph 5 of our report.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) In our opinion, the Company's accumulated losses at the end of the financial year are less than fifty per cent of its net worth. Further the Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xi) In our opinion, the company has not defaulted in repayment of dues to a bank. The Company has no dues payable to a financial institution or debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, 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.

(xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which the loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has made preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co. For Arun K. Gupta & Associates Chartered Accountants Chartered Accountants Firm Registration No: 001076N Firm Registration No: 000605N

By B P Singh By Sachin Kumar Partner Partner Membership No. 70116 Membership No. 503204

Gurgaon Gurgaon May 30, 2011 May 30, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Cals Refineries Limited, (the Company) as at March 31, 2010, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto (collectively referred as the financial statements). These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. -

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

4. Without qualifying our opinion, we have considered the adequacy of the disclosure made in Note 1 of Schedule 14 to the financial statements concerning the Companys ability to continue as a going concern. The ability of the Company to continue as a going concern is significantly dependent on its ability to successfully arrange the balance funding and achieve financial closure to fund its refinery project. The management is in the process of arranging funds for the refinery project and is confident of achieving financial closure. Further, in the event of any delay in the arrangement of the balance funding, the management is confident of arranging the funds required for discharging the liabilities of the Company arising in the foreseeable future. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

5. Without qualifying our opinion, attention is drawn to Note 2 of Schedule 14 to the financial statements. In view of the mutual non-fulfillment of contractual obligations arising out of the Companys contracts with certain suppliers/ contractors, the Company has not accrued liability amounting to Rs. 5,153,656,&80. The ultimate

performance of such contractual obligations and their impact on current liabilities cannot presently be determined and no adjustment that may result has been made in the financial statements for the year ended March 31, 2010.

6. Without qualifying our opinion, attention is drawn to Note 2 of Schedule 14 to the financial statements. The Company has given advances amounting to Rs. 8,360,400,558 to various suppliers/contractors in terms of the agreements executed by the Company for the implementation of its refinery project. Such advances may not be recoverable in the event of non-fulfillment of the contractual obligations by the Company. The ability of the Company to fulfill its contractual obligations cannot presently be determined and no adjustment with respect to such advances that may result has been made in the financial statements for the year ended March 31, 2010.

7. As more fully explained in Note 18 of Schedule 14 to the financial statements, the Company has included the exchange differences arising on reporting monetary assets and liabilities at closing rate, interest on outstanding statutory dues and certain indirect expenses not directly attributable to construction up to the year ended March 31, 2010 aggregating to net profit after lax ofRs. 502,958,525 in the carrying amount of capital work in progress. In our opinion, these items should be recognized in the Profit and Loss Account.

We further report that had the observations made by us in paragraph 7 above been considered, the net loss after tax for the period would have been Rs. 54,819,992 (as against the reported figure of Rs. Nil), Reserves and Surplus would have been Rs. 435,491,785 (as against the debit balance of profit and loss account of Rs. 67,466,739), capital work in progress would have been Rs. 8,768,307,618 (as against the reported figure ofRs. 7,953,376,015) and loss per share would have been Rs. 0.01 (as against the reported figure ofRs. Nil).

8. Subject to our comments in paragraph 7 above and 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 financial statements dealt with by this report are in agreement with the books of account;

d. On the basis of written representations received from the directors, as on March 31, 2010 and taken on record by the Board of

Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act; e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act and the Rules framed there under and 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, in the case of:

i) the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

ii) the Profit and Loss Account, of the loss for the year ended on that date; and

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

ANNEXURE TO AUDITORS REPORT

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) In our opinion, a substantial part of fixed assets has not been disposed of during the year.

(ii) The Company does not have any inventory. Accordingly, the provisions of clause 4(ii) of the Order are not applicable.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to (d) of the Order are not applicable.

(b) The Company had taken interest free loan from one company covered in the register maintained under section 301 of the Act. The maximum amount outstanding during the year was Rs. 193,421,035 and the year-end balance was Rs. 187,871,035.

(c) In our opinion, the terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

• (d) In respect of loans taken, the principal amount and interest amount are payable on demand in accordance with the terms and conditions.

(iv) In our opinion, there is an 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 and services.

(v) The Company has not entered into contracts or arrangements referred to in seption 301 of the Act. Accordingly, the provisions of clause 4(v) of the Order are not applicable.

(vi) The Company has not accepted any deposits from the public within the meaning of sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act, in respect of Companys products. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service-tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year end for a period of more than six months from the date they became payable are as follows:

Name of Nature of Amount the statute the dues (Rs.) Income-tax Tax deducted at source 137,625,733 Act, 1961 payable - foreign remittances and interest thereon month Income-tax 44,219,858 Finance Act, Service tax payable 196,482,247 1994- and interest thereon Service tax West Bengal Works contract tax 3,429,473 Value Added and interest thereon Tax Act, 2003

Name of Period to which Due Date Date of the statute the amount Payment relates Income-tax September 2007 to 7th of each Not paid Act, 1961 September 2009 subsequent month Year ended September 30, Not paid March 31, 2009 2009 Finance Act, September 2007 5th of each Not paid 1994- to September 2009 subsequent Service tax month West Bengal February 2009 to 10th of each Not paid Value Added September 2009 subsequent Tax Act, 2003 month

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) In our opinion, the Companys accumulated losses at the end of the financial year are less than fifty per cent of its net worth. The Company has incurred cash losses during the year. In the preceding financial year, the Company had not incurred cash losses.

(xi) In our opinion, the company has not defaulted in repayment of dues to a bank. The Company has no dues payable to a financial institution or debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, 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.

(xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which the loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co. For Aran K. Gupta & Associates Chartered Accountants Chartered Accountants Firm Registration No: 001076N Firm Registration No: 000605N By B P Singh By Sachin Kumar Partner Partner Membership No. 70116 Membership No. 503204 New Delhi Gurgaon June 14, 2010 June 14,2010

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