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Auditor Report of DCM Shriram Industries Ltd.

Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

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

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its profit and its cash flows for the year ended on that date.

emphasis of Matter

Attention is invited to note 45 which sets out the position regarding sugarcane subsidy aggregating Rs. 3277.93 lacs accounted by the Company in these financial statements. As indicated in this note, necessary adjustments would be made on final determination of the amount of subsidy.

Our opinion is not modified in respect of this matter. report on other Legal and regulatory requirements

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

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

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

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it 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 aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts)Rules, 2014.

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 32 and 33(a) to (c) to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses-Refer Note 34(b) to the financial statements.

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

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT (Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the management at reasonable intervals other than for stock lying with third parties and/ or goods in transit for which confirmations have been obtained and subsequent receipts have been verified in most of the cases.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

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

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year. In respect of deposits accepted in earlier years, the Company has complied with the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under Section 148(1) of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income-tax, Wealth Tax, Entry Tax, Purchase Tax, Customs Duty, Excise Duty, Value Added Tax, Works Contract Tax, Cess and other material statutory dues applicable to it and generally been regular in depositing dues in case of Tax Deducted At Source, Service Tax and Sales Tax with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at 31st March, 2015 for a period of more than six months from the date they became payable.

(c) Details of dues of Excise Duty, Service Tax, Income-tax and Sales Tax matters which have not been deposited as on 31st March, 2015 by the Company on account of disputes are given below:

Name of the Nature Forum where dispute is Period to which the Statute of dues pending amount relates (various years covering the period)

Central Excise High Court March '86 to Excise Act, Duty December '89 1944

Modvat Commissioner 1995-96, Credit (Appeals) November '04 to December '08

Service Service Deputy Commissioner January '08 to Tax Laws- Tax October '08 Finance Act Customs, Excise & July '12 to 1994 Service Tax Appellate March '14 Tribunal

Assistant Commis- December'09 to sioner, Central Excise & December'10 Customs

Income Income Income Tax Appellate 2003-06 Tax Act, 1961 Tax Tribunal

Sales Tax Sales Additional Commissi -oner 2004-05, 2010-11 and Laws Tax (Appeals) 2011-12

Joint Commissioner 2010-11

Name of the statute Amount Amount involved * paid under (Rs. lacs) protest (Rs. lacs)

Central Excise Act, 1944 20.00 -

31.79 -

Service Tax Laws- Finance Act, 1994 1.44 -

236.16 10.00

4.28 -

Income Tax Act, 1961 1708.75 1708.75

Sales Tax Laws 10.09 3.08

0.11 -

* amount as per demand orders including interest and penalty wherever indicated in the demand.

Further, in respect of following matters, the concerned authority is in appeal against favourable orders received by the Company:

Name of the Nature of Forum where department Statute dues has preferred appeal

Central Excise Excise duty Customs, Excise & Service Act, 1944 Tax Appellate Tribunal

High Court

Modvat Credit High Court

Service Tax Service Tax Customs, Excise & Service Laws- Finance Tax Appellate Tribunal Act, 1994

Sales Tax Sales Tax High Court Laws

Name of the Statute Period to which the Amount involved * amount relates (various (Rs. lacs) years covering the period)

Central Excise Act, 1944 2003-08 26.71

1998-99 3.54

1995-96 15.15

Service Tax Laws- Finance Act, 1994 2005 2.01

Sales Tax Laws 1976-80, 1982-85, 1989-90, 129.44 1992-93, 1995-98 and 2008-11

* amount as per demand orders including interest and penalty wherever indicated in the demand. We have been further informed that there are no dues in respect of Wealth Tax, Customs Duty, Value Added Tax and Cess which have not been deposited as on 31st March, 2015 on account of any dispute.

(d) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1of 1956) and Rules made thereunder within time.

(viii) The Company does not have accumulated losses at the end of the financial year and the Company has not incurred cash losses during the financial year covered by our audit 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 defaulted in the repayment of dues to banks and financial institutions. The Company has not issued any debentures during the year.

(x) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For A. F. Ferguson & Co. Chartered Accountants (Firm's Registration No. 112066W)

Jaideep Bhargava

Place : New Delhi Partner

Date : 29.5.2015 (Membership No. 090295)


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

The Company''s 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 notifed under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and the 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 Company''s internal control. An audit also includes evaluating the appropriateness of the 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 suffcient 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 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, 2014;

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

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

Report on Other Legal and Regulatory Requirements

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

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 it appears from our examination of those books.

(c) The Balance Sheet, the Statement of profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notifed under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

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

report of even date)

Having regard to the nature of the Company''s business / activities / result during the year clauses (xii) and (xiii) of paragraph 4 of Companies (Auditor''s Report) Order, 2003 (hereinafter referred to as the Order) are not applicable to the Company.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verifed by the management during the year. The discrepancies noticed on such verifcation between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verifed during the year by the management at reasonable intervals other than for stock lying with third parties and/ or goods in transit for which confirmations have been obtained and subsequent receipts have been verifed in most of the cases.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verifcation of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, 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 Companies Act, 1956. Accordingly, clauses 4(iii) (a) to (d) of the Order are not applicable.

(b) According to the information and explanations given to us, unsecured loans taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 are by way of fixed deposits. The Company has not taken any fixed deposits during the year from such parties. At the year-end, the outstanding balances of such loans taken aggregated Rs. 19.00 lacs (four parties) and the maximum amount involved during the year was Rs. 29 lacs (five parties).

(c) The rate of interest and other terms and conditions of such loans taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(d) The payments of principal amounts and the interest in respect of such loans are as per stipulations.

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

(v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction (excluding loans reported under paragraph (iii) above) is in excess of Rs. 5 lacs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

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

(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

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

(ix) According to the information and explanations given to us and the records of the Company examined by us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Entry Tax, Purchase Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it and generally been regular in depositing dues in case of Tax Deducted At Source, Service Tax and Works Contract Tax with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(c) Details of dues of Excise Duty, Service Tax, Income-tax and Sales Tax matters which have not been deposited as on March 31, 2014 by the Company on account of disputes are given below:

Name of Nature Forum where dispute is Period to which the the Statute of dues pending amount relates (various years covering the period)

Central Excise High Court March ''86 to Excise Act, Duty December ''89 1944

Modvat Commissioner (Appeals) 1995-96, Credit November ''04 to December ''08

Service Service High Court 2004-07 Tax Laws Tax

Deputy Commissioner January ''08 to Finance October ''08 Act, 1994

Assistant Commissioner, December''09 to Central Excise & Customs December''10

Income Tax Income Income Tax Appellate 2005-06 Act, 1961 Tax Tribunal

Commissioner of Income 2003-05 Tax (Appeals)

Sales Tax Sales Commercial Tax Tribunal 2008-09 Laws Tax Additional Commissioner 2007-11



Name of the Statute Amount Amount involved * paid under (Rs. lacs) protest (Rs. lacs)

Central Excise Act, 1944 20.00 -

31.79 -

Service Tax Laws- Finance Act, 1994 27.87 -

1.44 -

4.28 -

Income Tax Act, 1961 193.40 193.40

2112.46 1297.96

Sales Tax laws 0.88 -

10.78 7.94

*amount as per demand orders including interest and penalty wherever indicated in the demand.

Further, in respect of following matters, the concerned authority is in appeal against favourable orders received by the Company:

Name of the Nature of Forum where department Statute dues has preferred appeal

Central Excise Excise Customs, Excise & Service Act, 1944 Duty Tax Appellate Tribunal

High Court

Modvat High Court Credit

Income Tax Income High Court Act, 1961 Tax

Service Tax Service Customs, Excise & Service Laws- Finance Tax Tax Appellate Tribunal Act, 1994

Sales Tax Sales Tax High Court Laws Commercial Tax Tribunal

Name of the Statute Period to which the Amount involved * amount relates (various (Rs. lacs) years covering the period)

Central Excise Act, 1944 2003-08 26.71

1998-99 3.54

1995-96 15.15

Income Tax Act, 1961 1999-2005 1441.45

Service Tax Laws- Finance Act, 1994 2005 2.01

Sales Tax Laws 1976-2002 151.35

2006-07 0.32

* amount as per demand orders including interest and penalty wherever indicated in the demand.

We have been further fnformed that there are no dues in respect of wealth tax and cess which have not been deposited on account of any dispute.

(x) The Company does not have accumulated losses at the end of the financial year and the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions. There were no debentures outstanding during the year.

(xii) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions.

(xiii) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the CARO is not applicable.

(xiv) In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied by the Company for the purposes for which they were obtained.

(xv) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have not been used during the year for long-term investment.

(xvi) During the year the Company has not made any preferential allotment of shares to the parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xvii) The Company has not issued any debentures during the year.

(xviii) The Company has not raised money by way of public issue during the year.

(xix) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For A. F. Ferguson & Co.

Chartered Accountants

(Firm Registration No. 112066W)

Jaideep Bhargava Place : New Delhi Partner

Date : 30.5.2014 (Membership No. 090295)


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of DCM SHRIRAM INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The 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 Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the 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 controls relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the 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 qualified audit opinion. Basis for Qualified Opinion

Various issues arisen/arising out of the reorganisation arrangement will be settled and accounted for as and when the liabilities/benefits are finally determined. The effect of these cannot be determined at this stage (refer note 31 (b) of notes to the financial statements). The matter referred to in above paragraph to the extent covered here was also subject matter of qualification in our audit report on the financial statements for the year ended March 31, 2012. 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 matter described in the Basis for 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 31 st March, 2013;

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

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government in terms of

Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary f 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 it appears from our examination of those books.

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

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the , accounting standards referred to in Section 211 (3C) of the Act.

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

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

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

Having regard to the nature of the Company''s business / activities / result, clauses (xii) and (xiii) of paragraph 4 of Companies (Auditor''s Report) Order, 2003 (hereinafter referred to as the Order) are not applicable to the Company.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the management at reasonable intervals other than for stock lying with third parties and/ or goods in transit for which confirmations have been obtained and subsequent receipts have been verified in.most of the cases.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, unsecured loan granted by the Company to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, are by way of housing loan to a whole time director amounting to Rs. 47.50 lacs during the year. At the year-end, the outstanding balance of such loan granted was Nil and the maximum amount involved during the year was Rs. 47.50 lacs.

(b) The rate of interest and other terms and conditions of such loan are, in our opinion, prima facie not prejudicial to the interest of the Company.

(c) The receipts of principal amounts and interest have been as per stipulations.

(d) According to the information and explanations given to us, unsecured loans taken by the Company from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, are by way of fixed deposits aggregating Rs. 10.00 lacs (only one party) from directors and their relatives. Maximum amount outstanding during the year and year end balance from five parties is Rs. 29.00 lacs.

(e) In our opinion, the rate of interest and other terms and conditions of unsecured loan taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(f) In our opinion, the Company is regular in payment of the principal amount and the interest thereon.

(iv) In our opinion and according to therinformation and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business

1 with regard to the purchase of jnventories and fixed assets and the sale of goods and services.

During the course of our audit, we have not observed any major weakness in such internal control system.

(v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us :

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction isin excess of Rs. 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing ! market prices at the relevant time.

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

(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the management have been commensurate with the size of the Company and the nature of its business.

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

(ix) According to the information and explanations given to us and the records of the Company examined by us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed dues, including investor education and protection fund, employees'' state insurance, income-tax, wealth tax, sales tax, customs duty, cess, entry tax, purchase tax, provident fund and other material statutory dues applicable to it and generally been regular in depositing dues in case of tax deducted at source, service tax and excise duty with the appropriate authorities. There were no undisputed statutory dues outstanding for a period of more than six months from the date they become payable as at the year end.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions. There were no debentures outstanding during the year.

(xii) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv}of the CARO is not applicable.

(xiii) According to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions.

(xiv) In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purposes for which they were obtained.

(xv) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet, we report that funds raised on short term basis have not been used for long term investments.

(xvi) As the Company has not made any preferential allotment during the year, paragraph 4(xviii) of the CARO is not applicable.

(xvii) The Company has npt issued any debentures during the year.

(xviii)The Company has not raised money by way of public issue during the year.

(xix) To the best of our knowledge and according to the information and explanations given to us by the management, no fraud by the Company and no fraud on the Company has been noticed or reported during the year.

For A. F. Ferguson & Co. Chartered Accountants (Registration No. 112066W)

Jaideep Bhargava

Place : New Delhi Partner

Date : 23.5.2013 (Membership No. 090295)


Mar 31, 2012

1. We have audited the attached Balance Sheet of DCM Shriram Industries Limited ("the Company") as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:

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

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

iii) 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;

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

v) various issues arisen/arising out of the reorganisation arrangement will be settled and accounted for as and when the liabilities/benefits are finally determined. The effect of these cannot be determined at this stage (refer note 31 (b) of notes to the financial statements).

The matter referred to in paragraph (v) to the extent covered here above was also subject matter of qualification in our audit report on the financial statements for the year ended March 31, 2011.

Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

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

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

5. 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 section 274(1)(g) of the Companies Act, 1956.

Having regard to the nature of the Company's business / activities / result, clause (xiii) of CARO is not applicable.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (hereinafter referred to as the Act). For this purpose, the Company has taken the view that the transactions which are subjected to the provisions of section 299(6) of the Act are not required to be entered in this register. Notwithstanding the Company's views regarding the provisions of section 299(6) of the Act, in respect of the loan granted by the Company to a promoted company as per the Scheme of Rehabilitation approved by Board for Industrial and Financial Reconstruction (BIFR) in earlier years, the maximum amount outstanding during the year and the year-end balance was Rs. 541.94 lacs.

(b) In our opinion and according to the information and explanations given to us, during the year, the Company has rescheduled the terms of repayment of the loan granted by the Company, as referred to in para (iii) (a) above, the rate of interest and other terms and conditions of such rescheduled loan are not, prima facie, prejudicial to the interest of the Company.

(c) As per the information and explanations given to us, the receipt of principal amount and interest has been as per stipulation.

(d) As per the information and explanations given to us and records of the Company, there are no overdue amounts in respect of above loan, and interest thereon.

(e) According to the information and explanations given to us, unsecured loans taken by the Company from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, are by way of fixed deposits aggregating Rs. 14.00 lacs from directors and their relatives. Maximum amount outstanding during the year and year end balance from four parties is Rs. 19.00 lacs.

(f) In our opinion, the rate of interest and other terms and conditions of unsecured loan taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(g) In our opinion, the Company is regular in payment of the principal amount and the interest thereon.

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

(v) According to the information and explanations given to us, during the year, the particulars of contracts / arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section. For this purpose, the Company has taken the view that the transactions which are subjected to the provisions of section 299(6) of the Act are not required to be entered in this register. Notwithstanding the Company's views regarding the provisions of section 299(6) of the Act, in respect of certain transactions, exceeding the value of Rs. 5 lacs entered into with such party during the year have been made at prices which are prima facie reasonable having regard to prevailing market prices at the relevant time.

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

(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the management have been commensurate with the size of the Company and the nature of its business.

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

(ix) According to the information and explanations given to us and the records of the Company examined by us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed dues, including investor education and protection fund, employees' state insurance, income-tax, wealth tax, sales tax, customs duty, excise duty, cess, entry tax, purchase tax and other material statutory dues applicable to it and generally been regular in depositing dues in case of tax deducted at source, service tax and provident fund with the appropriate authorities. There were no undisputed statutory dues outstanding for a period of more than six months from the date they become payable as at the year end.

(b) Details of dues of excise duty, service tax, customs duty, income-tax and sales tax matters which have not been deposited as on March 31, 2012 by the Company on account of disputes are given below:

S. Name of the Nature of Amount Amount No. Statute dues involved * paid (Rs. lacs) under protest (Rs. lacs)

1 Central Excise Duty 1.84 - Excise Laws

20.00 -

Modvat Credit 31.79 -

Service Tax 1.44 -

4.28 -

2 Income Tax Income Tax 193.40 193.40 Act, 1961

1468.20 480.01

3 Sales Tax Sales Tax 0.88 - Laws

1.79 -

S. Name of the Period to which Forum where dispute is No. Statute the amount pending relates (various years covering the period)

1. Central 1981-82 Assistant Commissioner Excise Laws March '86 to High Court

December '89

1995-96, Commissioner (Appeals)

November '04 to December '08

January '08 to Deputy Commissioner October '08

December'09 to Assistant Commissioner, December'10 Central Excise & Customs

2. Income Tax 2005-06 Income Tax Appellate Act, 1961 Tribunal

1999-00, 2001-02 Commissioner of to 2004-05 and Income Tax (Appeals) 2008-09

3 Sales Tax 2008-09 Joint Commissioner Laws (Appeals), Commercial Tax

2009-10 Additional Commissioner

*amount as per demand orders including interest and penalty wherever indicated in the demand.

Further, in respect of following matters, the concerned authority is in appeal against favourable orders received by the Company:

S. Name of the Nature of Amount Period to which the Forum where department No. statute dues involved amount relates has preferred appeal (Rs. lacs) (various years covering the period)

1 Central Excise duty 26.71 2003-08 Customs, Excise & Service Excise Laws Tax Appellate Tribunal

3.54 1998-99 High Court

Modvat Credit 15.15 1995-96 High Court

Service Tax 29.88 2004-08 Customs, Excise & Service Tax Appellate Tribunal

2 Customs Law Customs Duty 584.84 2000-01 High Court

3 Sales Tax Laws Sales Tax 151.35 1976-2002 High Court

2.42 2006-07 & 2008-09 Commercial Tax Tribunal

We have been further informed that there are no dues in respect of wealth tax and cess which have not been

deposited on account of any dispute.

(x) The Company does not have accumulated losses at the end of the financial year ended March 31, 2012. Further, the Company has incurred cash losses during the financial year ended March 31, 2012 and had not incurred cash losses during the immediately preceding financial year ended March 31, 2011.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions and debenture holders during the year.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the CARO is not applicable.

(xiii) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the CARO is not applicable.

(xiv) According to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions.

(xv) In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purposes for which they were obtained.

(xvi) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet, we report that funds raised on short term basis have not been used for long term investments.

(xvii) As the Company has not made any preferential allotment during the year, paragraph 4(xviii) of the CARO is not applicable.

(xviii) The Company has not issued any debentures during the year.

(xix) The Company has not raised money by way of public issue during the year.

(xx) To the best of our knowledge and according to the information and explanations given to us by the management, no fraud by the Company has been noticed or reported during the year and with respect to fraud on the Company during the year, there was a fraudulent withdrawal of Rs. 1.27 lacs from a bank account of the Company by a third party which is being recovered from bank.

For A. F. Ferguson & Co.

Chartered Accountants

(Registration No. 112066W)

Jaideep Bhargava

Place : New Delhi Partner

Date : 30.5.2012 (Membership No. 090295)


Mar 31, 2010

1. We have audited the attached balance sheet of DCM Shriram Industries Limited ("the Company") as at March 31, 2010, the profit and loss account and the cash flow statement of the Cojnpany for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:

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

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

iii) the balance sheet, the profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account;

iv) in our opinion, the balance sheet, the profit and loss account and the cash flow statement dealt with by this report are in compliance with the accounting standards referred to in section 211(3C) of the Companies Act, 1956;

v) without qualifying our opinion, we draw attention to note 16 of schedule 11 relating to accounting for cane purchase liability for sugar season 2007-08 at Rs 110 per quintal instead of State Advised Price of Rs. 125 per quintal fixed by the Uttar Pradesh State Government. Pending completion of legal proceedings in the matter, the effect thereof on these accounts cannot be determined at this stage.

vi) various issues arisen/arising out of the reorganisation arrangement will be settled and accounted for as and when the liabilities/benefits are finally determined. The effect of these cannot be determined at this stage (refer to note 2 (b) of Schedule 11).

The matter referred to in paragraph (vi) to the extent covered here above was also subject matter of qualification in our audit report on the financial statements for the year ended March 31, 2009.

Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010;

b) in the case of the profit and loss account, of the profit of the Company for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

5. 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 section 274(1 )(g) of the Companies Act, 1956.

Having regard to the nature of the Companys business / activities / result, clauses (x) and (xiii) of CARO are not applicable.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (hereinafter referred to as the Act). For this purpose, the Company has taken the view that the transactions which are subjected to the provisions of section 299(6) of the Act are not required to be entered in this register. Notwithstanding the Companys views regarding the provisions of section 299(6) of the Act, in respect of the loan granted by the Company to a promoted company as per the Scheme of Rehabilitation approved by the Board for Industrial and Financial Reconstruction (BIFR), in earlier years, the maximum amount outstanding during the year and the year-end balance was Rs. 541.94 lacs.

(b) In our opinion and according to the information and explanations given to us and also in view of the rehabilitation scheme sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) on May 24, 2007, in respect of the concerned promoted company, the rate of interest and other terms and conditions of loan granted by the Company, as referred to in para-(iii) (a) above are not, prima facie, prejudicial to the interest of the Company.

(c) As per the information and explanations given to us and also as per Rehabilitation Scheme sanctioned by the BIFR, in respect of the concerned promoted company, the receipts of principal amount and interest has been as per stipulation.

(d) As per the information and explanations given to us and records of the Company, there are no overdue amounts in respect of above loan, and interest thereon.

(e) According to the information and explanations given to us, the Company has during the year not taken any loans, secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Act. Accordingly, paragraphs (f) and (g) of the Companies (Auditors Report) Order, 2003 (hereinafter referred to as the Order) are not applicable.

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

(v) According to the information and explanations given to us, during the year, the particulars of contracts/ arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section. For this purpose, the Company has taken the view that the transactions which are subjected to the provisions of section 299(6) of the Act are not required to be entered in this register. Notwithstanding the Companys views regarding the provisions of section 299(6) of the Act, in respect of certain transactions, exceeding the value of Rs. 5 lacs entered into with such party during the year have been made at prices which are prima facie reasonable having regard to prevailing market prices at the relevant time.

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

(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) According to the information and explanations given to us and the records of the Company examined by us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed dues, including provident fund, investor education and protection fund, employees state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess, entry tax, purchase tax and other material statutory dues applicable to it and generally been regular in depositing dues in case of tax deducted at source with the appropriate authorities. There were no undisputed statutory dues outstanding for a period of more than six months from the date they become payable as at the year end.

(b) Details of dues of excise duty, customs duty, income-tax and sales tax matters which have not been deposited as on March 31, 2010 by the Company on account of disputes are given below:

S. Name of Nature of Amount Amount Period to which the No. the Statute dues involved* paid under amount relates (Rs.lac) protest (various year (Rs.lacs) covering the period)

1 Central Excise Laws Excise Duty 1.84 - 1981-82

21.90 - June 05 to December 07

20.00 - March 86 to December 89

Modvat Credit 70.33 - 1995-96, November04 to December 08 Service Tax 216.85 - 2001-02 to 2005-06 1.44 - January08 to October08

2 Customs Law Customs Duty 143.16 - 2006-07

3 Income Tax Act, 1961 Income Tax 209.96 105.86 2005-07

4 Sales Tax Laws Sales Tax 11.17 6.44 2005-06,2008-10

1.68 0.43 2008-10

9.61 4.13 2006-07,2009-10

Purchase Tax 10.76 9.59 2001-02



S.No. Name of the Forum where dispute Statute is pending

1 Central Excise Laws Assistant Commissioner

Joint Commissioner

High Court

Commissioner (Appeals)

Customs, Excise & Service Tax Appellate Tribunal Deputy Commissioner 2 Customs Law Commissioner (Appeals), Customs Duty 3 Income Tax Act,1961 Commissioner of Income

Tax (Appeals) 4 Sales Tax Laws Commercial Tax Tribunal Joint Commissioner

(Appeals), Commercial Tax Deputy Commissioner,

Tax Board

amount as per demand orders including interest and penalty wherever indicated in the demand.

S.No. Name of the Forum where dispute Statute is pending

1 Central Excise Laws Assistant Commissioner

Joint Commissioner

High Court

Commissioner (Appeals)

Customs, Excise & Service Tax Appellate Tribunal Deputy Commissioner 2 Customs Law Commissioner (Appeals), Customs Duty 3 Income Tax Act,1961 Commissioner of Income

Further, in respect of following matters, the concerned authority is in appeal against favourable orders received by the Company:

S. Name of Nature of Amount Period to which the No. the Statute dues involved amount relates (Rs. lacs) (various years covering the period)

1 Central Excise Laws Excise Duty 26.71 2003-08

3.54 1998-99

12.56 1972-73,1977-78

Modvat Credit 15.15 1995-96

Service Tax 4.25 2004-08

2 Customs Law Customs Duty 327.10 2000-01

3 Sales Tax Laws Sales Tax 123.13 1976-98

65.00 2000-01

0.32 2006-07

S.No. Name of the Forum where dispute Statute is pending

1 Central Excise Laws Assistant Commissioner

Joint Commissioner

High Court

Commissioner (Appeals)

Customs, Excise & Service Tax Appellate Tribunal Deputy Commissioner 2 Customs Law Commissioner (Appeals), Customs Duty 3 Income Tax Act,1961 Commissioner of Income

We have been further informed that there are no dues in respect of wealth tax and cess which have not been deposited on account of any dispute.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions and debentureholders during the year.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the Order is not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the Order is not applicable.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purposes for which they were obtained.

(xvii) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet, we report that funds raised on short term basis have not been used for long term investments.

(xviii) According to the information and explanations given to us, during the year, the Company has not made any preferential allotment of shares to parties and companies / firms covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised money by way of public issue during the year.

(xxi) To the best of our knowledge and according to the information and explanations given to us by the management, no fraud by the Company and no fraud on the Company has been noticed or reported during the year.

S. Name of Nature of Amount No. the Statute dues involved (Rs. lacs)

1 Central Excise Laws Excise Duty 26.71

3.54 12.56

Modvat Credit 15.15

Service Tax 4.25

2 Customs Law Customs Duty 327.10

3 Sales Tax Laws Sales Tax 123.13

65.00

0.32

S.No Name of Period to which the Forum where Statute amount relates department has (various years preferred appeal covering the period)

1 Central Excise 2003-08 Customs, Excise & Laws Service Tax Appellate Tribunal

1998-99 High Court

1972-73, 1977-78 Collector, Central Excise

1995-96 High Court

2004-08 Customs, Excise & Service Tax Appellate Tribunal

2. Customs Laws 2000-01 High Court

3. Sales Tax Laws 1976-98 High Court

2000-01 Supreme Court of India

2006-07 Commercial Tax Tribunal



For A. F. Ferguson & Co.

Chartered Accountants

(Registration No. 112066W)

Manjula Banerji Place : New Delhi Partner

Date : 29.5.2010 (Membership No. 086423)

 
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