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Auditor Report of Foods & Inns Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

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

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 that 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 March 31,2015, its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

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

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

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

c. The 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.

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

f. With respect to the other matters to be included in the Auditor's Report in accordance with 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 standalone financial statements - Refer Note 29 to the standalone financial statements;

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as required under the applicable law or accounting standards;

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 INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our Independent Auditor's Report of even date on the standalone financial statements for the year ended March 31, 2015.

We report that:

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

b. The fixed assets were physically verified by the management during the year 2012-2013 and no material discrepancies were noticed on such verification. Since then the Company has adopted a policy of verifying all its fixed assets in a phased manner designed to cover all the fixed over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets.

ii. a. Inventories (including stocks with third parties, except stocks lying in overseas godowns) have been physically verified by the management during the year. In case of inventories at the year end lying with third parties and the overseas godowns, certificates confirming the same have been received in respect of a substantial portion thereof. In our opinion, the frequency of such verification is reasonable.

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

c. In our opinion the Company has maintained proper records of its inventories and no material discrepancies have been noticed on physical verification between the physical stocks and book records.

iii. a. As per the information furnished, in earlier years, the Company had granted unsecured loans to a company and an individual, covered in the Register maintained under Section 189 of the Act.

b. As regards the loan given to the individual, the amount receivable is adjusted against the amount of ex-gratia as and when paid and with respect to the loan given to the company, the terms of repayment of loan are not stipulated. Accordingly, the question of making any comment for the regularity of the principal or the recovery of overdue amounts does not arise.

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 through personal supervision of management of the Company for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weaknesses have been observed in such internal control system.

v. Based on legal opinion obtained by the Company with regard to compliance of the repayment of deposits accepted by the Company, 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 Sections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in respect of any such deposit.

vi. According to the information and explanations given to us, pursuant to the Companies (Cost Records and Audit) Rules, 2014 read with Section 148(1) of the Act, the Central Government has not prescribed maintenance of cost records in respect of any of the Company's products.

vii. a. According to the information and explanations given to us and on the basis of the books and records examined by us, except in respect of the Tax Deducted at Source for which there were delays, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other statutory dues as applicable to it with the appropriate authorities and there are no arrears of outstanding statutory dues as at the last day of the financial year, for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and on the basis of the books and records examined by us, as may be applicable, given hereinbelow are the details of dues of Income-tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess which have not been deposited with on account of disputes and the forum where the dispute is pending:

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

Income-tax 5,17,721



The Income-tax Act, Income-tax and interest 2,25,036 1961



Income-tax 7,29,808*



The Finance Act, 1994 Service Tax and interest 3,96,978





Name of the Statute Period to which the Forum where dispute is amount relates pending

A.Y 2007-2008 Income-Tax Appellate Tribunal

The Income-tax Act, A.Y 2009-2010 Income-tax Appellate 1961 Tribunal

Commissioner of A.Y 2011-2012 Income-tax (Appeals)

A Y 2004 2005 to Commissioner o The Finance Act, 1994 2007-2008 Central Excise (Appeals)

* Amounts deposited is Rs. 51,97,172

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

viii. There are no accumulated losses of the Company as on March 31, 2015 and the Company has not incurred any cash losses during such financial year and in the immediately preceding financial year.

ix. According to the information and explanations given to us, as also on the basis of the books and records examined by us, the Company has not defaulted in the repayment of dues to banks and financial institutions. Since the Company has not issued any debenture, the question of commenting on whether the Company has defaulted in repayment of dues to debenture holders does not arise.

x. According to the information and explanations given to us, in an earlier year, the Company had given a Corporate Guarantee for loan taken by one company from a bank, the terms and conditions of which, are not, prima facie, prejudicial to the interest of the Company.

xi. According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised other than amounts temporarily placed pending utilisation of the funds for the intended use.

xii. Based on the audit procedures performed and to the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For B. S. MEHTA & CO. Chartered Accountants Firm Registration No. 106190W

PARESH H. CLERK Partner Membership No. 36148

PLACE : MUMBAI DATED : May 25, 2015


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including accounting standards notified under 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 the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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, 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 management, as well as evaluating the overall presentation of the financial statements.

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

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

ii. in the case of Statement of Profit and Loss, of the profit for the year ended on that date; and

iii. in the case of Cash Flow Statement, of the Cash Flow 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"), as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraph 4 of the Order.

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

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

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

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

d. In our opinion, the Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards notified under 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 the Companies Act, 2013;

e. On the basis of the written representations received from the Directors of the Company as on March 31,2014, 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 Act.

ANNEXURE TO INDEPENDENT AUDITOR''S REPORT

[Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of FOODS AND INNS LIMITED on the financial statements for the year ended March 31, 2014]

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, 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 were physically verified by the management during the year 2012-2013 and no material discrepancies were noticed on such verification. Since then the Company has adopted a policy of verifying all its fixed assets in a phased manner designed to cover all the fixed assest over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and nature of its assest.

c. During the year, the Company has not disposed off any substantial part of its fixed assets so as to affect its going concern.

ii. a. Inventories (including stocks with third parties, except stocks lying in overseas godowns) have been physically verified by the management during the year. In case of inventories at the year end lying with third parties and the overseas godowns, certificates confirming the same have been received in respect of a substantial portion thereof. In our opinion, the frequency of verification is reasonable.

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

c. In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operations of the Company.

iii. a. The Company has granted an unsecured loan to a company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1,90,00,000 and the year end balance of the loan given to such company was Rs. 1,85,00,000. The Company has not granted any other loans to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

b. In our opinion, the rate of interest and other terms and conditions on which such loan has been granted are not, prima facie, prejudicial to the interest of the Company.

c. As the terms of repayment of the above loan are not stipulated, we are unable to comment on the regularity of receipt; accordingly, Clause (iii)(d) relating to steps for recovery of overdue amount of more than rupees one lakh is also not commented upon.

d. The Company has taken unsecured loans from three individuals covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 4,83,16,149 and the year end balance of loans taken from such parties was Rs. 4,63,91,973.The Company has not taken any other loan from companies, firms or any other parties covered in the register maintained under Section 301 of the Act.

e. In our opinion the rate of interest and other terms and conditions on which such loans have been taken are not, prima facie, prejudicial to the interest of the Company.

f. As the terms of repayment of above loans are not stipulated, we are unable to comment on the regularity of repayment.

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 through personal supervision of management of the Company for the purchase of inventory, fixed assets and for the sale of goods. As informed to us, the Company is not engaged in the sale of any service. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the aforesaid areas of internal control system.

v. a. According to the information and explanation given to us, we are of the opinion that the particulars of all contracts or arrangements that needed to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred in (v) (a) above and exceeding the value of rupees five lakhs with any party during the year have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time, wherever applicable.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposit accepted from public.

vii. During the year, internal audit was carried out by the company for all its operations except for those at corporate office. In our opinion the internal audit is commensurate with the size of the Company and the nature of its business except that it requires to cover operations at its corporate office.

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. a. According to the information and explanations given to us and the records examined by us, except in respect of the Tax Deducted at Source for which there were delays, the Company is regular in depositing undisputed statutory 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 and other material statutory dues applicable to it. However, there were no arrears of any statutory dues as at March 31,2014 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, as may be applicable, given herein below are the details of dues of Income- tax, Sales-tax, Service-tax, Customs Duty, Excise Duty, Cess Duty which have not been deposited on account of dispute and the forum where the dispute is pending:

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

Tax for disallowance of 5,17,721 expenditure/ deduction

Tax and interest 2,25,036 thereon for disallowance of expenditure/ deduction; The Income-tax Act, addition to income 1961 Tax and interest 2,28,68,208* thereon for disallowance of expenditure/ deduction

Tax for disallowance of 7,29,808** expenditure/ deduction

The Finance Act, Service tax and interest 3,96,978 1994 thereon

Name of the Statute Period to which the Forum where dispute is amount relates pending

A.Y 2007 - 2008 Commissioner of Income- tax (Appeals)

A.Y. 2009-2010 Income-Tax Appellate Tribunal The Income-tax Act, 1961 A.Y. 2010 -2011 Commissioner of Income- tax (Appeals) A.Y. 2011 -2012 Commissioner of Income- tax (Appeals)

The Finance Act, A. Y. 2004-2005 to Commissioner of Central 1994 2007-2008 Excise (Appeals)

* Amounts deposited under protest is Rs. 82,02,825 ** Amounts deposited under protest is Rs. 51,97,172

x. At the year end, the Company has no accumulated losses and it has not incurred any cash losses during the year ended on that date or in the immediately preceding financial year.

xi. Based on our audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues, if any, to financial institutions, banks or debenture holders.

xii. According to the information and explanations given to us, as also on the basis of the books and records examines by us, 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, Clause 4(xii) of the Order relating to maintenance of adequate documents and records in this regard is not applicable.

xiii. As the Company is not a chit fund, Nidhi, mutual benefit fund or a society, Clause 4 (xiii) of the Order is not applicable.

xiv. According to the information and explanations given to us, as the Company is not dealing or trading in shares, securities, debentures and other investments, the requirements of Clause 4(xiv) of the Order relating to the maintenance of the proper records of the transactions and contracts and making of timely entries therein are not applicable.

xv. In our opinion and according to the information and explanations given to us, in the earlier year, the Company had given a Corporate Guarantee for loan taken by one company from a bank, the terms and conditions of which, are not prima facie prejudicial to the interest of the Company.

xvi. According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised other than amounts temporarily placed pending utilization of the funds for the intended use.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the funds raised on short term basis have been utilized for long-term investments to the extent of Rs. 47,02,02,977 (Including Rs. 7,38,61,610 have been utilized during the year).

xviii. According to the information and explanations given to us, as the Company has not made any preferential allotment of shares during the year, Clause 4(xviii) of the Order is not applicable.

xix. According to the information and explanations given to us, as the Company has not issued any debentures, the question of creating security or charges in respect thereof does not arise.

xx. As the Company has not raised any money by public issue during the year, Clause 4(xx) of the Order requiring to disclose the end use of money raised and verifying the same is not applicable.

xxi. Based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud (i.e. intentional material misstatements resultant from fraudulent financial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the course of our audit.

For B. S. MEHTA & CO. Chartered Accountants Firm Registration No: 106190W

PARESH H.CLERK PLACE : Mumbai Partner DATE : May 17, 2014 Membership No. 36148


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of FOODS AND INNS LIMITED ("the Company") which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial posi- tion, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including 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 fair presentation of trie 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 accor- dance 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 management, as well as evaluating the overall presentation of the financial statements.

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

i. in the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2013; ii. in the case of Statement of Profit and Loss, of the profit for the year ended on that date; and iii. in the case of Cash Flow Statement, of the Cash Flow 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"), as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraph 4 of the Order.

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

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

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

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

d. In our Opinion, the Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement comply with the Account- ing Standards referred to in sub-section (3C) of Section 211 of the Act;

e. On the basis of the written representations received from the Directors of the Company as on March 31, 2013, 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 Act.

ANNEXURE TO INDEPENDENT AUDITOR''S REPORT

[Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of FOODS AND INNS LIMITED on the financial statements for the year ended March 31, 2013]

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

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

b. According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year for the first time since 2003 and no material discrepancies were noticed on such verification. As informed, the Company has decided to physically verify its fixed assets in a phased manner so as to cover the verification of all the fixed assets at least once in every three years. In our opinion, such programme of verification would be considered at reasonable intervals.

c. During the year, the Company has not disposed off any substantial part of its fixed assets so as to affect its going concern.

ii. a. Inventories (including stocks with third parties, except stocks lying in overseas godowns) have been physically verified by the manage- ment during the year. In case of inventories at the year end lying with third parties and the overseas godowns, certificates confirming the same have been received in respect of a substantial portion thereof. In our opinion, the frequency of verification is reasonable.

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

c. In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operations of the Company.

iii. a. The Company has granted an unsecured loan to a company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1,70,00,000 and the year end balance of the loan given to such com- pany was Rs. 1,70,00,000. The Company has not granted any other loans to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

b. In our opinion, the rate of interest and other terms and conditions on which such loan has been granted are not, prima facie, prejudicial to the interest of the Company.

c. As the terms of repayment of the above loan are not stipulated, we are unable to comment on the regularity of receipt; accordingly, Clause (iii)(d) relating to steps for recovery of overdue amount of more than rupees one lakh is also not commented upon.

d. The Company has taken unsecured loans from two individuals covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 4,19,23,649 and the year end balance of loans taken from such par- ties was Rs. 4,12,21,149.The Company has not taken any other loan from companies, firms or any other parties covered in the register maintained under Section 301 of the Act.

e. In our opinion the rate of interest and other terms and conditions on which such loans have been taken are not, prima facie, prejudicial to the interest of the Company.

f. As the terms of repayment of above loans are not stipulated, we are unable to comment on the regularity of repayment.

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 through personal supervision of management of the Company for the purchase of inventory, fixed assets and for the sale of goods. As informed to us, the Company is not engaged in the sale of any service. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the aforesaid areas of internal control system.

v. a. According to the information and explanation given to us, we are of the opinion that the particulars of all contracts or arrangements that needed to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred in (v) (a) above and exceeding the value of rupees five lakhs with any party during the year have been made at prices which are reasonable, having regard to prevaifing market prices at the relevant time, wherever applicable.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposit accepted from public.

vii. During the year, internal audit was carried out by the Company for all its operations except for those at corporate office. In our opinion the internal audit is commensurate with the size of the Company and the nature of its business except that it requires to cover operations at its corporate office.

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. a. According to the information and explanations given to us and the records examined by us, except in respect of the Tax Deducted at Source for which there were delays, the Company is regular in depositing undisputed statutory 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 and other material statutory dues applicable to it. However, there were no arrears of any statutory dues as at March 31, 2013 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, as may be applicable, given herein below are the details of dues of Income- tax, Sales-tax and Service-tax which have not been deposited with appropriate authorities on account of any dispute and the forum where the dispute is pending:

Name of the Statute Nature of the Dues Amount Period to which Forum where dispute is pend- (Rs.) the amount relates ing

The Income- tax Act, 1961 Disallowance of expendi- 2,28,68,208 2010-2011 Commissioner of Income-tax ture/ deductions and interest (Appeals)

The Finance Act, 1994 Service tax and interest 3,96,978 2004-2005 to 2007- Commissioner of Central Excise thereon 2008 (Appeals)

Value Added Tax Act Sales Tax and interest 2,14,61,834 2012-2013 Sales-tax Appellate Tribunal

x. At the year end, the Company has accumulated losses but they do not exceed more than fifty per cent of its net worth. However, it has not incurred any cash losses during the year ended on that date or in the immediately preceeding financial year.

xi. Based on our audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues, if any, to financial institutions, banks or debenture holders as at balance sheet date.

xii. According to the information and explanations given to us, as also on the basis of the books and records examines by us, 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, Clause 4(xii) of the Order relating to maintenance of adequate documents and records in this regard is not applicable.

xiii. As the Company is not a chit fund, Nidhi, mutual benefit fund or a society, Clause 4 (xiii) of the Order is not applicable.

xiv. According to the information and explanations given to us, as the Company is not dealing or trading in shares, securities, debentures and other investments, the requirements of Clause 4(xiv) of the Order relating to the maintenance of the proper records of the transactions and contracts and making of timely entries therein are not applicable.

xv. In pur opinion and according to the information and explanations given to us, in the earlier year, the Company had given a Corporate Guar- antee for loan taken by one company from a bank, the terms and conditions of which, are not prima facie prejudicial to the interest of the Company

xvi. According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised other than amounts temporarily placed pending utilization of the funds for the intended use.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we re- port that the funds raised on short-term basis have been utilized for long-term investments to the extent of Rs. 39,63,41,365 (Including Rs. 3,72,80,440 have been utilized during the year).

xviii. According to the information and explanations given to us, as the Company has not made any preferential allotment of shares during the year, Clause 4(xviii) of the Order is not applicable.

xix. According to the information and explanations given to us, as the Company has not issued any debentures, the question of creating security or charges in respect thereof does not arise.

xx. As the Company has not raised any money by public issue during the year, Clause 4(xx) of the Order requiring to disclose the end use of money raised and verifying the same is not applicable.

xxi. Based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud (i.e. intentional material misstatements resultant from fraudulent financial reporting and misappropriation of assets) on or by the Company �- has been noticed or reported during the course of our audit.



For B. S. MEHTA & CO.

Chartered Accountants

Firm Registration No. 106190W

PLACE :MUMBAI PARESH H.CLERK

DATE : MAY 14, 2013 Partner Membership No. 36148


Sep 30, 2010

1. We have audited the attached Balance Sheet of FOODS AND INNS LIMITED, as at September 30, 2010 and the Proft and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These fnancial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these fnancial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) order, 2004, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifed in the paragraph 4 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above:

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 such books.

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

d. In our opinion, the attached Proft and Loss Account and Balance Sheet and Cash Flow Statement comply with the applicable 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 and taken on record by the Board of Directors, we report that none of the Directors is disqualifed as on September 30, 2010 from being appointed as a Director in terms of Clause (g) of Sub- Section (1) of Section 274 of the Companies Act, 1956.

f. Subject to:

Note 3b. to Accounts under Schedule 15 relating to the adjustment of amounts written off and diminution in value of Investments against the Revaluation Reserve Account in an earlier year and its consequential effect on the carried forward balance in General Reserve as on October 1, 2009 (as also affecting the balance Sheet as on September 30, 2010)[our Audit Report on the Financial Statements for the year ended September 30, 2009 was also modifed with this remark],

in our opinion, and to the best of our information and according to the explanations given to us, the said accounts, read with notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view: i. In the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2010; ii. In the case of the Proft and Loss Account, of the proft for the year ended on that date, and; iii. In the case of Cash Flow Statement, of the cash fows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph (3) of our Report of even date)

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

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

b. No physical verifcation of fxed assets has been conducted by the management during the year. Hence, we are unable to comment on material discrepancy, if any.

c. During the year, the Company has not disposed off any substantial part of its fxed assets so as to affect its going concern.

ii. a. Inventories (including stocks with third parties, except stocks lying in overseas godowns) have been physically verifed by the management during the year. In case of inventories at the year end lying with third parties and the overseas godowns, certifcates confrming the same have been received in respect of a substantial portion thereof. In our opinion, the frequency of verifcation is reasonable. 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 are 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 is maintaining proper records of inventory. The discrepancies noticed on verifcation between the physical stocks and the book records were not material having regard to the size of the operations of the Company.

iii. a. The Company has granted an unsecured loan to a company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.1,22,00,000 and the year end balance of the loan given to such company was Rs.82,00,000. The Company has not granted any other loans to companies, frms or other parties covered in the register maintained under Section 301 of the Act.

b. In our opinion, the rate of interest and other terms and conditions on which such loan has been granted are not, prima facie, prejudicial to the interest of the Company.

c. As the terms of repayment of the above loan are not stipulated, we are unable to comment on the regularity of receipt; accordingly, Clause (iii)(d) relating to steps for recovery of overdue amount of more than rupees one lakh is also not commented upon.

d. The Company has taken unsecured loans from four individuals covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.6,21,56,390 and the year end balance of loans taken from such parties was Rs.4,97,05,000. During the year, the Company has repaid loan to one of such individuals. The Company has not taken any other loan from companies, frms or any other parties covered in the register maintained under Section 301 of the Act.

f. In our opinion the rate of interest and other terms and conditions on which such loans have been taken are not, prima facie, prejudicial to the interest of the Company.

g. As the terms of repayment of above loans are not stipulated, we are unable to comment on the regularity of repayment.

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 through personal supervision of management of the Company for the purchase of inventory, fxed assets and for the sale of goods. As informed to us, the Company is not engaged in the sale of any service. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the aforesaid areas of internal control system.

v. a. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section; and

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred in (v) (a) above and exceeding the value of rupees fve lakhs with any party during the year have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time, wherever applicable.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposit accepted from public.

vii. During the year, internal audit was carried out only for manufacturing units at bulsar and Chembur and not for the manufacturing unit at Nashik and its Corporate Offce; in case of the manufacturing unit at Chittor only compliance audit of statutory dues and inventory was carried out. Therefore, in our opinion, considering the size of the Company and the nature of its business operations, the extent and scope of internal audit requires to be increased.

viii. We are informed that the Central Government has not prescribed the maintenance of cost records under clause (d) of sub section (1) of Section 209 of the Companies Act, 1956 for any of the products manufactured by the Company. Accordingly, Clause 4(viii) of the Order is not applicable to the Company.

ix. a. According to the information and explanations given to us and the records examined by us, except in respect of the Tax Deducted at Source for which there were delays, the Company is regular in depositing undisputed statutory 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 and other material Statutory dues applicable to it. However, there were no arrears of any statutory dues as at September 30, 2010 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, as may be applicable, given herein below are the details of dues of Income-tax, Sales-tax, Wealth tax, Service-tax, Customs duty, Excise duty and Cess which have not been deposited with appropriate authorities on account of any dispute and the forum where the dispute is pending:

Name of the Statute Nature of the Period to which the Amount Dues amount relates (Rupees)

Income-tax Act, 1961 Income Tax 2006-2007 3,57,260

Income-tax Act, 1961 Income Tax 2003-2004 29,11,629

Finance Act,1994 Service Tax 2004-2005 to 2007-2008 3,96,978

Name of the Statute Forum where dispute is pending

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

Finance Act,1994 Commissioner of Central Excise (Appeals)

x. The Company has no accumulated losses as at September 30, 2010 and it has not incurred any cash losses in the fnancial year ended on that date or in the immediately preceding fnancial year.

xi. Based on our audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues, if any, to fnancial institutions, banks or debenture holders as at balance sheet date.

xii. According to the information and explanations given to us, as also on the basis of the books and records examines by us, 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, Clause 4(xii) of the Order relating to maintenance of adequate documents and records in this regard is not applicable.

xiii. As the Company is not a chit fund, Nidhi, mutual beneft fund or a society, Clause 4 (xiii) of the Order is not applicable.

xiv. According to the information and explanations given to us, as the Company is not dealing or trading in shares, securities, debentures and other investments, the requirements of Clause 4(xiv) of the Order relating to the maintenance of the proper records of the transactions and contracts and making of timely entries therein are not applicable.

xv. In our opinion and according to the information and explanations given to us, the terms and conditions of a guarantee given by the Company, in the current year for loans taken by one Company from a bank, are not prima facie prejudicial to the interest of the Company.

xvi. According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised other than amounts temporarily placed pending utilisation of the funds for the intended use.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the funds raised on short term basis have been utilized for long term investments to the extent of Rs. 4,65,19,000.

xviii. According to the information and explanations given to us, during the year, the Company has allotted 1,03,000 equity shares of Rs.10 each against the conversion of preferential convertible warrants issued in an earlier year to parties and a company covered under register maintained under Section 301 of the Companies Act, 1956. According to the information and explanations given to us, those warrants were issued in terms of Securities and Exchange Board Of India (Disclosure And Investor Protection) Guidelines, 2000 and accordingly, the price at which those warrants were issued is not, prima facie, prejudicial to the interest of the Company.

xix. According to the information and explanations given to us, as the Company has not issued any debentures, the question of creating security or charges in respect therof does not arise.

xx. As the Company has not raised any money by public issues during the year, Clause 4 (xx) of the Order requiring to disclose the end use of money raised and verifying the same is not applicable.

xxi. Based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud (i.e. intentional material misstatements resultant from fraudulent fnancial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the course of our audit.

For B.S.MEHTA & CO.

Chartered Accountants Firm Registration No.-106190W

PLACE : MUMBAI PARESH H.CLERK DATED : January 31, 2011 Partner Membership No.36148


Sep 30, 2009

1. We have audited the attached Balance Sheet of FOODS AND INNS LIMITED, as at September 30, 2009 and the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the 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 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 amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) order, 2004, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraph 4 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above:

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 such books.

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

d. In our opinion, the attached Profit and Loss Account and Balance Sheet and Cash Flow Statement comply with the applicable 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 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on September 30, 2009 from being appointed as a Director in terms of Clause (g) of Sub- Section (1) of Section 274 of the Companies Act, 1956.

f. Subject to:

Note 3b. to Accounts under Schedule 15 relating to the adjustment of amounts written off and diminution in value of Investments aggregating to Rs. 2,49,05,778 against the Revaluation Reserve Account in an earlier year and its consequential effect on the carried forward balance in General Reserve as on October 1,2008 (as also affecting the Balance Sheet as on September 30,2009)[our Audit Report on the Financial Statements for the year ended September 30,2008 was also modified with this remark]in our opinion, and to the best of our information and according to the explanations given to us, the said accounts, read with other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at September 30,2009;

ii. In the case of the Profit and Loss Account, of the profit for the year ended on that date, and;

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



ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph (3) of our Report of even date)

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

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

b. No physical verification of fixed assets has been conducted by the management during the year. Hence, we are unable to comment on material discrepancy, if any.

c. The Company has not disposed off substantial part of its fixed assets during the year and hence, do not affect the going concern assumption.

ii. a. Inventories (including stocks with third parties, except stocks lying in overseas godowns) have been physically verified by the management during the year. In case of inventories lying with third parties, certificates confirming stocks have been received in respect of a substantial portion of the stocks held during the year or at the year-end. In our opinion, the frequency of verification is reasonable.

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

c. In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operations of the Company.

iii. a. The Company has not granted any loans, secured or unsecured, to companies, firms, or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

b. The Company has taken unsecured loans from three parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 6,50,03,007 and the year end balance of loans taken from such parties was Rs. 6,10,48,007.

c. In our opinion the rate of interest and other terms and conditions on which loans have been taken from the parties listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

d. As the terms of repayment of above loans are not stipulated, we are unable to comment on regularity of repayment.

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 through personal supervision of management of the Company for the purchase of inventory, fixed assets and for the sale of goods. As informed to us, the Company is not engaged in the sale of any service. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the aforesaid areas of internal control system.

v. a. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section; and

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred in (v) (a) above and exceeding the value of rupees five lakhs with any party during the year have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time, wherever applicable.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposit accepted from public.

vii. During the year, Internal Audit has been carried out only for Bulsar manufacturing unit and not for its other three manufacturing units and for its Corporate Office, to that extent the same is not commensurate with the size of the Company and the nature of its business operations.

viii. We are informed that the Central Government has not prescribed the maintenance of cost records under clause (d) of sub section (1) of Section 209 of the Companies Act, 1956 for any of the products manufactured by the Company. Accordingly, Clause 4(viii) of the Order is not applicable to the Company.

ix. a. According to the information and explanations given to us and the records examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Wealth tax, Service tax, Sales tax, Custom duty, Excise duty, Cess and other materia! Statutory dues applicable to it and there were no arrears of such Statutory dues as at September 30, 2009 for a period of more than six months from the date they became payable..

b. According to the information and explanation given to us, as may be applicable, given herein below are the details of dues of Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and Cess which have not been deposited with appropriate authorities on account of any dispute and the forum where the dispute is pending:

Name of the Statute Assessment Year Amount Forum where dispute is Rupees pending



Income-tax Act,1961 2006 -2007 10,23,942 Commissioner of Income Tax (Appeals)

x. The Company has no accumulated losses as at September 30,2009 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

xi. Based on our audit procedures and according to the information and explanation given to us, the Company has defaulted in repayment of dues to a Bank amounting to Rs. 37,00,000 (including interest), out of which Rs. 9,20,000 became due on August 31,2009 and the balance of Rs. 27,80,000 became due on September 30, 2009. The Company has paid Rs. 10,00,000 on October 20, 2009, Rs. 10,00,000 on October 29, 2009, Rs. 10,00,000 on November 7, 2009 and the balance Rs. 7,00,000 on November 11, 2009.

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 by way of pledge of shares, debentures and other securities, Clause 4(xii) of the Order relating to maintenance of adequate documents and records in this regard is not applicable,

xiii. In our opinion and according to the information and explanation given to us, the Company is not a chit fund or a nidhi /mutual benefit fund /society. Accordingly, Clause 4(xiii) of the Order is not applicable to the Company.

xiv. According to the information and explanations given to us, as the Company is not dealing or trading in shares, securities, debentures and other investments, the requirements of Clause 4(xiv) of the Order relating to maintenance of proper records of the transactions and contracts and making of timely entries therein are not applicable.

xv. In our opinion and according to the information and explanations given to us, the terms and conditions of a guarantee given by the Company to a bank, in an earlier year for loans taken by one company from the said bank, are not prima facie prejudicial to the interest of the Company. The said guarantee has been withdrawn during the year.

xvi. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were raised.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the funds raised on short term basis have not been utilized for long term investments.

xviii. According to the information and explanations given to us, the Company has made preferential allotment of warrants, convertible into equity shares to parties and company covered in the register maintained under section 301 of the Companies Act, 1956. The price at which such warrants have been issued have been determined as per the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, which in our opinion, is not prejudicial to the interest of the Company.

xix. According to the information and explanations given to us, as the Company has not issued any debentures, the question of creating security or charges in respect therof does not arise.

xx. As the Company has not raised any money by public issues during the year, Clause 4(xx) of the Order is not applicable.

xxi. Based on the audit procedures performed and information and explanations given to us by the management, we report that no fraud (i.e. intentional material misstatements resultant from fraudulent financial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the course of our audit.

For B. S. MEHTA & CO. Chartered Accountants

PLACE :MUMBAI PARESH H.CLERK DATED : December 30, 2009 Partner Membership No.36148


Sep 30, 2003

1. We have audited the attached Balance Sheet of FOODS AND INNS LIMITED, as at 30th September, 2003 and the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the 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 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 amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1966, we enclose in the Annexure a statement on the matters specified in the paragraph 4 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above :

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 such books.

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

d. In our opinion, the attached Profit and Loss Account and Balance Sheet and Cash Flow Statement comply with the applicable 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 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30* September, 2003 from being appointed as a Director in terms of Clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956.

f. Subject to Note no. 4(a) of Schedule M relating to appropriation of loans, advances and dimunition in value of Investment from Revaluation Reserve in the earlier period and its consequential effect on the carried forward General Reserve as on October 1,2002 (affecting the Balance Sheet as on September 30, 2003) and further to our comments in Annexure referred to in paragraph 3, in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read with other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

i) In the case of the Balance Sheet of the state of affairs of the Company as at 30th September, 2003;

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

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

Annexure referred to in paragraph 3 of the Auditors Report of even date on the accounts of the Foods And inns Limited for the year ended 30th September, 2003.

(i) (a) Subject to note 3 in Schedule M, the company is in the process of updating its fixed assets records to show full particulars including quantitative details and situation of fixed assets.

(b) No physical verification of fixed assets has been conducted by the management during the year. Hence, we are unable to comment on any material discrepancies, if any.

(c) There has been no disposal of substantial part of the fixed assets during the year.

(ii) (a) The inventory has been physically verified by the management during or at the year end. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its business. In case of stocks lying with third parties, certificate confirming stocks have been received in respect of stocks held at the end of period.

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

(c) The company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification between the physical stocks and the book records.

(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has taken unsecured loans from one company and three parties covered in the register maintained under section 301 of the Companies Act, 1956 has stated below:

Name of the Party Relationship Balance as Amount Balance as with the on 1.10.02 Received /paid on 30.09.03 Company During the Year

(Rs.) (Rs.) (Rs.)

Muller and Phipps Associate (India) Limited Company 2,10,00,000 13,00,000 1,97,00,000

Mr. Utsav Dhupelia Director 20,31,400 26,50,000 46,81,400

Field Marshal Sam Manekshaw Director 50,00,000 - 50,00,000

Mr. Ray Simkins Director Nil 2,35,45,000 2,35,45,000

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

(d) The company is regular in repaying the principal amounts as stipulated and has been regular in payment of interest.

(e) There is no overdue amount of loans taken from companies or other parties listed in the registers maintained under Section 301 of the Companies Act, 1956.

(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 through personal supervision of management of the company with regard to purchase of fixed assets and with regard to the Sale of goods. In respect of purchase of inventory viz., raw fruits and packing materials, the purchase is directly controlled by its Director who is looking after its day to day affairs, the internal control procedure is commensurate with the size of the company and nature of its business.

(v) (a) According to the information and explanations given to us, the transactions that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has accepted deposits from the public, to which the provisions of Section 58A and 58AA of the Act apply, during the year. In our opinion and to the best of our knowledge, and on the basis of the information and explanations given to us, the Company has compiled with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) The Internal Audit of the Company has been carried out by an independent firm of Chartered Accountant. In our opinion the scope of internal Audit is not commensurate with the sire of the Company and the nature of its business operations and needs to be further strengthened.

(viii) We are informed that the Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products manufactured by the Company.

(ix) (a) According to the information and explanations given to us, the company has generally been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, wealth tax, sales tax, custom duty, excise duty, cess and other statutory dues with the appropriate authorities. The amount of statutory dues outstanding as on 30th September, 2003 for a period of six months from the date they became payable is as follows:

Amount outstanding as on 30/9/03 Amount paid

Statutory due / ces subsequently Payment date

Sales Tax 17,772.80 Nil -

Excise duty 44,252.00 Nil -

Provident Fund 3,249.00 Nil -

Professional Tax 8,645.00 Nil -

AMC Dues 168,374.00 168,374.00 27.10.2003

Entry Tax 159,055.00 159.055.00 27.10.2003

Total 401,347.80 327,429.00

(b) According to the information and explanation given to us, there are no dues payable by the Company on account of any dispute in case of income tax , wealth tax, sales tax, custom duty, excise duty, and cess as on 30th September, 2003. Hence, the question of depositing such dues on account of any dispute does not arise.

(x) The accumulated losses at the end of the financial year are not in excess of fifty percent of the net worth of the company. The company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial period.

(xi) The Company has not defaulted in the payment of dues to financial institution or bank or debenture holders.

(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.

(xiii) The company is not a nidhi /mutual fund /society to which the provisions of special statute relating to chit fund are applicable.

(xiv) (a) According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments.

(b) According to the information and explanations given to us, Investments by way of shares are held by the company in its own name except the shares seized by the income tax department, which we are unable to verify.

(xv) As explained to us, the company has given guarantee for loan taken by others from banks or financial institutions and the terms and conditions of such guarantee are not, prima facie, prejudicial to the interest of the company.

(xvi) As explained to us, the company has applied the term loan obtained during the year for the purpose for which it was obtained .

(xvii) According to the information and explanation given to us, the company has utilized funds from its cash credit account amounting to Rs. 2,33,90,343 for long term investments, till the disbursement of the term loan from the companys bankers for the purchase of long term assets. At the Balance Sheet date, no short term funds were utilized for the long term purposes and vice versa.

(xviii) The company has not made any preferential allotment of shares during the year.

(xix) The Company has not issued any debentures.

(xx) The company has not raised money from the public during the year.

(xxi) On the basis of our examination of the books of account and other relevant records and information made available to us, prima-facie we have not noticed any fraud on or by the Company, during the year.

Further, the management has represented to us that no fraud on or by the Company has been reported during the year. However, we are unable to determine / verify as to whether any such reporting has been made, during the year.

For B.S.MEHTA & CO., CHARTERED ACCOUNTANTS,

A.R.DESAI PARTNER Membership No. 8204

Place : Mumbai, Date : 5th March, 2004

 
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