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Auditor Report of Gayatri BioOrganics Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of M/s. GAYATRI BIOORGANICS LIMITED (the com- pany) which comprise the Balance Sheet as at 31st March, 2015, 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 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 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 prin- ciples 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 poli- cies; making judgments and estimates that are reasonable and prudent; and design, implementation and mainte- nance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and com- pleteness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

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

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and 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 qualified audit opinion on the financial statements.

Basis of qualified opinion

The Company's trade receivables include certain trade receivables amounting to Rs.2,25,75,901/- which are overdue and outstanding for a period more than three years. The management believes that the same are fully recoverable as it is in the process of collecting the amounts and no provisions are required. In the absence of adequate documentation, we are unable to comment on the timing and the ultimate amount of collection and its consequential impact on the profit for the year.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect 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, of the state of affairs of the Company as at March 31, 2015, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

Without qualifying our opinion, we invite reference to the following:

* In respect of Sundry Debtors and Sundry creditor balances, according to the explanations given to us, The Management is in the process of reconciliation and Confirmation of balances as at the end of the year. Pending confirmation of balances and reconciliation of the Sundry debtors and Sundry Creditors the consequent impact on the profit is not ascertainable.

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 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 all pending litigations on its financial position in its financial statements - refer Note 2.25 & Note 2.34 to the financial statements;

ii. The Company did not have any material foreseeable losses relating to long-term contracts including derivative contracts.

iii. There were no amounts due for transfer to the Investor Education and Protection Fund by the Company.

STATEMENT REFERRED TO IN PARAGRAPH (1) 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) A major portion of the fixed assets have been physically verified during the year by the Management in accordance with a programme of verification, which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, the discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.

(ii) In respect of its inventories:

(a) According to the information and explanations given to us, the Management has physically verified the inventories during the year. In our opinion, having regard to the nature of business and location of stocks, 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 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 verification between the physical stocks and the book records were not material and have been properly dealt 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. Accordingly, clause (b) of the Order is not applicable to the Company.

(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 for the purchase of inventory and fixed assets and for the sale of goods and services and during the course of our audit we have not observed any major weaknesses in such internal control system. However, in respect of sale of by- products and sale of maize (traded) during the year, internal controls need to be further strengthened. According to the information and explanations given to us, The Management has initiated steps to introduce the required additional controls relating to the same.

(v) The Company has not accepted any deposits from the Public.

(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 sub-section (1) of Section 148 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) on the basis of examination of records of the Company, amounts deducted /accrued in the books of accounts in respect of undisputed statutory dues including for Provident Fund, , Employees State Insurance, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

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

(c) According to the information and explanation given to us, there are no dues of Income Tax, Sales Tax, Service Tax and Excise Duty, which have not been deposited with the appropriate tax authorities on account of any dispute. According to the information and explanations given to us, the following dues of Customs Duty have not been deposited by the Company on account of disputes.

Name of the Nature of Amount Period to which Forum where Statute Dues Rs. the amount dispute is relates pending

The Custom Customs 4,15,87,220* Financial Year CESTAT - Act, 1962 Duty 1994-95 Bangalore

*Net of deposit. An amount of Rs 37,00,000 has been paid under protest.

(d) As explained to us, the company did not have any dues on account of Investor Education and Protection Fund.

(viii) The Company's accumulated losses at the end of the financial year is less than fifty percent of its networth. The Company has not incurred cash losses in the current financial year and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the company during the year has delayed repayment of dues to the bankers and financial institution. Installments amounting to Rs.1,70,00,000/- and interest amounting to Rs.1,27,00,000/- were due for payment as at 31st March 2015. (Refer Note 2.3 of the Financial Statements). The company did not have any outstanding debentures during the year.

(x) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions

(xi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

(xii) During the course of our examination of the books and other records of the Company carried out in accordance with the Generally Accepted auditing practices in India and according to the information and explanations given to us, no instance of fraud on or by the company was reported during the year, nor have we been informed of such case by the Management.



for M.Bhaskara Rao & Co., Chartered Accountants Firm Regn No:000459S

Place: Hyderabad ANIL KUMAR MEHTA Date: 30th May, 2015 PARTNER Membership No: 14284


Mar 31, 2014

We have audited the accompanying financial statements of M/s. GAYATRI BIOORGANICS LIMITED (the com- pany) 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 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 referred to in Section 211(3C) of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presenta- tion 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 sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis of qualified opinion

The Company''s trade receivables include certain trade receivables amounting to Rs. 3,11,63,794/- which are overdue and outstanding for a period more than one year. The management believes that the same are fully recoverable as it is in the process of collecting the amounts and no provisions are required. In the absence of adequate documentation, we are unable to comment on the timing and the ultimate amount of collec- tion and its consequential impact on the profit for the year.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect 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 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.

Emphasis of Matter

Without qualifying our opinion, we invite reference to the following:

* Non-availability of confirmation of balances from Sundry Debtors and creditors

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 as amended by the Companies (Auditor''s Report) Order, (Amendment) 2004 issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matter specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

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

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

STATEMENT REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE

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

b) The management has conducted physical verification of major fixed assets during the year and as explained to us, no material discrepancies have been noticed on such verification.

c) According to the information and explanations given to us, the Company has not disposed of a substan- tial part of its fixed assets during the year as to affect the going concern assumption in preparing the financial statements under report.

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

b) In our opinion and according to the information and explanations given to us, the procedures of physi- cal 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 for inventories and, based on the information and explana- tions given to us discrepancies noticed on physical verification have been properly dealt with in the books of account.

3. a) According to the information and explanations given to us, the Company has not granted any unsecured loans to Companies, parties covered in the register maintained under Section 301 of the Compa- nies Act, 1956. Accordingly, sub clauses b, c, d of Clause 3 of this Order is not applicable to the Company for the current year.

b) According to the information and explanations given to us, the Company has taken unsecured loans from Companies, parties covered in the register maintained under Section 301 of the Companies Act, 1956. The number of parties involved are three and maximum aggregate amount during the year is Rs. 26,80,53,020/- and the year end balance of the aggregate amount of loan taken is Rs.19,46,02,362/-.

c) In our opinion the rate of interest and other terms and conditions of loans taken by the company from companies, firms or other 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) In the case of loans taken from two Companies and a person listed in the Register maintained under Section 301 of the Companies Act, 1956, there are no fixed terms of repayment and due date for payment of interest and accordingly clause 4(iii)(h) of the Order is not applicable.

4. In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialized requirements and similarly certain goods sold are for the specialized requirements of the buyers and suitable alternate sources are not available to obtain comparative quotations, there are adequate internal control systems commensurate with the size of the Company and nature of its business for the purchase of inventories and fixed assets and for the sale of goods. However, in respect of sale of by-products and sale of maize (traded) during the year, internal controls need to be further strengthened. According to the information and explanations given to us, The Management has initiated steps to introduce the required additional controls relating to the same.

5. 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 Companies Act, 1956 have been entered in to the register required to be maintained under that Section.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of Contracts and arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000 with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at relevant time.

6. The Company has not accepted any deposits from the Public.

7. During the year under report, the Internal Audit of the Company has been conducted by a firm of Chartered Accountants In our opinion, the scope and coverage of Internal audit is commensurate with the size and nature of its business.

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records prescribed under Section 209(1)(d) of the Companies Act, 1956, and we are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

9. In respect of Statutory Dues

a. According to the information and explanations given to us and on the basis of examination of records of the Company, amounts deducted /accrued in the books of accounts in respect of undisputed statutory dues including for Provident Fund, , Employees State Insurance, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases. As explained to us, the company did not have any dues on account of Investor Education and Protection Fund and Wealth Tax..

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues that were in arrears, as at 31st March 2014 for a period of more than six months from the date they became payable.

c. According to the information and explanation given to us, there are no dues of Income Tax, Sales Tax, Service Tax and Excise Duty, which have not been deposited with the appropriate tax authorities on account of any dispute. According to the information and explanations given to us, the following dues of Customs Duty have not been deposited by the Company on account of disputes.

Name of the Nature of Amount Period to which Forum where Statute Dues Rs. the amount dispute is relates pending

The Custom Customs 8,31,74, Financial Year CESTAT - Act, 1962 Duty -440* 1994-95 Bangalore

*Net of deposit. An amount of Rs 37,00,000 has been paid under protest.

10. The company has accumulated losses at the end of the financial year which exceeds fifty percent of its net worth. The Company has not incurred cash losses in the current financial year and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company during the year has defaulted /delayed in repayment of dues to the bankers and financial institution. Installments amount- ing to Rs.59,95,418/-, were overdue for repayment as at 31st March 2014 and the same were paid in April 2014. (Refer Note 2.3 of the Financial Statements). The company did not have any outstanding debentures during the year.

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

13. According to information and explanations given to us, the Company is not a Chit fund / Nidhi / Mutual Benefit Fund / Society.

14. In our opinion and according to the information and explanations given to us, the company is not dealing in or trading in shares, securities, debentures and other investments.

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

16. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised on short term basis have not been used for long term investment.

18. During the year under report, 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.

19. The company has not issued any debentures.

20. The company has not raised any money by way of public issues during the year.

21. During the course of our examination of the books and other records of the Company carried out in accor- dance with the Generally Accepted auditing practices in India and according to the information and explana- tions given to us, no instance of fraud on or by the company was reported during the year, nor have we been informed of such case by the Management.

for M.Bhaskara Rao & Co. Chartered Accountants Firm Regn No:000459S

Place: Hyderabad ANIL KUMAR MEHTA Date: May 28, 2014 PARTNER Membership No: 14284


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Gayatri Bioorganics Limited (''the Company''), which comprise the Balance Sheet as at 31 March 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 position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal 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.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.

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

Basis of qualified opinion

The Company''s trade receivables includes certain trade receivables amounting to INR 58,130,503 which are overdue and outstanding for a period of more than one year. The Management believes that the same are fully recoverable as it is in the process of collecting the amounts and no provisions are required. In the absence of adequate documentation, we are unable to comment on the timing and the ultimate amount of collection and its consequential impact on the profit for the year.

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 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 March 2013;

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

c) the Balance Sheet, 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 sub-section (3C) of Section 211 of the Act, to the extent applicable;

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

The Annexure referred to in the Auditors'' Report to the Members of Gayatri BioOrganics Limited ("the Company") for the year ended 31 March 2013. We report that:

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

b) The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

c) The Company has not disposed off any of its fixed assets during the year. Thus, paragraph 4(i)(c) of the order is not applicable.

ii) a) The inventory, except stocks lying with the third party has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with the third party at the year-end, written confirmations have been obtained.

b) The procedures for the 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. The discrepancies noticed on verification between the physical stocks and book records were not material.

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 ("the Act"). Hence clause 4 (iii) (a), (b), (c) and (d) of the Order is not applicable.

e) The Company has taken loan from two companies and a person covered in the Register maintained under Section 301 of the Act. The maximum amount outstanding during the year including interest was INR 126,281,832 and the year-end balance of such loan including interest was INR 125,415,775. The Company has not taken any loan, secured or unsecured, from any other companies, firms or other parties covered under Section 301 of the Act.

f) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies and a person listed in the Register maintained under Section 301 of the Act are not, prima facie, prejudicial to the interest of the Company.

g) In the case of loans taken from two companies and a person listed in the Register maintained under Section 301, there are no fixed terms for repayment of the principal amount and due date for payment of interest and accordingly clause 4(iii)(g) of the Order is not applicable.

iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialized requirements and similarly certain goods sold are for the specialized requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to sale of goods. In respect of sale of certain by-products during the year, internal controls need to be further strengthened. According to the information and explanations given to us, the Management has initiated steps to introduce the required additional controls relating to sale of by-products.

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.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements entered in the Register maintained under Section 301 of the Act 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 the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from the public.

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

viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

ix) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, amounts deducted/accrued in the books of accounts in respect of undisputed statutory dues including for Provident fund, Employees State Insurance, Income- Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in a large number of cases. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund and Wealth Tax.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service Tax, Customs duty, Excise duty and other material statutory dues that were in arrears as at 31 March 2013 for a period of more than six months from the date they became payable.

c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax and Excise Duty, which have not been deposited with the appropriate tax authorities on account of any dispute. According to the information and explanations given to us, the following dues of customs duty have not been deposited by the Company on account of disputes:

Name of the statute Nature of Amount in Rs. Period to which Forum where the dues the amount the relates dispute is pending

The Custom Act, Customs duty 83,174,440* Financial year CESTAT- 1962 1994-95 Bangalore

* Net deposits. An amount of INR 3,700,000 has been paid under protest.

x) The Company has accumulated losses at the end of the financial year which exceeds fifty per cent of its net worth. The Company has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, the Company has defaulted/ delayed in repayment of dues to the bankers and financial institution. Refer appendix I for the period and amount of defaults. The Company did not have any outstanding debentures during the year.

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

xiii) In our opinion, and according to the information and explanations given to us, the Company is not a chit fund/ nidhi/ mutual benefit fund/ society.

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

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

xvi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose 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 are of the opinion that the funds raised on short-term basis have not been used for longterm investment.

xviii) The Company has not made any preferential allotment of shares to parties covered in the Register maintained under Section 301 of the Act.

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

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

xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R and Co.

Chartered Accountants

Firm''s Registration No: 128510W

Zubin Shekary

Place : Hyderabad Partner

Date : 28 May, 2013 Membership No: 48814


Mar 31, 2012

We have audited the attached balance sheet of Gayatri BioOrganics Limited ("the Company") as at 31 March 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

c) the Balance Sheet, 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, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

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

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

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

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

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

ANNEXURE TO THE AUDITORS' REPORT

The Annexure referred to in the Auditors' Report to the Members of Gayatri BioOrganics Limited ("the Company") for the year ended 31 March 2012. We report that:

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

b) The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noted on such verification.

c) Fixed assets disposed of during the year were not substantial, and therefore, do not affect the going concern assumption.

ii) a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. For stocks lying with the third parties at the year-end, written confirmations have been obtained.

b) The procedures for the 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. The discrepancies noticed on verification between the physical stocks and book records were not material.

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 ("the Act"). Hence clause 4 (iii) (a), (b), (c) and (d) of the Order is not applicable.

b) The Company has taken loan from a person covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year including interest was Rs. 14,628,646 and the year end balance of such loans including interest was Rs. 14,628,646. The Company has not taken any loan, secured or unsecured, from companies or firms covered under Section 301 of the Companies Act, 1956.

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

d) In the case of loans taken from a person listed in the register maintained under section 301, there are no fixed terms for repayment of the principal amount and payment of interest and accordingly clause 4(iii)(g) of the Order is 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 with regard to the sale of goods. The Company is not engaged in any sale of services. We have not observed any major weakness in the internal control system during the course of our audit.

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.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements entered in the register maintained under Section 301 of the Act 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 the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from the public.

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

viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed 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. However, we have not made a detailed examination of the records.

ix) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, amounts deducted/accrued in the books of accounts in respect of undisputed statutory dues in respect of other material statutory dues have been regularly deposited with appropriate authorities except for Provident fund, Employees State Insurance, Income Tax, Service Tax, Sales Tax and Excise Duty where there have been slight delays. As explained to us, the provisions of Investor Education and Protection fund and Wealth tax are not applicable to the Company.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Employees' state insurance, Income tax, Customs duty, Excise duty, Cess and other material statutory dues that were in arrears as at 31 March 2012 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Excise duty and Cess which have not been deposited with the appropriate tax authorities on account of any dispute. According to the information and explanations given to us, the following dues of customs duty have not been deposited by the Company on account of disputes:

Name of the statute Nature of Amount in Rs. Period to which Forum where the the dues the amount relates dispute is pending

The Custom Act, Customs duty 83,174,440* Financial year CESTAT- 1962 1994-95 Bangalore

* Out of the above amount Rs. 3,700,000 has been paid under protest.

x) The Company has accumulated losses at the end of the financial year which exceeds fifty per cent of its net worth. The Company has not incurred cash losses in the current financial year 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 repayment of dues to its bankers and to any financial institutions during the year. The Company did not have any outstanding debentures during the year.

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

xiii) In our opinion, and according to the information and explanations given to us, the Company is not a chit fund/ nidhi / mutual benefit fund / society.

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

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

xvi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose 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 are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

xviii) According to the information and explanation given to us, the Company has not made any preferential allotment of shares to parties covered in the register maintained under section 301 of the Act.

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

xx) The Company has not raised any money by public issues.

xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R and Co.

Chartered Accountants

Firm's Registration No: 128510W

Zubin Shekary

Partner

Membership No: 48814

Place : Hyderabad

Date : 30 May, 2012


Mar 31, 2011

1 We have audited the attached balance sheet of Gayatri BioOrganics Limited ("the Company") as at 31 March 2011, the profit and loss account and the cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3 As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), as amended, issued by the Ministry of Corporate Affairs in terms of sub-section (4A) of Section 227 of the Companies Act 1956, (the Act) we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the 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 appears from our examination of those books;

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

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

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

(vi) 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 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 March 2011;

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

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

ANNEXURE TO THE AUDITORS' REPORT

Annexure referred to in paragraph 3 of our report of even date to the members of Gayatri BioOrganics Limited ("the Company") for the year ended 31 March 2011. We report that:

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

b) The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noted on such verification.

c) Fixed assets disposed of during the year were not substantial, and therefore, do not affect the going concern assumption.

ii) a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. For stocks lying with the third parties at the year-end, written confirmations have been obtained.

b) The procedures for the 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. The discrepancies noticed on verification between the physical stocks and book records were not material.

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 (the Act). Hence clause 4 (iii) (a), (b), (c) and (d) of the Order is not applicable.

b) The Company has taken loan from a person covered in the register maintained under section 301 of the Act. The maximum amount outstanding during the year was Rs. 33,884,425 and the year end balance of such loans was Rs. 14,305,737.

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

d) In the case of loans taken from a person listed in the register maintained under section 301, there are no fixed terms for repayment of the principal amount and payment of interest and accordingly clause 4(iii)(g) of the Order is 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 with regard to the sale of goods. The Company is not engaged in any sale of services. We have not observed any major weakness in the internal control system during the course of our audit.

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.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements entered in the register maintained under section 301 of the Act 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 the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from the public.

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

viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed 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. However, we have not made a detailed examination of the records.

ix) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, amounts deducted/accrued in the books of accounts in respect of undisputed statutory dues in respect of Income tax, Excise duty, Custom duty and other material statutory dues have been regularly deposited with appropriate authorities except for Provident fund, Employees State Insurance and Sales tax where there have been slight delays. As explained to us, the provisions of Investor Education and Protection fund and Wealth tax are not applicable to the Company.

Further, there were no dues on account of Cess under Section 441A of the Act, since the date from which the aforesaid section comes into force has not been notified by the Central Government.

According to the information and explanations given to us, except for undisputed amount payable in respect of service tax (Rs 86,267) which is outstanding for more than six months, there are no undisputed amounts payable in respect of Provident Fund, Employees' state insurance, Income tax, Customs duty, Excise duty, Cess and other material statutory dues that were in arrears as at 31 March 2011 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Excise duty and Cess which have not been deposited with the appropriate tax authorities on account of any dispute. According to the information and explanations given to us, the following dues of customs duty have not been deposited by the Company on account of disputes:

Name of the Nature of Amount in Rs. Period to which Forum where dispute statute the dues 2010-2011 the amount relates is pending

The Custom Customs duty 79,512,120* Financial year CESTAT- Act, 1962 1994-95 Bangalore

* Rs. Out of the above amount Rs. 3,700,000 has been paid under protest.

x) The Company has accumulated losses at the end of the financial year which exceeds fifty per cent of its net worth. The Company has not incurred cash losses in the current financial year 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 repayment of dues to its bankers and to any financial institutions during the year. The Company did not have any outstanding debentures during the year.

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

xiii) In our opinion, and according to the information and explanations given to us, the Company is not a chit fund / nidhi / mutual benefit fund / society.

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

xv) 1. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) 2. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose 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 are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

xviii) According to the information and explanation given to us, the Company has made preferential allotment of shares to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company

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

xx) The Company has not raised any money by public issues.

xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R and Co

Chartered Accountants

Firm Registration No.: 128510W

Sd/-

Zubin Shekary

Place : Hyderabad Partner

Date : 28 May 2011 Membership No: 48814














Mar 31, 2010

1 We have audited the attached balance sheet of Gayatri BioOrganics Limited ("the Company") as at 31 March 2010, the profit and loss account and the cash flow statement 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 amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4 Without qualifying our opinion, we draw attention to Note 4 of Schedule 21 in the financial statements. Notwithstanding the profits made during the year ended 31 March 2010, the Company has accumulated losses from the previous years which have exceeded its equity share capital. These factors along with other matters as set forth in Note 4 of Schedule 21 prima facie raises doubt about the Companys ability to continue as a going concern. However, the mitigating factors, particularly the ongoing implementation of Rehabilitation Scheme, sanctioned by the Board of Industrial and Financial Reconstruction (BIFR), cause us to believe that the going concern assumption is appropriate.

5 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 appears from our examination of those books;

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

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

(v) on the basis of written representations received from the directors, as on 31 March 2010, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31 March 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) 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 31 March 2010;

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

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

ANNEXURE TO THE AUDITORS REPORT Annexure referred to in paragraph 3 of our report of even date to the members of Gayatri BioOrganics Limited:

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

2. The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noted on such verification.

3. Fixed assets disposed of during the year were not substantial, and therefore, do not affect the going concern assumption.

4. The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. For stocks lying with the third parties at the year-end, written confirmations have been obtained.

5. The procedures for the 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.

6. The Company is maintaining proper records of inventory. The discrepancies noticed on verificati6n between the physical stocks and book records were not of material.

7. 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.

8. The Company has taken loans from a person covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs.37,845,064 and the year end balance of such loans was Rs.33,636,040.

9. In our opinion, the rate of interest and other terms and conditions on which loans have been taken from other 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.

10. In the case of loans taken from a person listed in the register maintained under section 301, there are no fixed terms for repayment of the principal amount and payment of interest and accordingly clause 4(iii)(g) of the Order is not applicable.

11. 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 with regard to the sale of goods. The Company is not engaged in any sale of services. We have not observed any major weakness in the internal control system during the course of our audit.

12. In our opinion and according to the information and explanations given to us, the partic dars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. In our opinion and according to the infomlation and explanations given to us. the transactions made in pursuance of contracts and arrangements entered in the register maintained under section 301 of the Companies Act, 1956 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 the prevailing market prices at the relevant time.

13. The Company has not accepted any deposits from the public.

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

15. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed 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. However, we have not made a detailed examination of the records.

16. According to the information and explanations given to us and on the basis of examination of the records of the Company, the Company has not been regular in depositing amount deducted/accrued in the books of accounts with the appropriate authorities in respect of prouident fund, employees state insurance and sales-tax. According to the information and explanations given to us and on the basis of our examination of the books of account, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including excise duty, income-tax, service tax, customs duty and other material statutory dues, have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the provisions of investor education and protection fund and wealth tax are not applicable to the Company.

Further, there were no dues on account of Cess under Section 441A of the Act, since the date from which the aforesaid section comes into force has not been notified by the Central Government.

According to the information and explanations given to us, except for undisputed amount payable in respect of service tax (Rs 86,267) which is outstanding for more than six months, there are no undisputed amounts payable in respect of provident fund, employees state insurance, income tax, service tax, customs duty, excise duty, cess and other material statutory dues that were in arrears as at 31 March 2010 for a period of more than six months from the date they became payable.

17. According to the information and explanations given to us, there are no dues of income tax, service tax, excise duty and cess which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of sales-tax and customs duty have not been deposited by the Company on account of disputes:

Name of the statute Nature of Amount in Rs. Period to which Forum where the the dues 2009-2010 the amount relates dispute is pending

The Central Excise Customs duty* 75,949,800 Financial year CESTAT- Act, 1944 1994-95 Bangalore

* Rs. 3,700,000 paid under protest.

18. The Company has accumulated losses at the end of the financial year which exceeds fifty per cent of its net worth. The Company has not incurred cash losses in the current financial year, however it has incurred cash losses in the immediately preceding financial year.

19. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers and to any financial institutions during the year.

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

21. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

22. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

23. According to the information and explanations given to us, the Company has not given any guarantee for loans take 1 by others from banks or financial institutions.

24. According to the information and explanation given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

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

26. According to the information and explanation given to us, the company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under section 301 of the Companies Act, 1956.

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

28. The Company has not raised any money by public issues during the year.

29. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.



for B S R and Associates

Chartered Accountants

Firm Registration no: 128901W

Zubin Shekary

Partner

Membership No: 48814

Place : Hyderabad

Date : 12 May 2010

 
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