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Auditor Report of GEI Industrial Systems Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2015.

This responsibility 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 its and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

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

Opinion

We report that:

1. Balances of Trade Receivables, Trade Payables, Advance to Suppliers and Bank accounts have been un-reconciled and unconfirmed.

2. Liability on account of interest on borrowings from financial institutions/ ICDs where suits were filed by the lenders or the account is classified as NPA by them, has not been provided in the accounts. It has been estimated by the management and disclosed as contingent liability of Rs. 11,06,96,963/- in Note No.26 of the financial statements.

3. Reconciliation of Intra-head and intra-group accounts and resultant adjustments are pending which may have impact on intra-head balances and financial position disclosed in the financial statements.

Subject to our remarks 1 to 3 above and subject to other qualifications in the report mentioned in Para (1) under "Report on Other Legal and Regulatory Requirements" below, in our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to Note No. 8.1 to the financial statements regarding the financial effect of any diminution in value of non-moving inventories. In the opinion of the company, the realization will be materialized with the revival of the projects, hence no provision for any loss thereof is made in the accounts.

Report on Other Legal and Regulatory Requirements

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

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from the directors as on March 31, 2015, and 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;

(d) 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, 2015, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has not disclosed the additional financial impact, if any, of pending litigations in its financial statements-Refer Notes 4.2 and 4.4 to the financial statements;

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

iii. As per the information and explanations given to us there were Rs. 4,15,294/- which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure as referred to in paragraph 1 under the heading "Report on other Regulatory requirements" of our report of even date of GEI Industrial Systems Limited on the Accounts for the year ended on 31st March,2015

(i) (a) The company has not maintained up to date records showing full particulars including quantitative details and situation of fixed assets.

(b) We have not been provided with evidence of physical verification of assets by the management as per a program of verification in a periodical manner, hence unable to comment whether any discrepancies were noticed on such verification.

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

(ii) (a) We have not been provided with evidence of physical verification of inventories by the management, hence unable to comment whether any discrepancies were noticed on such verification.

(b) In view of our remark in sub-para (a) above, we are unable to comment whether the procedures of physical verification of inventories, if any, followed by the management during the year, are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company has maintained records of inventories on computerized environment. Inventory of work in progress, obsolete material and project have been determiner certified- by the management arraingment incorporated the accounts accordingly and not verified by us for want of proper records.

(iii) 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. Hence provisions of Clause (iii) of Paragraph 3 are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is no adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have come across major weakness in internal controls.

(v) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the purview of sections 73 to 76 of the Companies Act, 2013 and the rules framed there under.

(vi) We have not been provided with the cost records as specified by the Central te Government under sub-section 148 of the Companies Act, hence we are A unable to comment whether such records are maintained.

(vii) (a) According to the records of the company udisputed statutory dues including provident fund, employeesstate insurance income tax sales tax wealth tax, service tax, duty of customs duty mentioned below have cess and other material stautory dues except those mentioned below haveauthority. According to the information and explanations given to us undisputed amounts payable in respect of aforesaid payable as under:-

Amount (Rs,) Nature of Liability

ESI 5510997/-

Provident Fund 31217597/-

TDS (Deducted) 43354713/- on various heads)

1243002/- Professional Tax (Employees)

Export Tax 2034991/-

VAT* 13075151/-

SERVICE TAX* 17288058/-

EXCISE DUTY* 46021291/-

CST 10028104/-

* Subject to adjustment for input credit

(b) According to the information and explanations given to us, the following are the particulars of statutory dues as at 31st 2015 not deposited on account of a dispute pending.

Name of Nature of Amount Period to Forum Where the the Dues (Rs.) which amount dispute is pending Statute relates FY

Sales Tax Central Rs,1747280 2006-2007 Board of Revenue Law Sales Tax Bhopal

Sales Tax Central Rs, 839541 2007-2008 Board of Revenue Law Sales Tax Bhopal

Sales Tax Central Rs,4135024 2006-2007 Board of Revenue Law Sales Tax Bhopal

Sales Tax Central Rs, 166859 2006-2007 Board of Revenue Law Sales Tax Bhopal

Income Income Tax Rs, 3576166 2006-07 Commissioner of Tax Act Demand Income Tax

(c) According to the information and the explanations given to us an amount of Rs.4,15,294/- is required to be transferred to Investor Education and Protection Fund, for which necessary instruction was given to the banker. However, no confirmation of such transfer is available with the company.

(viii) The accumulated losses at the end of the financial year are less than fifty percent of its net worth and the company has incurred cash losses during the financial year and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the company has defaulted in repayment of dues to financial institution or bank as unden-

S/N Name of the Fl/Bank Period of Defult Amount of 0 Default Rs,

1 The HSBC LTD >365 days Rs,37165626/-

2. Citi Bank LTD >365 days Rs.276460387/-

3. Madhya Pradesh Finance >365 days Rs.2546389/- Corp.LTD

(x) In terms of the information and explanations given to us, the company has given corporate guarantee for loans taken by subsidiary company from banks or financial institutions. In our opinion, the terms and conditions on which the company has given such guarantees are not prejudicial to the interest of the company.

(xi) The company has not raised any fresh term lons during the year.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given to us by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For A.K. Khabya & Co.

Chartered Accountants

Firm Reg. No. 001994C

Place : Bhopal CA. M.N.G. PILLAI

Date : 14th June, 2015 Partner

M.No.74051


Mar 31, 2014

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

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 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 presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

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

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

Opinion

We report that:

1. Balances of Trade Receivables, Trade Payables and Advance to Suppliers have not been confirmed.

2. Liability on account of interest on borrowings from financial institutions/ ICDs where suit were filed by the lenders or the account is classified as NPA by them, has not been provided in the accounts. It has been estimated by the management and disclosed as contingent liability of Rs. 10,53,83,183/- in the Balance Sheet.

Subject to our remarks above and subject to other qualifications in the report mentioned in Para (1) under "Report on Other Legal and Regulatory Requirements''" below, in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) In the case of the Statement of Profit and Loss, of the loss 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") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 section 211(3C) of the Act;

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

Annexure as referred to in paragraph 3 of our report of even date of GEI Industrial Systems Limited on the Accounts for the year ended on 31st March, 2014

(i) (a) On the basis of available information the company has maintained records showing full particulars including quantitative details and situation of fixed assets, however the records are not updated as at the year end.

(b) We have not been provided with evidence of physical verification of assets by the management as per a program of verification in a periodical manner, hence unable to comment whether any discrepancies were noticed on such verification.

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

(ii) (a) We have not been provided with evidence of physical verification of inventories by the management, hence unable to comment whether any discrepancies were noticed on such verification.

(b) In view of our remark in sub-para (a) above, we are unable to comment whether the procedures of physical verification of inventories, if any, followed by the management during the year, are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company has maintained records of inventories on computerized environment. Inventory of work in progress, obsolete material and project have been determined, certified by the management and incorporated in the accounts accordingly and relied upon by us without verification.

(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. Hence provisions of Clause (iii) (b), (c) and (d) of Paragraph 4 are not applicable to the Company.

(b) The company has taken unsecured loan from two parties covered in the register maintained under section 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstanding at any time during the year and the year end balance was RS. 8,39,66,288/-.

(c) According to the information and explanations given to us, there was no stipulation of interest and period of repayment hence no irregularity thereon is reported.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not come across any major weakness in internal controls.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts and 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 or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of RS. 500000/- in respect of each party during the year have been made at prices which appear reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the purview of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, during the year.

(vii) In our opinion, there was no internal audit system during the year.

(viii) We have not been provided the accounts and 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, hence unable to comment whether, the prescribed cost records have been maintained.

(ix) (a) According to the records of the company, undisputed statutory dues including provident fund, investor education protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty cess and other material statutory dues applicable to it have been generally deposited with the appropriate authority. According to the information and explanations given to us, undisputed amounts payable in respect of aforesaid dues were in arrears, as at 31st March, 2014 for a period of more than six months from the date they became payable as under: -

Nature of Liability Period Amount

ESI September,2013 2790041.00

Provident Fund September,2013 18956921.00

TDS (Deducted) Upto September, 2013 13667210.00 on various heads)

Professional Tax Upto September 2013 901988.00 (Employees)

EXPORT Tax Upto September 2013 2034991

(b) According to the information and explanations given to us, the following are the particulars of statutory dues as at 31st March, 2014 not deposited on account of a dispute pending:

Name of the Nature of Dues Amount Period to which Statute (Rs.) amount relates F.Y.

Sales Tax Law Central Sales 1747280 2006-2007 Tax

Sales Tax Law Central Sales 839541 2007-2008 Tax

Sales Tax Law Central Sales 4135024 2008-09 Tax Sales Tax Law Central Sales 166859 2009-10 Tax

Income Tax Income Tax 3576166 2006-07 Act Demand

Name of the Nature of Dues Forum where the dispute Statute is pending

Sales Tax Law Central Sales Board of Revenue, Bhopal Tax

Sales Tax Law Central Sales Board of Revenue, Bhopal Tax

Sales Tax Law Central Sales Board of Revenue, Bhopal Tax Sales Tax Law Central Sales Board of Revenue, Bhopal Tax

Income Tax Income Tax Commissioner of Income Act Demand Tax

(x) The accumulated losses at the end of the financial year are less than fifty percent of its net worth and the company has incurred cash losses during the 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 in repayment of dues to financial institution or bank as under:-

S/No Name of the FI/ Bank Period of Default Amount of Default

The HSBC LTD >365 37165626

Citi Bank Ltd >365 276460387

Madhya Pradesh Financial Corp.Ltd >365 2230545

(xii) 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 and therefore Paragraph 4(xii) of the Order is not applicable.

(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the

provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other * investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xv) In terms of the information and explanations given to us, the company has given corporate guarantee for loans taken by subsidiary company from banks or financial institutions. In our opinion, the terms and conditions on which the company has given such guarantees are not prejudicial to the interest of the company.

(xvi) The Company has not raised any new term loans during the year and accordingly paragraph 4(xvi) of the Order is not applicable.

(xvii) According to the cash flow statement and other records examined by us and information and explanations given to us, on an overall basis, the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

(xviii)The company has not made preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Act.

(xix) The company has not issued any debentures and therefore paragraph 4(xix) of the Order is not applicable.

(xx) The company has not raised any money by way of public issues during the year and therefore paragraph 4(xx) of the Order is not applicable.

(xxi) According to the information and explanations given to us and in our opinion, no fraud on or by the company has been noticed or reported during the year.

For A.K. Khabya &Co. Chartered Accountants Firm Reg. No. 001994C

Place : Bhopal CA. M.N.G. PILLAI Date : 29th May, 2014 Partner M.No.74051


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

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 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 presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility *

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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 March 31, 2013;

(b) In the case of the Statement of Profit and Loss, of the loss 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") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 section 211 (3C) of the Act;

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

(f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

[Annexure as referred to in paragraph 3 of our report of even date of GEI Industrial Systems Limited on] |the Accounts for the year ended on 31s'' March, 2oT3|

(i) (a) On the basis of available information the company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us all the assets have been physically verified by the management as per a program of verification in a periodical manner, which in our opinion 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) In our opinion, the company has not disposed off substantial part of fixed assets during the year and the going concern status of the company is not affected.

(ii) (a) As explained to us the inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

(c) The company has maintained proper records of inventories. As explained to us, no material discrepancies were noticed or> physical verification as compared to the book records. Inventory of work in progress, obsolete material and project have been determined certified by the management and incorporated in the accounts as such.

(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. Hence provisions of Clause (iii) (b), (c) and (d) of Paragraph 4 are not applicable to the Company.

(b) The company has taken unsecured loan from two parties covered in the register maintained under section 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstanding at any time during the year and the year end balance was 71752027/-.

(c) According to the information and explanations given to us, the rate of interest wherever applicable and other terms and conditions on which loans have been taken by the company are not, prima facie, prejudicial to the interest of the company.

(d) Wherever stipulated the company has been regular in the payment of principal amount and interest.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not come across any major weakness in internal controls.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts ands 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 or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of 500000/- in respect of each party during the year have been made at prices which appear reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the purview of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, during the year.

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

(viii) We have broadly reviewed the accounts and 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 records with a view to determine whether they are accurate and complete.

(x) The company has accumulated losses at the end of the financial year. The company has incurred cash losses during the financial year covered by our audit but not 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 any financial institution or bank except Rs.280489892.39 of CITI Bank (Unsecured Loan) and Rs.37165626/- of HSBC Ltd(Unsecured Loan Rs.22400000/- and Rs. 14765626/- Current Liabilities).

(xii) 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 and therefore Paragraph 4(xii) of the Order is not applicable.

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

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xv) In terms of the information and explanations given to us, the company has given corporate guarantee for loans taken by subsidiary company from banks or financial institutions. In our opinion, the terms and conditions on which the company has given such guarantees are not prejudicial to the interest of the company.

(xvi) The Company has not raised any new term loans during the year and accordingly paragraph 4(xvi) of the Order is not applicable.

(xvii) According to the cash flow statement and other records examined by us and information and explanations given to us, on an overall basis, the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

(xviii) The company has made preferential allotment of shares on conversion of warrants during the year to parties and companies covered in the register maintained under section 301 of the Act and in our opinion the price at which shares have been issued is not prejudicial to the interest of the company.

(xix) The company has not issued any debentures and therefore paragraph 4(xix) of the Order is not applicable. ,

(xx) The company has not raised any money by way of public issues during the year and therefore paragraph 4(xx) of the Order is not applicable.

(xxi) According to the information and explanations given to us and in our opinion, no fraud on or by the company has been noticed or reported during the year,

For A.K. Khabya & Co.

Chartered Accountants

Firm Reg. No. 001994C

Place : Bhopal CA. M.N.G. PILLAI

Date : 30th May, 2013 Partner

M.No.74051


Mar 31, 2012

1. We have audited the attached Balance Sheet of GEI Industrial Systems Ltd as at 31st March 2012, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 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 specifed in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to 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 mandatory 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 31st March 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 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 read together with the Significant Accounting Policies and Notes thereon, 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 31st March, 2012;

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

Annexure as referred to in paragraph 3 of our report of even date of GEI Industrial Systems Ltd on the accounts for the year ended on 31st March, 2012

(i) (a) On the basis of available information the Company has properly maintained records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us the fixed assets have been physically verifed by the management as per a program of verification in a periodical manner, which in our opinion 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) In our opinion, the Company has not disposed off a substantial part of fixed assets during the year and the going concern status of the Company is not affected.

(ii) (a) As explained to us the inventories have been physically verifed during the year by the management. In our opinion, the frequency of verification is reasonable.

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

(c) The Company has maintained proper records of inventories. As explained to us, no material discrepancies were noticed on physical verification as compared to the book records.

(iii) (a) 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 301 of the Companies Act, 1956. Accordingly, clauses 4(iii)(b), (c) and (d) of the Order are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses 4(iii)(f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems 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 service. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in the internal control systems.

(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) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 500000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the purview of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, during the year. 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.

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

(viii) According to the information and explanations given to us the Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, for the products manufactured by the Company.

(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable, with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2012 for a period more than six months from the date they become payable.

(b) According to the information and explanations given to us, the following are the particulars of statutory dues as at 31st March, 2012 not deposited on account of a dispute pending:

Name of the Nature of Dues Amount (Rs.) Period to Statute which amount relates F. Y.

Sales Tax Law Central Sales Tax 1747280 2006-2007

Sales Tax Law Central Sales Tax 839541 2007-2008

Sales Tax Law Central Sales Tax 4135024 2008-09

Income Tax Act Income Tax Demand 1085865 2005-2006

Income Tax Act Income Tax Demand 2287677 2006-2007

Income Tax Act Income Tax Demand 21723813 2007-08

Income Tax Act Income Tax Demand 118147090 2009-10



Name of the Statue Forum where the dispute is pending

Sales Tax Law Board of Revenue, Bhopal

Sales Tax Law Board of Revenue, Bhopal

Sales Tax Law Board of Revenue, Bhopal

Income Tax Act ITAT

Income Tax Act ITAT

Income Tax Act Commissioner of Income Tax

Income Tax Act Commissioner of Income Tax

(x) The Company has no accumulated losses as at 31st March, 2012 and it has not incurred cash losses in the financial year ended on that date 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 a financial institution or bank.

(xii) 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.

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) The Company has given corporate guarantee for loans taken by it's subsidiary Company from banks and financial institutions. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us, the term loans raised by the Company have been applied for the purposes for which they were obtained.

(xvii) According to the cash flow statement and on overall examination of the Balance Sheet, we are of the opinion that no funds raised on short-term basis have, prima facie, been used for long-term investment.

(xviii) According to the information and explanations given to us the Company has made preferential allotment of shares/warrants to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares/warrants have been offered is according to SEBI guidelines and not prejudicial to the interest of the Company.

(xix) The Company has not issued any debentures.

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

(xxi) According to the information and explanations given to us and in our opinion, no instances of fraud on or by the Company have been noticed or reported during the year nor have we been informed of such case by the Company.

For A. K. Khabya & Co.

Chartered Accountants

Place : Bhopal CA. M.N.G. PILLAI

Date : 03.09.2012 Partner

Membership No.74051 FRN 001994C


Mar 31, 2011

1. We have audited the attached Balance Sheet of GEI Industrial Systems Ltd as at 31st March 2011, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 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. Further to our comments in the Annexure referred to 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 mandatory 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 31st March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2011 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 read together with the Significant Accounting Policies and Notes thereon, 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 31st 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 the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditor's Report

Annexure as referred to in paragraph 3 of our report of even date of GEI Industrial Systems Ltd on the accounts for the year ended on 31st March, 2011

(i) (a) On the basis of available information the Company has properly maintained records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us the assets have been physically verified by the management as per a program of verification in a periodical manner, which in our opinion 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) In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

(ii) (a) As explained to us the inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

(c) The Company has maintained proper records of inventories. As explained to us, no material discrepancies were noticed on physical verification as compared to the book records.

(iii) (a) 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 301 of the Companies Act, 1956. Accordingly, clauses 4(iii)(b), (c) and (d) of the Order are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses 4(iii)(f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fxed assets and for the sale of goods and service. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in the internal control systems.

(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) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the purview of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, during the year. 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.

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

(viii) According to the information and explanations given to us the Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, for the products manufactured by the Company.

(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us, the following are the particulars of statutory dues as at 31st March, 2011 not deposited on account of a dispute pending:

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

Sales Tax Central Sales 3144803 2006-2007 Board of Revenue, Law Tax Bhopal

Sales Tax Central Sales 1089541 2007-2008 Commissioner Law Tax of Sales Tax

Income Tax Income Tax 3171740 2005-2006 Commissioner Act Demand of Income Tax

Income Tax Act Income 3360566 2006-2007 Commissioner Tax Demand of Income Tax

(x) The Company have no accumulated losses as at 31st March, 2011 and it has not incurred cash losses in the financial year ended on that date 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 a financial institution or bank.

(xii) 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.

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) In terms of the information and explanations given to us, the Company has given corporate guarantee for loan taken by subsidiary Company from banks or financial institutions.

(xvi) According to the information and explanations given to us, the term loans have been applied by the Company for the purposes for which they were obtained.

(xvii) According to the Cash Flow Statement and other records examined by us and information and explanations given to us, on an overall basis, the funds raised on short-term basis have, prima facie, not been used for long-term investment.

(xviii) According to the information and explanations given to us, the Company has made preferential allotment of shares/ warrants to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares/warrants have been offered is according to SEBI guidelines and not prejudicial to the interest of the Company.

(xix) The Company has not issued any debentures.

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

(xxi) According to the information and explanations given to us and in our opinion, no instances of fraud on or by the Company have been noticed or reported during the year nor have we been informed of such case by the Company.

For A. K. Khabya & Co. Chartered Accountants

CA. M.N.G. PILLAI Partner Membership No.74051 FRN 001994C

Place : Bhopal Date : 20th August, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of GEI Industrial Systems Ltd as at 31st March 2010, the Profit and Loss Account and also 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 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. Further to our comments in the Annexure referred to 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 mandatory 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 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st 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 read together with the Significant Accounting Policies and Notes thereon, specifically Note No. 6 regarding excess managerial remuneration of Rs. 79.99 lakhs pending approval of Central Government, 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 31st 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 the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report

Annexure as referred to in paragraph 3 of our report of even date of GEI Industrial Systems Ltd on the Accounts for the year ended on 31st March 2010

i) a) On the basis of available information the Company has properly maintained records showing full particulars including quantitative details and situation of fixed assets.

b) As explained to us the assets have been physically verified by the management as per a program of verification in a periodical manner, which in our opinion 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) In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii) a) As explained to us the inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c) The Company has maintained proper records of inventories. As explained to us, no material discrepancies were noticed on physical verification as compared to the book records.

iii) a) 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 301 of the Companies Act, 1956. Accordingly, clauses 4(iii)(b), (c) and (d) of the Order are not applicable.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses 4(iii)(f) and (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control

systems 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 service. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in the internal control systems.

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) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the purview of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, during the year. 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.

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

viii) According to the information and explanations given to us the Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, for the products manufactured by the Company.

ix) a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable, with the appropriate authorities.

b) According to the information and explanations given to us, the following are the particulars of statutory dues as

at 31st March 2010 not deposited on account of a dispute pending:

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

Sales Tax Law Central Sales Tax 569830

Sales Tax Law Central Sales Tax 3144803

Income Tax Act Income Tax Demand 3171740

Income Tax Act Income Tax Demand 3360566

(Amount in Rs.) Name of the Statute Period to which Forum where the amount relates F.Y. dispute is pending Sales Tax Law 2005-2006 Board of Revenue, Bhopal Sales Tax Law 2006-2007 Board of Revenue, Bhopal

Income Tax Act 2005-2006 Commissioner of Income Tax Income Tax Act 2006-2007 Commissioner of Income Tax

x) The Company has no accumulated losses as at 31st March 2010 and it has not incurred cash losses in the financial year ended on that date 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 a financial institution or bank.

xii) 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.

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

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

xv) In terms of the information and explanations given to us, the Company has given corporate guarantee for loan taken by Subsidiary Company from banks or financial institutions.

xvi) According to the information and explanations given to us, the term loans have been applied by the Company for the purposes for which they were obtained.

xvii) According to the Cash Flow Statement and other records examined by us and information and explanations given to us, on an overall basis, the funds raised on short-term basis have, prima facie, not been used for long-term investment.

xviii) According to the information and explanations given to us the Company has made preferential allotment of shares/warrants to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares/warrants have been offered is according to SEBI guidelines and not prejudicial to the interest of the Company.

xix) The Company has not issued any debentures.

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

xxi) According to the information and explanations given to us and in our opinion, no instances of fraud on or by the Company have been noticed or reported during the year nor have we been informed of such case by the Company.

For A.K. Khabya & Co. Chartered Accountants

CA. M.N.G. Pillai Partner Place: Bhopal Membership No.74051 Date: 23rd August 2010 FRN 001994C



 
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