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Auditor Report of Greenlam Industries Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of GREENLAM INDUSTRIES LIMITED (''the Company''), 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 significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

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

Auditors'' Responsibility

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

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

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

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

Opinion

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

Emphasis of Matter

We draw attention to Notes nos. 32, 3.1 and 7.1 to the financial statements which describe the effect of the Scheme of Arrangement on the Company and reciprocal charges, mortgages and encumbrances on the immovable assets of the Company and of Greenply Industries Limited, respectively.

Our opinion is not modified in respect of these matters. Report on Other Legal and Regulatory Requirements

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

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

(a) We have 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 and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

(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 and with the returns received from the branches not visited by us;

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

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

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

i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note no. 19.1.1 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. The Company was not required to transfer any amount to the Investor Education and Protection Fund.

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

The Annexure referred to in Paragraph 1 under heading of "Report on the other Legal and Regulatory Requirements" in our Independent Auditors'' Report to the members of the Company on the standalone financial statements for the year ended 31st March 2015,

We report that:

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

(b) A substantial portion of the fixed assets have been physically verified by the management during the year and there is a regular programme of verification 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.

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

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

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

3. The Company has not granted any loans to those covered in the register maintained under section 189 of the Companies Act, 2013 (''the Act'').

4. 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 purchase of inventory and fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

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

6. The Central Government has not prescribed the maintenance of any cost records under section 148(1) of the Act, which apply to the Company.

7. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. Although there has been delay in few cases, there are no undisputed statutory dues outstanding for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, the following disputed amounts of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited:

Name of the Nature of Amount

Statute the Dues (Rs. in Lacs)

Rajasthan VAT Act, Disallowance of Set-off of the 58.95 2003 Entry Tax in respect of Branch Transfers

Rajasthan VAT Act, Disallowance of Set-off of the 47.55 2003 Entry Tax in respect of Branch Transfers

Central Excise Act, Reversal of Cenvat Credit 11.07 1944

Rajasthan Tax on Constitutional Validity of the 98.00 Entry of Goods into Act Local Areas Act, 1999

Central Excise Act, Excise Duty on Resin for 2543.31 1944 Captive Consumption

Name of the the amount relates Forum where Period to which dispute is pending Statute (Financial Year)

Rajasthan VAT Act, 2003-2004 Tax Board, Ajmer 2003

Rajasthan VAT Act, 2003 2004-2005 Tax Board, Ajmer

Central Excise Act, 2007-2008 Rajasthan High 1944 Court, Jodhpur

Rajasthan Tax on Entry of Goods into Act January 2006 to Supreme Court of Local Areas December 2014 India Act, 1999

Central June 2009 to Before CESTAT, Excise Act, February 2013 New Delhi 1944

(c) According to the information and explanations given to us, the Company was not required to transfer any amount to the Investor Education and Protection Fund.

8. As the Company has been registered for a period of less than five years, clause 3 (viii) of the Order is not applicable.

9. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks during the year. The Company has not issued any debentures and has not taken any loans from the financial institutions.

10. In our opinion and according to the information and the explanations given to us, the Company has given guarantee for loan taken from a bank by its subsidiary. The terms and conditions thereof are not prejudicial to the interest of the Company.

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

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

For D. DHANDARIA & COMPANY Chartered Accountants ICAI Firm Reg. No. 306147E

(Dindayal Dhandaria) Partner Membership No. 010928

Place of Signature: New Delhi Dated: 28th May, 2015

 
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