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Auditor Report of Hind Syntex Ltd.

Mar 31, 2015

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

Auditor's Responsibility

Our responsibility is to express an opinion on these 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, as 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 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 incluues evaluating the appropriateness of 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 financial statements.

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, of the state of affairs of the Company as at 31 st March, 2015, its'profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in theAnnexure 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 further report that:

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

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

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

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

e) on the basis ofthe written representations received from the directors as on 31st March, 2015 and taken on record by the Board of Directors, none ofthe directors is disqualified as on 31 st 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 does not have any pending litigations except as stated in para vii(b) of the annexure to this report which would impact its financial position.

ii. ) the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses, and

iii. ) there were no amounts due which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditor's Report (Referred to in paragraph-1 on Other Legal and Regulatory Requirements of our Report of even date to the members of Hind Syntex Limited on the Financial Statements ofthe Company for the year ended 31 st March, 2015) On the basis of such checks, as we considered appropriate during the course of our audit, we report that:

i. a) The Company is generally maintaining proper records to show full particulars including quantitative details and situation of its Fixed Assets.

b) As explained to us, Fixed Assets have been physically verified by the management at regular intervals, and as informed to us no material discrepancies were noticed on such verification.

ii. a) The inventories have been physically verified during the year at reasonable intervals 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 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 in relation to the operations of the Company and the same have been properly dealt with in the books of account. >

iii. According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Accordingly, clause 3(iii)(a) and (b) ofthe Order are not applicable.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventories and fixed assets and for sale of products and services. Further during the course of our audit, we have not observed any weaknesses or continuous failure to correct any major weakness in the aforesaid internal control system ofthe Company.

v. According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year within the meaning of sections 73 to 76 of the Act and the rules framed there under to the extent notified.

vi. We have broadly reviewed the books of account maintained by the Company in respect of the products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed u/s 148(1) of the Act and are ofthe opinion that prima facie, the prescribed accounts and records have been maintained. We have not, however, made a detailed examination ofthe records with a view to determine whether the same are accurate or complete.

vii a) As per records of the Company and according to the information and explanations given to us, the Company is generally

regular in depositing undisputed applicable statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Service Tax, Custom Duty, Wealth Tax, Value Added Tax, Cess and any other statutory dues with the appropriate authorities and there are no undisputed amount payable in respect of the same which were in arrear as on 31 st March, 2015 for a period of more than six months from the date the same became payable.

b) According to the information and explanations given to us, the Company has not deposited the following dues on account of disputes with the appropriate authorities:

Name of the statue Nature of the dues Amount in Rs.

Entry Tax Act,1976 Entry Tax 410,968

Employees' Provident Fund and Miscellaneous Provident Fund 1,083,267 Provisions Act, 1952

CENVAT Credit Availing of and Rules, 2004 and Central Utilisation of 76,028 Excise Act, 1944 CENVAT Credit

CENVAT Credit Rules, Availing of and 71,534 2004 and Central Excise Utilisation of Act, 1944 CENVAT Credit

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

Entry Tax Act, 1976 1997-98 High Court, Indore

Employees' Provident April 2008 to Employees'Provident Fund and Miscellaneous December 2010 Fund Appellate Tribunal, Provisions Act, 1952 New Delhi

CENVAT Credit Rules, September 2010 Asstt. Commissioner of 2004 and Central to December 2012 Central Excise Excise Act, 1944

CENVAT Credit Rules, January 2013 to Asstt. Commissioner of 2004 and Central November 2013 Central Excise Excise Act, 1944

c) According to the information and explanations given to us, there were no amount due which is required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

viii. In our opinion, the accumulated losses of the Company as at the end of the financial year have not exceeded fifty percent of its net worth. The Company has not incurred cash losses during the financial year covered by our audit but has incurred cash losses in the immediately preceding financial year.

ix. In our opinion and according to the information and explanations given to us, the Company has not obtained any loan from Bank or Financial Institution or issued any debentures. Accordingly, clause 3(ix) of the Order is not applicable.

x. According to the information and explanations given to us, the Company has given the corporate guarantees to banks for loans taken by an associate company and terms and conditions of which are not prima facie prejudicial to the interest of the Company. However, during the year, the Company has exceeded the limit sanctioned by the shareholders for giving corporate guarantee. As informed to us the Company is taking necessary steps to ratify the same in the ensuing Annual General Meeting of the shareholders.

xi. According to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that no term loan was obtained by the Company during the year.

xii. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor we have been informed of such case by the management

For V. SINGHI & ASSOCIATES Chartered Accountants Firm Registration No. 311017E

(V.K.SINGHI) Partner Date: 30 th May, 2015 Membership No. 050051 Place; Kolkata


Mar 31, 2014

We have audited the accompanying financial statements of HIND SYNTEX LIMITED ("the Company") which comprise the Balance Sheet as at March 31,2014, the Statement of Profit and Loss and the Cash Flow Statement for the period from October 01,2013 to March 31,2014 ("the period"), and a summary of significant accounting policies, and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including Accounting Standards notified under the Companies Act, 1956 ("the Act")read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our Qualified Audit Opinion as well as Disclaimer of Opinion.

Basis for Qualified Opinion

(a) During the period ended on March 31,2014, the Company has charged to the Statement of Profit and Loss of Rs. 1,037,547in respect of Gratuity and of Rs. 508,952 in respect of Compensated Absences. In the absence of detailed information from an Independent Actuary, interalia, as to the present value of obligation and employee benefits cost to be recognised respectively in the Balance Sheet and Statement of Profit & Loss, we are unable to ascertain the adjustment and the charges which should have been made to the Statement of Profit & Loss, respectively, in respect of Gratuity and Compensated Absences, as contemplated by the Accounting Standard-15 ("AS-15") on "Employees Benefits" [As-15 (Revised)]and accordingly, we are unable to comment on the effect thereof on the Profit for the period and the consequential effect on the Statement of Profit & Loss, and Current Liabilities and Provisions carried forward for the period end (Refer note no. 25 of Notes forming part of the financial statements).

Further, in view of the absence of the information as aforesaid, the Company has not made disclosures of reconciliation of obligation, fair value of plan assets, Actuarial assumptions, etc. as required by AS-15 (Revised).

(b) Based on a technical opinion, the Company has provided depreciation on all plant and machinery (including Power Plant) as continuous process plants at the rate pursuant to notification in GSR No.756E dated 16.12.1993on straight line method.

On the basis of the Guidance Note issued by the Institute of Chartered Accountants of India on "Some Important Issues Arising From The Amendments To Schedule XIVto the Companies Act, 1956", in our opinion, depreciation should have been provided at the rate other than that provided for continuous process plant Schedule XIV of the Companies Act, 1956.

Had depreciation been provided at the rate other than that provided for continuous process plant, depreciation for the period would have been'' 5,028,919 (instead ofRs. 11,488,465), Profit for the period (Net of Deferred Tax Assets of Rs. 2,095,800 for such depreciation) would have beenRs. 9,260,490 (instead of Rs. 17,816,881) and for the period end, Net Block of Fixed Assets would have beenRs. 60,397,543 (instead of Rs. 177,045,598), Debit Balance in the Statement of Profit and Loss, after adjusting balances in Reserves and Surplus (except to the extent of Rs. 188,227,352 on account of Capital Reserves), (Net of Deferred Tax Asset of Rs. 37,846,461 for such depreciation) would have been Rs. 138,721,210 [instead of Debit Balance in the Statement of Profit and Loss, after adjusting balances in Reserves and Surplus (except to the extent of Rs. 188,227,352 on account of Capital Reserves), of Rs. 59,919,616] and there would have been Deferred Tax Asset (Net) of Rs. Nil (instead of Deferred Tax Assets (Net) ofRs. Nil).

(c) During the period ended on March 31, 2014 the Company has arrived at an "One Time Settlement" (OTS) of dues with its lenders, the cut-off date being September 30,2012; as a result, the lenders have agreed to waive the principal amount of Rs. 4,482,737and such amount is credited to Capital Reserve which is not in accordance with the Accounting Standard (AS) 5 on "Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies" as notified under the Companies (Accounting Standards) Rules, 2006. In fact, the said treatment is not in line with the opinion of the Expert Advisory Committee (EAC) of the ICAI on Accounting treatment of waiver of loan.

Had the said waiver of principal amount of loan been credited to the Statement of Profit and Loss instead of the Credit reflected in Capital Reserve account, the profit for the period and the carried forward balances in Surplus under the head ''Reserves &Surplus'' would have been higher by Rs. 4,482,737(Refer note no. 22 of Notes forming part of financial statements and other explanatory information).

Basis for Disclaimer of Opinion

Since we have not been able to obtain sufficient and appropriate audit evidencebased on which it is not possible for us to form an opinion as to whether the Company would be liable to pay Minimum Alternate Tax on the Book Profit so as to make Provision for Net Current Tax Expense in the financial statements (Refer note no. 30 of Notes forming part of financial statements and other explanatory information).

Qualified Opinion and Disclaimer of Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects for the matters described in Basis for Qualified Opinion and Basis of Disclaimer of Opinion paragraphs, 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 Balance Sheet, of the state of affairs of the Company as at March 31,2014;

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

c) in the case of Cash Flow Statement, of the Cash Flows for the period ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the 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 Cash Flow Statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards notified underthe Act read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section133 of the Companies Act, 2013;

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

Annexure referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our Report of even date to the members of HIND SYNTEX LIMITED on the accounts for the period ended March 31,2014

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

(i) (a) The Company is generally maintaining proper records to show full particulars, including quantitative details and situation of fixed

assets.

(b) As explained to us, the Company has a phased programme of physical verification of fixed assets 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) The Company has not disposed off any substantial part of its fixed assets during the period so as to affect its going concern.

(ii) (a) The inventories have been physically verified by the management during the period. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of accounts.

(iii) (a) As per the information furnished, the Company has not granted any loans, secured or unsecured, to companies, firms or other

parties covered in the register maintained under Section 301 of the Companies Act, 1956

(b) As the Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in the

(c) register maintained under Section 301 of the Companies Act, 1956, Clause (iii) (b) of the Order relating to the rate of & interest and terms and conditions being prima facie prejudicial to the Company, Clause (iii) (c) relating to regularity of

(d) receipt of principal amount and interest and Clause (iii) (d) relating to steps taken for recovery of overdue principal and interest of more than rupees one lakh, are not applicable.

(e) During the period, 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 Act.

(f) As the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in Register

& maintained under Section 301 of the Act, Clause (iii) (f) of the Order relating to rate of interest and terms and conditions being

(g) prima facie prejudicial to the interest of Company, Clause (iii) (g) relating to regularity in repayment of principal amount and interest, are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is 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. As informed to us, the Company is not engaged in the sale of any services. During the course of our audit, no major weakness has been noticed in these internal control systems.

(v) (a) According to the information and explanations given to us and the records of the Company examined by us, we are of the opinion

that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of Act have been so entered; and

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or

arrangements (including purchase of services) entered into the register in pursuance of Section 301 of the Act and exceeding the value of Rupees Five Lakhs in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time, wherever applicable.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the period. Hence, the question of complying with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any relevant provision of the Act, and the rules framed there under, does not arise. Accordingly clause 4(vi) of the order is not applicable.

(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 books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1)(d) of the Companies Act, 1956, in respect of the manufacturing activities of the Company to which the said rules are applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records examined by us, the Company has been regular in

depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise-duty, Cess and other material Statutory dues, applicable to it and there were no arrears of such statutory dues as on March 31,2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, given herein below are the details of dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty, cess which have not been deposited on account of disputes and the forum where the dispute is pending:

Name of the statue Nature of the dues Amount in

Entry Tax Act, 1976 Entry Tax 410,968

Employees'' Provident Fund and Miscellaneous Provident Fund 1,083,267 Provisions Act, 1952

CENVAT Credit Rules, Availing of and 2004 and Central Excise Utilisation of 76,028 Act, 1944 CENVAT Credit

CENVAT Credit Rules, Availing of and 2004 and Central Excise Utilisation of 71,534 Act, 1944 CENVAT Credit

Name of the statue Period to which Forum where dispute the amount relate is Pending

Entry Tax Act, 1976 1997-98 High Court Indore

Employees'' Provident April, 2008 to Employees'' Provident Fund and Miscellaneous December, 2010 Fund Appellate Provisions Act, 1952 Tribunal New Delhi

CENVAT Credit Rules 2004 September, 2010 to Asstt. Commissioner of and Central Excise Act,1944 December, 2012 Central Excise CENVAT Credit Rules,2004 and January, 2013 to Asstt. Commissioner of Central Excise Act, 1944 November, 2013 Central Excise

(x) In our opinion, the accumulated losses of the Company as at the end of the financial period are more than fifty percent of its net worth. In addition to this, the Company has incurred cash losses during the period under audit. However in the immediately preceding financial period there were no cash losses.

(xi) In view of the sanction of CDR package and related extension of the due dates, the Company has defaulted in following repayment of dues to Banks or Institutions:

I.PrincipalPeriod Total Amount Amount Default due paid on or amount before due date

2006- 07 51,940,846 16,937,863 35,002,983

2007- 08 66,526,092 25,292,744 41,233,348

2008- 09 75,111,312 2,800,000 72,311,312

2009- 10 75,111,312 - 75,111,312

2010- 11 81,279,485 18,400,000 62,879,485

2011- 12 78,779,485 - 78,779,485

Apr''12 to Sep''12 60,181,810 - 60,181,810

Total 488,930,342 63,430,607 425,499,735

Period Amount of Period in Amount of Default made which default as on good default made good September 30, 2012 2006-07 9,727,401 2007-08 25,275,582

2007-08 2,908,204 2008-09 38,325,144

2008-09 - - 72,311,312

2009-10 - - 75,111,312

2010-11 - - 62,879,485

2011-12 - - 78,779,485

Apr''12 to Sep''12 - - 60,181,810

Total 12,635,605 - 412,864,130

# During the period the secured lenders invoked the provision of the SARFAESI Act, 2002 and took over the possession (including right to transfer by way of lease, assignment or sale) of fixed assets being Land & Building valuing '' 50,266,490 situated at survey No. 134 to 140 and 142 at Village Birgod, Tehsil - Sonkutch, Dist - Dewas, M.P. in lieu of their outstanding term liability. (Refer Note No. 23 of Notes forming part of the financial statements)

II. Interest Amount in Rs.

Period Total Amount Amount paid Default due on or before amount due date

2006- 07 38,010,844 17,548,156 20,462,688

2007- 08 56,694,298 26,429,413 30,264,885''

2008- 09 60,818,220 9,042,313 51,775,907

2009- 10 61,702,017 2,576,644 59,125,373

2010- 11 70,273,125 4,775,462 65,497,663

2011- 12 75,177,927 14,127,308 61,050,619

Apr''12 to Sep''12 31,051,484 - 31,051,484

Total 393,727,915 74,499,296 319,228,619

Period Amount of Period in Amount of Default made which default default as on good made good Sept 30, 2012

2006-07 - - 20,462,688

2007-08 1,097,696 2008-09 29,167,189

2008-09 - - 51,775,907

2009-10 - - 59,125,373

2010-11 - - 65,497,663

2011-12 6,787,415 2008-09 to 54,263,204 2010-11

Apr''12 to Sep''12 - - 31,051,484

Total 7,885,111 - 311,343,508

Company and the secured lenders had mutually agreed to arrive at consensus in respect of settlement of all the claims by the secured lenders on the Company and as a result, in pursuance to the scheme of "One Time Settlement (OTS)", with the cut-off date of September 30, 2012, the secured lenders had agreed to settle the total outstanding (principal and interest thereon). (Refer Note No.22 of Notes forming part of the financial statements)

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and / or advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) According to the information and explanations given to us, in our opinion the Company is not dealing or trading in shares, securities, debentures and other investments and hence, the requirements of Clause 4(xiv) of the Order are not applicable to the Company.

(xv) As the Company has not given any guarantee for loans taken by others from banks or financial institutions, clause 4(xv) of the Order is not applicable to the Company.

(xvi) According to the information and explanations given to us, in our opinion, the Company has not availed any of the term loan facilities, and hence, the requirements of Clause 4 (xvi) of the Order are not applicable to the Company.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the funds raised on short term basis have not been utilised for long term investment.

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

(xix) According to the information and explanations given to us, as the Company has not issued any debentures and hence, the question of creating security or charges in respect thereof does not arise, Clause 4 (xix) of the Order is not applicable to the Company.

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

(xxi) Based on the audit procedures performed and 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 Bansi S Mehta & Co. Chartered Accountants Firm Registration No.100991W

Divyesh I. Shah Place : Indore Partner Date : May 30, 2014 Membership No. 37326


Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of HIND SYNTEX LIMITED ("the Company"), which comprise the Balance Sheet as at September 30, 2013, and the Statement of Profit and Loss and the Cash Flow Statement for the period ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility forthe 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 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.

Auditor''s Responsibility

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

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

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

Basis for Qualified Opinion

(a) During the period ended on September 30, 2013, the Company has charged to the Statement of Profit and Loss of t 4,562,725 in respect Of Gratuity and oft 1,738,402 in respect of Compensated Absences. In the absence of detailed information from an Independent Actuary, interalia, as to the present value of obligation and employee benefits cost to be recognised respectively in the Balance Sheet and Statement of Profit & Loss, we are unable to ascertain the adjustment and the charges which should have been made to the Statement of Profit & Loss, respectively, in respect of Gratuity and Compensated Absences, as contemplated by the Accounting Standard-15 ("AS-15") on- "Employees Benefits" [AS-15 (Revised)] and accordingly, we are unable to comment on the effect thereof on the Profit for the period and the consequential effect on the Statement of Profit & Loss, and Current Liabilities and Provisions carried forward for the period end.fRefer note No.25 of notes forming part of the financial statements)

Further, in view of the absence of the information as aforesaid, the Company has not made disclosures of reconciliation ¦ of obligation, fairvalue of plan assets, Actuarial assumptions, etc. as required by AS-15 (Revised).

(b) Based on a technical opinion, the Company has provided depreciation on all plant and machinery (including Power Plant) as continuous process plants at the rate pursuant to notification in GSR No.756E dated 16.12.1993 on straight line method.

On the basis of the Guidance Note issued by the Institute of Chartered Accountants of India on "Some Important Issues Arising From The Amendments To Schedule XIV to the Companies Act, 1956", in our opinion, depreciation should have been providedatthe rate otherthan that provided for continuous process plant Schedule XlVof the Companies Act, 1956. Had depreciation been provided at the rate other than that provided for continuous process plant, depreciation for the period would have been t 12,293,997 (instead off 47,056,590), Profit for the period (Net of Deferred Tax Assets off 11,278,723 for such depreciation) would have beent 226,346,083 (instead oft 180,304,767) and for the period end, Net Block of Fixed Assets would have been t 49,002,269 (instead off 172,109,870), Debit Balance in the Statement of Profit and Loss, after adjusting balances in Reserves and Surplus (except to the extent oft 183,744,615 on account of Capital Reserves), (Net of Deferred Tax Asset of t 39,942,261 for such depreciation) would ha ve been f 129,750,812 [instead of Debit Balance in the Statement of Profit and Loss, after adjusting balances in Reserves and Surplus (except to the extent oft 183,744,615 on account of Capital Reserves), oft 46,585,472] and there would have been Deferred Tax Asset (Net) of Rs. Nil (instead of Deferred Tax Assets (Net) oft Nil).

(c) During the period ended on September 30,2013, the Company has arrived at an "One Time Settlement" (OTS) of dues with its lenders, the cut-off date being September 30,2012; as a result, the lenders have agreed to waive the principal amount of f174,826,7 56/-'' and such amount is credited to Capital Reserve which is not in accordance with the Accounting Standard (AS) 5 on "Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies " as notified under the Companies (Accounting Standards) Rules, 2006. In fact, the said treatment is not in line with the opinion of the Expert Advisory Committee (EAC) ofthe ICAI on Accounting treatment ofwaiver ofloan.

Had the said waiver of principal amount of loan been credited to the Statement of Profit and Loss instead of the Credit reflected in Capital Reserve account, the profit for the period and the carried forward balances in Surplus under the head ''Reserves & Surplus''would have been higher by f 174,826,756.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects for the matter described in 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 Balance Sheet, of the state of affairs of the Company as at September 30,2013;

b) in the case of Statement of Profit and Loss, of the profit forthe period ended on that date; and

c) in the case of Cash Flow Statement, of the Cash Flows forthe period ended on that date. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in the 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 accounts 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 accounts;

(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 Companies Act, 1956;

(e) On the basis of the written representations received from the Directors as on September 30, 2013, taken on record by the Board of Directors, we repdrt that none of the directors is disqualified as on September 30,2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our Report of even date to the members of HIND SYNTEX LIMITED on the accounts for the period ended September 30,2013

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that: (i) (a) The Company is generally maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a phased programme of physical verification of fixed assets 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) The Company has not disposed off any substantial part of its fixed assets during the period so as to affect its going concern, subject to Note 24 to the Accounts relating to assets transferred to Pillukhedi Unit from Birgod Unit.

(ii) (a) The inventories have been physically verified by the management during the period. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of accounts.

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

(b) As the Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in the

(c) register maintained under Section 301 of the Companies Act, 1956, Clause (iii) (b) of the Order relating to the rate of & interest and terms and conditions being prima facie prejudicial to the Company, Clause (iii) (c) relating to regularity of

(d) receipt of principal amount and interest and Clause (iii) (d) relating to steps taken for recovery of overdue principal and interest of more than rupees one lakh, are not applicable.

(e) During the period, 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 Act.

(f) As the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in & Register maintained under Section 301 of the Act, Clause (iii) (f) of the Order relating to rate of interest and terms and

(g) conditions being prima facie prejudicial to the interest of Company, Clause (iii) (g) relating to regularity in repayment of principal amount and interest, are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is 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. As informed to us, the Company is not engaged in the sale of any services. During the course of our audit, no major weakness has been noticed in these internal control systems. (v) (a) According to the information and explanations given to us and the records of the Company examined by us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of Act have been so entered; and (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements (including purchase of services) entered into the register in pursuance of Section 301 of the Act and exceeding the value of Rup Five Lakhs in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time, wherever applicable. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the period. Hence, the question of complying with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any relevant provision of the Act, and the rules framed there under, does not arise. Accordingly clause 4(vi) of the order is not applicable. (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 books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1 )(d) of the Companies Act, 1956, in respect of the manufacturing activities of the Company to which the said rules are applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete. (ix) (a) According to the information and explanations given to us and the records examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise-duty, Cess and other material Statutory dues, applicable to it and there were no arrears of such statutory dues as on September 30,2013 for a period of more than six months from the date they became payable.

(x) In our opinion, the accumulated losses of the Company as at the end of the financial period are more than fifty percent of its net worth. But the Company has not incurred cash losses during the period under audit. However in the immediately preceding financial period there were cash losses.

(xi) In view of the sanction of CDR package and related extension of the due dates, the Company has defaulted in following repayment of dues to Banks are institutions: I. Principal Amount in X

* The Company and the secured lenders had mutually agreed to arrive at consensus in respect of settlement of all the claims by

the secured lenders on the Company and as a result, in pursuance to the scheme of "One Time Settlement (OTS)", with the cutoff date of September 30,2012, the secured lenders had agreed to settle the total outstanding (principal and interest thereon) crores (Refer Note No. 23 of notes farming part of financial statements)) (xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and / or advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) As the Company is not a chit fund, Nidhi, mutual benefit fund or society the provisions of Clause 4 (xiii) of the Order are not applicable to the Company. (xiv) According to the information and explanations given to us, in our opinion the Company is not dealing or trading in shares, securities, debentures and other investments and hence, the requirements of Clause 4(xiv) of the Order are not applicable to the Company. (xv) As the Company has not given any guarantee for loans taken by others from banks or financial institutions, clause 4(xv) of the Order is not applicable to the Company. (xvi) In our opinion, the term loans availed by the Company were prima facie, applied for the purpose for which the loans were btained. (xvii)According to the information and explanations given to us and on an overall examination of the balance sheet of the Company,

we report that the funds raised on short term basis have not been utilised for long term investment. (xviii)According to the information and explanations given to us, as the Company has not made any preferential allotment of shares during the period, Clause 4 (xviii) of the Order is not applicable. (xix) According to the information and explanations given to us, as the Company has not issued any debentures and hence, the question of creating security or charges in respect thereof does not arise, Clause 4 (xix) of the Order is not applicable. (xx) As the Company has not raised any money by public issues during the period, Clause4 (xx) of the Order is not applicable. (xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For BANSI S. MEHTA & CO.

Chartered Accountants

Firm Registration No. 100991W

PLACE :KOLKATA DIVYESH I. SHAH

DATED :October 28,2013 Partner

Membership No:37326


Mar 31, 2012

1. We have audited the attached Balance Sheet of HIND SYNTEX LIMITED as at March 31,2012 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financialstatements 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 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the basis of such checks, we considered appropriate and the information and explanations given to us, on the matters specified in paragraphs 4 of the said Order.

4. Further to our comments in the Annexure referred to 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 accounts as required by law have been kept by the Company, so far as appears from our examination of those books;

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

(d) Refer to Note No. 28 to Accounts relating to the charge to the Profit & Loss Account of Rs. 25,71,545 in respect of Gratuity and of 17,21,679 in respect of Compensated Absences. In the absence of detailed information from an independent actuary, interalia, as to the present value of obligation and employee benefits cost to be recognised respectively in the Balance Sheet and Profit & Loss Account, we are unable to ascertain the adjustment and the charges which should have been made to the Profit & Loss Account, respectively, in respect of Gratuity and Compensated Absences, as contemplated by the Accounting Standard-15 ("AS-15") on "Employees Benefits" [AS-15 (Revised)] and accordingly, we are unable to comment on the effect thereof on the Loss for the year and the consequential effect on Debit balance in the Profit & Loss Account, and Current Liabilities and Provisions carried forward at the year end.

Further, in view of the absence of the information as aforesaid, the Company has not made disclosures of reconciliation of obligation, fair value of plan assets, actuarial assumptions, etc. as required by AS-15 (Revised).

Further, as stated in Note 34 to the Accounts, on the basis of the working prepared by the Company to ascertain the impairment in terms of Accounting Standard-28, "Impairment of Assets", no impairment loss has been recognised. However, in view of the uncertainty Involved with the internal restructuring (refer note 26 of the accounts), and since the future cash flow prepared to determine the value in use are on basis of such restructuring, we are unable to comment whether there is an impairment of assets.

Subject to our observation as mentioned in paragraph (d) above, in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the Directors, as on March 31,2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31,2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of Companies Act, 1956;

(f) Based on a technical opinion, the Company has provided depreciation on all plant and machinery (including Power Plant) as continuous process plants at the rate pursuant to notification in GSR No.756E dated 16.12.1993 on straight line method.

On the basis of the Guidance Note issued by the Institute of Chartered Accountants of India on "Some Important Issues Arising From The Amendments To Schedule XIV to the Companies Act, 1956", in our opinion, depreciation should have been provided at the rate other than that provided for continuous process plant Schedule XIV of the Companies Act, 1956.

Had depreciation been provided at the rate other than that provided for continuous process plant, depreciation for the year would have been Rs. 1,00,18,680 (instead of Rs. 3,63,45,678), Loss for the year (Net of Deferred Tax Assets of Rs. 85,41,795 for such depreciation) would have been 17,10,29,139 (instead of 110,58,97,941) and at the year end, Net Block of Fixed Assets would have been Rs. 13,40,48,404 (instead of Rs. 29,19,18,598), Debit Balance in the Profit and Loss Account, after adjusting balances in Reserves and Surplus (except to the extent of X 89,17,860 on account of Capital Reserves), (Net of Deferred Tax Asset of Rs. 5,12,20,984 for such depreciation) would have been Rs. 50,83,66,206 [instead of Debit Balance in the Profit and Loss Account, after adjusting balances in Reserves and Surplus (except to the extent of Rs. 89,17,860 on account of Capital Reserves), of 140,17,16,996] and there would have been Deferred Tax Asset (Net) of Rs. Nil (instead of Deferred Tax Assets (Net) of Rs. Nil).

(g) We would like to draw attention to Note 26(b) to the Accounts relating to non availability of loan statement and balance confirmation of loans outstanding from some of the lender banks/institutions as on March 31, 2012, due to which the interest charged to Profit & Loss Account is determined on the basis of the interest rate specified in the Corporate Debt Restructuring Scheme and therefore, the outstanding loan and interest balance has been taken as per the records of the Company;

(h) Subject to our observations as mentioned in paragraph (d) and (f) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with notes thereon and significant Accounting Policies siatsd in Schedule XIV give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view:

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

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

(iii) in the case of Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.

Annexure referred to in paragraph 3 of the Auditors' Report of even date to the members of HIND SYNTEX LIMITED on the accounts for the year ended March 31, 2012.

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

(i) (a) The Company is generally maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a phased programme of physical verification of fixed assets 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) The Company has not disposed off any substantial part of its fixed assets during the year so as to affect its going concern, subject to Note 27 of Notes to the Accounts relating to assets transferred to Pillukhedi Unit from Birgod Unit.

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

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

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

(b) As the Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in

(c) the register maintained under Section 301 of the Companies Act, 1956, Clause (iii) (b) of the Order relating to the & rate of interest and terms and conditions being prima facie prejudicial to the Company, Clause (iii) (c) relating to

(d) regularity of receipt of principal amount and interest and Clause (iii) (d) relating to steps taken for recovery of overdue principal and interest of more than rupees one lakh, are not applicable.

(e) During the year, 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 Act.

(f) As the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in & Register maintained under Section 301 of the Act, Clause (iii) (f) of the Order relating to rate of interest and terms

(g) and conditions being prima facie prejudicial to the interest of Company, Clause (iii) (g) relating to regularity in repayment of principal amount and interest, are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is 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. As informed to us, the Company is not engaged in the sale of any services. During the course of our audit, no major weakness has been noticed in these internal control systems.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Consequently, reporting on clause 4(v)(b) of the said Order does not arise.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Hence, the question of complying with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any relevant provision of the Act, and the rules framed there under, does not arise. Accordingly clause 4(vi) of the order is not applicable.

(vii) In lieu of Corporate Debt Restructuring, the Monitoring committee has appointed an independent firm of Chartered Accountants as Concurrent Auditor to conduct concurrent audit of the Company on monthly basis, in view of which, the Board of Directors had decided to discontinue separate internal audit of the Company.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1 )(d) of the Companies Act, 1956, in respect of the manufacturing activities of the Company to which the said rules are applicable and are of the opinion that prima facie the t prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete. (ix) (a) According to the information and explanations given to us and the records examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise-duty, Cess and other material Statutory dues, applicable to it and there were no arrears of such statutory dues as on March 31,2012 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, given herein below are the details of dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty, cess which have not been deposited on account of disputes and the forum where the dispute is pending:

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

Entry Tax Act, 1976 Entry Tax 4,10,968 1997-98 Tribunal, Bhopal

(x) in our opinion, the accumulated losses of the Company as at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the year under audit. However in the immediately preceding financial year there were no cash losses.

(xi) In view of the sanction of CDR package and related extension of the due dates, the Company has defaulted in following repayment of dues to Banks or Institutions:

I. Period Amount in Rs.

Period Total Amount paid Default Amount due on or before amount due date

2006-07 5,19,40,846 1,69,37,863 3,50,02,983

2007-08 6,65,26,092 2,52,92,744 4,12,33,348

2008-09 7,51,11,312 28,00,000 7,23,11,312

2009-10 7,51,11,312 - 7,51,11,312

2010-11 8,12,79,485 1,84,00,000 6,28,79,485

2011-12 7,87,79,485 - 7,87,79,485

Total 42,87,48,532 6,34,30,607 36,53,17,925

Period Amount of Year in which Amount of Default made default made default as on good good March 31,2012

2006-07 97,27,401 2007-08 2,52,75,582

2007-08 29,08,204 2008-09 3,83,25,144

2008-09 - - 7,23,11,312

2009-10 - - 7,51,11,312

2010-11 - - 6,28,79,485

2011-12 - - 7,87,79,485

1,26,35,605 - 35,26,82,320



II. Interest Amount in Rs.



Period Total Amount paid Default Amount due on or before amount due date

2006-07 3.80,10,844 1,75,48,156 2,04,62,688

2007-08 5,66,94,298 2,64,29,413 3,02,64,885

2008-09 6,08,18,220 90,42,313 5,17,75,907

2009-10 6,17,02,017 25,76,644 5,91,25,373

2010-11 7.02,73,125 47,75,462 6,54,97,663

2011-12 7,51,77,927 1,41,27,308 6,10,50,619

Total 36,26,76,431 7,44,99,296 28,81,77,135

Period Amount of Year in which Amount of Default made default made default as on good good March 31,2012

2006-07 - - 2,04,62,688

2007-08 10,97,696 2008-09 2,91,67,189

2008-09 - - 5,17,75,907

2009-10 - - 5,91,25,373

2010-11 - - 6,54,97,663

2011-12 67,87,415 2008-09 to 5,42,63,204 2010-11

Total 78,85,111 - 28,02,92,024

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and / or advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) According to the information and explanations given to us, in our opinion the Company is not dealing or trading in shares, securities, debentures and other investments and hence, the requirements of Clause 4(xiv) of the Order are not applicable to the Company.

(xv) As the Company has not given any guarantee for loans taken by others from banks or financial institutions, clause 4(xv) of the Order is not applicable to the Company.

(xvi) In our opinion, the term loans availed by the Company were prima facie, applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on examination of the financial statements of the Company, we report that, the Company has utilized short-term funds for long- term purpose amounting to Rs.730.39 lacs. The utilization of short term funds towards long terms funds is due to recovery of interest on term loan by the bank.

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

(xix) According to the information and explanations given to us, as the Company has not issued any debentures and hence, the question of creating security or charges in respect thereof does not arise, Clause 4 (xix) of the Order is not applicable.

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

(xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Bansi S Mehta & Co.

Chartered Accountants

Firm Registration No. 100991W

Place : Plllukhedi Divyesh I. Shah

Dated : May 25, 2012 Partner

Membership No: 37326


Mar 31, 2011

1. We have audited the attached Balance Sheet of HIND SYNTEX LIMITED as at March 31, 2011 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the basis of such checks, we considered appropriate and the information and explanations given to us, on the matters specified in paragraphs 4 of the said Order.

4. Further to our comments in the Annexure referred to 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 accounts as required by law have been kept by the Company, so far as appears from our examination of those books;

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

(d) Refer to Note No. 5 of Schedule 15 to Accounts relating to the charge to the Profit & Loss Account of Rs. 31,34,025 in respect of Gratuity and of Rs. 7,14,862 in respect of Compensated Absences. In the absence of detailed information from an independent actuary, interalia, as to the present value of obligation and employee benefits cost to be recognised respectively in the Balance Sheet and Profit & Loss Account, we are unable to ascertain the adjustment and the charges which should have been made to the Profit & Loss Account, respectively, in respect of Gratuity and Compensated Absences, as contemplated by the Accounting Standard-15 ("AS-15") on "Employees Benefits" [AS-15 (Revised)] and accordingly, we are unable to comment on the effect thereof on the Loss for the year and the consequential effect on Debit balance in the Profit & Loss Account, and Current Liabilities and Provisions carried forward at the year end.

Further, in view of the absence of the information as aforesaid, the Company has not made disclosures of reconciliation of obligation, fair value of plan assets, actuarial assumptions, etc. as required by AS-15 (Revised).

Further, as stated in Note 11 of Schedule 15 to the Accounts, on the basis of the working prepared by the Company to ascertain the impairment in terms of Accounting Standard-28, "Impairment of Assets", no impairment loss has been recognised. However, in view of the uncertainty involved with the internal restructuring (refer note 3 of schedule 15), and since the future cash flow prepared to determine the value in use are on basis of such restructuring, we are unable to comment whether there is an impairment of assets.

Subject to our observation as mentioned in paragraph (d) above, in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in sub- section (3C) of Section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the Directors, as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of Companies Act, 1956;

(f) Based on a technical opinion, the Company has provided depreciation on all plant and machinery (including Power Plant) as continuous process plants at the rate pursuant to notification in GSR No.756E dated 16.12.1993 on straight line method.

On the basis of the Guidance Note issued by the Institute of Chartered Accountants of India on "Some Important Issues Arising From The Amendments To Schedule XIV to the Companies Act, 1956", in our opinion, depreciation should have been provided at the rate other than that provided for continuous process plant Schedule XIV of the Companies Act, 1956.

Had depreciation been provided at the rate other than that provided for continuous process plant, depreciation for the year would have been Rs. 1,13,95,980 (instead of Rs. 3,70,68,828), Loss for the year (Net of Deferred Tax Assets of Rs. 83,29,555 for such depreciation) would have been Rs. 1,12,97,139 (instead of Rs. 2,27,05,265) and at the year end, Net Block of Fixed Assets would have been Rs. 16,14,56,691 (instead of Rs. 34,56,53,883), Debit Balance in the Profit and Loss Account, after adjusting balances in Reserves and Surplus (except to the extent of Rs. 89,17,860 on account of Capital Reserves), (Net of Deferred Tax Asset of Rs. 5,97,62,779 for such depreciation) would have been Rs. 42,03,29,422 [instead of Debit Balance in the Profit and Loss Account, after adjusting balances in Reserves and Surplus (except to the extent of Rs. 89,17,860 on account of Capital Reserves), of Rs. 29,58,95,009] and there would have been Deferred Tax Asset (Net) of Rs. Nil (instead of Deferred Tax Assets (Net) of Rs. Nil).

(g) We would like to draw attention to Note 3(c) of Schedule 15 to the Accounts relating to non availability of loan statement and balance confirmation of loans outstanding from some of the lender banks/institutions as on March 31, 2011, due to which the interest charged to Profit & Loss Account is determined on the basis of the interest rate specified in the Corporate Debt Restructuring Scheme and therefore, the outstanding loan and interest balance has been taken as per the records of the Company;

(h) We would like to further draw attention Note 12 of Schedule 15 to the Accounts relating to non provisioning of management fees amounting to Rs. 22,00,000 payable to Bank of India for disbursement of loan taken by the Company for paying labour dues as the same is payable out of the sale proceeds of balance assets of the Company at Birgod unit remaining after reallocation of assets from Birgod unit to Pillukhedi Unit.

(i) Subject to our observations as mentioned in paragraph (d) and (f) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with notes thereon and significant Accounting Policies stated in Schedule XIV give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

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

(iii) in the case of Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.

Annexure referred to in paragraph 3 of the Auditors' Report of even date to the members of HIND SYNTEX LIMITED on the accounts for the year ended March 31, 2011.

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

(i) (a) The Company is generally maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a phased programme of physical verification of fixed assets 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) The Company has not disposed off any substantial part of its fixed assets during the year so as to affect its going concern, subject to Note 4 of Schedule 15 to the Accounts relating to assets transferred to Pillukhedi Unit from Birgod Unit.

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

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

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

(b) As the Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in

(c) the register maintained under Section 301 of the Companies Act, 1956, Clause (iii) (b) of the Order relating to the & rate of interest and terms and conditions being prima facie prejudicial to the Company, Clause (iii) (c) relating to

(d) regularity of receipt of principal amount and interest and Clause (iii) (d) relating to steps taken for recovery of overdue principal and interest of more than rupees one lakh, are not applicable.

(e) During the year, 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 Act.

(f) As the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in & Register maintained under Section 301 of the Act, Clause (iii) (f) of the Order relating to rate of interest and terms

(g) and conditions being prima facie prejudicial to the interest of Company, Clause (iii) (g) relating to regularity in repayment of principal amount and interest, are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is 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. As informed to us, the Company is not engaged in the sale of any services. During the course of our audit, no major weakness has been noticed in these internal control systems.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Consequently, reporting on clause 4(v)(b) of the said Order does not arise.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Hence, the question of complying with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any relevant provision of the Act, and the rules framed there under, does not arise. Accordingly clause 4(vi) of the order is not applicable.

(vii) In lieu of Corporate Debt Restructuring, the Monitoring committee has appointed an independent firm of Chartered Accountants as Concurrent Auditor to conduct concurrent audit of the Company on monthly basis, in view of which, the Board of Directors had decided to discontinue separate internal audit of the Company.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1)(d) of the Companies Act, 1956, in respect of the manufacturing activities of the Company to which the said rules are applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise-duty, Cess and other material Statutory dues, applicable to it and there were no arrears of such statutory dues as on March 31, 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, given herein below are the details of dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty, cess which have not been deposited on account of disputes and the forum where the dispute is pending:

Name of the Nature of Amount Period to Forum where statue The dues in Rs. which the dispute is amount pending relate Entry Tax Act, Entry Tax 4,10,968 1997-98 Tribunal, 1976 Bhopal

(x) In our opinion, the accumulated losses of the Company as at the end of the financial year are more than fifty percent of its net worth. The Company has not incurred cash losses during the year under audit. However in the immediately preceding financial year there were cash losses.

(xi) In view of the sanction of CDR package and related extension of the due dates, the Company has defaulted in following repayment of dues to Banks or Institutions:

I. Principal Amount in Rs.

Period Total Amount paid Default Amount due on or before amount due date

2006-07 5,19,40,846 1,69,37,863 3,50,02,983

2007-08 6,65,26,092 2,52,92,744 4,12,33,348

2008-09 7,51,11,312 28,00,000 7,23,11,312

2009-10 7,51,11,312 - 7,51,11,312

2010-11 8,12,79,485 - 8,12,79,485

Total 34,99,69,047 4,50,30,607 30,49,38,440

Period Amount of Year in which Amount of Default made default made default as on good good March 31, 2011

2006-07 97,27,401 2007-08 2,52,75,582

2007-08 29,08,204 2008-09 3,83,25,144

2008-09 - - 7,23,11,312

2009-10 - - 7,51,11,312

2010-11 - - 8,12,79,485

Total 1,26,35,605 - 29,23,02,835

II. Interest Amount in Rs.

Period Total Amount paid Default Amount due on or before amount due date

2006-07 3,80,10,844 1,75,48,156 2,04,62,688

2007-08 5,66,94,298 2,64,29,413 3,02,64,885

2008-09 5,74,94,893 90,42,313 4,84,52,580

2009-10 6,17,02,017 25,76,644 5,91,25,373

2010-11 7,02,73,125 47,75,462 6,54,97,663

Total 28,41,75,177 6,03,71,988 22,38,03,189

Period Amount of Year in which Amount of Default made default made default as on good good March 31, 2011

2006-07 - - 2,04,62,688

2007-08 10,97,696 2008-09 2,91,67,189

2008-09 - - 4,84,52,580

2009-10 - - 5,91,25,373

2010-11 - - 6,54,97,663

Total 10,97,696 - 22,27,05,493

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and / or advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) According to the information and explanations given to us, in our opinion the Company is not dealing or trading in shares, securities, debentures and other investments and hence, the requirements of Clause 4(xiv) of the Order are not applicable to the Company.

(xv) As the Company has not given any guarantee for loans taken by others from banks or financial institutions, clause 4(xv) of the Order is not applicable to the Company.

(xvi) In our opinion, the term loans availed by the Company were prima facie, applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on examination of the financial statements of the Company, we report that, the Company has utilized short-term funds for long- term purpose amounting to ` 161.13 lacs. The utilization of short term funds towards long terms funds is due to recovery of interest on term loan by the bank.

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

(xix) According to the information and explanations given to us, as the Company has not issued any debentures and hence, the question of creating security or charges in respect thereof does not arise, Clause 4 (xix) of the Order is not applicable.

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

(xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Bansi S Mehta & Co. Chartered Accountants Firm Registration No. 100991W



Place : Mumbai Divyesh I. Shah Dated : June 25, 2011 Partner Membership No: 37326


Mar 31, 2010

1. We have audited the attached Balance Sheet of HIND SYNTEX LIMITED as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the 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 in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the basis of such checks, we considered appropriate and the information and explanations given to us, on the matters specified in paragraphs 4 of the said Order.

4. Further to our comments in the Annexure referred to 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 accounts as required by law have been kept by the Company, so far as appears from our examination of those books;

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

(d) Refer to Note No. 5 of Schedule 15 to Accounts relating to the charge to the Profit & Loss Account of Rs. 37,90,824 in respect of Gratuity and of Rs. 2,13,144 in respect of Compensated Absences. In the absence of detailed information from an independent actuary, interalia, as to the present value of obligation and employee benefits cost to be recognised respectively in the Balance Sheet and Profit & Loss Account, we are unable to ascertain the adjustment and the charges which should have been made to the Profit & Loss Account, respectively, in respect of Gratuity and Compensated Absences, as contemplated by the Accounting Standard-15 ("AS-15") on "Employees Benefits" [AS-15 (Revised)] and accordingly, we are unable to comment on the effect thereof on the Loss for the year and the consequential effect on Debit balance in the Profit & Loss Account, and Current Liabilities and Provisions carried forward at the year end.

Further, in view of the absence of the information as aforesaid, the Company has not made disclosures of reconciliation of obligation, fair value of plan assets, actuarial assumptions, etc. as required by AS-15 (Revised).

Further, as stated in Note 10 of Schedule 15 to the Accounts, on the basis of the working prepared by the Company to ascertain the impairment in terms of Accounting Standard-28, "Impairment of Assets", no impairment loss has been recognised. However, in view of the uncertainty involved with the internal restructuring (refer note 3 of schedule 15), and since the future cash flow prepared to determine the value in use are on basis of such restructuring, we are unable to comment whether there is an impairment of assets.

Subject to our observation as mentioned in above paragraph (d) above, in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

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

(f) Based on a technical opinion, the Company has provided depreciation on all plant and machinery (including Power Plant) as continuous process plants at the rate pursuant to notification in GSR No.756E dated 16.12.1993 on straight line method.

On the basis of the Guidance Note issued by the Institute of Chartered Accountants of India on "Some Important Issues Arising From The Amendments To Schedule XIV to the Companies Act, 1956", in our opinion, depreciation should have been- provided at the rate other than that provided for continuous process plant Schedule XIV of the Companies Act, 1956.

Had depreciation been provided at the rate other than that provided for continuous process plant, depreciation for the year would have been Rs. 1,24,11,495 (instead of Rs. 3,79,70,737), Loss for the year (Net of Deferred Tax Assets of Rs. 86,87,586 for such depreciation) would have been Rs. 5,66,14,209 (instead of Rs. 7,34,85,865) and at the year end, Net Block of Fixed Assets would have been Rs. 17,27,76,780 (instead of Rs. 38,26,46,820, including Assets held for disposal Rs.7,45,82,998), Debit Balance in the Profit and Loss Account, after adjusting balances in Reserves and Surplus (except to the extent of Rs. 89,17,860 on account of Capital Reserves), (Net of Deferred Tax Liability of Rs. 7,13,34,827 for such depreciation) would have been Rs. 41,17,24,957 [instead of Debit Balance in the Profit and Loss Account, after adjusting balances in Reserves and Surplus (except to the extent of Rs. 89,17,860 on account of Capital Reserves), of Rs. 27,31,89,744] and there would-have been Deferred Tax Asset (Net) of Rs. Nil (instead of Deferred Tax Liability (Net) of Rs. Nil).

(g) We would like to draw attention to Note 3(c) of Schedule 15 to the Accounts relating to non availability of loan statement and balance confirmation of loans outstanding from some of the lender banks/institutions as on March 31, 2010, due to which the interest charged to Profit & Loss Account is determined on the basis of the interest rate specified in the Corporate Debt Restructuring Scheme and therefore, the outstanding loan and interest balance has been taken as per the records of the Company;

(h) We would like to further draw attention Note 11 of Schedule 15 to the Accounts relating to non provisioning of management fees amounting to Rs. 22,00,000 payable to Bank of India for disbursement of loan taken by the Company for paying labour dues as the same is payable out of the sale proceeds of balance assets of the Company at Birgod unit remaining after reallocation of assets from Birgod unit to Pillukhedi Unit.

(i) Subject to our observations as mentioned in paragraph (d) and (f) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with notes thereon and significant Accounting Policies stated in Schedule XIV give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

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

(iii) in the case of Cash Flow Statement, of the Gash Flows of the Company for the year ended on that date.





Annexure referred to in paragraph 3 of the Auditors Report of even date to the members of HIND SYNTEX LIMITED on the accounts for the year ended March 31, 2010.

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that: (i) (a) The Company is generally maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a phased programme of physical verification of fixed assets 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) The Company has not disposed off any substantial part of its fixed assets during the year so as to affect its going concern, subject to Note 4 of Schedule 15 to the Accounts relating to assets transferred to Pillukhedi Unit from Birgod Unit.

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

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

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

(b) As the Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in

(c) the register maintained under Section 301 of the Companies Act, 1956, Clause (iii) (b) of the Order relating to the & rate of interest and terms and conditions being prima facie prejudicial to the Company, Clause (iii) (c) relating to

(d) regularity of receipt of principal amount and interest and Clause (iii) (d) relating to steps taken for recovery of overdue principal and interest of more than rupees one lac, are not applicable.

(e) During the year, 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 Act.

(f) As the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in & Register maintained under Section 301 of the Act, Clause (iii) (f) of the Order relating to rate of interest and terms

(g) and conditions being prima facie prejudicial to the interest of Company, Clause (iii) (g) relating to regularity in repayment of principal amount and interest, are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is 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. As informed to us, the Company is not engaged in the sale of any services. During the course of our audit, no major weakness has been noticed in these internal control systems.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section; and

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of each party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time, wherever applicable.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Hence, the question of complying with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any relevant provision of the Act, and the rules framed there under, does not arise. Accordingly clause 4 vi) of the order is not applicable.

(vii) In lieu of Corporate Debt Restructuring, Asset Reconstruction Company India Limited (ARCIL) has appointed an independent firm of Chartered Accountants as Concurrent Auditor to conduct concurrent audit of the Company on monthly basis, in view of which, the Board of Directors had decided to discontinue separate internal audit of the Company.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1 )(d) of the Companies Act, 1956, in respect of the manufacturing activities of the Company to which the said rules are applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise-duty, Cess and other material Statutory dues, applicable to it and there were no arrears of such statutory dues as on March 31,2010 for a period of more than six months from the date they became payable except the following statutory due:

Name of Nature of Amount in Period to

the statue the dues Rupees which the

amount relate

Income Tax Income Tax 2,83,670 1989-90

Act, 1961 I Assessment dues |



Name of the statue Due Date Date of

payment

Income Tax September 26, 2008 - Act, 1961

(b) According to the information and explanations given to us, given herein below are the details of dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty, cess which have not been deposited on account of disputes and the forum where the dispute is pending:

Sr. Name of the Nature of The dues Amount

No. statue in Rupees

1. Entry Tax Act, Entry Tax 4,10,968 1976 Assessment dues

2. M.P. Commercial Tax 2,90,738 Commercial Tax Assessment dues Act, 1994

3. Central Sales Central Sales Tax 4,17,790 Tax Act, 1956 Assessment dues

Sr. Name of the Period to Forum where dispute is pending No. statue which the

amount relate

1. Entry Tax Act, 1976 1997-98 Tribunal, Bhopal

2. M.P. Commercial Tax Act, 1994 2003-04 Tribunal, Bhopal

3. Central Sales Tax Act, 1956 2003-04 Tribunal, Bhopal



(x) In our opinion, the accumulated losses of the Company as at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the year under audit and the immediately preceding financial year.

(xi) In view of the sanction of CDR package and related extension of the due dates, the Company has defaulted in following repayment of dues to Banks or Institutions: I. Principle Amount in Rupees

Period Total Amount paid Default

Amount due on or before amount

due date

2006-07 5,19,40,846 1,69,37,863 3,50,02,983

2007-08 6,65,26,092 2,52,92,744 4,12,33,348

2008-09 7,51,11,312 28,00,000 7,23,11,312

2009-10 7,51,11,312 - 7,51,11,312

Total 26,86,89,562 4,50,30,607 22,36,58,955



Period Amount of Year in which Amount of

Default made default made default as on good good March 31,2010

2006-07 97,27,401 2007-08 2,52,75,582

2007-08 29,08,204 2008-09 3,83,25,144

2008-09 - - 7,23,11,312

2009-10 - - 7,51,11,312

Total 1,26,35,605 - 21,10,23,350



II. Interest Amount in Rupees

Period Total Amount paid Default

Amount due on or before amount

due date 2006-07 3,80,10,844 1,75,48,156 2,04,62,688

2007-08 5,66,94,298 2,64,29,413 3,02,64,885

2008-09 5,74,94,893 90,42,313 4,84,52,580

2009-10 6,17,02,017 25,76,644 5,91,25,373

Total 21,39,02,052 5,55,96,526 15,83,05,526

II. Interest Amount in Rupees

Period Amount of Year in which Amount of

Default made default made default as on good good March 31,2010

2006-07 - - 2,04,62,688

2007-08 10,97,696 2008-09 2,91,67,189

2008-09 - - 4,84,52,580

2009-10 - - 5,91,25,373

Total 10,97,696 - 15,72,07,830



(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and / or advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) According to the information and explanations given to us, in our opinion the Company is not dealing or trading in shares, securities, debentures and other investments and hence, the requirements of Clause 4(xiv) of the Order are not applicable to the Company.

(xv) As the Company has not given any guarantee for loans taken by others from banks or financial institutions, clause 4(xv) of the Order is not applicable to the Company.

(xvi) In our opinion, the term loans availed by the Company were prima facie, applied for the purpose f or which the loans were obtained.

(xvii) According to the information and explanations given to us and on examination of the financial statements of the Company, we report that, the Company has utilized short-term funds for long- term purpose amounting to Rs. 378.27 lacs. The utilization of short term funds towards long terms funds is due to recovery of interest on term loan by the bank.

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

(xix) According to the information and explanations given to us, as the Company has not issued any debentures and hence, the question of creating security or charges in respect thereof does not arise, Clause 4 (xix) of the Order is not applicable.

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

(xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



For Bansi S Mehta & Co.

Chartered Accountants



Place : Mumbai Amit A Desai

Dated : June 30, 2010 Partner

Membership No: 48512

 
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