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Auditor Report of India Glycols Ltd.

Mar 31, 2015

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

Management''s Responsibility for the Standalone Financial Statements

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

Auditor''s responsibility

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

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

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

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

Basis for Qualified Opinion

Attention is invited to:

i. Note no. 32(A)(i) & 32(A)(ii) of financial statements regarding non-provision against investment, inter- corporate deposit and advances in subsidiary company Shakumbari Sugar and Allied Industries Limited (SSAIL) amounting to '' 5,427.50 Lacs (Previous Year Rs. 5,427.50 Lacs), RS. 1,915.13 Lacs (including interest thereon) (Previous Year Rs. 1,834.83 Lacs) & RS. 8,453.81 Lacs (Previous Year Rs. 8,375.82 Lacs) respectively, where, in the opinion of management no provision is necessary considering the long term in nature, the intrinsic value of assets of subsidiary company and for the reasons as stated in the said notes and our inability to comment thereon. Further company have also extended corporate guarantee on behalf of SSAIL against outstanding loans amount of Financial Institution and Banks (as stated in the note no. 27(A)(iii) & 32(A)(iii)).

ii. Note no. 32(B) regarding non provision against total exposure of amounting RS. 14,774.64 Lacs (Previous Year RS. 14,848.04 Lacs) (including investment in capital of RS. 125 Lacs, (Previous Year RS. 125 Lacs) in a subsidiary, IGL Finance Limited, where the management is confident about its recoverability for the reasons as stated in said note, and our inability to comment thereon.

iii. Note no. 32(D) regarding non provision against total exposure of amounting to RS. 505.16Lacs (including trade receivable account of''RS. 477.75 Lacs) in a subsidiary, IGL CHEMINTT. PTE Limited, Singapore, where the management is confident about its recoverability for the reasons as stated in said note, and our inability to comment thereon.

Net loss for the year, investments, loans & advances and reserve & surplus are without considering impact of the above which could not be ascertained or otherwise for the reason stated in as above. Our opinion was also qualified in respect of matters reported in Para (i) & (ii) above on the financial statement for the year ended 31st March, 2014.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the "Basis for Qualified Opinion" paragraph above, the aforesaid standalone financial statements,give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of the affairs of the Company as at 31st March 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

1) We draw attention to note no. 32(C) to the financial statements for two notices received by the Company from National Stock Exchange (NSE) regarding reinstatement of financial statement and to suitably rectify the financial statement as stated in said note. Pending granting of opportunity / clarification. Company have not reinstated/rectified.

Further, attention is invited to:

2(a) Note no. 34 regarding insurance claim filed with the insurance company for the reinstatement of machinery as well as loss incurred due to business interruption where management is confident about full realisibility, as stated in the said note 2(b) Note no. 37 regarding provision made (including made in earlier years) for special discount on account of sudden and steep fall in prices and quality issues, where necessary approvals are pending as stated in the said note.

2(c) Note no. 27(B) regarding Advance License pending fulfilment of export obligation, where management is confident that pending export obligation will be fulfilled before expiry of advance license as stated in said note.

Our opinion is not qualified in respect of these matters.

Report on other legal and the 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, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us during the course of audit, we give in the Annexure a statement on the matters specified in the paragraphs 3 and 4 of the order.

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

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

(b) Except for the effect of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

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

(e) The matter described in the basis for qualified opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note No. 27(A)(i) read with 46(a), 30, 31 & 32(A)(iii) to the Standalone Financial Statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts. Refer Note No. 46(a), 49(C)(c) & 49(C)(d) to the Standalone Financial Statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date for the year ended 31st March 2015-India Glycols Limited

1. (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in case of certain locations where records are in process of updation / compilation.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

2. (a) The inventories of the company (except stock in transit which have been verified based on subsequent receipt/ reconciliation) have been physically verified by the management at reasonable intervals.

(b) The procedures of physical verification of inventory 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 such physical verification of inventory as compared to book records were not material.

3. The Company has not granted during the year any loan secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a) & (b) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services {this to be read with note no. 40 of financial statement}. Based on the audit procedure performed and information & explanations provided by the management,during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 73 to 76 of the Act or any other relevant provisions of the Act and the rules framed there under (to the extent applicable) with regard to deposit accepted from the public. According to the information and explanation given to us no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

6. 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 148(1) of the Act in respect of the Company''s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

7. (a) According to the records of the company the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income- tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax cess and any other material statutory dues with the appropriate authority to the extent applicable and there are no undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March 2015.

(b) According to the records and information and explanations given to us, there are no material dues in respect of Income Tax, Wealth Tax or Cess that have not been deposited with the appropriate authorities to the extent applicable on account of any dispute and dues in respect of Duty of Custom, Service Tax, Duty of Excise, VAT & Sales Tax that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Nature of Statue Nature of dues Amount (RS. in lacs)

Custom Act Custom duty 11.42

Custom duty 193.05

Duty Drawback 15.86

Custom Duty 763.77

Finance Act 1994 Service Tax 36.31

Service Tax 8.09

Central Excise Act Cenvat Credit 7,438.36

Cenvat Credit 6,568.27

Cenvat Credit 1,118.53

Cenvat Credit 1,920.52

Cenvat Credit 33.86

Cenvat Credit 20.54

Cenvat Credit 15.82

Cenvat Credit 9.06

Cenvat Credit 6.41

Cenvat Credit 5.91

Cenvat Credit 2.56

Cenvat Credit 12.20

Cenvat Credit 0.23

Excise duty 4,183.63

Excise Duty 902.57

Excise duty 90.62

Excise duty 69.99

Excise duty 56.70

Excise duty 14.10

Excise duty 1.87

UP VAT Act Sales Tax 16.65

Nature of Statue Period Forum

Custom Act 1992-93 High Court - Uttaranchal

2004-05, 2009-10 Asstt. Commissioner of custom

2006-07 Joint Secretary, Department of Revenue

2004-05, 2010-11 Commissioner Customs (Appeals)

Finance Act 1994 2004-05 to 2007-08 CESTAT

2005-09, 2010-12 Assistant Commissioner- Haldwani

Central Excise Act 2007-08 to 2013-14 Commissioner Allahabad

2006-07 to 2013-14 Assistant Commissioner Haldwani

2013-14 Commissioner LTU - KSP

2013-14 Commissioner LTU - GKP

2010-11 to 2013-14 Commissioner Appeal Allahabad

2005-06 to 2009-10 CESTAT

2011-12 to 2013-14 Asstt. Commissioner Gorakhpur

2010-11 to 2011-12 Commissioner Appeals,LTU - GKP

2013-14 Assistant/Deputy Commissioner LTU - GKP

2011-12 to 2013-14 Additional Commissioner, LTU - KSP

2013-14 Joint/Additional Commissioner LTU - KSP

2008-09 to 2012-13 Commissioner Appeal LTU - KSP

2013-14 Superintendent - LTU- GKP

2010-11 Commissioner LTU - KSP

2007-08 to 2011-12 Asstt. Commissioner Gorakhpur

2006-07 to 2009-10 Allahabad High Court

2007-08 CESTAT

2005-06 to 2008-09, Assistant Commissioner 2012-13, 2013-14 Haldwani

2008-09 to 2012-13 Additional Commissioner LTU - KSP

2010-11 Joint Secretary,GOI, New Delhi

UP VAT Act 2008-09, 2009-10, Additional Commissioner 2011-12 & 2013-14

(c) According to the records of the Company and information and explanations given to us, the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under has been transferred to such fund with in time.

8. The company does not have accumulated losses as at the end of the financial year. Further company has not incurred cash loss during the current financial year and also not in the immediately preceding financial year. However, considering the exceptional item (note no. 46) company has incurred cash loss during the the current financial year, as well as in the immediately preceding financial year.

9. Based on our audit procedures and on the information and explanations given by the management, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

10. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited (''SSAIL'' a Subsidiary Company) for amounting to RS. 12,045.43 lacs as stated in note no. 27(A)(iii) of the financial statements, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie,as explained, prejudicial to the interest of the Company since the same is/are on account of commercial expediency. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

11. According to the information and explanations given to us, the term loans were applied for the purposes for which the loans were obtained except pending utilization, have been temporarily parked in the current assets/deposits with banks.

12. During the course of our examination of the books and records of the company carried out in accordance with the auditing standards generally accepted in India, we have neither come across any material instance of fraud on or by the company, noticed neither reported during the year nor we have been informed of such case by the management.

For Lodha & Co., Chartered Accountants Firm Registration No: 301051E

(N. K. Lodha) Date: 28th May, 2015 Partner Place: Noida, UP M. No.: - 85155


Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's responsibility

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

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

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

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

Basis for Qualified Opinion

Attention is invited to:

i. Note no. 32(A)(i) & 32(A)(ii) of financial statements regarding non-provision against investment, inter- corporate deposit and advances in subsidiary company Shakumbari Sugar and Allied Industries Limited (SSAIL) amounting to ' 5,427.50 Lacs (Previous Year Rs. 5,427.50 Lacs), RS. 1,915.13 Lacs (including interest thereon) (Previous Year Rs. 1,834.83 Lacs) & RS. 8,453.81 Lacs (Previous Year Rs. 8,375.82 Lacs) respectively, where, in the opinion of management no provision is necessary considering the long term in nature, the intrinsic value of assets of subsidiary company and for the reasons as stated in the said notes and our inability to comment thereon. Further company have also extended corporate guarantee on behalf of SSAIL against outstanding loans amount of Financial Institution and Banks (as stated in the note no. 27(A)(iii) & 32(A)(iii)).

ii. Note no. 32(B) regarding non provision against total exposure of amounting RS. 14,774.64 Lacs (Previous Year RS. 14,848.04 Lacs) (including investment in capital of RS. 125 Lacs, (Previous Year RS. 125 Lacs) in a subsidiary, IGL Finance Limited, where the management is confident about its recoverability for the reasons as stated in said note, and our inability to comment thereon.

iii. Note no. 32(D) regarding non provision against total exposure of amounting to RS. 505.16Lacs (including trade receivable account of'RS. 477.75 Lacs) in a subsidiary, IGL CHEMINTT. PTE Limited, Singapore, where the management is confident about its recoverability for the reasons as stated in said note, and our inability to comment thereon.

Net loss for the year, investments, loans & advances and reserve & surplus are without considering impact of the above which could not be ascertained or otherwise for the reason stated in as above. Our opinion was also qualified in respect of matters reported in Para (i) & (ii) above on the financial statement for the year ended 31st March, 2014.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the "Basis for Qualified Opinion" paragraph above, the aforesaid standalone financial statements,give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of the affairs of the Company as at 31st March 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

1) We draw attention to note no. 32(C) to the financial statements for two notices received by the Company from National Stock Exchange (NSE) regarding reinstatement of financial statement and to suitably rectify the financial statement as stated in said note. Pending granting of opportunity / clarification. Company have not reinstated/rectified.

Further, attention is invited to:

2(a) Note no. 34 regarding insurance claim filed with the insurance company for the reinstatement of machinery as well as loss incurred due to business interruption where management is confident about full realisibility, as stated in the said note 2(b) Note no. 37 regarding provision made (including made in earlier years) for special discount on account of sudden and steep fall in prices and quality issues, where necessary approvals are pending as stated in the said note.

2(c) Note no. 27(B) regarding Advance License pending fulfilment of export obligation, where management is confident that pending export obligation will be fulfilled before expiry of advance license as stated in said note.

Our opinion is not qualified in respect of these matters.

Report on other legal and the 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, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us during the course of audit, we give in the Annexure a statement on the matters specified in the paragraphs 3 and 4 of the order.

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

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

(b) Except for the effect of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

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

(e) The matter described in the basis for qualified opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note No. 27(A)(i) read with 46(a), 30, 31 & 32(A)(iii) to the Standalone Financial Statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts. Refer Note No. 46(a), 49(C)(c) & 49(C)(d) to the Standalone Financial Statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date for the year ended 31st March 2015-India Glycols Limited

1. (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in case of certain locations where records are in process of updation / compilation.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

2. (a) The inventories of the company (except stock in transit which have been verified based on subsequent receipt/ reconciliation) have been physically verified by the management at reasonable intervals.

(b) The procedures of physical verification of inventory 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 such physical verification of inventory as compared to book records were not material.

3. The Company has not granted during the year any loan secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a) & (b) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services {this to be read with note no. 40 of financial statement}. Based on the audit procedure performed and information & explanations provided by the management,during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 73 to 76 of the Act or any other relevant provisions of the Act and the rules framed there under (to the extent applicable) with regard to deposit accepted from the public. According to the information and explanation given to us no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

6. 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 148(1) of the Act in respect of the Company's products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

7. (a) According to the records of the company the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax cess and any other material statutory dues with the appropriate authority to the extent applicable and there are no undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March 2015.

(b) According to the records and information and explanations given to us, there are no material dues in respect of Income Tax, Wealth Tax or Cess that have not been deposited with the appropriate authorities to the extent applicable on account of any dispute and dues in respect of Duty of Custom, Service Tax, Duty of Excise, VAT & Sales Tax that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Nature of Statue Nature of dues Amount (RS. in lacs)

Custom Act Custom duty 11.42

Custom duty 193.05

Duty Drawback 15.86

Custom Duty 763.77

Finance Act 1994 Service Tax 36.31

Service Tax 8.09

Central Excise Act Cenvat Credit 7,438.36

Cenvat Credit 6,568.27

Cenvat Credit 1,118.53

Cenvat Credit 1,920.52

Cenvat Credit 33.86

Cenvat Credit 20.54

Cenvat Credit 15.82

Cenvat Credit 9.06

Cenvat Credit 6.41

Cenvat Credit 5.91

Cenvat Credit 2.56

Cenvat Credit 12.20

Cenvat Credit 0.23

Excise duty 4,183.63

Excise Duty 902.57

Excise duty 90.62

Excise duty 69.99

Excise duty 56.70

Excise duty 14.10

Excise duty 1.87

UP VAT Act Sales Tax 16.65

Nature of Statue Period Forum

Custom Act 1992-93 High Court - Uttaranchal

2004-05, 2009-10 Asstt. Commissioner of custom

2006-07 Joint Secretary, Department of Revenue

2004-05, 2010-11 Commissioner Customs (Appeals)

Finance Act 1994 2004-05 to 2007-08 CESTAT

2005-09, 2010-12 Assistant Commissioner- Haldwani

Central Excise Act 2007-08 to 2013-14 Commissioner Allahabad

2006-07 to 2013-14 Assistant Commissioner Haldwani

2013-14 Commissioner LTU - KSP

2013-14 Commissioner LTU - GKP

2010-11 to 2013-14 Commissioner Appeal Allahabad

2005-06 to 2009-10 CESTAT

2011-12 to 2013-14 Asstt. Commissioner Gorakhpur

2010-11 to 2011-12 Commissioner Appeals,LTU - GKP

2013-14 Assistant/Deputy Commissioner LTU - GKP

2011-12 to 2013-14 Additional Commissioner, LTU - KSP

2013-14 Joint/Additional Commissioner LTU - KSP

2008-09 to 2012-13 Commissioner Appeal LTU - KSP

2013-14 Superintendent - LTU- GKP

2010-11 Commissioner LTU - KSP

2007-08 to 2011-12 Asstt. Commissioner Gorakhpur

2006-07 to 2009-10 Allahabad High Court

2007-08 CESTAT

2005-06 to 2008-09, Assistant Commissioner 2012-13, 2013-14 Haldwani

2008-09 to 2012-13 Additional Commissioner LTU - KSP

2010-11 Joint Secretary,GOI, New Delhi

UP VAT Act 2008-09, 2009-10, Additional Commissioner 2011-12 & 2013-14

(c) According to the records of the Company and information and explanations given to us, the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under has been transferred to such fund with in time.

8. The company does not have accumulated losses as at the end of the financial year. Further company has not incurred cash loss during the current financial year and also not in the immediately preceding financial year. However, considering the exceptional item (note no. 46) company has incurred cash loss during the the current financial year, as well as in the immediately preceding financial year.

9. Based on our audit procedures and on the information and explanations given by the management, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

10. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited ('SSAIL' a Subsidiary Company) for amounting to RS. 12,045.43 lacs as stated in note no. 27(A)(iii) of the financial statements, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie,as explained, prejudicial to the interest of the Company since the same is/are on account of commercial expediency. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

11. According to the information and explanations given to us, the term loans were applied for the purposes for which the loans were obtained except pending utilization, have been temporarily parked in the current assets/deposits with banks.

12. During the course of our examination of the books and records of the company carried out in accordance with the auditing standards generally accepted in India, we have neither come across any material instance of fraud on or by the company, noticed neither reported during the year nor we have been informed of such case by the management.

For Lodha & Co., Chartered Accountants Firm Registration No: 301051E

(N. K. Lodha) Date: 28th May, 2015 Partner Place: Noida, UP M. No.: - 85155


Mar 31, 2014

We have audited the accompanying financial statements of INDIA GLYCOLS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2014 and also the Statement of the Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the 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 the 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 General Circular 15/2013 dated 13th September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and 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 Institute of Chartered Accountant of India. Those standards require that we comply with the 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 assessment of 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 on 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 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 opinion.

Basis for Qualified Opinion

Attention is invited to:

i. Note no. 34 (A) of financial statements regarding non- provision against investment, inter-corporate deposit and advances in subsidiary company Shakumbari Sugar and Allied Industries Limited (SSAIL) amounting to Rs. 5,427.50 Lacs, Rs. 1,834.83 Lacs (including interest thereon) & Rs. 8,375.82 Lacs respectively, where, in the opinion of management no provision is necessary considering the long term in nature, the intrinsic value of assets of subsidiary company and for the reasons as stated in the said notes. Further company have also extended corporate guarantee on behalf of SSAlL against outstanding amount of Financial Institution and Banks (as stated in the note no. 27(A)(iii)).

ii. Note no 34 (B) regarding non provision against total

exposure of amounting Rs. 14,848.64 lacs including Inter-corporate deposit in a subsidiary, IGL Finance Limited, where the management is confident about its recoverability for the reason as stated in said note, and our inability to comment thereon.

Net Profit for the year, investments, loans & advances and reserve & surplus are without considering the above which cannot be ascertained or otherwise for the reason stated in paras above.

Qualified Opinion

In our opinion and best to our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements, give the information required by the Act in the manner so require and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of the affairs of the company as at 31st March 2014,

b. in case of the Statement of the Profit and Loss, of the loss for the year ended on that date, and

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

Emphasis Matter

Attention is invited to:

Note no. 45(b) with respect to provision made of special discount on account of sudden and steep fall in prices and quality issues, where necessary approvals are pending.

Report on other legal and the regulatory requirements:

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the, matter 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 purposes of our audit;

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

c. the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report comply with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with General Circular 15/2013 dated 13th September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013;

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

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company is generally maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. (a) As per the information and records made available to us, the Company has not granted during the year any loan secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (b) to (d) of the order are not applicable to the Company.

(b) The company has taken unsecured loan from seven companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of such loans are aggregate of Rs. 7,977.24 Lacs and Rs. 6,910.23 Lacs respectively.

(c) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been taken are not, prima facie, prejudicial to the interest of the company.

(d) The company is regular in repaying the principal and interest amounts whenever the same are stipulated.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services {this to be read with note no. 37 & 43(a) of financial statement}. Based on the audit procedure performed and information & explanations provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

vii. The Company has an internal audit system commensurate with the size of the Company and nature of its business.

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 Act in respect of the Company''s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31st March, 2014 for a period of more than six months.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax and Wealth Tax that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Custom Duty, Service Tax, Excise Duty, Sales tax and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Nature of Statue Nature of dues Amount Period (Rs. in lacs)

Custom Act Custom duty 11.42 1992-93 Custom duty 193.05 2004-05, 2009-10 Duty Drawback 15.86 2006-07 Custom Duty 598.17 2004-05

Finance Act 1994 Service Tax 36.31 2004-05 to 2007-08 Service Tax 3.29 2004-08

Central Excise Act Cenvat Credit 20.54 2005-06 to 2009-10 Excise duty 69.99 2007-08 Excise duty 6,646.11 1996-97, 2005-06 to 2013-14 Excise duty 4,183.63 2010-11 Excise duty 90.62 2006-07 to 2009-10 Excise duty 1.87 2009-10 to 2010-11 Excise duty 42.92 2010-11 to 2013-14 Excise duty 7,438.36 2007-08 to 2013-14 Excise duty 918.39 2007-08 to 2013-14 UP VAT Act Sales Tax 13.52 2008-09, 2009-10, 2011-11 & 2012-13 Sales Tax 10.50 2007-08



Nature of Statue Forum High Court - Uttaranchal Asstt. Commissioner of custom Joint Secretary, Department of Revenue Commissioner Customs (Appeals) Finance Act 1994 CESTAT Assistant Commissioner- Haldwani

Central Excise Act CESTAT CESTAT Asstt. Commissioner Haldwani Asstt. Commissioner Haldwani Allahabad High Court Joint Secretary, GOI, New Delhi Commissioner Appeal Allahabad Commissioner Allahabad Asstt. Commissioner Gorakhpur UP VAT Act Additional Commissioner Allahabad High Court

x. The Company does not have accumulated losses at the end of financial year. Further company has not incurred cash loss during the current financial year and not in the immediately preceding financial year. However, considering the exceptional item (note no. 45) company has incurred cash loss during the year.

xi. In our opinion, based on audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited (''SSAIL'' a Subsidiary Company whose net worth have been fully eroded) for amounting to Rs. 12,428.52 lacs as stated in note no. 27(A)(iii) of the financial statements, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie, as explained, prejudicial to the interest of the Company since the same is/are on account of commercial expediency. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Custom Duty, Service Tax, Excise Duty, Sales tax and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

xvi. According to the information and explanations given to us, term loans have been applied for the purposes for which they were obtained except pending utilization, have been temporarily parked in the current assets/ deposits with banks.

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short term basis have, prima facie not been used for long term investments.

xviii.According to the information and explanation given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

xix. On the basis of record made available to us and according to the information and explanations given to us, the company does not have outstanding debentures during the year and also at year end.

xx. The Company has not raised any money through a public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India and according to the information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha& Co.,

Chartered Accountants Firm Registration No:301051E

(N. K. Lodha) Date : 22.05.2014 Partner Place : Noida, UP M. No.: - 85155


Mar 31, 2013

Report on the financial statements

We have audited the accompanying financial statements of INDIA GLYCOLS LIMITED, which comprise the balance sheet as at 31st March 2013, and the statement of the profit and loss and the cash flow statement for the year then ended, and a summary of the 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 the fair view of the financial position, financial performance and cash flows of the company in accordance with the accounting principles generally accepted in India, including accounting standards referred to in 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 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 Institute of Chartered Accountant of India. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain the reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including assessment of 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 audit opinion.

Qualification

Attention is invited to:

Note no. 34 of financial statements regarding non- provision against investment and loans & advances in subsidiary company Shakumbari Sugar and Allied Industries Limited (SSAlL) amounting to Rs. 5,427.50 Lacs and Rs. 1,713.30 Lacs (including interest accrued thereon) respectively, where, in the opinion of management no provision is necessary considering the long term in nature, the intrinsic value of assets of subsidiary company and for the reasons as stated in the said notes. Further company have also extended corporate guarantee on behalf of SSAIL against outstanding amount of Financial Institution and Banks (as stated in the note no. 27(A)(iii)).

Net Profit for the year, investments, loans & advances and reserve & surplus are without considering the above which cannot be ascertained or otherwise for the reason stated in para above.

Opinion

Subject to above, in our opinion and best to our information and according to the explanations given to us, the financial statements read together with other notes thereon, give the information required by the Companies Act 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of the balance sheet, of the state of the affairs of the company as at 31 st March 2013,

b. In case of the statement of the profit and loss, of the profit for the year ended on that date, and

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

Report on other legal and the regulatory requirements:

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give 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 purposes of our audit;

e. 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;

f. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account;

g. In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of Companies Act, 1956;

h. On the basis of the written representations received from the Directors and taken on records by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31st March 2013 from being appointed as a Director of the Company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditors'' Report

(Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31 st March, 2013)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company is generally maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. (a) As per the information and records made available to us, the Company has not granted during the year any loan secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly the provisions of clause 4 (iii) (b) to (d) of the order are not applicable to the Company.

(b) The company has taken unsecured loan from seven companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of such loans are aggregate of Rs. 12,107.00 Lacs and Rs. 8,093.74 Lacs respectively.

(c) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been taken are not, prima facie, prejudicial to the interest of the company.

(d) The company is regular in repaying the principal and interest amounts whenever the same are stipulated.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services {read with note no. 37 & 43(a) of financial statement }. Based on the audit procedure performed and information & explanations provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

vii. The Company has an internal audit system commensurate with the size of the Company and nature of its business.

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 Act in respect of the Company''s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31st March, 2013 for a period of more than six months.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax and Wealth Tax that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Custom Duty, Service Tax, Excise Duty, Sales tax and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Nature of Statue Nature of dues Amount Period (Rs. in lacs)

Custom Act Custom duty 11.42 1992-93

Custom duty 193.05 2004-05, 2009-10

Duty Drawback 15.86 2006-07

Finance Act 1994 Service Tax 5.85 2005-09

Service Tax 36.31 2004-08

Central Excise Act CENVAT Cedit 0.94 1996-97

Excise duty 69.99 2007-08

Excise duty 66.23 2005-06 to 2012-13

Excise duty 4,183.63 2010-11

Excise duty 14.09 2005-06 to 2010-11

Excise duty 6.45 2009-10 to 2010-11

Excise duty 17.77 2010-11 to 2011-12

Excise duty 5,951.69 2007-08 to 2012-13

Excise duty 455.53 2007-08 to 2012-13

UP VAT Act Sales Tax 10.28 2008-09 to 2009-10

Sales Tax 10.50 2009-10

Nature of Statute Forum

Custom Act High Court - Uttaranchal

Asstt. Commissioner of custom

Joint Secretary , Department of Revenue

Finance Act 1994 CESTAT

Commissioner (Appeals)

Central Excise Act CESTAT

CESTAT

Asstt. Commissioner Haldwani

Asstt. Commissioner Haldwani

CESTAT

CESTAT

Commissioner Appeal Allahabad

Commissioner Allahabad

Asstt. Commissioner Gorakhpur

U P VAT Act Additional Commissioner

Allahabad High Court x. The Company does not have accumulated losses at the end of financial year and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

xi. In our opinion, based on audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited (''SSAIL'' a Subsidiary Company whose net worth have been fully eroded) amounting to Rs. 12,665.42 lacs as stated in note no. 27(A)(iii) of the financial statements, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie, as explained, prejudicial to the interest of the Company since the same is/are on account of commercial expediency. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, The Company does not have outstanding debentures during the year and also at year end.

xx. The Company has not raised any money through a public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India and according to the information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co.,

Chartered Accountants

Firm Registration No:301051E

(N. K. Lodha)

Date : 30th May, 2013 Partner

Place : Noida, UP M. No.: - 85155


Mar 31, 2013

Report on the financial statements

We have audited the accompanying financial statements of INDIA GLYCOLS LIMITED, which comprise the balance sheet as at 31st March 2013, and the statement of the profit and loss and the cash flow statement for the year then ended, and a summary of the 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 the fair view of the financial position, financial performance and cash flows of the company in accordance with the accounting principles generally accepted in India, including accounting standards referred to in 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 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 Institute of Chartered Accountant of India. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain the reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including assessment of 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 audit opinion.

Qualification

Attention is invited to:

Note no. 34 of financial statements regarding non- provision against investment and loans & advances in subsidiary company Shakumbari Sugar and Allied Industries Limited (SSAlL) amounting to Rs. 5,427.50 Lacs and Rs. 1,713.30 Lacs (including interest accrued thereon) respectively, where, in the opinion of management no provision is necessary considering the long term in nature, the intrinsic value of assets of subsidiary company and for the reasons as stated in the said notes. Further company have also extended corporate guarantee on behalf of SSAIL against outstanding amount of Financial Institution and Banks (as stated in the note no. 27(A)(iii)).

Net Profit for the year, investments, loans & advances and reserve & surplus are without considering the above which cannot be ascertained or otherwise for the reason stated in para above.

Opinion

Subject to above, in our opinion and best to our information and according to the explanations given to us, the financial statements read together with other notes thereon, give the information required by the Companies Act 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of the balance sheet, of the state of the affairs of the company as at 31 st March 2013,

b. In case of the statement of the profit and loss, of the profit for the year ended on that date, and

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

Report on other legal and the regulatory requirements:

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give 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 purposes of our audit;

e. 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;

f. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account;

g. In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of Companies Act, 1956;

h. On the basis of the written representations received from the Directors and taken on records by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31st March 2013 from being appointed as a Director of the Company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditors'' Report

(Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31 st March, 2013)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company is generally maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. (a) As per the information and records made available to us, the Company has not granted during the year any loan secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly the provisions of clause 4 (iii) (b) to (d) of the order are not applicable to the Company.

(b) The company has taken unsecured loan from seven companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of such loans are aggregate of Rs. 12,107.00 Lacs and Rs. 8,093.74 Lacs respectively.

(c) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been taken are not, prima facie, prejudicial to the interest of the company.

(d) The company is regular in repaying the principal and interest amounts whenever the same are stipulated.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services {read with note no. 37 & 43(a) of financial statement }. Based on the audit procedure performed and information & explanations provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

vii. The Company has an internal audit system commensurate with the size of the Company and nature of its business.

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 Act in respect of the Company''s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31st March, 2013 for a period of more than six months.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax and Wealth Tax that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Custom Duty, Service Tax, Excise Duty, Sales tax and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Nature of Statue Nature of dues Amount Period (Rs. in lacs)

Custom Act Custom duty 11.42 1992-93

Custom duty 193.05 2004-05, 2009-10

Duty Drawback 15.86 2006-07

Finance Act 1994 Service Tax 5.85 2005-09

Service Tax 36.31 2004-08

Central Excise Act CENVAT Cedit 0.94 1996-97

Excise duty 69.99 2007-08

Excise duty 66.23 2005-06 to 2012-13

Excise duty 4,183.63 2010-11

Excise duty 14.09 2005-06 to 2010-11

Excise duty 6.45 2009-10 to 2010-11

Excise duty 17.77 2010-11 to 2011-12

Excise duty 5,951.69 2007-08 to 2012-13

Excise duty 455.53 2007-08 to 2012-13

UP VAT Act Sales Tax 10.28 2008-09 to 2009-10

Sales Tax 10.50 2009-10

Nature of Statute Forum

Custom Act High Court - Uttaranchal

Asstt. Commissioner of custom

Joint Secretary , Department of Revenue

Finance Act 1994 CESTAT

Commissioner (Appeals)

Central Excise Act CESTAT

CESTAT

Asstt. Commissioner Haldwani

Asstt. Commissioner Haldwani

CESTAT

CESTAT

Commissioner Appeal Allahabad

Commissioner Allahabad

Asstt. Commissioner Gorakhpur

U P VAT Act Additional Commissioner

Allahabad High Court x. The Company does not have accumulated losses at the end of financial year and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

xi. In our opinion, based on audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited (''SSAIL'' a Subsidiary Company whose net worth have been fully eroded) amounting to Rs. 12,665.42 lacs as stated in note no. 27(A)(iii) of the financial statements, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie, as explained, prejudicial to the interest of the Company since the same is/are on account of commercial expediency. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, The Company does not have outstanding debentures during the year and also at year end.

xx. The Company has not raised any money through a public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India and according to the information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co.,

Chartered Accountants

Firm Registration No:301051E

(N. K. Lodha)

Date : 30th May, 2013 Partner

Place : Noida, UP M. No.: - 85155


Mar 31, 2012

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

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

1. As required by the Companies (Auditor's Report) Order, 2003 ("The Order") as amended by the Companies (Auditor's Report) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ("The Act"), we enclose in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

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

e) As per explanations and information given to us, none of the directors of the Company is disqualified from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Attention is invited to:

Note no. 34(i) & (iii) of financial statements regarding non-provision against investment in a subsidiary company Shakumbari Sugar and Allied Industries Limited (SSAIL) amounting to Rs.5,427.50 lacs and against loans of amounting to Rs. 1,546.67 lacs (including interest accrued thereon) where in the opinion of management no provision is presently necessary considering the long term in nature and the intrinsic value of assets of stated subsidiary company as stated in the said note and Company has also provided corporate guarantee for loan sanctioned/drawn by SSAIL (Note no.27 (iv)) where management is confident about recoverability / reliability and our inability to comment thereon.

Net profit for the year, investments, loans & advances and reserves & surplus are without considering the above which cannot be ascertained or otherwise for the reason stated in para above.

Subject to above, in our opinion and to the best of our information and according to the explanations given to us, they said statements of account read together with note no 46 and other notes thereon, give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012;

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

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

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company is generally maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. (a) The Company has granted unsecured loan to one body corporate covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of such loan is Rs. 54 lacs and Nil respectively

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been granted are not, prima facie, prejudicial to the interest of the Company

(c) In respect of aforesaid loan, the recovery of principal as well as interest is regular as stipulated.

(d) According to the information and explanations given to us, the year end balance is not overdue for payment.

(e) The company has taken unsecured loan from seven companies covered in the register maintained under section 301 of the Companies Act,1956. The maximum amount involved during the year and the yearend balance of such loans are aggregate of Rs. 12,040 lacs and Rs. 12,000 lacs respectively

(f) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been taken are not, prima facie, prejudicial to the interest of the company.

(g) The company is regular in repaying the principal and interest amounts whenever the same are stipulated.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services {read with note no. 37 & 43(a) of financial statements}. Based on the audit procedure performed and information & explanations provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

vii. The Company has an internal audit system commensurate with the size of the Company and nature of its business.

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 Act in respect of the Company's products to which they said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, generally there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31st March, 2012 for a period of more than six months.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax and Wealth Tax that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Custom Duty, Service Tax, Excise Duty, Sales tax and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Nature of Statue Nature of dues Amour: Period Foum (Rs. in lacs)

Custom Act Custom duty 11.42 1992-93 High Court - Uttaranchal

Custom duty 193.05 2004-05, 2009-10 Asstt. Commis sioner of custom

Duty Drawback 15.86 2006-07 Joint Secre tary, Depar tment Of Revenue

Finance Act 1994 Service Tax 7.93 2005-2009 CESTAT

Service Tax 111.18 2004-05, 2005-06 Commissioner

Service Tax 36.31 2004-08 Commissioner (Appeals)

Central Excise Act CENVAT Cedit 0.94 1996-97 CESTAT

Excise duty 69.99 2007-08 CESTAT

Excise duty 61.26 2005-06 to 2011-12 Asstt. Com missioner Haldwani

Excise duty 4,183.63 2010-2011 Asstt. Com missioner Haldwani

Excise duty 59.40 2005-06 to 2010-11 CESTAT

Excise duty 6.45 2009-10 to 2010-11 CESTAT

Excise duty 9.06 2010-11 to 2011-12 Joint Com missioner Allahabad

Excise duty 3.19 2010-11 to 2011-12 Asstt. Com missioner Gorakhpur

UP VAT Act Sales Tax 12.29 2008-09 to 2009-10 Additional Commissioner

Sales Tax 10.50 2009-10 Allahabad High Court

This is to be read with note no.27 (A) (i) of the financial statements

x. The Company does not have accumulated losses at the end of financial year and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

xi. In our opinion, based on audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited ('SSAIL' a Subsidiary Company whose net worth have been fully eroded) amounting to Rs. 19,663.93 lacs as stated in note no. 27 (A) (iv) of the financial statements, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie, as explained, prejudicial to the interest of the Company since the same is/are on account of commercial expediency As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, the Company does not have outstanding debentures during the year and also at year end.

xx. The Company has not raised any money through a public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India and according to the information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co.,

Chartered Accountants

Firm Registration No:301051E

(N. K. Lodha)

Date : 14th May, 2012 Partner

Place: New Delhi M. No.: - 85155


Mar 31, 2012

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

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

1. As required by the Companies (Auditor's Report) Order, 2003 ("The Order") as amended by the Companies (Auditor's Report) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ("The Act"), we enclose in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

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

e) As per explanations and information given to us, none of the directors of the Company is disqualified from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Attention is invited to:

Note no. 34(i) & (iii) of financial statements regarding non-provision against investment in a subsidiary company Shakumbari Sugar and Allied Industries Limited (SSAIL) amounting to Rs.5,427.50 lacs and against loans of amounting to Rs. 1,546.67 lacs (including interest accrued thereon) where in the opinion of management no provision is presently necessary considering the long term in nature and the intrinsic value of assets of stated subsidiary company as stated in the said note and Company has also provided corporate guarantee for loan sanctioned/drawn by SSAIL (Note no.27 (iv)) where management is confident about recoverability / reliability and our inability to comment thereon.

Net profit for the year, investments, loans & advances and reserves & surplus are without considering the above which cannot be ascertained or otherwise for the reason stated in para above.

Subject to above, in our opinion and to the best of our information and according to the explanations given to us, they said statements of account read together with note no 46 and other notes thereon, give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012;

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

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

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company is generally maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. (a) The Company has granted unsecured loan to one body corporate covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of such loan is Rs. 54 lacs and Nil respectively

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been granted are not, prima facie, prejudicial to the interest of the Company

(c) In respect of aforesaid loan, the recovery of principal as well as interest is regular as stipulated.

(d) According to the information and explanations given to us, the year end balance is not overdue for payment.

(e) The company has taken unsecured loan from seven companies covered in the register maintained under section 301 of the Companies Act,1956. The maximum amount involved during the year and the yearend balance of such loans are aggregate of Rs. 12,040 lacs and Rs. 12,000 lacs respectively

(f) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been taken are not, prima facie, prejudicial to the interest of the company.

(g) The company is regular in repaying the principal and interest amounts whenever the same are stipulated.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services {read with note no. 37 & 43(a) of financial statements}. Based on the audit procedure performed and information & explanations provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

vii. The Company has an internal audit system commensurate with the size of the Company and nature of its business.

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 Act in respect of the Company's products to which they said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, generally there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31st March, 2012 for a period of more than six months.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax and Wealth Tax that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Custom Duty, Service Tax, Excise Duty, Sales tax and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Nature of Statue Nature of dues Amour: Period Foum (Rs. in lacs)

Custom Act Custom duty 11.42 1992-93 High Court - Uttaranchal

Custom duty 193.05 2004-05, 2009-10 Asstt. Commis sioner of custom

Duty Drawback 15.86 2006-07 Joint Secre tary, Depar tment Of Revenue

Finance Act 1994 Service Tax 7.93 2005-2009 CESTAT

Service Tax 111.18 2004-05, 2005-06 Commissioner

Service Tax 36.31 2004-08 Commissioner (Appeals)

Central Excise Act CENVAT Cedit 0.94 1996-97 CESTAT

Excise duty 69.99 2007-08 CESTAT

Excise duty 61.26 2005-06 to 2011-12 Asstt. Com missioner Haldwani

Excise duty 4,183.63 2010-2011 Asstt. Com missioner Haldwani

Excise duty 59.40 2005-06 to 2010-11 CESTAT

Excise duty 6.45 2009-10 to 2010-11 CESTAT

Excise duty 9.06 2010-11 to 2011-12 Joint Com missioner Allahabad

Excise duty 3.19 2010-11 to 2011-12 Asstt. Com missioner Gorakhpur

UP VAT Act Sales Tax 12.29 2008-09 to 2009-10 Additional Commissioner

Sales Tax 10.50 2009-10 Allahabad High Court

This is to be read with note no.27 (A) (i) of the financial statements

x. The Company does not have accumulated losses at the end of financial year and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

xi. In our opinion, based on audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited ('SSAIL' a Subsidiary Company whose net worth have been fully eroded) amounting to Rs. 19,663.93 lacs as stated in note no. 27 (A) (iv) of the financial statements, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie, as explained, prejudicial to the interest of the Company since the same is/are on account of commercial expediency As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, the Company does not have outstanding debentures during the year and also at year end.

xx. The Company has not raised any money through a public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India and according to the information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co.,

Chartered Accountants

Firm Registration No:301051E

(N. K. Lodha)

Date : 14th May, 2012 Partner

Place: New Delhi M. No.: - 85155


Mar 31, 2011

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

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

1. As required by the Companies (Auditor's Report) Order, 2003 ("The Order") as amended by the Companies (Auditor's Report) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ("The Act"), we enclose in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

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

e) As per explanations and information given to us, none of the directors of the Company is disqualified from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Without qualifying attention is invited to:

(i) Note no. 1 (B) of schedule `L' regarding pending export obligation against custom duty saved on raw material consumed imported under advance licenses as stated in the said note. In the opinion of the management considering the Going Concern Concept and past export performance at this stage there is no need to make provision against duty saved.

(ii) Note no. 8 (i) & (ii) of schedule `L regarding investment in subsidiaries amounting to Rs. 5454.91 Lacs where in the opinion of management no provision for diminution is necessary considering the long term in nature and the intrinsic value of assets of subsidiary companies as stated in the said note and note no. 8 (iii) regarding loans to a subsidiary amounting to Rs. 463.39 Lacs (including interest accrued thereon) where management is confident about recoverability/ realisability

In our opinion and to the best of our information and according to the explanations given to us, the said statements of account read together with notes thereon, give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2011;

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

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

Annexure to the Auditors' Report

(Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31st March, 2011)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management. As explained to us there is regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company is generally maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. (a) According to the information and explanations given to us, the Company has not granted during the year any loans, secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) of the Order are not applicable to the Company.

(b) The Company has taken unsecured loan from three Companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of such loans are aggregate of Rs.1597 Lacs and Rs.1583 Lacs respectively.

(c) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions on which aforesaid loan has been taken are not, prima facie, prejudicial to the interest of the Company.

(d) The company is regular in repaying the principal and interest amounts whenever the same are stipulated.

iv In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and for which suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an adequate internal control system which needs to be further strengthened to be made the same commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services (read with note no.12 & 19 (a) of schedule L). Based on the audit procedure performed and information & explanations provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

vii. The Company has an internal audit system commensurate with the size of the company and nature of its business. However, scope and coverage of balance confirmation as stated in note no. 19 (a) of schedule L needs to be further strengthened.

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 Act in respect of the Company's products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, generally there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31st March, 2011 for a period of more than six months.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax, Sales Tax and Wealth Tax that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Custom Duty, Service Tax, Excise Duty and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Name of the Nature of Amount Period Forum where dispute Statue (Rs.in. is pending Lacs) Custom Act Custom 11.42 1992-93 High Court- duty 193.05 2004-05 Uttaranchal 2009-10 Asstt.Commissioner of Custom

Central Excise 0.94 1996-97, CESTAT Excise Duty 69.99 2007-2008 CESTAT Act 56.54 2005-06 Asstt.Commissioner 4,183.63 to Haldwani 59.40 2010-11 Asst.Commissioner 11.97 2006-07 Haldwani 3.59 to Additional 2010-11 Commissioner 2009-10 Joint Commissioner to Asst.Commissioner 2010-11 Allahabad 2009-10 to 2010-11

State Export 993.25 2007-2011 High Court Excise Fees Nainital Act

Finance Service 7.93 2005-2009 CESTAT Act Tax 36.31 2004-2008 Commissioner 1994 111.18 2004- 05 (Appeal) 6.39 2005- 06 Commissioner 2005- 06 Asstt.Commissioner

This is to be read with note no.1 (A) (i) of schedule L

x. The Company does not have accumulated losses at the end of financial year and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

xi. Inouropinion, based on audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited (`SSAIL a Subsidiary Company) amounting to Rs.22,633.13 lacs as stated in note no.1(A)(iv) of schedule `L, the terms and conditions on which the Company has given guarantees for loans taken by SSAIL from banks are not, prima facie, prejudicial to the interest of the Company since the is/are on account of commercial expediency. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, the Company does not have outstanding debentures during the year and also at year end.

xx. The Company has not raised any money through a public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha& Co. Chartered Accountants Firm Registration No: 301051E

(N. K. Lodha) Partner M. No.: - 85155

Place : Noida Date : 20th May, 2011


Mar 31, 2010

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

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

1. As required by the Companies (Auditors Report) Order, 2003 ("The Order") as amended by the Companies (Auditors Report) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ("The Act"), we enclose in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards

referred to in sub section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

e) As per explanations and information given to us, none of the directors of the Company is disqualified from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Attention is invited to;

(i) Note no. 9 of schedule L regarding investment made in subsidiaries amounting to Rs.3854.91 lacs, where in the opinion of management no provision for diminution is necessary considering the long term nature and the intrinsic value of the assets of subsidiary companies as stated in the said note.

(ii) Note no. 1 (B) of schedule L regarding pending export obligation against custom duty saved on raw material consumed, under advance license as stated in the said note.

In our opinion and to the best of our information and according to the explanations given to us, the said statements of account read together with notes thereon, give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2010;

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

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

Annexure to the Auditors Report (Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31st March, 2010)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company has been maintaining proper records of inventory except in certain cases where records for receipts and issue of inventory are, as explained, in process of compilation /updation. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. The Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an adequate internal control system which needs to be further strengthened commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services (read with note no. 13 of schedule L). Based on the audit procedure performed and information & explanations provided by the

management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

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

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 Act in respect of the Companys products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax (except some delay), Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31s1 March, 2010 for a period of more than six months except Service Tax amounting to Rs.4,48,392/- and TDS Rs1,0507- (since paid).

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax, Service Tax, Custom Duty and Wealth Tax, that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Sales Tax, Excise Duty and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Name of the Statue Nature of Dues Amount Period Forum where dispute is (Rs.In Lacs) pending

Custom Act Custom duty 11.42 1992-93 High Court - Uttaranchal 221.93 2004-05, Commissioner of Custom 2009-10

Central Excise Act Excise Duty 0.94 1996-97, CESTAT 79.07 2007-2008 CESTAT 42.73 2006-07 CESTAT 91.93 2006-10 Commissioner of custom.

Finance Act 1994 Service Tax 10.18 2005-08 Asstt. Commissioner 3.60 2009-10 Commissioner (Appeal) 72.60 2004-07 Additional Director, Delhi Zone, Directorate, Director General of Central Excise of Intelligence

x. The Company does not have accumulated losses at the end of financial year and in the current financial year Company has not incurred cash losses, however Company had incurred cash loss in the immediate preceding financial year.

xi. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited (a Subsidiary Company) amounting to Rs.22,513 lacs as stated in note no.1

(iii) of schedule L. The terms and conditions on which the Company has given guarantees for loans taken by others from banks are not, prima facie, prejudicial to the interest of the Company. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments as at close of the year.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, The Company does not have debentures during the year.

xx. The Company has not raised any money through a public issue during the year.

xxi. As per information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co., Chartered Accountants

(N. K. Lodha)

Partner

Date : 04.05.2010 M. No.: - 85155

Camp: Noida, UP Firm Registration No: 301051E




Mar 31, 2010

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

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

1. As required by the Companies (Auditors Report) Order, 2003 ("The Order") as amended by the Companies (Auditors Report) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ("The Act"), we enclose in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards

referred to in sub section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

e) As per explanations and information given to us, none of the directors of the Company is disqualified from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Attention is invited to;

(i) Note no. 9 of schedule L regarding investment made in subsidiaries amounting to Rs.3854.91 lacs, where in the opinion of management no provision for diminution is necessary considering the long term nature and the intrinsic value of the assets of subsidiary companies as stated in the said note.

(ii) Note no. 1 (B) of schedule L regarding pending export obligation against custom duty saved on raw material consumed, under advance license as stated in the said note.

In our opinion and to the best of our information and according to the explanations given to us, the said statements of account read together with notes thereon, give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2010;

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

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

Annexure to the Auditors Report (Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31st March, 2010)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the Company has been maintaining proper records of inventory except in certain cases where records for receipts and issue of inventory are, as explained, in process of compilation /updation. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. The Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time in certain cases, there is an adequate internal control system which needs to be further strengthened commensurate with the size of the Company and nature of its business for the certain purchases of Inventory & fixed assets, and for the sale of goods and services (read with note no. 13 of schedule L). Based on the audit procedure performed and information & explanations provided by the

management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

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

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 Act in respect of the Companys products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax (except some delay), Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable. According to the information and explanations given to us, there are no undisputed amounts payable in respect of statutory dues which have remained outstanding as at 31s1 March, 2010 for a period of more than six months except Service Tax amounting to Rs.4,48,392/- and TDS Rs1,0507- (since paid).

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax, Service Tax, Custom Duty and Wealth Tax, that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Sales Tax, Excise Duty and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending are given below:-

Name of the Statue Nature of Dues Amount Period Forum where dispute is (Rs.In Lacs) pending

Custom Act Custom duty 11.42 1992-93 High Court - Uttaranchal 221.93 2004-05, Commissioner of Custom 2009-10

Central Excise Act Excise Duty 0.94 1996-97, CESTAT 79.07 2007-2008 CESTAT 42.73 2006-07 CESTAT 91.93 2006-10 Commissioner of custom.

Finance Act 1994 Service Tax 10.18 2005-08 Asstt. Commissioner 3.60 2009-10 Commissioner (Appeal) 72.60 2004-07 Additional Director, Delhi Zone, Directorate, Director General of Central Excise of Intelligence

x. The Company does not have accumulated losses at the end of financial year and in the current financial year Company has not incurred cash losses, however Company had incurred cash loss in the immediate preceding financial year.

xi. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund /society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks for Loans taken by Shakumbari Sugar & Allied Industries Limited (a Subsidiary Company) amounting to Rs.22,513 lacs as stated in note no.1

(iii) of schedule L. The terms and conditions on which the Company has given guarantees for loans taken by others from banks are not, prima facie, prejudicial to the interest of the Company. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments as at close of the year.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, The Company does not have debentures during the year.

xx. The Company has not raised any money through a public issue during the year.

xxi. As per information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co., Chartered Accountants

(N. K. Lodha)

Partner

Date : 04.05.2010 M. No.: - 85155

Camp: Noida, UP Firm Registration No: 301051E


Mar 31, 2009

We have audited the attached Balance Sheet of INDIA GLYCOLS LIMITED as at 31st March 2009, the Profit and Loss Account and the also Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditors Report) Order, 2003 ("The Order") as amended by the Companies (Auditors Report) order,2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ("The Act"), we enclosed in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

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

e) As per explanations and information given to us, none of the directors of the company is disqualified from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Regarding investment made in subsidiaries amounting to Rs.1029.91 lacs, where in the opinion of management no provision for diminution is necessary considering the long term nature and the intrinsic value of the assets of subsidiary companies as stated in the said note where Attention is invited (note no. 9 (ii) of schedule L)

In our opinion and to the best of our information and according to the explanations given to us, the said statement of accounts read together with notes thereon, give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31 st March, 2009;

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

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

Annexure to the Auditors Report

(Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31st March 2009)

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

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the management according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) The inventory of the Company (except stock lying with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanation given to us, the company has maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

iii. The Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, there is an adequate internal control system commensurate with the size of the company and nature of its business for the purchases of Inventory & fixed assets and for the sale of goods and services which needs to be further strengthened. Based on the audit procedure performed and information & explanations provided by the management, during the course of our audit,

we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section; and, having regard to our comment in para 4 above, the transaction made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act or any other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the company Law Board or national company law tribunal or Reserve bank of India or any Court or other tribunal in this regard.

vii. In our opinion, the Company has an internal audit system commensurate with the size of the Company 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 Act in respect of the companys products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. (a) According to the records of the company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty (paid on time with some payment delay), Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable and there are no undisputed statutory dues payable. Custom duty amounting to Rs.331.35 lacs and interest thereon amounting to Rs. 173.86 lacs outstanding for a period of more than six months from the date they become payable as at 31st March 2009.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax, Service Tax, Custom Duty and Wealth Tax, that have not been deposited with the appropriate authorities on account of any dispute and dues in respect of Sales Tax, Excise Duty and Cess that have not been deposited with appropriate authority on account of dispute and the forum where the dispute is pending given below:-

Name of the Statue Nature of Dues

Custom Act Custom duty

Income Tax Act Income Tax

Central Excise Act Excise Duty

Finance Act 1994 Service Tax

Amount Period Forum where dispute is (Rs. In Lacs) pending

11.42 1992-93 High Court - Uttaranchal

38.57 2004-05 CIT (A)

1.55 1996-97, CESTAT

2005-2009

124.31 2006-2008 Commissioner (A)

12.51 2007-2008 Assisst. Commissoner

155.51 2001-03,

2004-2008 Commissioner (A)

This is to be read with note no.1 of schedule L

x. The Company does not have accumulated losses at the end of financial year and in the current financial year company has incurred cash losses, however Company did not incur any loss in the immediate preceding financial year.

xi. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

xiii. The Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanation given to us, the Company has given corporate guarantee to bank for Loans taken by Shakumbari Sugar & Allied Industries Limited (the subsidiary Company) amounting to Fis.31878 lacs as stated in note no. 1 (iii) of schedule L. The terms and condition on which the Company has given guarantee for loan taken by others from bank are not prima facie prejudicial to the interest of the Company. As explained to us, the Company has not given any guarantee for loans taken by others from financial institution.

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

xvii.On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie not been used for long- term investments.

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

xix. On the basis of record made available to us and according to the information and explanations given to us, The Company does not have debentures during the year.

xx. The Company has not raised any money through a public issue during the year.

xxi. As per information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co., Chartered Accountants

(N. K. Lodha) Place: New Delhi Partner Date: 20th June, 2009 M. No.: 85155


Mar 31, 2008

We have audited the attached Balance Sheet of INDIA GLYCOLS LIMITED as at 31 st March 2008, the Profit and loss Account and also Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditors Report) Order, 2003 ("The Order") as amended by the Companies (Auditors Report) order,2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ("The Act"), we enclosed in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

c) The Balance Sheet, Profit and Loss Account and Cash

Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance sheet. Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

e) As per explanations and information given to us, none of the directors of the company is disqualified from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

In our opinion and to the best of our information and according to the explanations given to us, the said statement of accounts read together with notes thereon, give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of Balance sheet, of the state of affairs of the company as at 31st March, 2008:

ii) in the case of Profit and loss account, of the profit of the company for the year ended on that date: and

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

Annexure to the Auditors Report

(Referred to in paragraph (1) of our Report of even date on INDIA GLYCOLS LIMITED for the year ended 31st March 2008)

i. a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain fixed assets, which are in process of updation.

b) As per information & explanation given to us, certain fixed assets have been physically verified by the management according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its Fixed assets. The discrepancies noticed on such. physical verification were not material.

c) As per the records and information and explanation given to us, fixed assets disposed off during the year were not substantial.

ii. a) The inventories of the company (except stock lying with the third parties and in transit) have been physically verified by the management at reasonable intervals.

b) In our opinion and according to information & explanation given to us, the procedures of physical verification of inventries followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion and according to information & explanation given to us, the company has maintaining proper records of inventries. The discrepancies noticed on such physical verification of inventries as compared to book records were not material.

iii. During the year, the Company has neither granted nor taken any loans, secured or unsecured to or from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regards to the explanation that some of the items purchased are of specialised nature, taking into consideration the quality, usage and such other factors, comparative sources/ quotations are not available. The Company has internal control system commensurate with the size of the company and nature of its business for the purchase of inventories & fixed assets and for the sale of goods and services (read with note nos. 11,18 and 22H of schedule L). Based on the audit procedure performed and information & explanation provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section and having regard to our comment in para (iv) above, the transactions made in pursuance of such contracts or arrangements (exceeding the value of Fis. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 58A and 58 AA of the Act and other relevant provisions of the Act and the rules framed there under with regard to deposit accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other Tribunal in this regard.

vii. In our opinion, the company has an adequate internal audit system commensurate with the size of the company 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 Act in respect of the companys products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate and complete.

ix. a) According to the records of the company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable and there are no undisputed statutory dues payable for a period of more than six months from the date they become payable as at 31st March 2008.

b) According to the information and explanations given to us, and the records of the Company, as at the year end, the following are the particulars of disputed dues on account of Income Tax, Service Tax, Custom Duty,

x. The Company does not have accumulated losses at the end of financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii. According to the information and explanation given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4 (xiii) of the Order are not applicable.

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

xv. According to the information and explanations given to us, the Company has given corporate guarantees to banks against agricultural loans given to certain sugarcane suppliers amounting to Rs. 2500.00 lacs and for Rs. 5500.00 lacs against loan taken by Shakumbari Sugar & Allied Industries Limited (a Subsidiary Company), as stated in note no.1 (iv) of Schedule L. The terms and conditions on which the Company has given guarantees against loans taken by others from banks are not prima facie prejudicial to the interests of the Company. As explained to us, the Company has not given any guarantee for loans taken by others from financial institutions.

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

xvii. On the basis of information and explanations given to us and on overall examination of the financial statements of the Company, funds raised on short-term basis have, prima facie not been used for long-term investment.

xviii. According to the information and explanations given to us, the company has not made any preferential allotment of shares to any parties or companies covered in the register maintained under section 301 of the Act.

xix. On the basis of record made available to us and according to the information and explanations given to us, the Company has created security or charge in respect of debentures repaid during the year.

xx. The Company has not raised any money through a public issue during the year.

xxi. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co. Chartered Accountants N. K. Lodha Place: New Delhi Partner Date: 23rd May 2008 Membership. No.: 85155


Mar 31, 2007

We have audited the attached Balance Sheet of INDIA GLY- COLS LIMITED , as at 31st March 2007, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our re- sponsibility is to express an opinion on these financial state- ments based on our audit.

We conducted our audit in accordance with the auditing stan- dards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable as- surance about whether the financial statements are free of material misstatements. 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 fi- nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 (as amended) (The Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (The Act), we enclose in the An- nexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above, we report that:

(a) We have obtained all the information and explana- tions, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

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

(e) As per the information and explanations given to us, none of the directors of the Company is disqualified from being appointed as a director under Clause (g) of sub section (1) of section 274 of the companies act, 1956;

In our opinion and to the best of our information and accord- ing to the explanations given to us, the said accounts read together with notes thereon, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of Balance Sheet, of the state of af- fairs of the Company as at 31st March 2007; ii) In the case of the Profit & Loss Account, of the

Profit for the year ended on that date; and iii) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31s1 March 2007.)

1. (a) The Company has maintained proper records in

respect of fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain fixed assets which are in process of updation.

(b) As per information & explanation given to us, certain fixed assets have been physically verified by the Management according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the Company and the nature of its Fixed Assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information and explanations given to us, fixed assets disposed off during the year were not substantial.

2. (a) The inventory of the company (except stock lying

with the third parties and in transit) has been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to information & explanations given to us, the Company has maintaining proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. The Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties as covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (b) to (d), (f) & (g) of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations or where user department has shown specific preference, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services (read with note no. 17 & 21 (H) of Schedule L). Based on the audit procedure performed and on the basis of information and explanations provided by the management, during the course of our audit we have not observed any continuing failure to correct major weaknesses in internal control system.

5. According to the information and explanations provided by the management and based upon audit procedures performed, we are of the opinion that the particular 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, having regard to

our comments in para 4 above, the transactions made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5/- lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Act or any other provisions of the Act and the rules framed thereunder with regard to deposits accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other Tribunal in this regard.

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

8. 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 Act in respect of the Companys products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

9. (a)According to the records of the Company, the

Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable and there are no undisputed statutory dues payable for a period of more than six months from the date they become payable as at 31st March 2007. (b)According to the records and information & explanations given to us, there are no dues in respect of income tax, service tax, custom duty and wealth tax that have not been deposited with the appropriate authorities on account of any dispute and the dues in respect of sales tax, excise duty and cess that have not been deposited with the appropriate authority on account of dispute and the forum where the dispute is pending are given below: -

Nature of statute Nature Amount of dues (Rs. in lacs)

Customs Act Custom 11.42 duty Income Tax Act. Income 38.57 Tax Central Excise Excise 0.64 Act duty 0.94

Period Forum where dispute is pending

1992-93 High Court- Uttaranchal

2004-05 CIT (A)

1994-95 CESTAT

1996-97 High Court

10. The company does not have accumulated losses at the end of financial year and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

11. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions and banks and debenture holders.

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

13. The Company is not a chit fund or a nidhi /mutual benefit fund /society, therefore, the provisions of clause 4 (xiii) of the said Order are not applicable to the company.

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

15. According to the information and explanations given to us, the company has given corporate guarantee to banks for agricultural loan given to certain sugarcane suppliers amounting to Rs.3000.00 lacs as stated in note no.2 (IV) of schedule L. In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from bank are not prima facie prejudicial to the interest of the Company. As explained to us, the company has not given any guarantee for loans taken by others from financial institutions

16. On the basis of information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

17. On the basis of information and explanations given to us and on an overall examination of the financial statements of the company, funds raised on short-term basis have, prima- facie, not been used for long-term investment.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year to any parties or companies covered in the register maintained under section 301 of the Act.

19. On the basis of records made available to us and according to information and explanations given to us, the company has created security or charge in respect of debentures issued/ outstanding during the year

20. The company has not raised any money through a public issue during the year.

21. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the company has been noticed or reported during the course of the audit.

For LODHA & CO. Chartered Accountants

N. K. LODHA New Delhi Partner Date : 23rd June, 2007 Membership No.: - 85155


Mar 31, 2006

We have audited the attached Balance Sheet of India Glycols Limited as at 31M March 2006 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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.

1. As required by the Companies (Auditors' Report) Order, 2003 (as Amended) ("The Order") issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (The Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above, we report that:

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

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

(c) The accounts of CDS International for the period 01.04.03 to 31.03.06 have been incorporated in these accounts as stated in note no 6 of schedule L and considered for our report thereon, as audited by M/s Narayanan, Patil and Ramesh, Chartered Accountants, the auditors of erstwhile CDS International Ltd ("CDS").

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

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

(f) On the basis of written representations received from all the directors of the company and taken on record by the board of directors, we report that none of the directors is disqualified as on 31st March 2006 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the companies act, 1956;

(g) Attention is drawn to note no 2(iv) of Schedule L regarding custom duty saved on raw material consumed under advance license, pending, fulfillment of export obligation as stated in said note.

(h) 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, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2006;

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

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

For LODHA & CO. Chartered Accountants

N. K. LODHA Partner Membership No. : - 85155

New Delhi Date : 27.5.2006

ANNEXURE TO THE AUDITORS'REPORT

(Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31st March 2006).

1. (a) The Company has maintained proper records in respect of its fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain fixed assets which are in the process of updation.

(b) As per information and explanations given to us, certain fixed assets have been physically verified by the Management according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion, is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information and explanations given to us, no substantial part of fixed assets has been disposed off during the year.

2. (a) The inventories of the company (except stocks lying with the third parties and in transit) have been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. The Company has neither granted nor taken any loans, secured/unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations or where user department has shown specific preference, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. (a) According to the information and explanations provided by the management, 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.

(b) In our opinion, having regard to our comments in para 4 above and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lacs rupees 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.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA and the rules framed there under and any other relevant provisions of the Act with regard to deposits accepted from the public. As informed, no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

8. We have broadly reviewed the books of account and records 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 Act in respect of the Company's products to which the said records are made 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 said records with a view to determine whether they are accurate and complete.

9.(a) According to the records of the company, the company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Sales Tax, Wealth Tax, Income Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities and there are no undisputed statutory dues payable for a period of more then six months from the date they become payable as at 31st March 2006.

(b) According to the records and information and explanation given to us, there are no dues in respect of sales tax, wealth tax, service tax and cess that have not been deposited with the appropriate authorities on account of any dispute and the dues in respect of custom duty, excise duty, and income tax that have not been deposited with the appropriate authority on account of dispute and the forum where the dispute is pending are given below :-

Nature of statute Nature Amount Period Forum where of dues (Rs.in lacs) dispute is pending

Customs Act Custom 11.42 1992-93 High Court- duty Uttaranchal Central Excise Act Excise 2.57 1994-95 CESTAT duty 0.94 1996-97 1.46 2004-05 Income Tax Act Income 119.35 2002-03 CIT tax (Appeals)

10. The company has no accumulated losses and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

11. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company has not defaulted in repayment of any dues to banks, financial institutions and debenture holders.

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

13. The Company is not a chit fund or a nidhi/mutual benefit fund/society, therefore, the provisions of clause 4 (xiii) of the said Order are not applicable to the company.

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

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

16. In our opinion and on the basis of information and explanations given to us, the term loans were applied for the purposes for which they were obtained.

17. According to information and explanations given to us and on an overall examination of the financial statements of the company, funds raised on short-term basis have, prima-facie, not been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

19. On the basis of records made available to us and according to information and explanations given to us, the company has created security or charge in respect of debentures issued/outstanding during the year.

20. The company has not raised any money through a public issue during the year.

21. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of information and explanations provided by the management, no fraud on or by the company has been noticed or reported during the course of our audit.

For LODHA & CO. Chartered Accountants

N. K. LODHA Place : New Delhi Partner Date : 27.5.2006 Membership No.: - 85155


Mar 31, 2005

We have audited the attached Balance Sheet of India Glycols Limited, as at 31st March 2005 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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.

1. As required by the Companies (Auditors' Report) Order (As Amendment), 2003 (The Order) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (The Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above, we report that:

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

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

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

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

(e) On the basis of written representations received from all the directors of the company and taken on record by the board of directors, we report that none of the directors is disqualified as on 31a March 2005 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the companies act, 1956;

(f) Attention is invited to:

(i) Note No. 6 of Schedule L regarding non-provision (amount unascertainable) against diminution in the value of investment and loans and advances to a subsidiary company, pending approval of the Hon'ble High Court of Karnataka as stated in the said note.

We further report that the profit for the year, reserves, investments, loans and advances are without considering the impact of item mentioned in Para f(i) above, the effect of which could not be determined.

(g) Subject to the foregoing, 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, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2005;

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

iii) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date

For LODHA & CO. Chartered Accountants N. K. LODHA New Delhi Partner Date : 22nd June, 2005 Membership No.: - 85155

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph (1) of our Report of even date of INDIA GLYCOLS LIMITED for the year ended 31st March 2005.)

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

(b) As per information and explanations given to us, certain fixed assets have been physically verified by the Management according to the regular programme of physical verification once in every three years in phased manner, which in our opinion, is.reasonable having regard to the size of the Company and the nature of its Fixed Assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information and explanations given to us, no substantial part of fixed assets has been disposed off during the year.

2.(a) The inventories of the company (except stocks lying with the third parties, at port and in transit) have been physically verified by the management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventory. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. The Company has not granted nor taken any loans, secured/unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4-(iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations or where user department has shown specific preference, 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 and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. According to the information and explanations provided by the management and based upon audit procedures performed, we report 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 there are no transactions made in pursuance of such contracts or arrangements exceeding the value of five lacs rupees in respect of each party during the year, accordingly, the provisions of clause 4 (v)(b) of the Order are not applicable.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA and the rules framed there under and any other relevant provisions of the Act with regard to deposits accepted from the public. As informed, no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

7. The Company has an adequate internal audit system commensurate with the size of the Company and nature of its business.

8. We have broadly reviewed the books of account and records 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 Act in respect of the Company's products to which the said records are made 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 said records with a view to determine whether they are accurate and complete.

9.(a) According to the records of the company, the company is generally regular in depositing undisputed statutory dues including Providend Fund, Investor Education and Protection Fund, Employees' State Insurance, Sales Tax, Wealth Tax, Income Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities and there are no undisputed statutory dues payable for a period of more then six months from the date they become payable as at 31st March 2005. However this is to be read with note no. 15 of Schedule L.

(b) According to the records and information and explanation given to us, there are no dues in respect of sales tax, wealth tax and cess that have not been deposited with the appropriate authorities on account of any dispute and the dues in respect of custom duty, excise duty, service tax and income tax that have not been deposited with the appropriate authority on account of dispute and the forum where the dispute is pending are given below :-

Nature of Nature Amount Forum where statute of dues (Rs. in lacs) dispute is pending

Customs Act Custom duty 11.42 Appellate authority Central Excise Excise duty 16.52 Additional Act commissioner, CE 5.06 CESTAT 0.94 Commissioner (Appeals) Service Tax Service Tax 3.20 Deputy Commissioner, CE Income Tax Act Income tax 80.71 Appellate authority

10. The company has no accumulated losses and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

11. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company has not defaulted in repayment of any dues to banks, financial institutions and debenture holders.

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

13. The Company is not a chit fund or a nidhi/mutual benefit fund/society, therefore, the provisions of clause 4 (xiii) of the said Order are not applicable to the company

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

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

16. In our opinion and on the basis of information and explanations given to us, the term loans were applied for the purposes for which they were obtained.

17. According to information and explanations given to us and on an overall examination of the financial statements of the company, funds raised on short-term basis have, prima-facie, not been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

19. On the basis of records made available to us and according to information and explanations given to us, the company has created security or charge in respect of debentures issued/outstanding during the year.

20. The company has not raised any money through a public issue during the year.

21. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the company has been noticed or reported during the course of our audit.

For LODHA & CO. Chartered Accountants

N K LODHA New Delhi Partner Date : 22nd June, 2005 Membership No. : - 85155


Mar 31, 2003

We have audited the attached Balance Sheet of India Glycols Limited as at 31st March 2003 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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.

We report that:

1) 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.

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

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

4) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

5) On the basis of the written representations received from all the Directors and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2003 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

6) Attention is invited to:

i) Note no.6 regarding transfer of an equivalent amount of Rs. 1179.11 lacs on account of provision for doubtful advances/loans from General Reserves to Profit & Loss Account resulting in lower charge to the Profit &' Loss Account.

ii) Note no.11 regarding change in the method of depreciation on certain assets as stated in said note and transfer of an amount of Rs. 1718.51 lacs from General Reserves to Profit and Loss Account resulting in lower charge to Profit for the year.

iii) Note no.7 regarding non-provision (amount unascertainable) against diminution in the value iff Investment and loans to subsidiary company as stated in the said note.

We, further report that without considering item mentioned in para 6(iii) above, the effect of which could not be determined and had the observation made by us in para 6 (i) & 6(ii) above been considered, the profit for the year would liave been Rs.900.09 lacs (as against reported figures of Rs.3628.44 Incs), reserve and surplus would have been Rs. 12131.80 lacs (as against reported figures of Rs.10244.02 lacs) and Net Block of Fixed Assets would have been Rs.26195.89 lacs (as against reported figures ofRs.24308.11 lacs).

7) Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with significant accounting policies the notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the-Balance Sheet, of the state of affairs of the Company as at 31 st March, 2003;

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

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

8) As required by the Manufacturing and other Companies

(Auditor's Report) Order, 1988 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956, we further report:

(i) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. As per information and explanations given to us, the Company has a regular programme of physical verification of fixed assets once in every three years and in accordance with this programme, the management has carried out a physical verification of certain fixed assets of the Company. In our opinion, the frequency of verification of fixed assets by the management is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(ii) None of the fixed assets have been revalued during the year.

(iii) The stocks of finished goods, stores, spare parts and raw material, excluding materials in-transit and materials lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(v) The discrepancies noticed on verification between the physical stocks and book records were not material.

(vi) In our opinion and on the basis of our examination, the valuation of stocks is fair and proper in accordance with normally accepted accounting principles and is on the same basis as in the previous year.

(vii) The company has not taken any loans from companies, firms or other parties listed in the Register maintained under Section 301.

(viii) The company has not granted any loans to companies, firms or other parties listed in the Register maintained under Section 301.

(ix) Interest free loan Rs. 143 lacs given to a subsidiary Company are repayable on demand [refer note no. 7] and Interest free advance against subscription of equity share of Rs. 145 lacs [refer note no. 5 (b)], in respect of which there is no recovery. Adequate steps have been / are being taken for the recovery of such outstanding. In respect of interest free/bearing loans and advances in the nature of loan given to employees and others, the same arc being received generally regularly except in cases where there arc no stipulation as to repayment.

(x) In our opinion and according to the information and explanations given to us during the course of the audit, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of stores, raw material, including components, plant and machinery, equipment and other assets and with regard to the sale of goods.

(xi) According to the information and explanations given to us, the transactions of purchase of goods and materials, and sale of goods, materials and services, made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs.50,000/- or more in respect of each party, have been made at prices which, in our opinion, are reasonable having regard to prevailing market prices for such goods, materials and services or the prices at which similar transactions have been made with other parties in accordance with the Company's business needs and exigencies.

(xii) As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores, raw material and finished goods. Adequate provisions have been made in the accounts for the loss arising on the items so determined.

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

(xiv) In our opinion reasonable records have been maintained by the Company for sale and disposal of realisable by-products and scrap.

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

(xvi) 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 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We. have not, however, made a detailed examination of the records.

(xvii) According to the records of the Company, Provident Fund and Employees State Insurance dues have been regularly deposited during the year with the appropriate authorities.

(xviii) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income-tax, Wealth-Tax, Sales Tax, Custom Duty and Excise Duty outstanding for a period of more than six months as at 31st March, 2003 from the date they became payable.

(xix) According to the information and explanations given to us, no personal expenses of employees or directors have been charged to revenue account, other than, those payable under contractual obligation or in accordance with generally accepted business practice.

(xx) The Company is not a sick industrial company within the meaning of clause (o) of Sub-Section. (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

For Lodha & Co. Chartered Accountants

Place : New Delhi (N.K.LODHA) Date : June 13, 2003 Partner


Mar 31, 2002

We have audited the attached Balance Sheet of India Glycols Limited as at 31st March 2002 and also the Profit and Loss Account 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.

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.

We report that:

1. 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.

2. 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 the books.

3. The Balance Sheet and the Profit and Loss Account referred to in this report are in agreement with the books of account.

4. In our opinion, the profit and loss account and balance sheet comply with the accounting standards referred to in sub-section (30 of Section 211 of the Companies Act, 1956.

5. On the basis of information and explanations given to us and representation received from all the Directors of the company and taken on record by the Board of the Directors, we report that none of the Director is disqualified from being appointed as Director under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

6. Attention is invited to:

1) Note no. 6 regarding accounting of interest income of Rs. 502.41.lacs (including Rs 188.36 lacs for current year) on receipt basis as stated in the said note.

2) Note no. 7 regarding non provision (amount unascertainable) for diminution in the value of Investment and loans to subsidiary company as stated in the said note.

We, further report that without considering item mentioned in para 6(2) above the effect of which could not be determined and had the observation made by us in para 6 (1) above been considered, the profit for the year would have been Rs. 1538.48 lacs (as against reported figures of Rs. 1036.07 lacs), reserve and surplus would have been Rs. 10015.61 lacs (as against reported figures of Rs. 9513.20 lacs) and loans and advances would have been Rs. 5180.58 lacs (as against reported figures of Rs. 4678.17 lacs).

7. Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us the said accounts read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at 31st March, 2002 and

(ii) in so far as it relates to the Profit and Loss Account, of the Profit of the Company for the year ended on that date.

8. As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956, we further report:

(i) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. As per information and explanations given to us, the Company has a regular programme of physical verification of fixed assets once in every three years and in accordance with this programme, the management has carried out a physical verification of certain fixed assets of the Company. In our opinion, the frequency of verification of fixed assets by the management is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(ii) None of the fixed assets have been revalued during the year.

(iii) The stocks of finished goods, stores, spare parts and raw material, excluding materials in-transit and materials lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(v) The discrepancies noticed on verification between the physical stocks and book records were not material.

(vi) In our opinion and on the basis of our examination, the valuation of stocks is fair and proper in accordance with normally accepted accounting principles and is on the same basis as in the previous year.

(vii) In our opinion the rate of interest and other terms and conditions on which unsecured loans have been taken from companies listed in the register maintained under Section 301 of the Act are not prima facie, prejudicial to the interest of the company.

(viii) The company has not granted any loans to companies, firms or other parties listed in the Register maintained under Section 301.

(ix) Inter Corporate Deposit of Rs. 1146.79 lacs (including Rs. 369 lacs of a subsidiary Company) are repayable on demand, accrued interest amounting to Rs. 401.32 lacs, upto 31.03.1999 (refer note No. 6 & 7) and Rs. 27.14 lacs is due from bodies corporate in respect of which there is no recovery. Adequate steps have been/are being taken for the recovery of such outstanding. In respect of interest free loans and advances in the nature of loan given to employees and others the same are being received generally regularly except in cases where there are no stipulation as to repayment.

(x) In our opinion and according to the information and explanations given to us during the course of the audit, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of stores, raw material, including components, plant and machinery, equipment and other assets and with regard to the sale of goods.

(xi) According to the information and explanations given to us, the transactions of purchase of goods and materials, and sale of goods, materials and services, made in pursuance of contracts or arrangements entered in the Register, maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000/- or more in respect of each party, have been made at prices which, in our opinion, are reasonable having regard to prevailing market prices for such goods, materials and services or the prices at which similar transactions have been made with other parties and the Companys business needs and exigencies.

(xii) As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores, raw material and finished goods. Adequate provisions have been made in the accounts for the loss arising on the items so determined.

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

(xiv) In our opinion reasonable records have been maintained by the Company for sale and disposal of realisable by-products and scrap.

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

(xvi) 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 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records.

(xvii) According to the records of the Company, Provident Fund and Employees State Insurance dues have been regularly deposited during the year with the appropriate authorities.

(xviii) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income-tax, Wealth-Tax, Sales Tax, Custom Duty and Excise Duty outstanding for a period of more than six months as at 31st March, 2002 from the date they became payable.

(xix) According to the information and explanations given to us, no personal expenses of employees or directors have been charged to revenue account, other than those payable under contractual obligation or in accordance with generally accepted business practice.

(xx) The Company is not a sick industrial company within the meaning of clause (o) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

For Lodha & Co. Chartered Accountants

Place: New Delhi, (N. K. Lodha) Date : 30th June, 2002 Partner

 
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