Home  »  Company  »  Indian Sucrose L  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Indian Sucrose Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made 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 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 true and fair view 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 Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Emphasis on Matter

We draw attention to Note No. 42 of the Financial Statements regarding "Micro, small, & Medium Enterprises Development Act, 2006". Our opinion is not qualified in respect of this matter.

Basis of Qualified Opinion

a. The Company has granted loan to M/s. Yadu Sugar Ltd. in the earlier years and the balance outstanding amount is Rs. 4.94 cr. as on 31-03-2015 this loan has been granted Interest free which is prejudicial to the interest of the Company, moreover the requisite information and other relevant documents are not provided to us for verification, accordingly we are unable to comment on terms and conditions of loan granted.

b. As per the Information and explanation given to us by the management, the Company has provided guarantee in respect of KCC loan secured to the farmers (suppliers) from Banks. As per Tri-party agreement between the Indian Sucrose Ltd., farmers and banks, the banks have sanctioned KCC limit to the farmers and credited the same in the Indian Sucrose Ltd. The proper records and documents were not produced by the company in respect of such loans for our verification. Accordingly, we are unable to comment on the same. Refer Para 10(ii) at Annexure to Our Report.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except the matter described under the paragraph basis of qualified opinion, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

f) With respect to the other matters included in the Auditor's Report and to our best of our information and according to the explanations given to us :

I The Company has disclosed the impact of pending litigation on its financial position in its financial statements - Refer Note 35 to the financial statements.

II The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses;

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

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of INDIAN SUCROSE LIMITED on the accounts of the Company for the year ended 31st March, 2015.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) As explained to us, Fixed Assets are verified by rotation every year. No discrepancies were observed in the Fixed Assets physically verified during the financial year.

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

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

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been adequately dealt with in books of accounts.

3. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has granted unsecured loans/capital advances to one company covered in the register maintained under Section 189 of the Companies Act, 2013. Total outstanding of such loan at the end of the year was Rs.493.56 lacs. Further as per information and explanation given by the company, it has not given any other secured loan to companies, firm or other parties covered in the register maintained under section 189 of the Act.

(a) Unsecured loans being interest free, other terms and conditions of the loan are not verified by us as described in our "Basis of qualified opinion" paragraph (a), in the audit report.

(b) Ref. matter described as above.

4. In our opinion, there is generally an adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventories & fixed assets and for sale of goods & services. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any instance of major weaknesses in the aforesaid internal control procedures.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the meaning of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and rules framed thereunder. We have been explained that 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 against the Company during the year.

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 Sub- section (1) of Section 148 of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

7. (a) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, Income-Tax, Wealth Tax, Service Tax, Sales Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other statutory dues applicable to it. According to the records of the Company examined by us and the information and explanations given to us, in our opinion, no undisputed amounts payable in respect of provident fund, Income-Tax, Wealth Tax, Service Tax, Sales Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other statutory dues were outstanding, as at 31.03.2015 for a period of more than six months from the date they became payable.

(b) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, there are no dues of sale tax, income-tax / sales tax / wealth tax / service tax / customs duty / excise duty / Value Added Tax / cess which have not been deposited on account of any dispute, except the following:

Name of Statue Nature of Financial year to which it Amont Rs. Dues pertains

Sales Tax Laws Sales tax 1997-98 5.67

Sales Tax Laws Purchase 1999-2000 16.64 Tax

2000-01 & 2001-0 39.59

2002-03 & 2003-04 36.73

2004-05 30.16

2006-07 157.38

2007-08 163.82

2010-11 232.56

2011-12 203.41

Excise & Service Tax Service Tax 2006-11 New Delhi 11.73

Direct Taxes Income Tax 2012-13 Ludhiana 49.50

Name of Statue Forum where dispute is pending.

Sales Tax Laws Deputy Excise & Taxation Commissioner (Appeal)

Sales Tax Laws Punjab & Haryana High Court.

DETC, Jalandhar

DETC, Jalandhar

DETC, Jalandhar

Vat Tribunal, Chandigarh

Vat Tribunal, Chandigarh DETC , Jalandhar

DETC , Jalandhar Excise & Service Tax CESTAT,

Direct Taxes CIT (Appeals)-I,

(c) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, no amount was required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

8. The Company has incurred cash loss amounting to Rs. 0.54 crore but the company does not have any accumulated loss during the current financial year. The Company does not have any accumulated loss and cash loss in the immediately preceding financial year.

9. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has defaulted in repayment of dues to a financial institution or bank. Generally the average default period is one and half month for almost each and every installment . As the Company has not issued debentures since inception, clause regarding default to debenture holders does not apply to the Company.

10. According to the information and explanations given to us, the Company has given following corporate guarantees:- i) Rs. 13.69 crore in respect of a loan provided by State Bank of India to M/s Rangar Breweries Limited in the Year 2012-13.

ii) The Company has provided guarantee in respect of KCC loan secured to the farmers (suppliers) from Banks. As per Tri-party agreement between the Indian Sucrose Ltd., farmer and bank, the bank will sanction KCC limit to the farmers and credit the same in the Indian Sucrose Ltd. on account of agri Input to be supplied by the Indian Sucrose Ltd. to farmers and in return the Indian Sucrose Ltd. shall repay the loan to Bank by making deduction from amount payable to farmers on account of sugarcane.

During the Year Rs. 172.67 crores was disbursed to the farmers and Rs. 138.13 crores was received /recovered from the farmers and accordingly the net debit balance outstanding as on 31.03.2015 was Rs. 0.69 crores, after adjusting opening credit balance of Rs. 33.85 crores, which has been shown under the Head "Current Asset" in the Financial Statements. As the KCC loan has been sanctioned by the banks to the farmers and the Indian Sucrose Ltd. is only guarantor and moreover the requisite information is not provided for verification by the company accordingly we are unable to comment whether the farmers loan balances as shown in the Indian Sucrose Ltd. books tally with the balances as per Bank books.

11. According to the records of the Company examined by us and the information and explanations given to us, term loans availed by the Company during the year have been utilized for the purpose they have been received.

12. 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, we have neither come across any instance of fraud on or by the Company, noticed or reported during the period, nor have we been informed of such case by the management.

For Rakesh Grover & Co.

Chartered Accountants

(Firm Regn. No. 017153N) Place: Ludhiana

Date : 05/06/2015 (CA Rakesh Kumar Grover)

Managing Partner

Membership No.096934


Mar 31, 2014

We have audited the accompanying financial statements of INDIAN SUCROSE LIMITED which comprise the Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of 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 are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

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

Emphasis on Matter

We draw attention to Note No. 46 of the financial statements regarding "Micro, small, & Medium Enterprises Development Act, 2006". Our opinion is not qualified in respect of this matter.

Basis of Qualification

a. Non-provision of disputed Purchase Tax liability on purchase of Sugar Cane aggregating to '' 1,19,63,485/- for the financial year 1999-2000 to 2003-04 pending at appellate levels and '' 16,43,07,575/- estimated for financial years from 2006-07 to 2013-14 as per Note No 34 (ii).

b. Non-provision of disputed liabilities created by the Sales Tax Department & State Electricity Board aggregating to '' 11,19,000/- as per Note No 34(i)

c. Subject to our comments in paragraph 4(f) & (g) which if had been considered, the loss for the year would have been '' 16,21,91,855/- as against the reported profit of '' 32,34,720/- and the balance

in Reserves & Surplus would have been '' 16,66,93,743/- as against the reported figure of '' 33,21,20,318/- similarly, the current liabilities would have been '' 63,85,16,212/- as against the reported figure of '' 47,30,89,637/-,

Opinion

Subject to our comments under Emphasis of Matter paragraph and our qualifications under Basis of qualification paragraph, In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d. In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act''2013; and

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

ANNEXURE TO THE AUDITORS'' REPORT (The Annexure referred to in our report to the members of INDIAN SUCROSE LIMITED for the year ended 31st March, 2014. We report that:

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

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regards to the size of the company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies have been noticed on such verification.

(c) Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

2. (a) The physical verification of inventory has been conducted 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 the nature of its business.

(c) On the basis of our examination, in our opinion, the Company has maintained proper records of inventory. Discrepancies noticed on such physical verification of inventory as compared to the book records were not material.

3. (a) According to information made available to us, the company

has granted unsecured loans/ capital advances to one company covered in the register maintained under section 301 of the Act. Total outstanding of such loan at the end of the year was '' 9,31,30,000/- and maximum balance outstanding 11,63,10,000/- Further the company has not given any other secured loan to companies, firm or other parties covered in the register maintained under section 301 of the Act.

(b) Unsecured loans being interest free, other terms and conditions of the loan given by the company are prima facie not prejudicial to the interest of the company.

(c) There is no overdue amount receivable more than '' One Lac on account of principal amount.

(d) According to information made available to us, the company has taken interest free unsecured loans from two directors as covered in the register maintained under section 301 of the Act. Total outstanding for such loans at the year end was at the amount of '' 2,83,37,410/- and maximum outstanding during the year amounted to '' 3,51,00,000/-. Further, the company has not taken any secured loan from the aforesaid referred parties.

(e) The other terms and conditions of the unsecured loans taken by the Company are prima- facie not prejudicial to the interest of the Company.

(f) As informed to us, the repayment of the principal amount of unsecured loans, wherever there is stipulation as regards the payments, are regular.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination and according to the information and explanation given to us, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. (a) Based on our examination and according to the information

and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the company has not entered into any contract or arrangement that needs to be entered in the register required to be maintained under section 301 of the Act.

6. On the basis of information and explanations given to us, the Company has not accepted any public deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act, and rules framed there under.

7. The Company has an internal audit system which needs to be strengthened to make it commensurate with the size and nature of the Company''s business.

8. We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central Government for the maintenance of the cost records under section 209(1) (d) of the Act and are of the opinion that, prima-facie, the prescribed account and records have been maintained and are being made up. We however as not required have not made a detailed examination of such records with a view to determine whether these are accurate or complete.

9. (a) According to the information and explanations given to

us the Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to it. As explained to us, the provisions of Employees State Insurance are not applicable to the Company; no amount was due to be deposited under investor Education and Protection Fund. Further, except Income tax dues of Nil (Previous year '' 2,37,96,495/-) there was no arrears of undisputed statutory dues outstanding as at 31st March 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the disputed statutory dues of Sales Tax & Excise duty aggregating to '' 11,02,77,703/- that have not been deposited are given below: -

Name of Statue Nature of Dues Financial year to Amount which it pertains

Sales Tax Laws Sales tax 1997-98 567489

Sales Tax Laws Purchase Tax 1999-2000 1663678

2000-01 & 2001-02 5283608

2002-03 & 2003-04 4899199

2004- 05 4026274

2006- 07 20983714

2007- 08 21842376

2010- 11 29497416

2011- 12 20341380

Excise & Service Tax 2006- 11 1172569 Service Tax 110277703

Name of the Statue Forum wher dispute is pending

Sales Tax Laws Deputy Excise & Taxation Commissioner (Appeal) Sales Tax Laws Punjab & Haryana High Court.

Supreme Court.

Supreme Court.

Supreme Court.

Vat Tribunal, Chandigarh

Vat Tribunal, Chandigarh

DETC , Jallandhar

DETC , Jallandhar

Excise & Service Tax CESTAT, New Delhi

Further, in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax and Cess, it has been informed that there are no dues, which have not been deposited on account of any dispute.

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

11. In our opinion and according to the information and explanations given to us, the Company has delayed in repayment of its dues to Banks. The particulars of delays which relates to interest/ installment during the year ended 31st March 2014 are as follows:-

Particulars Amount(including Interest) Period of Delay (Rs in Lacs) (Days)

Banks 304 1.30

97 31.60

Total 401

There are no dues of 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 provisions of clause 4(xiii) of the order are not applicable to the Company.

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

15. According to the information and explanations given to us, the Company has not given any corporate guarantees for loans taken by others from Banks.

16. In our opinion and on the basis of information and explanation given to us, the term loans availed by the company has been on overall basis utilised for the purpose for which it were sanction.

17. On the basis of overall examination of the Balance sheet of the company in our opinion and according to the information and explanations given to us, funds raised on short term basis to the extent of '' 325 lacs up to the date of Balance Sheet, have been used for long term investments primarily in the nature of capital expenditures and repayment of loans.

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

19. The Company has not issued any debenture, therefore, no comment is required under para 4(xix) of CARO, 2003.

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

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For Rakesh Grover & Co. Firm Registration No. 017153N Chartered Accountants,

Sd/- (Rakesh Grover) F.C.A. Partner M. No. 096934

Place: Ludhiana Dated: 30-05-2014


Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of INDIAN SUCROSE LIMITED which comprise the Balance Sheet as at September 30, 2013 and the Statement of Proft and Loss and Cash Flow Statement for the year then ended and a summary of signifcant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial 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 fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial 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 fnancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fnancial statements. We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our audit opinion.

Emphasis on Matter

We draw attention to Note No. 43 of the fnancial statements regarding "Micro Small & Medium Enterprises Development Act 2006". Our opinion is not qualifed in respect of this matter.

Basis of Qualifcation

a. Non-provision of disputed liabilities created by the Sales Tax Department aggregating to -11,19,000/- as per Note No 34 (i)

b. There is a non-provision of disputed Purchase Tax liability on purchase of Sugar Cane aggregating to -1,19,63,485/- for the fnancial year 1999-2000 to 2003-04 pending at appellate levels and -12,64,36,638/-estimated for fnancial years 2004-05 and from 2006-07 to 2012-13 as per Note No 34 (ii).

Opinion

Subject to our qualifcations under Basis of qualifcation paragraph which if had been considered the loss for the year would have been Rs.7,12,89,890/- as against the reported proft of Rs.6,82,29,233/- and the balance in Reserves & Surplus would have been 18,93,46,615 as against the reported fgure of X32,88,65,738/- similarly, the current liabilities would have been X92,79,08,795/- as against the reported fgure of X78,83,89,672/-, in our opinion and to the best of our information and according to the explanations given to us, the fnancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2013;

b) in the case of the Statement of Proft and Loss, of the proft for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d. In our opinion, the Balance Sheet, Statement of Proft and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors as on September 30, 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on September 31 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditors'' Report

(Referred to our Report on Other Legal and Regulatory Requirements of our Report of even date to the shareholders of INDIAN SUCROSE LIMITED for the year ended 30th September, 2013)

1. (a) The Company has maintained records showing particulars including quantitative details and situation of its principal fxed assets, accordingly the fxed assets are physically verifed by the management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regards to the size of the company and the nature of its assets. Pursuant to the programme, a portion of the fxed assets has been physically verifed by the management during the year and no material discrepancies have been noticed on such verifcation.

(b) Fixed Assets disposed off during the year were not substantial and, therefore, do not effect the going concern assumption.

2. (a) The physical verifcation of inventory has been conducted by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verifcation 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) On the basis of our examination, in our opinion, the Company has maintained proper records of inventory. Discrepancies noticed on such physical verifcation of inventory as compared to the book records were not material.

3. (a) According to information made available to us, the company has granted unsecured loans to two parties covered in the register maintained under section 301 of the Act. Total outstanding of such loan at the end of the year was -14,13,10,000/- and maximum balance outstanding 37,76,75,000/- Further the company has not given any other secured loan to companies, frm or other parties covered in the register maintained under section 301 of the Act.

(b) Unsecured loans being interest free, other terms and conditions of the loan given by the company are prima facie not prejudicial to the interest of the company.

(c) There is no overdue amount receivable more than -One Lac on account of principal amount.

(d) According to information made available to us, the company has taken interest free unsecured loans from two parties as covered in the register maintained under section 301 of the Act. Total outstanding for such loans at the year end was at the amount of -3,51,00,000/- and maximum outstanding during the year amounted to -3,96,00,000/-. Further, the company has not taken any secured loan from the aforesaid referred parties.

(e) The other terms and conditions of the unsecured loans taken by the Company are prima- facie not prejudicial to the interest of the Company.

(f) As informed to us, the repayment of the principal amount of unsecured loans, wherever there is stipulation as regards the payments, are regular.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for purchase of inventory and fxed assets and for the sale of goods and services. Further, on the basis of our examination and according to the information and explanation given to us, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. (a) Based on our examination and according to the information and

explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion 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 rupees fve lakhs in respect of any party have been made at prices which are reasonable having regard to prevailing market price at the relevant time.

6. On the basis of information and explanations given to us, the Company has not accepted any public deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act, and rules framed there under.

7. The Company has an internal audit system which needs to be strengthened to make it commensurate with the size and nature of the Company''s business.

8. We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central Government for the maintenance of the cost records under section 209(1) (d) of the Act and are of the opinion that, prima-facie, the prescribed account and records have been maintained and are being made up. We however as not required have not made a detailed examination of such records with a view to determine whether these are accurate or complete.

9. (a) According to the information and explanations given to us the Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to it. As explained to us, the provisions of Employees State Insurance are not applicable to the Company; no amount was due to be deposited under investor Education and Protection Fund. Further, except Income tax dues of 2,37,96,495/- there was no arrears of undisputed statutory dues outstanding as at 30th September 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the disputed statutory dues of Sales Tax & Excise duty aggregating to - 10,91,05,134/- that have not been deposited are given below: -

Name of Nature of Financial Amont Forum where Statue Due year to (Rs.) dispute is pending. which it pertains

Sales Tax Sales tax 1997-98 567489 Deputy Excise Laws & Taxation Commissioner (Appeal)

Sales Tax Purchase 1999-2000 1663678 Punjab & Haryana Laws Tax High Court.

2000-01 & 5283608 Supreme Court. 2001-02

2002-03 & 4899199 Supreme Court.

2003-04

2004-05 4026274 Supreme Court.

2006-07 20983714 Vat Tribunal,

Chandigarh 2007-08 21842376 Vat Tribunal, Chandigarh

2010-11 29497416 DETC , Jalandhar

2011-12 20341380 DETC , Jalandhar

10,91,05,134

Further, in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax and Cess, it has been informed that there are no dues, which have not been deposited on account of any dispute.

10. The company does not have accumulated losses. The company has not incurred any cash losses during the current fnancial year and in the immediately preceding fnancial year.

11. In our opinion and according to the information and explanations given to us, the Company has delayed in repayment of its dues to Banks. The particulars of delays which relates to interest/installment during the year ended 30th September 2013 are as follows: -

Particulars Amount (including Period of delay Interest) (Days)

Banks 7,05,17,245 1-30

6,07,41,265 31-60

1,10,77,300 61-90

Total 14,23,35,810



There are no dues of 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 beneft fund / society, therefore provisions of clause 4(xiii) of the order are not applicable to the Company.

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

15. According to the information and explanations given to us, the Company has not given any corporate guarantees for loans taken by others from Banks.

16. In our opinion and on the basis of information and explanation given to us, the term loans availed by the company has been on overall basis utilised for the purpose for which it were sanction.

17. On the basis of overall examination of the Balance sheet of the company in our opinion and according to the information and explanations given to us funds raised on short term basis have prima facie not been used for long term investment.

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

19. The Company has not issued any debenture, therefore, no comment is required under para 4(xix) of CARO, 2003.

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

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B.K.Kapur & Co.

Firm Registration No 000852C

Chartered Accountants,

(M.S.Kapur) F.C.A.

Partner

M. No.074615

Place: Ghaziabad

Dated: 29.11.2013


Mar 31, 2010

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

2. We conducted our audit in accordance with auditing standards generally accepted in In-dia. Those standards require that we plan and perform the audit to obtain reasonable as-surance about whether the financial statements are free of material misstatement. An au-dit also includes examining, on a test basis evidence supporting the amounts and disclo-sures in the financial statements. An audit also includes assessing the accounting princi-ples used and significant estimates made by management, as well as evaluating the over-all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 ("The Order") 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 pa-ragraphs 4 & 5 of the said Order. 4. Further to our comments in Annexure referred to above, we report that:

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

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

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

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

e) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the Directors are dis-qualified as on 31st March, 2010 from being appointed as Directors in terms of clause (g) of Sub Section (1) of Section of 274 of the Companies Act, 1956.

f) Non-provision of disputed Purchase Tax liability on purchase of Sugar Cane ag-gregating to Rs.119.63 Lakhs for the financial year 1999-2000 to 2003-04 pend-ing at appellate levels and Rs. 722.16 Lakhs estimated for financial years from 2005-06 to 2009-10 as per Note No: 8(iii) of schedule 20 for Notes to the Accounts.

g) Non-provision of disputed liabilities created by the Sales Tax Department & State Electricity Board aggregating to Rs.22.32 Lakhs as per Note No.6(i) & (ii) of Schedule 20 for Notes to the accounts.

h) Subject to our comments in paragraph 4(f) & (g) which if had been considered, the loss for the year would have been Rs.409.56 Lakhs as against the reported profit of Rs. 454.55 Lakhs and the balance in Reserves & Surplus would have been Rs.1675.64 Lakhs as against the reported figure of Rs.2539.75 Lakhs simi-larly, the current liabilities would have been Rs.12817 Lakhs as against the re-ported figure of Rs.11953 Lakhs, and note no 18 of schedule 20 of notes to the ac-counts regarding Micro, small, & Medium Enterprises, in our opinion, and to the best of our information and according to the explanations given to us, the said ac-counts read together with the significant accounting policies and others notes thereon, and attached thereto, 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 Balance Sheet, of the State of affairs of the Company as at 31st March, 2010.

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

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

ANNEXURE TO THE AUDITORS REPORT

1. (a) The company is generally maintaining records showing particulars including quantitative details and situation of its fixed assets, however, their final compilation is under process.

(b) The fixed assets of the Company have been physically verified during the year by the management at reasonable intervals and no material discrepancies between the book re-cords and the physical inventory have been noticed on such verification.

(c) As per records and information and explanation given to us company has not disposed off during the year substantial part of its fixed assets.

2. (a) The physical verification of inventory has been conducted by the management at reason-able intervals.

(b) In our opinion and according to the information and explanation given to us, the proce-dures 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) On the basis of our examination, in our opinion, the Company has maintained proper re-cords of inventory & discrepancies noticed on such physical verification on inventory as compared to the books records were not material.

3. (a) According to information made available to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register main-tained under section 301 of the Act, accordingly clause 4(iii) (b) to (d) of the Order are not applicable to the company.

(b) According to information made available to us, the company has taken unsecured loans from the Directors and their relative as covered in the register maintained under section 301 of the Act. Total outstanding for such loans at the year end was at the amount of Rs.360.00 Lakhs (Previous year Rs. 21.50 Lakhs) and maximum outstanding during the year amounted to Rs. 360.00 Lakhs (Previous year Rs.21.50 Lakhs). Further, the com-pany has not taken any secured loan from the aforesaid referred parties.

(c) The rate of interest and other terms and condition of the unsecured Loans taken by the company are prime facie not prejudicial to the interest of the company.

(d) As informed to us, presently, there is no stipulation as regards to repayment of Principal amount. However, payment of interest is regular.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination and according to the information and explanation given to us, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. (a) Based on our examination and according to the information and explanation given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Sec- tion 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanation given to us, the transac-tions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market price at the relevant time.

6. On the basis of information and explanations given to us, the company has not accepted any public deposits from the public within the meaning of Section 58A, 58AA or any other rele-vant provisions the Act, and rules framed thereunder.

7. The company has an internal audit system which needs to be more strengthened to make it commensurate with the size and nature of the Companys business.

8. We have broadly reviewed the books of account maintained by the company pursuant to the order made by the Central Government for the maintenance of the cost records under section 209(1) (d) of the Act and are of the opinion that, primafacie, the prescribed account and re-cords have been maintained and are being made up. We however as not required have not made a detailed examination of such records with a view to determine whether these are ac-curate or complete.

9. (a) According to the information and explanations given to us the company is regular in de-positing with appropriate authorities, undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to it. As explained to us, the provisions of Employees State Insurance are not applicable to the company, No amount was due to be deposited under investor Education and Protection Fund. Further, there was no arrears of undis-puted statutory dues outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable except the Wealth Tax dues of Rs.0.90 lakhs pertaining to the Assessment year 2009-10 (b) According to the information and explanation given to us, the disputed statutory dues of Sales Tax, & Purchase Tax aggregating to have not been deposited are given below:-

Name of Statue Nature of Financial year to Due which it pertains

Sales Tax Laws Sales tax 1997-98 & 2000-01 Sales Tax Laws Central 2003-04 Sales tax

Sales Tax Laws Purchase 1999-2000 Tax 2000-01 & 2001-02

2002-03 & 2003-04 2004-05

Provident Funds Provident 1997-98 to 2007-08 & Misc. Provisions Fund Act, 1952

Service Tax Act Service 2003-04 Tax

Name of Statue Amont (Rs. Forum where in Lakhs) dispute is pending.

Sales Tax Laws 11.19 Deputy Excise &

Sales Tax Laws 0.93 Taxation

Commissioner (Appeal)

Sales Tax Laws 16.64 Sales Ta x Tribunal. 52.78 Punjab & Haryana High Court. 50.21 Deputy Excise 41.48 Taxation Commissioner (Appeals) Provident Funds & Misc. Provisions Act, 1952 14.36 EPF Appellate Tribunal

Service Tax Act 8.00 Chief Commissioner Excise 195.59

Further, in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax and Cess it has been informed that there are no dues, which have not been deposited on account of any dispute.

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

11. According to the information and explanations given to us and based on the certificate from the Lender Bank, the company has not defaulted in repayment of its dues to Bank. However, as on 31st March 2010, there was an outstanding interest of Rs.26.82 Lakhs which has since been paid. There are no dues of 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 provi-sions of clause 4(xiii) of the order are not applicable to the company.

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

15. According to the information and explanation given to us, the company has not given corpo-rate guarantees for loans taken by others from Banks. The terms & conditions of these guar- antees are not prejudicial to the interest of the company.

16. In our opinion and on the basis of information and explanation given to us, the company has, during the year raised a Term loan of Rs. 160.00 Lakhs from Sugar development fund which was temporarily kept in the current account pending its utilisation.

17. On the basis of overall examination of the Balance sheet of the company in our opinion and according to the information and explanations given to us funds raised on short term basis to the extent of Rs. 315.54 lakhs up to the date of Balance sheet, have been used for long term investments primarily in the nature of capital expenditures and repayment of loans .

18. The company has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. In our opinion, prices at which shares have been issued is not prejudicial to the interest of the company.

19. The company has not issued any debenture, therefore, no comments is required under para 4(xix) of CARO, 2003.

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

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B.K. Kapur & Co. Chartered Accountants

Place : Mukerian, (Punjab) (M.S. KAPUR) F.C.A.

Date : 31st May, 2010 Partner

Membership No.74615


Mar 31, 2009

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

2. We conducted our audit in accordance with 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 also includes examining, on a test basis evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 ("The Order") 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 & 5 of the said Order. 4. Further to our comments in Annexure referred to above, we report that:

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

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

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

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

e) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2009 from being appointed as Directors in terms of clause (g) of Sub Section (1) of Section of 274 of the Companies Act, 1956.

f) Non-provision of disputed Purchase Tax liability on purchase of Sugar Cane aggregating to Rs.119.63 Lakhs for the financial year 1999-2000 to 2003-04 pending at appellate levels and Rs.796.02 Lakhs estimated for financial years ended 31.03.05 to 31.03.09 as per Note No: 6(iv) of schedule 19 for Notes to the Accounts.

g) Non-provision of disputed liabilities created by the Sales Tax Department & State Electricity Board aggregating to Rs.56.12 Lakhs as per Note No.6(ii) & (iii) of Schedule 19 for Notes to the accounts.

h) Subject to our comments in paragraph 4(f) & (g) which if had been considered, the profit for the year would have been Rs. 1991.68 Lakhs as against the reported profit of Rs. 1019.91 Lakhs and the balance in Reserves & Surplus Rs.816.33 Lakhs as against the reported figure of Rs. 1788.10 Lakhs similarly, the current liabilities would have been Rs.10442.35 Lakhs as against the reported figure of Rs.9470.58 Lakhs, and note no 14 of schedule 19 of notes to the accounts regarding Micro, small, & Medium Enterprises, in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and others notes thereon, and attached thereto, 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 Balance Sheet, of the State of affairs of the Company as at 31st March, 2009.

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

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

ANNEXURE TO THE AUDITORS REPORT

1. (a) The company is generally maintaining records showing particulars including quantitative details and situation of its fixed assets, however, their final compilation is still under process, accordingly the fixed assets are physically verified by the management according to a phased programme designed to cover all the terms over a period of three years which, in our opinion, is reasonable having regards to the size of the company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies have been noticed on such verification.

(b) As per records and information and explanation given to us company has not disposed off during the year substantial part of its fixed assets.

2. (a) The physical verification of inventory has been conducted by the management at reasonable intervals.

(b) In our opinion and according to the information and 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 the nature of its business.

(c) On the basis of our examination, in our opinion, the Company has maintained proper records of inventory & discrepancies noticed on such physical verification on inventory as compared to the books records were not material.

3. (a) According to information made available to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act, accordingly clause 4(iii) (b) to (d) of the Order are not applicable to the company.

(b) According to information made available to us, the company has taken interest free unsecured loans from the Managing Director and their relative as covered in the register maintained under section 301 of the Act. Total outstanding for such loans at the year end was at the amount of Rs.21.50 (Previous year Rs. 48.50 Lakhs) and maximum outstanding during the year amounted to Rs. 48.50 Lakhs (Previous year Rs.48.50 Lakhs). Further, the company has not taken any secured loan from the aforesaid referred parties.

(c) The terms and condition of the unsecured Loans taken by the company are prime facie not prejudicial to the interest of the company.

(d) As informed to us, the repayment of Principal amount, wherever there is stipulation is regular.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination and according to the information and explanation given to us, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. (a) Based on our examination and according to the information and explanation given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market price at the relevant time, except the sale of the by-product to subsidiary in which the prices are not comparable as the prices have been determined by the management.

6. On the basis of information and explanations given to us, the company has not accepted any public deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions the Act, and rules framed there under.

7. The company has an internal audit system which needs to be more strengthened to make it commensurate with the size and nature of the Companys business.

8. We have broadly reviewed the books of account maintained by the company pursuant to the order made by the Central Government for the maintenance of the cost records under section 209(1) (d) of the Act and are of the opinion that, primafacie, the prescribed account and records have been maintained and are being made up. We however as not required have not made a detailed examination of such records with a view to determine whether these are accurate or complete.

9. (a) According to the information and explanations given to us the company is regular in depositing with appropriate authorities, undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to it, except few cases of delay in deposit of Tax Deducted at Source. As explained to us, the provisions of Employees State Insurance are not applicable to the company, No amount was due to be deposited under investor Education and Protection Fund. Further there was no arrears of undisputed statutory dues outstanding as at 31st March, 2009 for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us, the disputed statutory dues of Sales Tax, Purchase Tax and Provident Fund dues aggregating to have not been deposited are given below:-

Name of Statue Nature of Financial year to Due which it pertains

Sales Tax Laws Sales tax 1997-98 & 2000-01

Sales Tax Laws Purchase 1999-2000 Tax 2000-01 & 2001-02

2002-03 & 2003-04

Central Sales Tax CST 2003-04

Provident Funds Provident 1997-96 to 2007-08 & Misc. Provisions Fund Act, 1952

Name of Statues Amont (Rs. Forum where in Lakhs) dispute is pending.

Sales Tax Laws 11.19 Deputy Excise & Taxation Commissioner (Appeal) Sales Tax Laws 16.64 Sales Tax Tribunal. 52.78 Punjab & Haryana High Court. 50.21 Deputy Excise Taxation Commissioner (Appeals) Central Sales Tax 0.93 Deputy Excise Taxation Commissioner (Appeals)

Provident Funds & Misc. Provisions Act, 1952 14.36 EPF Appellate Tribunal

146.11

Further, in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax and Cess it has been informed that there are no dues, which have not been deposited on account of any dispute.

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

11. According to the information and explanations given to us, the certificate from the Lender Bank, the company has not defaulted in repayment of its dues tobank Except the few cases of sight delays. However as on 31st March 2009, there was an outstanding interest of Rs. 17.28 lakh which has since been paid. There are no dues of 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 provisions of clause 4(xiii) of the order are not applicable to the company.

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

15. According to the information and explanation given to us, the company has not given guarantees for loans taken by others from Banks or Financial Institutions.

16. In our opinion and on the basis of information and explanation given to us, term loans were applied for the purposes for which the loans were raised other than amounts temporarily invested in bank deposits pending utilization of the funds for the stated use.

17. According to the information and explanations given to us and on overall examination of the Balance sheet of the company, we report that no founds raised on short term basis, have been used for long term investment by the company.

18. The company has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. In our opinion, prices at which shares have been issued is not prejudicial to the interest of the company.

19. The company has not issued any debenture, therefore, no comments is required under para 4(xix) of CARO, 2003.

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

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B.K. Kapur & Co. Chartered Accountants

Sd/- Place : Delhi (M.S. KAPUR) F.C.A.

Date : 30-06-2009 Partner

Membership No.74615