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Auditor Report of Indo Rama Synthetics (India) Ltd.

Mar 31, 2015

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

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

3. Auditors' Responsibility

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

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

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

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

4. Opinion

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

5. Emphasis of matter

We draw attention to the following matters in the Notes to the standalone financial statement:

a) Note 42 of the standalone financial statements, which explains the early application, since the year 2010-11, of Accounting Standard 30, "Financial Instruments- Recognition and Measurement", issued by the Institute of Chartered Accountants of India. An amount of Rs. 4.69 Crores has been recognised as expense (previous year expense of Rs. 10.40 Crores) in the financial statements for the year ended 31 March 2015 and included in exceptional items as an adjustment on the said application of Accounting Standard 30.

b) Note 41 of the standalone financial statements, which explains the management's position regarding utilisation of Minimum Alternate Tax credit aggregating Rs. 57.33 Crores as at 31 March 2015. Based on the management's assumptions and future business plans, no provision has been considered in the books of account in respect of Minimum Alternate Tax credit.

Our opinion is not modified in respect of this matter.

6. Report on Other Legal and Regulatory Requirements

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

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

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

b. in our opinion, proper books of account as required by law have been kept by the Company so far as 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. on the basis of the written representations received from the directors, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act;

f. with respect to the other matters to be included in the Auditors' 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 notes 36 and 39 to the standalone financial statements;

ii. the Company did not have any long term contracts, including derivative contracts outstanding as at 31 March 2015 for which there were any material foreseeable losses; and

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

Annexure referred to in paragraph 6 of the Independent Auditors' Report to the Members of Indo Rama Synthetics (India) Limited on the Standalone financial statements for the year ended 31 March 2015.

(i) (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets are physically verified by the management in accordance with a phased programme designed to cover all items of fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its fixed assets. In accordance with this programme, certain categories of fixed assets at certain locations have been physically verified by the management during the year. As informed to us, no material discrepancies were noticed on such verification.

(ii) (a) According to the information and explanations given to us, the inventories, except for goods in transit and stocks lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year end, written confirmations are obtained.

(b) In our opinion and according to the information and explanations given to us, the procedures for 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) According to the information and explanations given to us, and on the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As informed to us, the discrepancies noticed on physical verification of inventories as compared to the book records were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, the Company, during the previous year had granted interest free unsecured loans to a wholly owned subsidiary company covered in the register maintained under Section 189 of the Companies Act, 2013.

(b) According to the information and explanations given to us, in case of loans granted to a wholly owned subsidiary company listed in the register maintained under Section 189 of the Companies Act, 2013, the loans were not due for repayment in the current year in accordance with the stipulations.

(c) According to the information and explanations given to us, there is no overdue amount of more than Rupees one lakh in respect of loans granted to a wholly owned subsidiary company listed in the register maintained under section 189 of the Companies Act, 2013.

(iv) According to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods. The activities of the Company do not involve sale of services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

(v) According to the information and explanations given to us, the Company has not accepted any deposits from public during the year.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed under sub section (1) of section 148 of the Companies Act, 2013 and 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 such records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Duty of Customs, Duty of Excise, Cess and other material statutory dues, to the extent applicable, have generally been regularly deposited with the appropriate authorities, except in respect of Value Added Tax, where there were few serious delays in depositing the same with the appropriate authorities, though the same have been deposited before the year end.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Duty of Customs, Duty of Excise, Value Added tax, Cess and other material statutory dues, to the extent applicable, were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of Income-tax, Sales-tax, Wealth-tax, Service tax, Duty of Customs, Value Added Tax, Duty of Excise and Cess, which have not been deposited with the appropriate authorities on account of any dispute, except as mentioned below: Name of the Statute Nature of dues Amount of Amount paid dispute under protest (Rs. Crores)# (Rs. Crores)

The Central Excise Act, 1944 Duty of Excise 1.44 -

64.29 5.90

6.75 0.08

3.81 -

Bombay Sales Tax Act, 1959/ Sales tax 0.43 0.13 Central Sales Tax Act, 1956

Maharashtra VAT Act, 2002 VAT 13.64 3.60

214.25 -

0.08 -

Customs Act, 1962 Duty of Customs

6.01 -

0.04 - Finance Act, 1994 Service tax 0.22 0.08

0.22 -

Income tax Act, 1961 * Income tax 0.26 -

24.55 14.50

Name of the Statute Period to which it Forum where dispute is relates pending

The Central Excise Act, 1944 2002-03 and Bombay High Court, 2005-06 Nagpur Bench

1996- 97 to Customs, Excise and 2008-09 Service Tax Appellate Tribunal

1996-97 to Commissioner of Central 2008-09 Excise and Customs (Appeals)

1997-98 to Commissioner/ Assistant 2010-11 Commissioner/ Deputy Commissioner

Bombay Sales Tax Act, 1959/ 1998-99 to Joint Commissioner Sales Central Sales Tax Act, 1956 1999-00 Tax (Appeals), Nagpur

Maharashtra VAT Act, 2002 2006-07 to 2008-09 and Joint Commissioner sales 2010-11 to 2013-14 tax (Appeals), Nagpur

2006-07 Supreme Court 2002-03 Customs, Excise and Service Tax Appellate Tribunal Customs Act, 1962 2006-07 Commissioner of Customs

1997- 98 to Assistant Commissioner/ 1998-99 Deputy Commissioner

Finance Act, 1994 2002-03 to Customs, Excise and 2009-10 Service Tax Appellate Tribunal

2002-03 to 2005-06 Commissioner, Nagpur Income tax Act, 1961 * AY 2006-07 Commissioner of Income Tax (Appeals)

AY 2002-03 to Income Tax Appellate AY 2004-05 and Tribunal AY 2007-08

* excluding cases where losses / unabsorbed depreciation have been adjusted by the tax authorities without raising any demands, though disputed by the Company.

# including interest/ penalties, where quantified and demanded by authorities.

According to the information and explanations given to us, and on the basis of the records of the subsidiary companies examined by us, there are no dues of Sales tax, Wealth Tax, Service tax, Duty of Customs, Duty of Excise, Value Added tax, Income tax and Cess, which have not been deposited with the appropriate authorities on account of any dispute.

(c) According to the information and explanations given to us, the Holding Company has transferred the required amount to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made thereunder within the stipulated time.

The subsidiary companies did not have any dues on account of Investor Education and Protection Fund.

(viii) The Holding Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

Further, the subsidiary companies were incorporated and registered for a period of less than five years. Thus, the provisions of clause 3(viii) of the Order are not applicable to the subsidiary companies.

(ix) According to the information and explanations given to us, the Holding Company has not defaulted in the repayment of dues to financial institutions or banks. Further, the Company has not issued any debenture during the year.

According to the information and explanations given to us, the subsidiary companies did not have any outstanding dues to any financial institution or banks or debenture holders during the year.

(x) According to the information and explanations given to us, the Holding Company and the subsidiary companies have not given any guarantees for loans taken by others from banks and financial institutions, except the guarantees given by IRRL which are in respect of loans taken by a wholly owned subsidiary company. We are of the opinion that the terms and conditions on which guarantees have been given to lenders are not prejudicial to the interest of IRRL.

(xi) According to the information and explanations given to us, term loans have been applied for the purpose for which such loans were obtained.

(xii) According to the information and explanations given to us, no fraud on or by the Group has been noticed or reported during the year.

For B S R and Associates Chartered Accountants ICAI Firm registration number: 128901W

Kaushal Kishore

Place : Gurgaon Partner

Date : 18 May 2015 Membership No.: 090075


Mar 31, 2013

1. Report on the Financial Statements

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

2. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting 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 controls 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.

3. Auditors'' Responsibility

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

4. Opinion

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 31 March 2013;

(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.

5. Emphasis of matter

Attention is drawn to note 45 to the financial statements, which explains the early application, since the year 2010-11, of Accounting Standard 30 "Financial Instruments- Recognition and Measurement", issued by the Institute of Chartered Accountants of India. An amount of Rs. 21.11 Crores has been recognized as income in these financial statements for the year ended 31 March 2013 and included in exceptional items as an adjustment on application of Accounting Standard 30. Our opinion is not qualified in respect of this matter.

6. Report on Other Legal and Regulatory Requirements

i. 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.

ii. 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 sub section (3C) of section 211 of the Companies Act, 1956; and

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

Annexure referred to in paragraph 6 of the Independent Auditors'' Report to the Members of Indo Rama Synthetics (India) Limited on the accounts for the year ended 31 March 2013.

(i) (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets are physically verified by the management in accordance with a phased programme designed to cover all items of fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its fixed assets. In accordance with this programme, certain categories of fixed assets at certain locations have been physically verified by the management during the year. As informed to us, no material discrepancies were noticed on such verification.

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

(ii) (a) According to the information and explanations given to us, the inventories, except for goods in transit and stocks lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year end, written confirmations have been obtained.

(b) In our opinion and according to the information and explanations given to us, the procedures for 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) According to the information and explanations given to us, and on the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As informed to us, the discrepancies noticed on physical verification of inventories as compared to the book records were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, the Company has granted an interest free loan to a wholly owned subsidiary company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 28.01 Crores and the year end balance of such loans was Rs. 28.01 Crores.

(b) According to the information and explanations given to us and considering that the interest free loan has been given to a wholly owned subsidiary company, we are of the opinion that the terms and conditions on which the above loan has been granted to a subsidiary company listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(c) According to the information and explanations given to us, in case of loan granted to a subsidiary company listed in the register maintained under Section 301, the loan is repayable on demand and has not been recalled during the year.

(d) According to the information and explanations given to us, there is no overdue amount of more than Rupees one lakh in respect of loan granted to a subsidiary company listed in the register maintained under section 301.

(e) According to the information and explanations given to us, the Company has not taken any loans from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(iv) According to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods. The activities of the Company do not involve sale of services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

(v) (a) According to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding Rs. 5 lacs in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year.

(vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed 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. However, we have not made a detailed examination of such records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues, to the extent applicable, have generally been regularly deposited except in respect of sales tax/ value added tax dues which have not been regularly deposited with the appropriate authorities and there have been serious delays in several case which have been deposited before the year end.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues were in arrears as at 31 March 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, and on the basis of the records of the Company examined by us, there are no dues of Income-tax, Wealth-tax, Service tax, Sales-tax, Customs duty, Cess and Excise duty which have not been deposited with the appropriate authorities on account of any dispute, except as mentioned below:

Name of the Statute Nature of Amount of Amount paid dues dispute* under protest (Rs. Crores) (Rs. Crores)

The Central Excise Act, Excise duty 1.06 - 1944 63.47 4.82

7.87 1.20

3.26 -

1.03 -

Bombay Sales Tax Sales tax 0.43 0.13 Act,1959/ Central Sales Tax Act, 1956

Maharashtra VAT Act, VAT 18.24 1.70 2002

Customs Act, 1962 Customs 92.15 duty

137.98 13.45#

6.01 -

0.04 -

Finance Act, 1994 Service tax 0.22 -

0.22 -

Income Tax Act, 1961 Income tax 0.31 0.31

24.24 14.19

Name of the Statute Period to Forum where dispute is pending which it relates

The Central Excise Act, 1944 2002-03 Bombay High Court, Nagpur Bench

1996- 97 to Customs, Excise and Service Tax 2008-09 Appellate Tribunal

1996-97 to Commissioner of Central Excise 2008-09 and Customs (Appeals)

1997-98 to Commissioner/ Assistant 2010-11 Commissioner/ Deputy Commissioner

2008-10 Additional Commissioner Nagpur

Bombay Sales Tax Act, 1959 1998-99 to Joint Commissioner Sales Tax 1999-00 (Appeals), Nagpur

Maharashtra VAT Act, 2002 2006-07 to Joint Commissioner Sales tax 2009-10 (Appeals), Nagpur

Customs Act, 1962 2002-03 and Customs, Excise and Service Tax 2006-07 Appellate Tribunal

2006-07 to Commissioner of Central Excise 2010-11 and Customs (Appeals)

2006-07 Joint Directorate General of Foreign Trade, Bhopal

1997-98 to Assistant Commissioner/ Deputy 1998-99 Commissioner

Finance Act, 1994 2002-03 to Customs, Excise and Service Tax 2009-10 Appellate Tribunal

2002-03 to Commissioner, Nagpur 2005-06

Income Tax Act, 1961 AY 2007-08 Commissioner of Income Tax (Appeals)

AY 2002-03 to Income Tax Appellate Tribunal AY 2004-05

* Excluding cases where losses / unabsorbed depreciation have been adjusted by the tax authorities without raising any demands, though disputed by the Company.

# Includes amount adjusted against refund by the authorities and protested by the Company.

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

(xi) According to the information and explanations given to us, the Company has delayed in repayment of dues aggregating Rs. 44.88 Crores for a period ranging from 40 days to 92 days to a bank. However, there are no overdue amounts outstanding to banks and financial institutions as at the year end.

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

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

(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 not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, term loans have been applied for the purpose for which such loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company at the end of the year, we report that, the Company has used short term funds to the extent of Rs.237.85 Crores for long-term investments, primarily towards fixed assets and investments.

(xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based on the audit procedures performed 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 S R and Associates

Chartered Accountants

Firm registration number: 128901W

Kaushal Kishore

Place: Gurgaon Partner

Date: 10 May 2013 Membership No.: 090075


Mar 31, 2012

1. We have audited the attached Balance Sheet of Indo Rama Synthetics (India) Limited ("the Company") as at 31 March 2012 and also the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

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

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

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

(iv) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the 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;

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

(vi) in our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2012;

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 of the Company for the year ended on that date.

Annexure to the Auditors' Report

annexure referred to in paragraph 3 of the auditors' Report to the members of indo Rama Synthetics (India) limited on the accounts for the year ended 31 march 2012.

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

(b) As explained to us, the fixed assets are physically verified by the management in accordance with a phased programme designed to cover all items of fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its fixed assets. In accordance with this programme, certain categories of fixed assets at certain locations have been physically verified by the management during the year. As informed to us, no material discrepancies were noticed on such verification.

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

(ii) (a) According to the information and explanations given to us, the inventories, except goods in transit and stocks lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year end, written confirmations have been obtained.

(b) In our opinion and according to the information and explanations given to us, the procedures for 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) According to the information and explanations given to us, and on the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As informed to us, the discrepancies noticed on physical verification of inventories as compared to the book records were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, Paras 4 (iii) (b) to (g) of the Order are not applicable.

(iv) According to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods. The activities of the Company do not involve sale of services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

(v) (a) According to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding Rs.5 lacs in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public during the year.

(vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed 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. However, we have not made a detailed examination of such records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor education and Protection Fund, employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, excise duty and other material statutory dues, to the extent applicable, have generally been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor education and Protection Fund, employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, excise duty and other material statutory dues were in arrears as at 31 March 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of Income tax, Wealth tax, Service tax, Sales tax, Customs duty, excise duty and cess which have not been deposited with the appropriate authorities on account of any dispute, except as mentioned below:

Name of the Nature of amount amount Period to Statute dues of paid under Which it dispute* protest relates

The Central excise excise duty 3.91 - 2002-03 to Act, 1944 2004-05

55.67 4.04 1996-97 to 2008-09

11.76 1.98 1996-97 to 2008-09 to

0.33 - 1997-98 to 2010-11

1.03 - 2008-10

Bombay Sales Tax Sales tax 0.43 0.13 1998-99 to 1999-00 Act,1959/ Central Sales Tax Act, 1956

Maharashtra VAT VAT 18.24 1.70 2006-07 to 2009-10 Act, 2002

Customs Act, 1962 Custom 0.08 - 2002-03 to duty 15.79 1.12 2010-11

25.72 1.97 2006-07

0.04 - 1997-98 to 1998-99

Finance Act, 1994 Service Tax 3.06 - 2002-03 to 2009-10

Name of the Statute Forum where dispute is which it pending

The Central Excise Act, 1944 Bombay High Court, Nagpur Bench

Customs, excise and Service Tax Appellate Tribunal Commissioner Appeal

Assistant Commissioner/

Deputy Commissioner

Additional Commissioner Nagpur

Bombay Sales Tax Act, 1959 / Central Sale Tax Act, 1956 Joint Commissioner Sales Tax (Appeals), Nagpur

Maharashtra VAT Act, 2002 Joint Commissioner Sales tax (Appeals), Nagpur

Customs Act, 1962 Customs, excise and Service Tax Appellate Tribunal Commissioner Appeal Joint Directorate General of

Foreign Trade, Bhopal Assistant Commissioner/

Deputy Commissioner_

Finance Act, 1994 Commissioner Appeals



* excluding cases where losses / unabsorbed depreciation have been adjusted by the tax authorities without raising any demands, though disputed by the Company.

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

(xi) According to the information and explanations given to us, the Company has delayed in repayment of dues aggregating Rs.94.87 Crore (for delays ranging up to one year) and Rs.41.36 Crore (for delays ranging from one year to two years) to a bank. As informed to us, the said delays were caused due to inconclusive negotiations as to their reschedulement. During the year, out of the total overdue amounts as above, the Company has paid Rs.115.86 Crore to the said bank and the overdue amounts of Rs.20.37 Crore are outstanding as at the year end, which are overdue for a period within three months.

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

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

(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 not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, term loans have been applied for the purpose for which such loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company at the end of the year, we report that, based on the maturity profile of assets and liabilities, the Company has used short term funds to the extent of Rs.307.47 Crore for long-term investments, primarily towards fixed assets.

(xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based on the audit procedures performed 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 S R and Associates

Chartered Accountants

Firm registration number: 128901W

Kaushal Kishore

Place: Gurgaon Partner

Date: 25 April 2012 Membership No.: 090075


Mar 31, 2010

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

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

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

4. Further to our comments in the Annexure referred to above, we report that:

i. we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

iv. in our opinion, the Balance Sheet, the Profit and Loss Account and the 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;

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

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

a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2010;

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

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

ANNEXURE TO THE AUDITORS REPORT

Annexure referred to in paragraph 3 of the Auditors Report to the Members of Indo Rama Synthetics (India) Limited on the accounts for the year ended 31 March 2010.

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

b. As explained to us, the fixed assets are physically verified by the management in accordance with a phased programme designed to cover all items of fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its fixed assets. In accordance with this programme, certain categories of fixed assets at certain locations have been physically verified by the management during the year. As informed to us, no material discrepancies were noticed on such verification.

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

ii. a. According to the information and explanations given to us, the inventories, except goods in transit and stocks lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year end, written confirmations have been obtained.

b. In our opinion and according to the information and explanations given to us, the procedures for 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 of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As informed to us, the discrepancies noticed on physical verification of inventories as compared to the book records were not material and have been properly dealt with in the books of account.

iii. According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paras 4 (iii) (b) to (g) of the Order are not applicable.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

v. a. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding Rs. 5 lacs in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi. The Company has not accepted any deposits from the public during the year.

vii. In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

viii. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed 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. However, we have not made a detailed examination of such records with a view to determine whether they are accurate or complete.

ix. a. According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues, to the extent

applicable, have been regularly deposited during the year by the Company with the appropriate authorities.

There were no dues on account of Cess under section 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other

material statutory dues were in arrears as at 31 March 2010 for a period of more than six months from the date they became payable.

b. According to the information and explanation given to us, and on the basis of the records of the Company examined by us, there are no dues of Income tax, Wealth tax, Service tax, Sales tax, Customs duty and Excise duty which have not been deposited with the appropriate authorities on account of any dispute, except as mentioned below:

(Rs. 000)

Name of the Statute Nature of dues Amount of Amount paid Period to which Forum where dispute

dispute under protest it rela tes is pending

The Central Excise Excise duty 6,220 1,400 2004-05 to Supreme Court

Act, 1944 2008-09

31,793 3,759 2002-03 Settlement Commission

494,635 40,609 1994-95 to Customs, Excise and Service tax

2009-10 Appellate Tribunal

44,012 823 2003-04 to Commissioner Appeal

2008-09

517 - 2004-05 to Deputy Commissioner

2006-07

Bombay Sales Tax Act, Sales tax 6,986 - 1998-99 Deputy Commissioner Sales

1959 / Central tax (Appeals), Nagpur

Sales Tax Act, 1956

Mahar ashtra VAT 40,331 - 2008-09 Joint Commissioner Sales tax

VAT Act, 2002 (Appeals), Nagpur

Customs Act, 1962 Custom duty 1,500 - 1999-2000 Customs, Excise and Service tax

Appellate Tribunal

Income Tax Act, 1961 Income tax 18,092 - Assessment year Commissioner of Income tax

2002-03 (appeals)

Income tax 47,606 - Assessm ent year Commissioner of Income tax

2003-04 (appeals)

Income tax 1,017 - Assessment year Commissioner of Income tax

2007-08 (appeals)

In respect of Cess, refer to our comment in para (ix) (a) above.

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

xi. According to the information and explanations given to us, the Company has defaulted in repayment of dues to certain lenders as per the details below, though these have been repaid either during the year or subsequent to the year end:

Category Amount Delays (considered

involved upto the respective (Rs 000) date of payment)

Banks 574,712 1 to 464 days

Financial institutions 240,457 1 to 390 days

Debentures 34,712 1 to 20 days

Further, with regard to the following delays in repayment of dues to lenders, the Company has obtained in-principle reschedulement approvals from the respective lenders and the Company is either in the process of complying with the underlying conditions of reschedulement or has approached such lenders for renegotiations of conditions:

Category Amount Delays

involved (upto the

(Rs 000) year end)

Banks 1,271,646 1 to 350 days

Financial institutions 186,583 1 to 274 days

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

xiii. According to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund/ society.

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 not given any guarantees for loans taken by others from banks or financial institutions.

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

xvii. According to the information and explanations given to us and on overall examination of the balance sheet and cash flow statement of the Company, we report that the Company has used short term funds to the extent of Rs. 1,362,614 thousand for long term investments, mainly for acquisition of fixed assets.

xviii. The Company has not made any preferential allotment of shares to companies / firms / parties covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

xix. According to the information and explanations given to us, the Company has created adequate security or charge in respect of privately placed debentures issued in the earlier years. However, subsequent to the year end, the charge has been vacated on account of redemption of debentures during the year.

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

xxi. Based on the audit procedures performed and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For B S R and Associates

Chartered Accountants

Firm Registration No.: 128901W

Kaushal Kishore

Place : Gurgaon Partner

Date : 25 September 2010 Membership No.: 090075

 
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