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Auditor Report of Indokem Ltd.

Mar 31, 2015

I have audited the accompanying fnancial statements of INDOKEM LIMITED, which comprises Balance Sheet as at 31st March, 2015, the Statement of Proft and Loss Account for the year ended 31st March 2015, Cash Flow Statement for the year ended 31st March 2015 and a summary of Signifcant Accounting Policies and other explanatory information.

Managements ' Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 ("the Act") with respect to the presentation of these financial statements that give a true and fair view of the financial position and financial performance in accordance with the accounting principles generally ac- 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 account- in 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 accounting records, relevant to the preparation and presentation of the financial state- mints that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

I have conducted the audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that I 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 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 adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my qualifed audit opinion.

Basis for Qualified Opinion

The inventories of the Ankelshwar Plant brought to D. M. godown in the last year amounting to Rs. 333.26 lacs at the year end is as valued and certifed by the management only (Refer Para No 2 ( c ) of Note No 27 of Notes on Accounts).

Qualifed Opinion

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

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2015.

(b) In the case of the Proft and Loss Account, of the Proft for the year ended on that date.

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

Emphasis of Matter

1. As referred in Para No 2(a) of Note No 27 of Notes on Accounts, the Company has repaid loan outstanding of Rs. 1410 lacs in the current financial year of 2015-16 and impact of additional interest of Rs. 164.06 lacs and gain on settlement of principal amount of such loan Rs. 67.39 lacs is accounted in the current year.

2. As referred in Para No 2(b) of Note no 27 of Notes on Accounts ,there are old debtors of Rs. 306.52 lacs which in the opinion of the management are good for recovery and no provision for doubtful debts is required.

3. As referred in Para No 3 of Note No 27 of Notes on Accounts, a sum of Rs. 1.73 lacs has been debited to the opening balance of Proft and Loss Account as per transitional provisions due to change in the method of providing depreciation on fxed assets.

4. The accounts of the Company for the current year includes those of amalgamated companies namely M/s invoked Exports Ltd. and M/s Khatau Capacitors Pvt. Ltd. ( Transferor companies) in pursuance to the Scheme of Amalgamation with such adjustments and details as given in Para No 16 of Note No 27 of Notes on Accounts.

Report on Other Legal and Regulatory Requirements

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

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

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

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

c. The Balance Sheet, Statement of Proft and Loss and other notes thereon dealt with by this Report are in agreement with the books of accounts.

d. In my opinion, the Balance Sheet and Statement of Proft and Loss comply with the accounting standards referred to in the Section 133 of the Companies Act,2013 and read with Rule No 7 of the Companies Accounting Rules 2014.

e. On the basis of representations received from the directors as on March 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. There are no other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules,2014.

ANNEXURE TO THE AUDITORS' REPORT

(REFERRED TO IN THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OF INDOKEM LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED 31st March 2015)

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

b) As explained to me major portion of the fixed assets have been physically verified by the management at the year end, which in my opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

2] a) The inventories have been physically verified by the management at the year end. In my opinion the frequency of verifcation is reasonable.

b) In my opinion the procedures of physical verifcation of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventories. The discrepancies noticed on physical verifcation of stocks as compared to book records were not material and the same have been properly dealt with in the books of accounts.

3] The Company has granted interest free loans, secured or unsecured amounting to Rs. 301.63 lacs (Includes amount receivable on account of reinstatement of Interest etc. amounting to Rs. 294.77 lacs) to Companies, forms and other parties listed in the register maintained under Section 189 of the Companies Act 2013. There are no terms stipulated as to its repayment.

4] In my opinion and according to the information and explanations given to me, there are adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fxed assets and for the sale of services. During the course of my audit I have not observed any continuing failure to correct major weaknesses in internal controls system.

5] The Company has not accepted any deposits from the public within the meaning of provisions of sections 73 to 76 and rules framed there under.

6] Maintenance of cost records under section 148 (1) of the Act are not applicable to the Company.

7] a) In my opinion and according to the information and explanations given to me, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, custom duty excise duty etc with the appropriates authorities. There are no arrears of outstanding statutory dues, as on 31st March, 2015 for a period of more than six months from the date they became payable.

b) As on 31st March, 2015, according to the records of the Company, there are no disputed dues on account of sale tax, excise duty and income tax, except those mentioned below.

Nature of Dues Amount Period to which Forum where the dispute ispending (Rs.in lacs) the amount relates

Income Tax 267.98 2001-02 to Commissioner of Income Tax (Appeals) 2009-10

Income Tax 343.84 2006-07 Commissioner of Income Tax (Appeals)

2009-10 Commissioner of Income Tax (Appeals)

2011-12 Commissioner of Income Tax (Appeals)

Sales Tax 9.92 1990-91 Sales Tax Tribunal

11.53 1995-96 Assistant Commissioner (Apepal)

7.50 2002-03 Sales Tax Tribunal

1.54 2004-05 Assistant Commissioner (Apepal)

Service Tax 2.78 2004-05 Service Tax & Excise Tribunal

8] The accumulated losses of the Company exceeds ffty per cent of its net worth at the year end. However the Company has not incurred cash loss during the year.

9] The Company has defaulted in repayment of dues to a bank amounting to Rs. 17.80 crores at the year end, however they have been paid in full in subsequent year (Refer Note No 2(a) of Note No 27 )

10] According tothe information and explanations given to me, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

11] To the best of my knowledge and belief and according to the information and explanations given to me, the term loans have been utilized for the purpose for which they were obtained.

12] To the best of my knowledge and belief and according to the information and explanations given to me, no fraud on or by the Company was noticed or reported during the year.

For Sheth Doctor and Associates

Chartered Accountants

Firm Regn. No. 124822W

Paresh S Doctor

Proprietor Membership No. 36056

Place : Mumbai

Date : 3rd November 2015


Mar 31, 2014

1. I have audited the accompanying financial statements of INDOKEM LIMITED (the "company"), which comprises Balance Sheet as at 31st March, 2014, the Statement of profit and Loss Account and also the Cash Flow Statement of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, which I have signed under reference to this report.

Managements'' Responsibility for the Financial Statements

2. 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 fow of the Company in accordance with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act,1956 (‘The Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

4. 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 the management, as well as evaluating the overall presentation of the financial statements.

5. I believe that the audit evidence I have obtained is suffcient and appropriate to provide a basis for my qualified opinion.

Basis for qualified Opinion

6. The Inventories of the Company at Ankleshwar Plant have been evaluated at Rs. 367.61 lacs against its book value of Rs. 412.17 lacs as certified by the Company and the said inventories have been transferred to Dahisar Mori godown of the Company at Mumbai. (Refer Note No.3(b) of Note No.26). Ankleshwar Plant operations have already been discontinued for since 16th July, 2009 and currently the same is under process of dismantling Further there are no records or physical verifcation of Fixed Assets lying at the said Plant amounting to Rs.468.49 Lacs and the same has been accepted as certified by management only.

Qualified Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis for qualified Opinion paragraph, the financial statements 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 31st March 2014

(b) In the case of the profit and Loss Account, of the Loss 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.

Emphasis of Matter

8. I draw attention to following Notes given in Note No.26 of the financial statements , which describe the uncertainty related to the final outcome of the respective events:

a) No.4a Re: No provision is made for further penal interest on Loan balance from the bank as already settled pursuant to One Time Settlement in last year for failure to repay the same as per terms of settlement.

b) No.4b Re: Unadjusted old debit balances under debtors amounting to Rs. 247.10 lacs are not provided for since the company is in the process of recovering these amounts.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

9. As required by the Companies (Auditor''s Report) Order, 2003, as amended by ‘the Companies (Auditor''s Report) (Amendment) Order, 2004'' ("The Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act and on the basis of such checks as I considered appropriate and according to information and explanation given to me, I give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the Order.

10. As required under provisions of section 227(3) of the Companies Act, 1956 I report that :

a) I have obtained all the information and explanations which to the best my knowledge and belief were necessary for the purpose of audit;

b) In my opinion proper books of accounts as required by law have been kept by the Company so far as appears from my 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 accounts.

d) In my 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 Act.

e) On the basis of 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 of Section 274 of the Act.

ANNEXURE TO THE AUDITORS'' REPORT (REFERRED TO IN THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OF INDOKEM LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2014)

1. Except for fixed assets at Ankleshwar plant as separately referred in Sl.no.3(a) of Note no.26, The Company has maintained fixed assets register during the year. The Company has programme for physical verifcation of its fixed assets which in my opinion is reasonable having regard to the size of the Company and the nature of its fixed assets.

2. Inventories:

a) Inventories have been physically verifed at the year end by the management. In my opinion, the frequency of verifcation is reasonable.

b) In my opinion, the procedures of physical verifcation of inventories by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verifcation between the physical stocks and book records were not material.

3. a) The Company had taken loan from three (three) Directors amounting to Rs. 827.03 Lacs (Rs. 768.03 Lacs) covered in the register maintained under section 301 of the Companies Act, 1956. The Company has granted loans to five (five) Companies covered in the register maintained u/s. 301 of the Companies Act, 1956 amounting to Rs. 127.53 lacs (Rs. 127.02 lacs), Maximum outstanding amount Rs. 127.53 lacs (Rs. 127.02 Lacs) during the year. However out of the same, amount of Rs. 127.51 has since been adjusted.

b) In my opinion, the rate of interest and other terms and conditions on which loans have been taken from directors listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. The Company has not charged interest on the Loans given to Companies.

c) There are no stipulations, attached to the loans for its repayment.

4. In my opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials including components, packing materials, plant and machinery, equipment and other assets and with regards to sale of goods. During the course of my audit we have not observed any continuing failure to correct major weakness in the internal control procedures.

5. a) According to the information and explanations given to me, I am of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered. b) In my opinion and according to the information and explanation given to me, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of sections 58A & 58AA of the Act and the rules framed thereunder.

7. The Company has no internal audit system during the year.

8. The Company, according to the information and explanations given to me, is maintaining accounts and records prescribed by the Central Government under section 209 (1)(d) of the Companies Act, 1956, and I am of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. I have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. a) Regarding depositing of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Professional Tax and Property tax with appropriate authorities, there were delays. Arrears outstanding in respect of all such statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable amounts to Rs. 103.98 lacs (Rs. 154.22 lacs). b) As at March 31 2014, according to the records of the Company and the information and explanations given to me, the following are the particulars of disputed dues (provided / considered contingent liability as appropriate) on account of sales tax, income tax, customs duty, wealth tax, excise duty and cess matters that have not been deposited.

Name of the Nature of Dues Amount involved Forum where the Statute (Rs. in Lacs) dispute is pending

Sales Tax Act Sales Tax 17.42 Tribunal 13.07 Commissioner (Appeals)

Income Tax Act Income Tax 446.77 Commissioner (Appeals)

Service Tax Act Service Tax 2.78 Commissioner (Appeals)

10. The Company has incurred cash loss in the current year as also in the immediately preceeding financial year and the accumulated losses are more than 50% of its net worth as at 31st March 2014.

11. Based on the examination of books of accounts and related records and according to the information and explanations provided to me, the Company has defaulted in repayment of dues to Bank and Financial Institutions. Out of total dues, a sum of Rs. 1410.00 lacs (Rs. 1410.00 lacs) and interest Rs. 222.07 lacs (Rs. 74.02 lacs) is found overdue and in default.

12. 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. In my opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

14. In my opinion and according to the information and explanations given to me, the Company is not a dealer or trader in securities.

15. The Company has given guarantees amounting to Rs. nil (Rs. 570 lacs) for loans taken by others from banks and financial institution (as referred in Note No. 26 (1e) of Annual Accounts) and terms and conditions are not prima facie prejudicial to the interest of the Company.

16. In my opinion and according to the information and explanations given to me, no term Loan has been raised during the year.

17. According to the information and explanations given to me and on an overall examination of the Balance Sheet of the Company, I report that no funds raised on short-term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets.

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

19. The Company has not raised any funds by the way of debenture during the year.

20. The Company has not raised any money by way of public issue during the year.

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

For Sheth Doctor and Associates Chartered Accountants (Firm Regn No. 124822W)

Paresh S Doctor Place : Mumbai. Proprietor Dated : 15th May, 2014 Membership No. 36056


Mar 31, 2013

Report on the Financial Statements

1. I have audited the accompanying fnancial statements of INDOKEM LIMITED(the ''company"), which comprises Balance Sheet as at 31st March, 2013, the Statement of Proft and Loss Account and also the Cash Flow Statement of the Company for the period then ended, and a summary of signifcant accounting policies and other explanatory information, which I have signed under reference to this report.

Managements'' Responsibility for the Financial Statements

2. 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 fow 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

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

4. 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 the management, as well as evaluating the overall presentation of the fnancial statements.

5. I believe that the audit evidence I have obtained is suffcient and appropriate to provide a basis for my qualifed opinion.

Basis for Qualifed Opinion

6. The Inventories of the company at Ankleshwar Plant are subject to physical verifcation and has been valued at Rs. 412.17 Lacs after making provision of Rs. 45.11 Lacs for obsolescence etc. as certifed by management only(Refer Sl. No. 3(b) of Note No.26). In the absence of stock records, physical verifcation, or any audit evidence for such inventory, the same has been accepted as certifed by management only even though Ankleshwar Plant operations have already been discontinued since 16th July, 2009 and currently the same is under process of dismantling. Further there are no records or physical verifcation of Fixed Assets lying at the said Plant amounting to Rs. 481.23 Lacs and the same has been accepted as certifed by management only.

Qualifed Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis for Qualifed Opinion paragraph, the fnancial statements 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 31st March 2013

(b) In the case of the Proft and Loss Account, of the Loss for the period ended on that date : and

(c) In the case of the Cash Flow Statement, of the cash fows for the period ended on that date.

Emphasis of Matter

8. I draw attention to following Sl. Nos. given in Note No.26 of the fnancial statements, which describe the uncertainty related to the fnal outcome of the respective events:

a) No.4a Re: No provision is made for further penal interest on Loan balance from the bank as already settled pursuant to One Time Settlement in last year for failure to repay the same as per terms of settlement.

b) No.4b Re: Unadjusted old debit balances under debtors amounting to Rs.346.19 lacs are not provided for since the company is in the process of recovering these amounts.

Our opinion is not qualifed in respect of this matter.

Report on Other Legal and Regulatory Requirements

9. As required by the Companies (Auditor''s Report) order ,2003,as amended by ''the Companies (Auditor''s Report) (Amendment)Order,2004'' (''The Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act and on the basis of such checks as I considered appropriate and according to information and explanation given to me, I give in the Annexure a statement on the matters specifed in the paragraphs 4 and 5 of the Order.

10. As required under provisions of section 227(3) of the Companies Act, 1956 I report that :

a) I have obtained all the information and explanations which to the best my knowledge and belief were necessary for the purpose of audit;

b) In my opinion proper books of accounts as required by law have been kept by the Company so far as appears from my 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 accounts.

d) In my opinion, the Balance Sheet, Statement of Proft and Loss and Cash Flow statement comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act.

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

ANNEXURE TO THE AUDITORS'' REPORT

(REFERRED TO IN THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OF INDOKEM LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED 31st MARCH 2013)

1. Except for fxed assets at Ankleshwar plant as separately referred in Sl.no.3(a) of Note no.26,

The Company has maintained fxed assets register during the year. The Company has programme for physical verifcation of its fxed assets which in my opinion is reasonable having regard to the size of the Company and the nature of its fxed assets.

2. Inventories:

Except for Inventories at Ankleshwar Plant as separately referred in Sl No.3(b) of Note No 26

a) Inventories have been physically verifed at the year end by the management. In my opinion, the frequency of verifcation is reasonable.

b) In my opinion, the procedures of physical verifcation of inventories by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verifcation between the physical stocks and book records were not material.

3. a) The Company had taken loan from three (three) Directors amounting to Rs. 768.03 lacs (Rs. 768.53 lacs) covered in the register maintained under section 301 of the Companies Act, 1956. The Company has granted loans to fve (fve) Companies covered in the register maintained u/s. 301 of the Companies Act, 1956 amounting to Rs. 127.02 lacs (Rs.159.00 lacs), Maximum outstanding amount Rs. 127.02 lacs (Rs.159.00 lacs) during the year.

b) In my opinion, the rate of interest and other terms and conditions on which loans have been taken from directors listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. The Company has not charged interest on the Loans given to Companies.

c) There are no stipulations, attached to the loans for its repayment.

4. In my opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials including components, packing materials, plant and machinery, equipment and other assets and with regards to sale of goods. During the course of my audit we have not observed any continuing failure to correct major weakness in the internal control procedures.

5. a) According to the information and explanations given to me, I am of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In my opinion and according to the information and explanation given to me, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees fve lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of sections 58A & 58AA of the Act and the rules framed thereunder.

7. In my opinion and according to the information & explanations given to me, the company has internal audit system during the period. However, the same is not commensurate with the size of the business of the Company and needs to be strengthened.

8. The Company, according to the information and explanations given to me, is maintaining accounts and records prescribed by the Central Government under section 209 (1)(d) of the Companies Act, 1956, and I am of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. I have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. a) Regarding depositing of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Professional Tax and Property Tax with appropriate authorities, there were delays. Arrears outstanding in respect of all such statutory dues as at the last day of the fnancial year concerned for a period of more than six months from the date they became payable amounts to Rs. 154.22 lacs (Rs. 111.66 lacs),

b) As at March 31 2013, according to the records of the Company and the information and explanations given to me, the following are the particulars of disputed dues (provided / considered contingent liability as appropriate) on account of sales tax, income tax, customs duty, wealth tax, excise duty and cess matters that have not been deposited.

Name of the Statute Nature of Dues Amount involved Forum where the dispute is pending (Rs. in Lacs)

Sales Tax Act Sales Tax 17.42 Tribunal

Sales Tax Act Sales Tax 13.07 Commissioner (Appeals)

Income Tax Act Income Tax 115.41 Commissioner (Appeals)

Service Tax Act Service Tax 2.78 Commissioner (Appeals)

10. The Company has incurred cash loss in the current year as also in the immediately preceeding fnancial year and the accumulated losses are more than 50% of its net worth as at 31st March 2013.

11. Based on the examination of books of accounts and related records and according to the information and explanations provided to me, the Company has defaulted in repayment of dues to Bank and Financial Institutions. Out of total dues, a sum of Rs. 1410.00 lacs (Rs. 1410.00 lacs) and interest Rs. 74.02 is found overdue and in default.

12. 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. In my opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special statute applicable to chit fund / nidhi / mutual beneft fund / societies are not applicable to the Company.

14. In my opinion and according to the information and explanations given to me, the Company is not dealer or trader in securities.

15. The Company has given guarantees amounting to Rs. 570 lacs ( Rs. 1030 lacs) for loans taken by others from banks and fnancial institution (as referred in Note No. 26 (1e) of Annual Accounts) and terms and conditions are not prima facie prejudicial to the interest of the company.

16. In my opinion and according to the information and explanations given to me, no Term Loan has been raised during the year.

17. According to the information and explanations given to me and on an overall examination of the Balance Sheet of the Company, I report that no funds raised on short-term basis have been used for long-term investment. No long-term funds have been used to fnance short-term assets.

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

19. The Company has not raised any funds by way of debentures during the year.

20. The Company has not raised any money by way of public issue during the year.

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

For Sheth Doctor & Associates Chartered Accountants

(Firm Regn No. 124822W)

Paresh S Doctor

Proprietor Membership No. 36056

Place : Mumbai.

Dated : 13th May, 2013


Sep 30, 2012

We have audited the attached Balance Sheet of INDOKEM LIMITED as at 30th September, 2012, the Profit and Loss Account and also the Cash Flow Statement of the Company for the period ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditor's Report) Order, 2003, issued by the Government of India in terms of sub-section 227(4A) 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.

Further to our comments in the Annexure referred to in paragraph 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 except for Inventory Records of Ankleshwar Plant as mentioned in SINo.5(b) of Note No. 26;

b) In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books;

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

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

e) On the basis of the written representation received from the directors of the Company as at the date of the Report and taken on record by the Board of Directors we report that no director is disqualified from being appointed as a director of the company under clause (g) of sub-section (1) of Section 274 of the of the Companies Act, 1956;

f) Value of the Inventory at Ankleshwar Plant amounting to Rs. 457.28 lacs being accepted as certified by the management only as referred in SI No. 5(b) of Note No. 26;

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

i) In the case of the Balance Sheet, of the state of affairs as at 30*1 September 2012,

ii) In the case of the profit and loss account, of the loss for the period ended on that date; and

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

ANNEXURE TO THE AUDITORS' REPORT

(REFERRED TO IN THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OF INDOKEM LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED 30st SEPT 2012)

1. The Company has maintained fixed assets register during the period. The Company has programme for physical verification of its fixed assets which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. The Company has disposed off factory building and plant at Ankleshwar during the period.

2. Inventories:

Except for Inventories at Ankleshwar Plant as separately referred in SI No.5(b) of Note No. 26:

a) Inventories have been physically verified at the year end by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventories by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material.

3. a) The Company had taken loan from three (three) Directors amounting to Rs. 768.53 Lacs (Rs. 688.83 Lacs) covered in the register maintained under section 301 of the Companies Act, 1956. The Company has granted loans to five Companies covered in the register maintained u/s. 301 of the Companies Act, 1956 amounting to Rs. 159 lacs (Rs. 127.02 lacs), Maximum amount outstanding during the period Rs. 159 lacs (127.02) lacs.

b) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from directors listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. The Company has not charged interest on the Loans given to Companies.

c) There are no stipulations, attached to the loan for its repayment.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials including components, packing materials, plant and machinery, equipment and other assets and with regards to sale of goods. During the course of our audit we have not observed any continuing failure to correct major weakness in the internal control procedures.

5. a) All the transaction with parties covered under section 301 of the Companies Act, 1956 have been properly entered in the register maintained under Section 301 of the Act.

b) In our opinion and according to the information and explanation given to us, the transaction made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act, and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are not comparable in the absence of similar transactions with other parties.

6. The Company has not accepted any deposits from public during the period.

7. The Company has no internal audit system during the period.

8. The Company, according to the information and explanations given to us, is maintaining accounts and records prescribed by the Central Government under section 209 (1)(d) of the Companies Act, 1956. We have not examined the contents of these accounts and records. ‘

a) Regarding depositing of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, and Professional Tax with appropriate authorities, there were delays, arrears outstanding in respect of all such statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable amounts to Rs. 111.66 lacs (Rs. 165.95 lacs).

b) As at Sept 30, 2012 according to the records of the Company and the information and explanations given to us, the following are the particulars of disputed dues (provided / considered contingent liability as appropriate) on account of sales tax, income tax, customs duty, wealth tax, excise duty and cess matters that have not been deposited.

Name of the Statute Nature of Dues Amount involved Forum where the dispute is pending (Rs.in Lacs)

Sales Tax Act Sales Tax 30.49 Commissioner (Appeals)

Income Tax Act Income Tax 21.89 Commissioner (Appeals)

Service Tax Act Service Tax 2.78 Commissioner (Appeals)

10. The Company has incurred cash loss in the current period as also in the immediately preceding financial year and the accumulated losses are more than 50% of its net worth as at 30th Sept 2012.

11. Based on the examination of books of accounts and related records and according to the information and explanations provided to us, the Company has defaulted in repayment of dues to Bank and Financial institutions. Out of total repayments made during the year, a sum of Rs. 20 lacs (99.92) lacs is found delayed on various dates as compared to its schedule of repayments agreed upon in pursuance to loan agreements (excluding delays which has been regularized by further arrangements). Out of total dues, a sum of ^1410.00 lacs (740.65) lacs is found overdue and in default.

12. 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. In our opinion, considering the nature of activities carried on by the Company during the period, the provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not dealer or trader in securities.

15. The Company has given guarantees (including counter guarantees) amounting to Rs. 1030 lacs (Rs. 1030 lacs) for loans taken by others from banks and financial institution (as referred in SI.No.1(e) of Note No. 26) and terms and conditions are not prima facie prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, no Term Loan has been raised during the period.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets. '

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

19. The Company has not raised any funds by the way of debenture during the period.

20. The Company has not raised any money by way of public issue during the period.

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

For Sheth Doctor & Associates

Chartered Accountants

(Firm Registration No. 124822W)

Mumbai Paresh S. Doctor

Dated: 9th November, 2012 Membership No. 36056


Mar 31, 2010

We have audited the attached Balance Sheet of INDOKEM LIMITED as at 31st March 2010, the Profit and Loss Account and also 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.

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.

As required by the Companies (Auditors Report) Order, 2003, issued by the Government of India in terms of sub-section 227(4A) 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.

Further to our comments in the Annexure referred to in paragraph 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 ofour audit except for Stores and Inventory Records ofAnkleshwar Plant for the reasons as mentioned in Note No. 2 of Sen. 20 Notes on Accounts.

b) In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books;

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

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

e) On the basis of the written representation received from the directors of the company as at the date of the Report and taken on record by the Board of Directors we report that no director is disqualified from being appointed as a director of the company under clause (g) of sub-section (1) of Section 274 of the of the Companies Act, 1956; and

f) Value of the Inventory at Ankleshwar Plant amounting to Rs.624.74 lacs Is accepted as certified by the management only for the facts and reasons mentioned in Note No. 2 ofSch - 20 of Notes on Accounts. In the absence of details of the original values of the Inventories, we are unable to report the impact of the same on Profit and Loss Account of the Company. Subject to above, the said accounts, in our opinion and to the best our information and according to the explanations given the said accounts read together with the significant accounting policies and notes thereon give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the state of affairs as at 31 st March 2010,

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

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

ANNEXURE TO THE AUDITORS REPORT

(REFERRED TO IN THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OFINDOKEMLIMITED ON THEACCOUNTS FORTHEYEARENDED31stMARCH,2010)

1. The Company should update Fixed Assets Register, so as to show item-wise details along with its cost and written down values. The Company has programme for physical verification of its fixed assets which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. The Company has disposed off residential property at Bharuch Colony and Office premises at Khatau House at Mumbai during the year.

2. Inventories:

Except for Inventories at Ankleshwar Plant as separately referred in Note No. 2 of Sen- 20 on Note on Accounts:

a) Inventories have been physically verified at the year end by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventories by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material.

3. a) The Company had taken loan of from a Director amounting to Rs. 594.80 Lacs (Rs. 397.23 Lacs) covered in the register maintained under section 301 of the Companies Act, 1956. The Company has not granted loans to Companies, firms or other parties covered in the register maintained u/s. 301 of the Companies Act, 1956.

b) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies 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) There are no stipulations, attached to the loan for its repayment.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials including components, packing materials, plant and machinery, equipment and other assets and with regards to sale of goods. During the course of our audit we have not observed any continuing failure to correct major weakness in the internal control procedures.

5. a) All the transaction with parties covered under section 301 of the Companies Act, 1956 have been properly entered in the register maintained under Section 301 of the Act.

b) In our opinion and according to the information and explanation given to us, the transaction made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act, and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are not comparable in the absence of similar transactions with other parties.

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

7. In our opinion, the scope and coverage of internal audit is not commensurate with the size of the Company and needs to be strengthened.

8. The Company, according to the information and explanations given to us, is maintaining accounts and records prescribed by the Central Government under section 209 (1 )(d) of the Companies Act, 1956. We have not examined the contents of these accounts and records.

9. a) Regarding depositing of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, and Professional Tax with appropriate authorities, there were delays. Arrears outstanding in respect of all such statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable amounts to Rs 224.96 lacs (Rs. 484.80 lacs),

b) As at March 31, 2010 according to the records of the company and the information and explanations given to us, the following are the particulars of disputed dues (provided / considered contingent liability as appropriate) on account of sales tax, income tax, customs duty, wealth tax, excise duty and cess matters that have not been deposited.

Name of the Statute Nature of Dues Amount involved Forum where the dispute is pending

(Rs. in Lacs)

Sales Tax Act Sales Tax 100.94 Commissioner (Appeals)

Income Tax Act Income Tax 11.98 Commissioner (Appeals)

10. The Company has incurred cash loss in the current year, but not in the immediately preceding financial year and the accumulated losses are not more than 50% of its net worth as at 31 st March 2010.

11. Based on the examination of books of accounts and related records and according to the information and explanations provided to us, the company has defaulted in repayment of dues to Bank and Financial institutions. Out of total repayments made during the year, a sum of Rs 243.04 lacs is found delayed on various dates as compared to its schedule of repayments agreed upon in pursuance to loan agreements (excluding delays which has been regularized by further arrangements). Out of total dues, a sum of Rs. 496.47 lacs is found overdue and in default.

12. 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. In our opinion, considering the nature of activities carried on by the company during the year, the provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not dealer or trader in securities.

15. The Company has given guarantees (including counter guarantees) amounting to Rs. 1,816 lacs (Rs. 2,052 lacs) for loans taken by others from banks and financial institution, (as referred in Note No. 1(e) of schedule 20 of Annual Accounts) and terms and conditions are not prima facie prejudicial to the interest of the company except for the fact that it includes a sum of Rs. 786.00 lacs worth guarantee given on behalf of subsidiary company viz. Kapsales Electricals Ltd., which has been registered u/s 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985.

16. In our opinion and according to the information and explanations given to us, no Term Loan has been raised during the year.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets.

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

19. The Company has not raised any funds by the way of debenture during the year.

20. The Company has not raised any money by way of public issue during the year.

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

For Sheth Doctor & Associates

Chartered Accountants

(Firm Registration No. 124822W)

Mumbai Paresh S. Doctor

Dated : 13th August, 2010 Membership No.36056

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