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Auditor Report of JCT Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements 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 auditors' 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 financial statements.

Opinion

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

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

i. Note No. 5.2 to the financial statements which describes the reasons for non-provision of Rs. 2,258.73 lakhs towards yield protection on the unpaid amount of Foreign Currency Convertible Bonds of Rs. 9,457.34 lakhs.

ii. Note No. 30.7 to the financial statements which describes the reasons for preparing the financial statements on a going concern basis although the accumulated losses have resulted in erosion of substantial net worth of the Company and its current liabilities exceed its current assets at the year-end.

iii. Note No. 30.8 to the financial statements which describes the uncertainty related to the outcome of the appeal filed with the Courts of Appeals at Malaya by the Company of a claim of Rs. 788.25 lakhs by ex-employees of CNLT, Malaysia on account of advances and compensation paid to the Company by CNLT, Malaysia.

iv. Note No. 30.10; to the financial statements regarding non-confirmation / reconciliation of certain balances in trade receivables, advances and trade payables of the Company. Our opinion is not modified in respect of these matters.

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, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraph 3 and 4 of the Order.

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

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

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

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

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

e. The going concern matter described in sub- paragraph (ii) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note No. 5.2, 30.1 and 30.8 to the financial statements;

ii. The Company has not entered into any long- term contracts including derivative contracts.

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

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under 'Report on other Legal and Regulatory Requirements' section of our Report of even date)

(i) In respect of its fixed assets;

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

b. As explained to us, the fixed assets have been physically verified by the management during the period in a phased periodical manner, which in our 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.

(ii) In respect of its inventories;

a. As explained to us, inventories except those lying with third parties have been physically verified by the management in accordance with the perpetual inventory programme, at regular intervals during the period. In our opinion, the frequency of verification is reasonable.

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

c. The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed in physical verification of inventory as compared to the book records.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013.

(iv) 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 for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have neither come across, nor we have been informed of any continuing failure to correct major weaknesses in internal control system.

(v) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 and other relevant provisions of the Companies Act, 2013 and the Rules framed there under, with regard to the deposits accepted from the public except some delays in clearance of cheques by the depositors in respect of its deposits accepted before the commencement of Companies Act, 2013. As informed to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of the Textile and Filament Units of the Company where Order has been made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

(vii) In respect of statutory dues:

a. According to the information and explanations given to us and the records of the Company examined by us, in our opinion the Company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues as applicable with the appropriate authorities though there has been a delay in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

b. The disputed statutory dues aggregating to Rs. 6,332.99 lakhs, that have not been deposited on account of matters pending in appeal before appropriate authorities are as under:

Sl. Name of the Nature of Forum where Amount No. statute the dues dispute is pending (Rs. in lakhs)

1. Central Excise Excise Upto 349.04 Act Duty Commissioner's Level

CESTAT 1,230.58

Tribunal 3,233.25

2. Central Sales Sales Tax Tribunal 1,334.07 Tax and Sales Tax Act of various states

3. Customs Duty Customs Commissioner of 186.05 Act, 1962 Duty Customs

TOTAL: 6,332.99

c. The amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 and Rules made thereunder has been transferred to such fund within prescribed time.

(viii) In our opinion, the accumulated losses of the Company as at 31st March, 2015 are more than fifty percent of its net worth. The Company has not incurred cash losses during the current financial year and in the immediately preceding financial period.

(ix) Based on our audit procedures and according to the information and explanations given to us, the Company has defaulted in repayment of US$ 15.00 million equivalent to Rs. 9,457.34 lakhs to Foreign Currency Convertible Bond (FCCBs) holders since 08.04.2011.

(x) The Company has given a guarantee for a loan taken by another body corporate from a financial institution during the earlier year. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima-facie prejudicial to the interest of the Company.

(xi) In our opinion and according to the information and explanations given to us, the Company has not availed any term loan during the year.

(xii) In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For S.P Chopra & CO.

Chartered Accountants

Firm Registration No.000346N

SANJIV GUPTA

Place:New Delhi Partner

Date : 19.05.2015 M. No. 83364


Mar 31, 2014

We have audited the accompanying financial statements of JCT Limited (the "Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit & Loss and Cash Flow Statement for the six months period then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Sub-section (3C) of Section 211 of "the Companies Act , 1956" (the "Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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 but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, and to the best of our information and according to the explanations given to us, the accompanying financial statements give the information required by 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, 2014;

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

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

Emphasis of Matter

We draw attention to the following notes in the financial statements:

i. Note No. 5.2; Non provision of yield protection of Rs. 1,622.36 lakhs payable on unpaid amount of Foreign Currency Convertible Bonds (FCCBs) for the reasons stated therein and likely impact of winding up petition filed by the FCCB Trustee for non payment of dues of US$ 1 5. 00 million equivalent to Rs. 9,071.91 lakhs since 08.04.2011,'' capital gain on settlement of US$ 12.93 million FCCBs liability of Rs. 5,082.50 lakhs has been directly credited to Reserves and Surplus as Capital Reserve based on legal opinion obtained by the management instead of taking to the Statement of Profit & Loss.

ii. Note No. 5.3(b); Delays including clearance of cheques to depositors of Rs. 328.46 lakhs as at 31.03.2014 under Section 58A of the Companies Act, 1956.

iii. Note No. 31.7; Accumulated losses have resulted in erosion of substantial net worth of the Company. However, the financial statements have been prepared on going concern basis on the grounds as disclosed in the Note No. 31.7.

iv. Note No. 31.10; Non-confirmation/reconciliation of certain balances in trade receivables, advances and trade payables of the Company.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

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

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

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

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

c. The Balance Sheet, Statement of Profit and Loss and Cash 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 dealt with by this report comply with the Accounting Standards notified under the Act read with the General Circular No.15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Setion 133 of the Companies Act, 2013.

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

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(REFERRED TO IN PARAGRAPH 1 UNDER REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS'' SECTION OF OUR REPORT OF EVEN DATE)

i) In respect of its fixed assets;

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

b. As explained to us, the fixed assets have been physically verified by the management during the period in a phased periodical manner, which in our 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.

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

ii) In respect of its inventories;

a. As explained to us, inventories except those lying with third parties have been physically verified by the management in accordance with the perpetual inventory programme, at regular intervals during the period. In our opinion, the frequency of verification is reasonable.

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

c. The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed in physical verification of inventory as compared to the book records.

iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

iv) 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 for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into a register maintained under Section 301 of the Companies Act, 1956.

vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, Section 58AA and other relevant provisions of the Companies Act, 1956 and the Rules framed there under, with regard to the deposits accepted from the public except delays including clearance of cheques of Rs. 328.46 lakhs as at 31st March, 2014 issued to depositors in respect of repayment of deposits. As informed to us, no order has been passed by the

National Company Law Tribunal, Reserve Bank of India, any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

vii) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size and nature of the Company''s business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of the Textile and Filament Units of the Company where Order has been made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

ix) In respect of statutory dues:

a. According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues have been generally regularly deposited with the appropriate authorities though there has been a delay in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

b. The disputed statutory dues aggregating to Rs. 5,976.16 lakhs, that have not been deposited on account of matters pending in appeal before appropriate authorities are as under:

Sl. Name of Nature of Forum where Amount No. the statute the dues dispute (Rs. in lakhs) is pending

1. Central Excise Upto Commissioner''s Excise Act Duty Level 445.81 CESTAT 1682.70 Tribunal 1979.19

2. Central Sales Upto AETC 447.33 Sales Tax Tax Tribunal 1183.98 and Sales Tax Supreme Court 51.10 Act of various states

3. Customs Customs Commissioner of Duty Duty Customs 186.05 Act, 1962 TOTAL: 5976.16

x) In our opinion, the accumulated losses of the Company as at 31st March, 2014 are more than fifty percent of its net worth. However, the Company has not incurred cash losses during the current financial period and in the immediately preceding financial period.

xi) Based on our audit procedures and according to the information and explanations given to us, the Company has defaulted in repayment of US$ 15.00 mlliion equivalent to Rs. 9,071.91 lakhs to Foreign Currency Convertible Bond (FCCBs) holders since 08.04.2011. During the period, the Company has settled US$ 12.93 million FCCBs by issue of 11,59,54,059 equity shares of Rs. 2.50 each at par aggregating to Rs. 2,898.86 lakhs and capital gain on such settlement of Rs. 5,082.50 lakhs has been directly credited to Reserves & Surplus as Capital Reserve based on legal opinion obtained by the management instead of taking it to Statement of Profit & Loss and redemption premium of US$ 2.57million equivalent to Rs. 1,641.52 lakhs has been written back and added to share premium account.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/society.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments.

xv) The Company has given a guarantee for a loan taken by another body corporate from a financial institution during the earlier year. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima-facie prejudicial to the interest of the Company.

xvi) In our opinion and according to the information and explanations given to us, the Company has not availed any term loan during the period.

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

xviii) The Company has made preferential allotment of shares to some parties and no shares are allotted to any company covered in the Register maintained under Section 301 of the Companies Act, 1956. During the period, the Company allotted 11,59,54,059 equity shares at par @ Rs. 2.50 per share aggregating to Rs. 2,898.86 lakhs, to Foreign Currency Convertible Bonds (FCCBs) holders in settlement of FCCBs liability of US$ 12.93 million on preferential basis. Such allotment of equity shares at par is not prejudicial to the interests of the Company.

xix) The Company has not issued any debentures during the period hence the issue of creation of charge or security does not arise.

xx) The Company has not raised any money by way of public issues during the period.

xxi) In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For S.P Chopra & CO. Chartered Accountants Firm Registration No.000346N

SANJIV GUPTA Place : New Delhi Partner Date : 30th May, 2014 M. No. 83364


Sep 30, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of JCT Limited (the "Company"), which comprise the Balance Sheet as at 30th September, 2013, the Statement of Profit and Loss and Cash Flow Statement for the 18 months period then ended and a summary of the significant accounting policies and other explanatory information.

Management''s 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 flows of the Company in accordance with the Accounting Standards referred to in Sub-section (3C) of Section 211 of "the Companies Act , 1956" (the "Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. 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.

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 auditors'' 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 consider internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

6. In our opinion, and to the best of our information and according to the explanations given to us, the accompanying financial statements give the information required by 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 30th September, 2013;

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

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

Emphasis of Matter

7. We draw attention to the following notes in the financial statements:

i. Note No. 5.2 (b) ; Non provision of yield protection of Rs. 2872.90 lakhs payable on unpaid amount of Foreign Currency Convertible Bonds (FCCBs) for the reasons stated therein and likely impact of winding up petition filed by the FCCB Trustee for non payment of dues of US$ 30.50 million equivalent to Rs.19302.79 lakhs since 08.04.2011.

ii. Note No. 5.3 (b); Non clearance/payment of cheques to depositors of Rs. 382.38 lakhs in respect of repayment of deposits under Section 58A of the Companies Act, 1956 and certain delays in repayments of deposits during the period for which details are not readily ascertainable due to large volume of deposits.

iii. Note No. 31.7 and 31.10; Continuing and accumulated losses have resulted in entire erosion of net worth of the Compnay. However, the financial statements have been prepared on going concern basis on the grounds as disclosed in the Note 31.7. Further, as referred to in Note 31.10, steps are being taken by the management as envisaged under the Sick Industrial Companies (Special Provisions) Act, 1985.

iv. Note No. 31.11; Non-confirmation/reconciliation of certain balances in trade receivables, advances and trade payables of the Company.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

8. 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.

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

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

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

c. The Balance Sheet, Statement of Profit 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 dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Act.

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

i) In respect of its fixed assets;

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

b. As explained to us, the fixed assets have been physically verified by the management during the period in a phased periodical manner, which in our 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.

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

ii) In respect of its inventories;

a. As explained to us, inventories except those lying with third parties, have been physically verified by the management in accordance with the perpetual inventory programme, at regular intervals during the period. In our opinion, the frequency of verification is reasonable.

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

c. The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed in physical verification of inventory as compared to the book records.

iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

iv) 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 for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into a register maintained under Section 301 of the Companies Act, 1956.

vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, Section 58AA and other relevant provisions of the Companies Act, 1956 and the Rules framed there under, with regard to the deposits accepted from the public except non clearance/ payment of cheques of Rs. 382.38 lakhs at 30th September, 2013 issued to depositors in respect of repayment of deposits and certain delays in repayments of deposits during the period for which details are not readily ascertainable due to large volume of deposits.

As informed to us, no order has been passed by the National Company Law Tribunal, Reserve Bank of India, any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

vii) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size and nature of the Company''s business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of the Textile and Filament Units of the Company where Order has been made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

ix) In respect of statutory dues:

a. According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-Tax, Sales tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues have been generally regularly deposited with the appropriate authorities though there has been a delay in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 30th September, 2013 for a period of more than six months from the date they became payable.

x) In our opinion, the accumulated losses of the Company as at 30th September, 2013 are more than fifty percent of its net worth. Further, the Company has incurred cash loss during the current financial period and also in the immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, the Company has defaulted in repayment of US$ 30.50 million equivalent to Rs.19,302.79 lakhs to foreign currency bond holders since 08.04.2011.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/society.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments.

xv) The Company has given a guarantee for a loan taken by another body corporate from a financial institution during the earlier year. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima-facie prejudicial to the interest of the Company.

xvi) In our opinion and according to the information and explanations given to us, the Company has not availed any term loan during the period.

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

xviii)The Company has made preferential allotment of shares to some parties and to a company covered in the Register maintained under Section 301 of the Companies Act, 1956. During the period, the Company allotted 4,08,80,000 equity shares at par @ Rs. 2.50 per share aggregating to Rs. 1,022 lakhs, to its promoter company, Provestment Securities Private Limited and Rs. 4,08,80,000 equity shares at par @ Rs. 2.50 per share aggregating to Rs. 1,022 lakhs to the secured lenders under the Corporate Debt Restructuring Scheme. Such allotment of equity shares at par is not prejudicial to the interests of the Company.

xix) The Company has not issued any debentures during the period hence the issue of creation of charge or security does not arise.

xx) The Company has not raised any money by way of public issues during the period.

xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the period. For S.P Chopra & CO.

Chartered Accountants

Firm Registration No.000346N

PAWAN K GUPTA

Place: New Delhi Partner

Date : 29.11.2013 Membership No.092529


Mar 31, 2012

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

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

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure hereto 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 in paragraph 3 above, we report that;

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

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

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

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

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

(f) Without qualifying our opinion, we draw attention to the following notes in the financial statements:

i. Note No. 5.2 (b) ; Non provision of yield protection of Rs. 924.78 lakhs payable on unpaid amount of Foreign Currency Convertible Bonds (FCCB) for the reasons stated therein and the uncertainty related to the outcome of the lawsuit filed against the Company by the Trustee of the FCCB holders.

ii. Note No. 31.7 : The Company has incurred substancial cash losses in the current year as also in the previous years resulting in substancial erosion of net worth of the company. However, the financial statements have been prepared on going concern basis on the grounds as stated therein.

iii. Note No. 31.12: Interest free unsecured security deposit of Rs.1150 lakhs given to an associate company and consequences, if any, as to the applicability of Section 295 and/or 372A of the Companies Act, 1956 to this transaction.

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

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

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

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

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our Report of even date)

i) a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our 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.

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

ii) a. As explained to us, inventories except those lying with third parties, have been physically verified by the management in accordance with the perpetual inventory programme, at regular intervals during the year. In our opinion, the frequency of verification is reasonable.

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

c. The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed in physical verification of inventory as compared to the book records.

iii) a. The Company during the year has granted an interest free unsecured security deposit to an associate company covered in the register maintained under Section 301 of the Companies Act, 1956 aggregating Rs.1150 lakhs. The balance as at 31st March, 2012 is Rs.1150 lakhs. As explained to us, the security deposit was granted consequent to non-fulfilment of a specific obligation as stipulated in the agreement entered into with the associate company as detailed by the management in Note No. 31.12, which has been fully repaid after the year end. Prima facie, it does not appear to be prejudicial to the interest of the Company. b. The Company has not taken any loan during the year from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

iv) 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 for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v) In our opinion and according to the information and explanations given to us, the Company has entered the interest free unsecured security deposit given to an associate company in the register maintained under Section 301 of the Companies Act, 1956. Besides the said transaction there is no other transaction which needs to be entered in the said register. Further, the clause regarding reasonability of the price is not applicable as it is the transaction of placement of interest free security deposit.

vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, Section 58AA and other relevant provisions of the Companies Act, 1956 and the Rules framed there under, with regard to the deposits accepted from the public. As informed to us, no order has been passed by the National Company Law Tribunal, Reserve Bank of India, any court or any other Tribunal during the year.

vii) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size and nature of the Company's business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of the Textile and Filament Units of the Company where Order has been made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the said records.

ix) In respect of statutory dues:

a. According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income- Tax, Sales tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues have been generally regularly deposited with the appropriate authorities though there has been a delay in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable.

b. The disputed statutory dues aggregating to Rs. 3146.70 lakhs, that have not been deposited on account of matters pending in appeal before appropriate authorities are as under:

Sl. Name of the Nature of the Forum where dispute Amount No statute dues is pending (Rs. in lakhs)

1 Central Excise Duty Upto Commissioner's Excise Act level 118.00 CESTAT 2,306.25 High Court 20.95

2 Central Sales Sales Tax Upto AETC 3.55 Tax and Tribunal 377.76 Sales Tax Act Supreme Court 51.10 of Various states

3 Customs Duty Customs Duty Commissioner of 186.05 Act, 1962 Customs

4 Income tax Income Tax CIT 0.55 Act, 1961 Supreme Court 82.49

Total 3146.70



x) In our opinion, the accumulated losses of the Company as at 31.03.2012 are more than fifty percent of its net worth. Further, the Company has incurred cash losses during the financial year covered by the audit and also in the immediately preceeding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, the Company has defaulted in repayment of term loan of Rs.857.49 lakhs to bankers and US$ 30.50 million equivalent to Rs.15,718.72 lakhs to foreign currency bond holders since 08.04.2011. Further, there have been delays in repayment of dues to banks amounting to Rs. 2,352.97 lakhs during the year with maximum of 105 days.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments.

xv) The Company has given a guarantee for a loan taken by another body corporate from a financial institution during the earlier year. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima-facie prejudicial to the interest of the Company.

xvi) In our opinion and according to the information and explanations given to us, the Company has not availed any term loan during the year.

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

xviii)The Company has not made any preferential allotment of shares to any parties or companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix) The Company has not issued any debentures during the year hence the issue of creation of charge or security does not arise.

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

xxi) In our opinion 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 that causes the financial statements to be materially misstated.



For S. P. CHOPRA & CO.

Chartered Accountants.

(PAWAN K. GUPTA)

Partner

Place: New Delhi Membership No. 92529

Dated: 31st October, 2012 Firm Registration No. : 000346N

 
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