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Auditor Report of Jeypore Sugar Company Ltd.

Mar 31, 2015

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

Management's responsibility for the financial statements

The Company's board of directors is responsible for the matters 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 fows 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 prevention and detection of frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; design, implementation and maintenance of adequate internal financial controls, that are 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.

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 board of 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

Basis for Disclaimer of Opinion

We are informed that the company has proposed for restructuring by demerging its Pothavaram sugar unit and same is under process. In view of this, the company is in the process of reviewing the carrying amount of its assets in Pothavaram Unit. Pending information about its recoverable amount, we are at present unable to ascertain the adjustment, if any, required to be made to the value of the assets between the carrying amount and its recoverable amount as required to be made as per AS-28 "Impairment of Assets" and its impact, if any, on the Loss for the year, fixed assets and reserves of the company.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the basis for Disclaimer of 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 Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

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

Report on other legal and regulatory requirements

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

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

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

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

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 subject to points noted in para of basis for disclaimer of opinion;

e) On the basis of written 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 sub-section (2) of section 164 of the Act;

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

i. The company does not have any pending litigations which would impact its financial position except those which are disclosed in the notes to the financial statements and para no.7 in Annexure to our Audit report.

ii. The company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education Protection Fund by the company except an amount of Rs.4,94,760/- which are held in abeyance due to pending legal cases.

The Annexure referred to in our report to the members of THE JEYPORE SUGAR COMPANY LIMITED ("Company") for the year ended March 31, 2015.

We report that:

1. In respect of its fixed assets:

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

b) According to the information and explanations furnished to us, the Company has not physically verified its fixed assets during the year. However, the Company has adopted a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

2. In respect of its inventories:

a) According to the information and explanations furnished to us, the Company has physically verified its inventories. In our opinion, the frequency of such verification to the extent carried out is reasonable.

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

c) According to the information furnished to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records, which were not material, have been properly dealt with in the books of account.

3. The Company has not granted any loans, secured or unsecured to companies, forms or other parties covered in the register maintained under section 189 of the Act. Consequently, clauses (iii)(a) and(b) of paragraph 3 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. Further during the course of our audit, we have not come across any instances of major weaknesses in internal control that in our opinion, require correction.

5. The Company has not accepted any deposits from the public and members during the financial year 2014-15. However, in respect of deposits accepted from public and members prior to 1.4.2014, being the date of commencement of Companies Act, 2013, an amount of Rs.352.24 lakhs (Public Rs.58.24 lakhs and members Rs.294 lakhs) is outstanding as on 31.3.2015 which are not due for repayment as per the terms of deposit. The company has not fled statement of deposits with the Registrar in Form DPT-4 as required to be fled as per the provisions of section 74(1)(a) of the Act.

The company has received advances against sale of goods amounting to Rs.19.47 lakhs which are pending for supply for more than a year and outstanding as on 31.3.2015. We are informed that all these advances has arisen in respect of sale of goods for which goods were already sold and some balances were outstanding against the supplies.

Subject to the above, the company has complied with the directives issued by Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. According to the information furnished to us, no order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non-compliance with the provisions of sections 73 to 76 of the Act.

6. We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed audit of the same.

7. a) According to the information furnished to us, the Company made substantial delays in remitting of its dues such as Provident Fund, Value added tax, Income-tax, Service tax, Excise duty, Cess and other statutory dues applicable to it. There were no undisputed statutory dues in arrears as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable except the following.

Name of the statue Nature of dues Amount (Rs.) Period

AP Non-agricultural Non- Agricultural 2,72,115 1978-79 to 1987-88

land asst. tax land tax

Income-tax Act, 1961 Income-tax 3,72,86,980 Asst. year 2013-14

AP Vat Act VAT TDS 6,20,669 2011-2012



Due date Date of

payment

30th June of - every year

Various dates -

Various dates -

b) According to the information furnished to us, the following amounts of Income tax, Value added tax, wealth tax, Entry tax, Excise duty and Service tax have been disputed by the Company, and hence were not remitted to the authorities concerned at the date of the Balance Sheet under report.

S. Nature of the dues and Name of Statute Disputed Amount Pending before No period to which dispute (amount paid relates under protest)

1 Sales Tax 1995-96 Orissa Sales Tax Act. 1947 2,00,21,670 High Court, Orissa (80,00,000 paid under protest)

2 Income Tax Asst Yr- 2009-10 Income Tax Act, 1961 7,43,163 (3,32,404 CIT(Appeals), paid under protest) Vizag

3 CENVAT credit for the period Central from Dec, Excise 2009 to Act, 1944 7,20,51,702 (Stay CESTAT, March,2009 granted Bangalore by CESTAT for demand) 4 CENVAT credit for the period Central from july Excise Act, 2007 to 1944 40,48,90 Commissioner of March, 2009 Central Excise, Guntur

5 Service tax for the period from Finance Act, Aprial2005 1994 16,10,484 Commissioner of to Feb, 2008 Central Excise, Guntur

c) Further, an amount of Rs.4,94,761/- related to the years 2004-05 to 2006-07 is pending for remittance into Investor Education Protection Fund which is kept in abeyance due to pending legal cases.

8) The Company had accumulated losses at the end of the financial year. The Company has incurred cash losses during the financial year covered by the audit and also in the immediately preceding financial year.

9) According to the information and explanations given to us and as per the books and records examined by us, the company made considerable delays and continuing defaults in repayment of its dues to banks. The company has not borrowed any amounts from financial institutions and by way of issue of debentures.

Amounts due in respect of Term loans from banks on account of Principal and interest aggregating to Rs.9642.57 lakhs during the year ended 31.3.2015 (IDBI Rs.4600.86 lakhs : BOB Rs.1146.90 lakhs: Andhra Bank Rs.848.53 lakhs: BOI Rs.2230.64 lakhs and ICICI Rs.815.63 lakhs) where payments were delayed from 1-365 days up to 31.3.2015 and these dues were cleared up to the close of financial year 31.3.2015, except an amount of Rs.1966.94 lakhs which is pending for remittance as on 31.3.2015. Of the said amount, an amount of Rs.19.48 Lakhs was remitted till the date of our report.

10)The Company has given corporate guarantee and also offered its properties as security for loans taken by its cane growers from banks. 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 interests of the company.

11)According to the information and explanations given to us, the term loans obtained by the Company during the year have been applied for the purpose for which they were obtained.

12)During the course of our examination of the books and records of the Company, carried out in accordance with the Generally Accepted Auditing Practices in India, and according to the information and explanations given to us, we have not 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 BRAHMAYYA & CO

Chartered Accountants

Firm Regd. No.000513S

Place :Camp : Chennai (Sd.) P.LAKSHMANA RAO

Date : 07-06-2015 Partner

(ICAI Memb No.13254)


Mar 31, 2014

We have audited the accompanying financial statements of THE JEYPORE SUGAR COMPANY LIMITED ("the Company") which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and its Cash Flow Statement for the year ended on that date annexed thereto and a summary of 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. 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.

Auditors'' responsibility

Our responsibility is to express an opinion on the 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 auditors 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 but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and 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

Basis for Disclaimer of Opinion

a) We are informed that the company has proposed for restructuring by demerging its Pothavaram sugar unit and same is under process. In view of this, the company is in the process of reviewing the carrying amount of its assets in Pothavaram Unit. Pending information about its recoverable amount, we are at present unable to ascertain the provision, if any, required to be made for short fall in vale of the assets between the carrying amount and its recoverable amount as required to be made as per AS-28 "Impairment of Assets" and its impact on the Loss for the year, fixed assets and reserves of the company.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the basis for Disclaimer of 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 March 31, 2014;

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

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

Report on other legal and regulatory requirements

As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, 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.

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

1. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except for the effects of the matter described in the basis for Disclaimer of opinion paragraph;

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

3. 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;

4. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act subject to point noted in para a of disclaimer of opinion and

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



ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

The Annexure referred to in our report to the members of THE JEYPORE SUGAR COMPANY LIMITED ("the Company") for the year ended March 31, 2014, we report that:

1. In respect of its fixed assets ;

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets except at its Rayagada units.

b) According to the information and explanations furnished to us, the Company has not physically verified its fixed assets during the year. However, the Company has adopted a phased programme of verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

c) According to the information and explanations furnished to us, the Company has not disposed off a substantial part of its fixed assets during the year and therefore do not affect the going concern assumption.

2. In respect of its Inventories ;

a) According to the information and explanations furnished to us, the Company has physically verified its inventories during the year except at its Rayagada units. In our opinion, the frequency of such verification to the extent carried out is reasonable.

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

c) According to the information furnished to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records, which were not material, have been properly dealt with in the books of account.

3. In respect of its loans ;

a) The Company has not granted any loans secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Act at the beginning of the year or during the year. Consequently, reporting under clauses (iii)(b), (iii)(c) and (iii)(d) of paragraph 4 of the Order are not applicable.

b) The company has accepted fixed deposits/loans aggregating to at the date of balance sheet to Rs.1180.80 lakhs from 4 directors, Rs.163.15 lakhs from 3 relatives of directors and Rs.103.63 lakhs from 2 companies covered in the register maintained under section 301 of the Act.

c) In our opinion, the rate of interest and other terms and conditions on which fixed deposits/loans have been taken by the Company from parties covered in the register maintained under section 301 of the Act are not, prima facie, prejudicial to the interest of the Company.

d) The company has been regular in repaying the principal and interest amounts as stipulated on the deposits taken by it from the parties covered in the register maintained under section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods and services. Further during the course of our audit, we have not come across any instances of major weaknesses in internal control system.

5. In respect of the contracts or arrangements referred to in section 301 of the Act:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Act have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts/arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rs.5 lakhs in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company and other terms of business with such parties, at the relevant time.

6. The Company has complied with the provisions of sections 58A and 58AA or any other relevant provisions of the Act and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information furnished to us, no order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for noncompliance with the provisions of sections 58A and 58AA of the Act.

7. In our opinion, the company has an Internal audit system commensurate with its size and nature of its business, except to its Rayagada Units which needs to be implemented.

8. We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act and we are of the opinion that prima facie the prescribed accounts and records have been maintained. However, we have not carried out a detailed examination of the same with a view to determine whether they are accurate or complete.

9 a) According to the information furnished and records produced before us, the Company made delays in remittance of TDS recovered but is regular in depositing the 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 any other statutory dues applicable to it. There were no undisputed statutory dues in arrears as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable except the following.

Name of the Nature of Amount Period Due date Date of statue dues (Rs.) payment

AP Non- Non- 2,72,115 1978-79 30th June --- agricultural Agricultural to of land asst. tax land tax 1987-88 every year

Income-tax Act, Income- 3,72,86,980 Asst. Various dates --- 1961 tax year 2013-14

Further, an amount of Rs.3.72 lakhs relating to the years 2004-05 and 2005-06 (Interim and Final) is pending for deposit in Investor Education Protection Fund which was kept in abeyance due to pending legal cases.

b) According to the information furnished to us and records of the Company examined by us, at the date of Balance Sheet, the following amounts of Income-tax, Sales tax and Excise duty have been disputed by the Company, and hence were not remitted to the authorities concerned authorities.

S.No Nature of the dues Name of Statute Disputed Pending before and period to which Amount dispute relates (amount paid under protest)

1 Sales Tax 1995-96 Orissa Sales 2,00,21,670 High Court, Tax Act.1947 (80,00,000 Orissa paid under protest)

2 Sales Tax 1995-96 & Orissa Sales 3,11,662 STAT, Orissa 1996-97 Tax Act. (2,10,000 1947 paid under protest)

3 Entry tax 1.4.05 to Orissa Entry 3,75,947 Joint 30.6.2010 Tax Act, (1,75,089 Commissioner 1999 Paid under of Sales tax, protest) Jeypore

CST 1.4.07 to CST Act, 1957 6,08,083 -do- 30.6.2010 (1,40,537 Paid under protest)

VAT 1.4.2005 to Orissa Vat Act, 7,08,405 -do- 30.6.2010 2004 (3,97,227 Paid under protest)

4 Income Tax Asst Yr Income Tax Act, 7,43,163 CIT(Appeals), 2009-10 1961 (3,32,404 Vizag paid under protest)

2010-11 66,14,047 CIT (Appeals), Vizag

5 CENVAT credit for Central Excise 7,20,51,702 CESTAT, the period from Act, 1944 (Stay Bangalore Dec, 2009 to by CESTAT March, 2011 for demand)

6 CENVAT credit Central Excise 40,48,908 Commissioner for the period Act, 1944 of Central from July, 2007 Excise, to March, 2009 Guntur

7 Service tax for Finance Act, 16,10,484 Commissioner the period from 1994 of Central April, 2005 to Excise, Feb, 2008 Guntur 10. The Company had accumulated losses at the end of the financial year. The Company has incurred cash losses during the financial year covered by the audit, but does not incurred in the immediately preceding financial year.

11. According to the information and explanations given to us and as per the books and records examined by us, the company made considerable delays and continuing defaults in repayment of its dues to banks. The company has not borrowed any amounts from financial institutions and by way of issue of debentures.

Amounts due in respect of Term loans from banks on account of Principal and interest aggregating to Rs.9179.72 lakhs during the year ended 31.3.2014 (IDBI Rs.3753.94 lakhs : BOB Rs.1190.60 lakhs: SBH Rs.1042.27 lakhs : Andhra Bank Rs.818.93 lakhs: IFCI Rs.203.24 lakhs: BOI Rs.1312.20 lakhs and ICICI Rs.858.53 lakhs) where payments were delayed from 1-365 days up to 31.3.2014 and these dues were cleared up to the close of financial year 31.3.2014, except an amount of Rs.3540.28 lakhs which is pending for remittance as on 31.3.2014. Of the said amount, an amount of Rs.1056.81 Lakhs was remitted till the date of our report.

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

12. In our opinion and according to the information and explanations furnished to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society and hence the requirements of clause (xiii) of paragraph 4 of the Order are not applicable to the Company during the year under report.

13. According to the information furnished to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the requirements of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

14. The Company has given corporate guarantee and also offered its properties as security for loans taken by its cane growers from banks. 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 interests of the company.

15. According to the information and explanations given to us, the term loans obtained by the company during the year have been applied for the purpose for which they were obtained.

16. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that considering the internal accruals of the Company, no funds raised on short-term basis have been used for long-term investment or other investments during the year. However, the company used an amount of Rs.114 crores approx. over the period of time up to the date of our report for long term applications being its new projects under execution.

17. According to the information and explanations given to us, 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.

18. According to the information and explanations given to us, the Company has not issued any debentures. Hence the clause (xix) of paragraph 4 of the Order is not applicable.

19. The Company has not raised any money through public issues during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of the Order are not applicable to the Company during the year under report.

20. During the course of our examination of the books and records of the Company, carried out in accordance with the Generally Accepted Auditing Practices in India, and according to the information and explanations given to us, we have not 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 BRAHMAYYA & CO Chartered Accountants Firm Regn.no.000513S

Place : Camp : Chennai (sd.) P. Lakshmana Rao Date : 18-06-2014 Partner ICAI Membership No.13254


Sep 30, 2012

We have audited the attached Balance Sheet of THE JEYPORE SUGAR COMPANY LIMITED as at 30th September 2012, the Statement of Profit and Loss and its cash-flow statement for the 18 months period ended on that date both 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 (Auditors'' Report) Order, 2003 issued by the Government of India in terms of sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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 such 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 the Cash-flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors as on 30th September, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th September, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

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

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 30th September, 2012,

ii. In the case of the Statement of Profit and Loss, of the Loss for the 18 months period ended on that date, and

iii. In the case of the cash-flow statement, of the cash-flows of the company for the 18 months period on that date

Annexure referred to in paragraph 3 of our report of even date,

1 According to the information and explanations furnished to us, the company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets except at its Rayagada units.

1.1 According to the information and explanations furnished to us, the company has not physically verified its fixed assets during the year. We have been informed that the company has adopted a phased programme of verification of its fixed assets which in our opinion is reasonable having regard to the size of the company and nature of its assets.

1.2 According to the information and explanations furnished to us, the company has not disposed of a substantial part of its fixed assets during the year, as to affect the going concern assumption in preparing the financial statements under report.

2.1 According to the information and explanations furnished to us, the company has a perpetual inventory verification programme, physically verified its inventories at WS Sugars and Distillery units in Chagallu during the year. In our opinion, the frequency and extent of such verification is reasonable.

2.2 In our opinion, the procedures of physical verification of inventories followed by the management, to the extent of the verification carried out, are reasonable and adequate in relation to the size of the company and the nature of its business.

2.3 According to the information furnished to us, the company is maintaining proper records of its inventory, and the discrepancies noticed on verification between the physical stocks, to the extent verified during the year, and the book records were not material, and have been properly dealt with in the books of account.

3.1 According to the information and explanations furnished to us, the company has not granted any loans to any parties covered by the register maintained under Section 301 of the Companies Act 1956, and consequently reporting under sub-clauses b, c and d of clause 4(iii) of the Order does not arise during the year.

3.2 According to the information and explanations furnished to us, the company has accepted deposits in terms of Section 58A of the Companies Act 1956 aggregating to Rs.7,59,00,000/- from 4 directors, Rs.1,63,15,000/- from 3 relatives of directors and Rs.93,63,000/- from 2 companies controlled by the key managerial personnel, covered by the register maintained under Section 301 of the Companies Act 1956.

3.3 In our opinion, the rate of interest and other terms and conditions on which loans have been taken by the company from companies, firms or other parties covered by the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

3.4 According to the information and explanations furnished to us, the company has been regular in repaying the principal and interest amounts as stipulated, on the loans taken by it from the persons covered by the register maintained under Section 301 of the Companies Act 1956.

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 purchases of inventory, fixed assets and with regard to the sale of goods and services. Further, during the course of our audit, we have not come across any instances of major weaknesses in internal control that require correction and have so continued without correction.

5.1 Based on the information and explanations given to us, we are of the opinion that the transactions that are required to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

5.2 In our opinion and according to the information and explanations given to us where such transaction is in excess of Rs.5 lakhs, the transaction has been made at prices which is prima facie reasonable having regard to the prevailing market prices at the relevant time and they are not prejudicial to the interests of the company. ,

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A and 58AA and other applicable provisions of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information furnished to us, no Order has been passed on the company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non-compliance with the provisions of Sections 58A and 58AA of the Companies Act 1956.

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

8. The Central Government has prescribed maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956. We have broadly reviewed these records of the company and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of such records.

9.1 According to the information furnished to us, the company has been regular in depositing with the appropriate authorities, the undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it; and the following undisputed statutory dues were in arrears, as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable.

Name of the statute Nature of Amount Period to which the Due date Date of the dues Rs. amount relates payment

A.P.Non- Agricultural Non- 2,72,115 1978-79 to 1987-88 30th June, - Land Assessment Tax Agricultural of each year Act Land Tax

9.2 According to the information furnished to us, the following amounts of Sales Tax, Customs Duty, Excise Duty, Cess, Income Tax, Wealth Tax, Service Tax have been disputed by the company, and hence, were not remitted to the concerned authorities at the date of the Balance Sheet under report.

Nature of the dues and period Disputed Amount S. No Name of Statute (amount paid under protest) Pending before which dispute relates

1 Sales Tax 1995-96 Orissa Sales Tax Act. 1947 2,00,21,670 (80,00,000 paid under protest) High Court, Orissa

2 Sales Tax 1995-96 & 1996-97 Orissa Sales Tax Act. 1947 3,11,662 (2,10,000 paid under protest) STAT, Orissa

3 Income Tax Asst Yr Income Tax Act, 1961 7,43,163 (3,32,404 2009-2010 paid under protest) CIT(Appeals), Vizag

4 CENVAT credit for the period Central Excise Act, 1944 7,20,51,702 (Stay from Dec, 2009 to March, 2011 granted by CESTAT for demand) CESTAT, Bangalore

5 CENVAT credit for the period Central Excise Act, 1944 40,48,908 Commissioner of from July, 2007 to March, 2009 Central Excise, Guntur

6 Service tax for the period Finance Act, 1994 16,10,484 Pending for filing appeal from April, 2005 to Feb, 2008

10 The company has no accumulated losses and has not incurred cash losses during the financial year . covered under our report but incurred cash losses in the previous financial year.

11 According to the information and explanations furnished to us by the company, the company made considerable delays during the period under report in repayment of its dues to banks to the extent of Rs. 10.68 crores. However, during the period under report, the term loans for financing Pothavaram sugar unit were restructured. After restructuring of the terms of repayment, the company is regular in repayment of the installments and there were no default in repayment except an amount of Rs.58.13 lakhs as on date of balance sheet. Out of said outstanding, an amount of Rs.20.66 lakhs was paid before the date of our report.

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

13 In our opinion and according to the information and explanations furnished to us, the company is not a chit fund or a nidhi / mutual benefit fund/ society and hence, the requirements of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company during the year under report.

14 According to the information furnished to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the requirements of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

15 In our opinion based on the information furnished to us, the guarantees given by the company for loans taken by its cane-growers from banks are not prima-facie prejudicial to the interests of the company.

16 In our opinion, and according to the information and explanations furnished to us, the term loans taken by the company have been applied for the purposes for which they were raised.

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 the company has used part of its short-term funds approx. Rs.83 cores over the period of time for long term applications being its new project under execution.

18 According to the information and explanations furnished to us, the company has not made any preferential allotment of shares during the period covered under audit to parties and companies covered in the register maintained under section 301 of the Companies Act, or to any others.

19 According to the information and explanations given to us, the company has not issued any debentures during the period covered under our report.

20 The company has not raised any moneys through public issue of its securities during the period, and the question of end use of such moneys does not arise during the period covered under audit.

21 During the course of our examination of the accounts of the company in accordance with the generally accepted auditing practices, we have not come across any instances of fraud on or by the company, nor have we been informed by the management, of any such instance being noticed or reported during the period covered under audit.

For BRAHMAYYA & CO

Chartered Accountants

Place: Camp : Chennai Firm Regn. No.000513S

Date: 28-11-2012 (Sd.) P. Lakshmana Rao

Partner

Memb. No. 13254


Mar 31, 2011

We have audited the attached Balance Sheet of THE JEYPORE SUGAR COMPANY LIMITED, as at 31st March 2011, its Profit and Loss Account for the year ended on that date annexed thereto, and its cash-flow statement for the year ended on that date. 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 ouraudit 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 (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

c. The Balance Sheet and Profit and Loss Account and Cash-flow Statement dealt with by this report are in agreement with the books of account;

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

e. On the basis of written representations received from the directors, as on March 31,2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31,2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

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

i. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011,

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

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

Annexure referred to in paragraph 3 of our report of even date,

1 According to the information and explanations furnished to us, the company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets except at its Rayagada units.

1.1 According to the information and explanations furnished to us, the company has physically verified its fixed assets at WS Sugars and Distillery units in Chagallu during the year. We have been informed that the company has adopted a phased programme of verification of its fixed assets which in our opinion is reasonable having regard to the size of the company and nature of its assets.

1.2 According to the information and explanations furnished to us, the company has not disposed of a substantial part of its fixed assets during the year, as to affect the going concern assumption in preparing the financial statements under report.

2.1 According to the information and explanations furnished to us, the company has under a perpetual inventory verification programme, physically verified its inventories at WS Sugars and Distillery units in Chagallu during the year. In our opinion, the frequency and extent of such verification is reasonable.

2.2 In our opinion, the procedures of physical verification of inventories followed by the management, to the extent of the verification carried out, are reasonable and adequate in relation to the size of the company and the nature of its business.

2.3 According to the information furnished to us, the company is maintaining proper records of its inventory, and the discrepancies noticed on verification between the physical stocks, to the extent verified during the year, and the book records were not material, and have been properly dealt with in the books of account.

3.1 According to the information and explanations furnished to us, the company has not granted any loans to any parties covered by the register maintained under Section 301 of the Companies Act 1956, and consequently reporting under sub-clauses b, c and d of clause 4(iii) of the Order does not arise during the year.

3.2 According to the information and explanations furnished to us, the company has accepted deposits in terms of Section 58A of the Companies Act 1956 aggregating to Rs.7,69,50,0007- from 6 directors and Rs.1,44,15,000/- from 3 relatives of directors and Rs.93,63,000/- from 2 companies controlled by the key managerial personnel, covered by the register maintained under Section 301 of the Companies Act 1956.

3.3 In our opinion, the rate of interest and other terms and conditions on which loans have been taken by the company from companies, firms or other parties covered by the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

3.4 According to the information and explanations furnished to us, the company has been regular in repaying the principal and interest amounts as stipulated, on the loans taken by it from the persons covered by the register maintained under Section 301 of the Companies Act 1956.

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 purchases of inventory, fixed assets and with regard to the sale of goods and services. Further, during the course of our audit, we have not come across any instances of major weaknesses in internal control that require correction and have so continued without correction.

5.1 Based on the information and explanations given to us, we are of the opinion that the transactions that are required to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

5.2 In our opinion and according to the information and explanations given to us, the transactions which have been entered into, pursuant to contracts that have been entered in the register maintained under Section 301 of the Companies Act 1956, have been made at prices and terms which are reasonable having regard to prevailing market prices at the relevant time, and other terms and conditions in the context of such transactions.

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A and 58AA and other applicable provisions of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information furnished to us, no Order has been passed on the company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non-compliance with the provisions of Sections 58A and 58AA of the Companies Act 1956.

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

8. We have broadly reviewed the books of account and records maintained by the company at its sugar, Distillery and Electric power co-generation units pursuant to the Rules made by the Central Government for the maintenance of Cost Records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

9.1 According to the information furnished to us, the company has been regular in depositing with the appropriate authorities, the undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it; and the following undisputed statutory dues were in arrears, as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable.

Name of the statue Nature of Amount Period to Due date the dues Rs. which the amount relates

A. P. Non-Agricu Non- 2,72,115 1978-79 to 30th June, ltural Land Agricultural 1987-88 of each Assessment Tax Act Land Tax year

Name of the statue Date of payment

A. P. Non- - Agricultural Land Assessment Tax Act

9.2 According to the information furnished to us, the following amounts of Sales Tax, Customs Duty, Excise Duty, Cess, Income Tax, Wealth Tax, Service Tax have been disputed by the company, and hence, were not remitted to the concerned authorities at the date of the Balance Sheet under report

S. Nature 0f the dues Name of Statute Disputed Pending No and Period to Amount before which dispute (amount relates paid under protest

1 Sales Tax 1995-96 Orissa Sales Tax 2,00,21,670 High Court Act.1947 (80,00,000 ,Orissa paid under protest)

2 Sales Tax 1995-96 Orissa Sales Tax 3,11,662 STAT, & 1996-97 , Act. 1947 (2,10,000 Orissa paid under protest)

3 Income Tax Asst Income Tax Act, 15,66,243 High Court Yr 2006-07 1961 (15,66,243 of AP paid under protest)

4 Income Tax Asst Income Tax Act, 44,74,986 ITAT,Vizag Yr 2007-08 1961 (44,74,986 paid under protest)

10. According to the information and explanations furnished to us, the company had no accumulated losses at the end of the financial year under report. However, the company incurred cash losses during the financial year under report.

11. According to the information and explanations furnished to us by the company, the company made considerable delays during the year in repayment of its dues to banks. However, the company made default in repayment of amounts aggregating to Rs.3.61 crores which are pending for remittance as on 31.3.2011. Against the said dues, an amount of Rs.82.34 crores was paid subsequently till the date of our report.

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

13. In our opinion and according to the information and explanations furnished to us, the company is not a chit fund or a nidhi / mutual benefit fund/ society and hence, the requirements of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company during the year under report.

14. According to the information furnished to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the requirements of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

15. In our opinion based on the information furnished to us, the guarantees given by the company for loans taken by its cane-growers from banks are not prima-facie prejudicial to the interests of the company.

16. In our opinion, and according to the information and explanations furnished to us, the term loans taken by the company have been applied for the purposes for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, and the pattern of application of funds considering the internal accruals of the company, we report that no funds raised on short term basis have been used for long term investment.

18. According to the information and explanations furnished to us, 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, or to any others.

19. According to the information and explanations given to us, the company has not issued any debentures during the year under report.

20. The company has not raised any moneys through public issue of its securities during the year, and the question of end use of such moneys does not arise during the year.

21. During the course of our examination of the accounts of the company in accordance with the generally accepted auditing practices, we have not come across any instances of fraud on or by the company, nor have we been informed by the management, of any such instance being noticed or reported during the year.

For BRAHMAYYA & CO Chartered Accountants FirmRegn. NO.000513S (Sd) K. RAJAJ ICAI Memb. No.202309 Partner

Place : Chennai Date : 31.5.2011


Mar 31, 2010

We have audited the attached Balance Sheet of THE JEYPORE SUGAR COMPANY LIMITED, as at 31st March 2010, its Profit and Loss Account for the year ended on that date annexed thereto, and its cash-flow statement for the year ended on that date. 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 (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

c. The Balance Sheet and Profit and Loss Account and Cash-flow Statement dealt with by this report are in agreement with the books of account;

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

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

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

i. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2010, ii. In the case of the Profit and Loss Account, of the profit for the year ended on that date, iii. In the case of the cash-flow statement, of the cash-flows of the company for the year ended on that date

Annexure referred to in paragraph 3 of our report of even date,

1 According to the information and explanations furnished to us, the company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

1.1 According to the information and explanations furnished to us, the company has physically verified its fixed assets at WS Sugars and Distillery units in Chagallu during the year. We have been informed that the company has adopted a phased programme of verification of its fixed assets which in our opinion is reasonable having regard to the size of the company and nature of its assets.

1.2 According to the information and explanations furnished to us, the company has not disposed of a substantial part of its fixed assets during the year, as to affect the going concern assumption in preparing the financial statements under report.

2.1 According to the information and explanations furnished to us, the company has under a perpetual inventory verification programme, physically verified its inventories at WS Sugars and Distillery units in Chagallu during the year. In our opinion, the frequency and extent of such verification is reasonable.

2.2 In our opinion, the procedures of physical verification of inventories followed by the management, to the extent of the verification carried out, are reasonable and adequate in relation to the size of the company and the nature of its business.

2.3 According to the information furnished to us, the company is maintaining proper records of its inventory, and the discrepancies noticed on verification between the physical stocks, to the extent verified during the year, and the book records were not material, and have been properly dealt with in the books of account.

3.1 According to the information and explanations furnished to us, the company has not granted any loans to any parties covered by the register maintained under Section 301 of the Companies Act 1956, and consequently reporting under sub-clauses b, c and d of clause 4(iii) of the Order does not arise during the year.

3.2 According to the information and explanations furnished to us, the company has accepted deposits in terms of Section 58A of the Companies Act 1956 aggregating to Rs. 58950000 from 6 directors and Rs. 11415000 from 3 relatives of directors and Rs.9363000 from 2 companies controlled by the key managerial personnel, covered by the register maintained under Section 301 of the Companies Act 1956.

3.3 In our opinion, the rate of interest and other terms and conditions on which loans have been taken by the company from companies, firms or other parties covered by the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

3.4 According to the information and explanations furnished to us, the company has been regular in repaying the principal and interest amounts as stipulated, on the loans taken by it from the persons covered by the register maintained under Section 301 of the Companies Act 1956.

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 purchases of inventory, fixed assets and with regard to the sale of goods and services. Further, during the course of our audit, we have not come across any instances of major weaknesses in internal control that require correction and have so continued without correction.

5.1 Based on the information and explanations given to us, we are of the opinion that the transactions that are required to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

5.2 In our opinion and according to the information and explanations given to us, the transactions which have been entered into, pursuant to contracts that have been entered in the register maintained under Section 301 of the Companies Act 1956, have been made at prices and terms which are reasonable having regard to prevailing market prices at the relevant time, and other terms and conditions in the context of such transactions.

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A and 58AA and other applicable provisions of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information furnished to us, no Order has been passed on the company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non-compliance with the provisions of Sections 58A and 58AA of the Companies Act 1956.

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

8. We have broadly reviewed the books of account and records maintained by the company at its sugar, Distillery and Electric power co-generation units pursuant to the Rules made by the Central Government for the maintenance of Cost Records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

9.1 According to the information furnished to us, the company has been regular in depositing with the appropriate authorities, the undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it; and the following undisputed statutory dues were in arrears, as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable.

Name of the statue Nature of Amount Period to which the Due date Date the dues Rs. amount relates of payment A. P. Non- Agricultural Non- 2,72,115 1978-79 to 1987-88 30th June, - Land Assessment Agricultural of each year Tax Act Land Tax

9.2 According to the information furnished to us, the following amounts of Sales Tax, Customs Duty, Excise Duty, Cess, Income Tax, Wealth Tax, Service Tax have been disputed by the company, and hence, were not remitted to the concerned authorities at the date of the Balance Sheet under report

S Nature of the Name of statute Disputed Amount Pending before No dues and period to (amount paid which dispule relates under protest) 1 Sales Tax 1995-96 Orissa Sales Tax Act. 1947 2,00,21,670 High Court, Orissa (80,00,000 paid under protest) 2 Income Tax Asst Yr 2006-07 Income Tax Act, 1961 15,66,243(15,66,243 ITAT.Vlzag paid under protest) 3 Income Tax Asst Yr 2007-08 Income Tax Act, 1961 4,47,92,595 CIT(A), Hyderabad 4 Sales tax 2004-05 APGST Act, 1957 6,92,492(6,92,492 AP High Court paid under protest)

10 According to the information and explanations furnished to us, the company had no accumulated losses at the end of the financial year under report. It did not incur cash losses during the financial year under report, or in the immediately preceding financial year.

11 According to the information and explanations furnished to us by the company, the company has not defaulted in repayment of its dues to financial institutions, banks or debenture holders.

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

13 In our opinion and according to the information and explanations furnished to us, the company is not a chit fund or a nidhi / mutual benefit fund/ society and hence, the requirements of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company during the year under report.

14 According to the information furnished to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the requirements of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

15 In our opinion based on the information furnished to us, the guarantees given by the company for loans taken by its cane-growers from banks are not prima-facie prejudicial to the interests of the company.

16 In our opinion, and according to the information and explanations furnished to us, the term loans taken by the company have been applied for the purposes for which they were raised.

17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, and the pattern of application of funds considering the internal accruals of the company, we report that no funds raised on short term basis have been used for long term investment.

18 According to the information and explanations furnished to us, 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, or to any others.

19 According to the information and explanations given to us, the company has not issued any debentures during the year under report.

20 The company has not raised any moneys through public issue of its securities during the year, and the question of end use of such moneys does not arise during the year.

21 During the year, some of the employees of the company misappropriated sugar stocks costing Rs.73.86 lakhs. Investigations are in progress and the concerned employees has been dismissed and arrested. The company has withheld their terminal benefits and taking necessary steps for attachment of their properties.

For BRAHMAYYA & CO Chartered Accountants Place: Chennai Firm Regn. NO.000513S Date : 28.05.2010 (P. LAKSHMANA RAO) ICAI Membership No. 13254 Partner


Mar 31, 2000

We have audited the attached Balance Sheet of THE JEYPORE SUGAR COMPANY LTD, CHENNAI, as at 31st March, 2000 and its Profit and Loss Account for the year ended on that date annexed thereto and Report that:

1. As required by the Manufacturing and other companies (Auditors Report) order 1988 issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

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

(b) Proper books of accounts as required by Law have been kept by the Company so as appears from our examination of such books.

(c) The Balance Sheet and Profit and Loss Account referred to in this Report are in agreement with the books of accounts.

(d) In our opinion, and to the best of our information and according to the explanations given to us, the said Balance Sheet and the Profit and Loss Account, read together with the statement on accounting policies, Note No.17 on non availability of information about the dues to small scale industries as required by Schedule VI to the Companies Act, 1956 and other notes forming part of accounts, comply with the accounting standards referred to in subsection (3C) of section 211 of the Companies Act 1956, and give the information required by the said Act, in the manner so required, and give a true and fair view:

(i) In so far as it relates to the Balance Sheet, of the state of affairs of the Company as at 31st March, 2000.

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE

1. The Company has maintained proper records showing full particulars including quantitative details and situation of its Fixed Assets. The Company has adopted a phased programme of physical verification of its fixed assets, except furniture and fixtures and office equipment. According to the information furnished to us, in respect of the fixed assets verified during the year, no discrepancies between physical assets and book records have been noticed.

2. None of the fixed assets of the Company has been revalued during the year.

3. According to the information and explanations given to us, the stocks of finished goods, stores, spares and raw materials have been physically verified during the year by the management at reasonable intervals.

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

5. According to the information and explanations furnished to us, the discrepancies noticed on physical verification of stocks as compared to book records, were not material and have been properly dealt with in the books of accounts.

6. In our opinion and according to the information made available to us and the explanations given to us, the method of valuation of stocks is proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceeding year except for changes made in line with AS-2 "valuation of Inventories" as explained in para No. 7 of notes forming part of accounts and para No. 5(c) of statement significant accounting policies.

7. In our opinion, the rate of interest and the terms and conditions on which loans have been obtained from parties listed in the register maintained Under Section 301 or from Companies under the same management as defined Under Section 370 (1B) of the Companies Act, 1956, are not, Prima facie, prejudicial to the interests of the Company.

8. According to the information and explanation given to us, the Company has not granted any loans to parties listed in the register maintained Under Section 301 and/or to the companies under the same management as defined Under Section 370 (1B) of the Companies Act, 1956.

9. According to the information and explanations given to us the parties to whom loans or advances in the nature of loans have been given by the Company, are repaying the principal amounts and also interest as stipulated.

10. In our opinion, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of stores, raw- materials including components, plant and machinery, equipment and other assets and for the sale of goods.

11. In our opinion and according to the information and explanations given to us, the transactions of purchase of goods and materials and sale of goods, materials and services, made in pursuance of contracts or arrangements entered in the register maintained Under Section 401 of the Companies Act, 1956 and aggregating during the period to Rs. 50,000/- or more in respect of each party have been made at prices and terms which are reasonable, having regard to the prevailing market prices for such goods, wherever such goods are available in the market, and the terms and conditions to the transaction.

12. In our opinion, wherever unserviceable or damaged stores, raw materials and finished goods were determined, provision for loss, if any, thereon has been made in the accounts.

13. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58-Aof the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public, except for the deposit of a required shortfall amount of Rs. 5,62,000 in accordance with Rule 3A of the said rules beyond the specified date thereunder.

14. In our opinion and according to the information and explanations given to us, the Company is maintaining reasonable records for the sale and disposal of realisable by products and scrap.

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

16. We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act 1956, in respect of Sugar Unit of the Company and are of the opinion that, prima facie, the prescribed accounts and records have been maintained. We have not however, conducted a detailed examination of such records.

17. According to the information and explanations given to us, the Company has been regular in depositing Provident Fund and Employees State Insurance dues with appropriate authorities, except in respect of its Rayagada units, where the monthly deposits have been made beyond the due dates and in another case where the contribution could not be made pending transfer of the employers P.F. Account. As at the Balance Sheet date, there were arrears of Rs.2,94,294/- being the companys and the employees contribution to Provident Fund. According to the information furnished to us said amount has been deposited subsequent to the Balance Sheet date, before the date of our report.

18. According to the records of the Company and information given to us, there are no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty outstanding as at the date of the Balance sheet for a period of more than six months from the date they became payable.

19. According to the information and explanations given to us and the records of the Company examined by us, no personal expenses have been charged to revenue account, except those payable under contractual obligations.

20. The Company is not a sick industrial company within the meaning of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985, as at the date of the Balance Sheet.

for BRAHMAYYA & CO., Chartered Accountants Place : Chennai (Sd.). C. MURALIKRISHNA

Date : 30.06.2000 Partner