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Auditor Report of Kesoram Industries Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Kesoram Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 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

2. 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 to 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements 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.

Auditors' Responsibility

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

4. We have taken into account the provisions of the Act and the Rules made there under including the Accounting Standards and matters which are required to be included in the audit report.

5. 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 and pronouncements 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors' judgement, 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.

7. 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

8. 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 March 31, 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw your attention to Note No. 25 regarding the transfer of the Automotive Tyre Manufacturing Unit at Laksar to Cavendish Industries Limited (the subsidiary), on a slump sale basis for a consideration of Rs. 2195.00 crore and recognition of excess of net consideration over and above the carrying value of the Unit aggregating to Rs. 409.20 crore as exceptional income. Subsequently, vide a binding term sheet between the Company, its subsidiary and JK Tyre Group (the acquirer) (together referred to as the 'parties') dated September 12, 2015, the Company also intends to sell its investment in the subsidiary to the acquirer for a consideration of Rs. 2195.00 crore. The closing date of such transfer is December 31, 2015 and in the eventuality of such transaction not being complete within the aforesaid date, the parties can terminate the term sheet. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

10. As required by 'the Companies (Auditor's Report) Order, 2015', issued by the Central Government of India in terms of sub- section (11) of section 143 of the Act (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

i. The Company has disclosed the impact, if any, of pending litigations as at March 31, 2015, on its financial position in

its financial statements – Refer Note No. 31;

ii. The Company has made provision as at March 31, 2015, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – Refer Note No. 34;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2015.

Annexure to Independent Auditors' Report

Referred to in paragraph 10 of the Independent Auditors' Report of even date to the members of Kesoram Industries Limited on the financial statements as of and for the year ended March 31, 2015

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

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

ii. (a) The inventory excluding stocks with third parties has been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. (a) The Company has granted unsecured loans, to a company covered in the register maintained under Section 189 of the Act.

The Company has not granted any secured/ unsecured loans to firms or other parties covered in the register maintained under Section 189 of the Act.

(b) In respect of the aforesaid loans, the principal amount is fully provided for hence, its question of repayment does not arise.

(c) In respect of the aforesaid loans, there is no overdue amount more than Rupees One Lakh.

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

v. The Company has not accepted any deposits during the year from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Sections 74 and 75 or any other relevant provisions of the Act and the Rules framed there under to the extent notified, with regard to the deposits accepted from the public prior to the commencement of the Act. According to the information and explanations given 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 products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been specified under sub-section (1) of Section 148 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (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 generally regular in depositing undisputed statutory dues in respect of Sales Tax and provident fund, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including employees' state insurance, wealth tax, duty of customs and duty of excise. However undisputed statutory dues including service tax and value added tax have not generally been regularly deposited with the appropriate authorities though the delays in deposit have not been serious.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of Income tax, wealth-tax, duty of customs and cess which have not been deposited on account of any dispute. The particulars of dues of sales tax, service tax, duty of excise and value added tax as at March 31, 2015 which have not been deposited on account of a dispute, are as follows:

Name of the statute Nature of Amount dues (Rs./Crore)

Central Excise Act, 1944 Central Excise 133.01

Central Excise Act, 1944 Central Excise 5.01

Central Excise Act, 1944 Central Excise 7.37

Central Excise Act, 1944 Central Excise 0.10

Central Excise Act, 1944 Central Excise 0.06

Central Excise Act, 1944 Central Excise 0.21

Central Sales Tax Act,1956 Central Sales Tax 0.17

Central Sales Tax Act,1956 Central Sales Tax 0.03

Central Sales Tax Act,1956 Central Sales Tax 8.54

Central Sales Tax Act,1956 Central Sales Tax 8.93

Central Sales Tax Act,1956 Central Sales Tax 0.36

Central Sales Tax Act,1956 Central Sales Tax 0.42

Central Sales Tax Act,1956 Central Sales Tax 0.05

Central Sales Tax Act,1956 Central Sales Tax 18.82

Central Sales Tax Act,1956 Central Sales Tax 6.49

Nature of the Status Period to which the Forum where the dispute amount relates is pending

Central Excise Act,1944 1993-1994 to 1996-97 Customs, Excise &

1999-2000 to 2002-03 Service Tax

2001-02, 2002-03, 2005-06, Appellate Tribunal

2003-05, 2004-05, 2003-04,

2001-02, 2002-03, 2003-05,

2003-06, 2004-05, 2005-06,

2006-07, 2006-08, 2006-09,

2006-10, 2007-08, 2007-09,

2008-09, 2009-10, 2010-11,

2011-12

Central Excise Act,1944 1985-86 to 1989-90, Commissioner

2000-01 to 2003-04,

2004-06, 2006-08, 2007-11, 2012-13

Central Excise Act,1944 1995-96, 1997-98, 2002-03, Commissioner (Appeals)

2004-05, 2003-04, 2003-05,

2004-05, 2005-06, 2009-10,

2009-11, 2010-11

Central Excise Act,1944 1994-95, 2008-09 High Court

Central Excise Act,1944 1987-88, 2014-15 Joint Commissioner

Central Excise Act,1944 1979-81, 1980-81, 1982-83, Superintendent of

1995-96, 1996-97, 1999-00, Central Excise

2012-13, 2014-15

Central Sales Tax Act,1956 1997-98, 1993-94, 1999-00, Additional Commissioner

2011-12

Central Sales Tax Act,1956 2010-11 Assessing Authority

Central Sales Tax Act,1956 2009-10 Commissioner

Central Sales Tax Act.1956 2003-04, 2009-10 High Court

Central Sales Tax Act,1956 2011-12, 2012-13, 2013-14 Joint Commissioner (Appeals)

Central Sales Tax Act,1956 1995-96, 1998-99, 2007-08, Revisional Board

2008-09, 2010-11

Central sales Tax Act,1956 2001-02, 2004-05 Senior Joint Commissioner

Central Sales Tax Act,1956 2000-01, 2001-02, 2002-03, Supreme Court

2003-04

Central Sales Tax Act,1956 1991-92, 1992-93, 1996-97, Tribunal

1998-99, 1999-00, 2002-03,

2004-05, 2005-06, 2007-08,

2008-09, 2009-10, 2010-11

Name of the Statute Nature of Dues Amount (/Crore)

Central Sales Tax Act,1956 Central Sales Tax 0.04

Central Sales Tax Act,1956 Central Sales Tax 0.52

Central Sales Tax Act,1956 Central Sales Tax 7.36

Central Sales Tax Act,1956 Central Sales Tax 0.03

Central Sales Tax Act,1956 Central Sales Tax 0.23

UP Trade Tax Act,1948 Central Sales Tax 0.01

Andhra Pradesh Sales Tax 0.11 Sales Tax Act, 1957

Andhra Pradesh Sales Tax 0.06 Sales Tax Act, 1957

Andhra Pradesh Sales Tax 0.13 Sales Tax Act, 1957

Bengal Finance Sales Tax 0.05 Sales Tax Act,1941

Bombay Sales Tax Act, 1959 Sales Tax 0.32

Delhi Sales Act, 1975 Sales Tax 0.42

Odisha Sales Tax Act, 1947 Sales Tax 0.02

Tamil Nadu General Sales Tax 0.18 Sales Tax Act, 1959

UP Trade Tax Act,1948 Sales Tax 0.11

WB Sales Tax Act,1994 Sales Tax 0.21

WB Sales Tax Act,1994 Sales Tax 0.28

WB Sales Tax Act,1994 Sales Tax 3.40

WB Sales Tax Act,1994 Sales Tax 0.06

Finance Act,1994 Service Tax 0.02

Finance Act,1994 Service Tax 0.04

Name of the Statute Period to which the Forum where the dispute amount related is pending

Central Sales Tax Act,1956 1995-96, 2006-07 Appellate &

Revisional Board

Central Sales Tax Act,1956 2006-07 Tribunal & High Court

Central Sales Tax Act,1956 2003-04, 2004-05, 2005-06, WB Appellate &

2006-07, 2007-08, 2008-09, Revisional Board

2009-10, 2010-11

Central Sales Tax Act,1956 2012-13 Deputy Commissioner, Commercial Taxes

Central Sales Tax Act,1956 2003-04 Commercial Tax Officer

UP Trade Tax Act,1948 2005-06, 2006-07 Additional Commissioner (Appeals)

Andra Pradesh Sales 2003-04 Appellate and Tax Act,1957 Revisional Board

Andra Pradesh Sales 2001-02 High Court Tax Act,1957

Andra Pradesh Sales 2001-02 Tribunal Tax Act,1957

Bengal Finance 1987-88, 1995-96 Tribunal Sales Tax Act,1941

Bombay Sales Tax Act,1959 2002-03, 2003-04, 2004-05 Tribunal

Delhi Sales Tax Act,1975 1999-00 Assessing Authority

Odisha Sales Tax Act,1947 1991-92 , 1992-93, 2004-05 Assistant Commissioner, Commercial Taxes

Tamil Nadu General 1999-00 Chennai High Court Sales Tax Act,1959

UP Trade Tax Act,1948 2006-07 Additional Commissioner (Appeals)

WB Sales Tax Act,1994 1995-96, 1997-98 Deputy Commissioner

WB Sales Tax Act,1944 2001-02, 2004-05 Senior Joint Commissioner

EB Sales Tax Act,1944 1995-96, 2003-04, 2004-05, West Bengal Appellate &

1998-99 Revisional Board

WB Sales Tax Act,1944 1999-00 Additional Commissioner, Sales Tax

Finance Act,1994 2007-09 Additional Commissioner of Central Excise

Finance Act,1944 2007-08, 2008-09, 2009-10, Customs, Excise & Service

2009 - 2010, 2010-11 Tax Appellate Tribunal

Name of the Statute Nature of Amount dues (/Crore)

Finance Act,1994 Service Tax 0.46

Finance Act,1994 Service Tax 0.73

Finance Act,1994 Service Tax 0.34

Andhra Pradesh VAT 0.26 VAT Act, 2005

Andhra Pradesh VAT 0.28 VAT Act, 2005

Bihar VAT Act, 2005 VAT 0.01

Jharkhand VAT, 2005 VAT 0.14

Jharkhand VAT, 2005 VAT 0.20

Maharashtra VAT Act, 2002 VAT 0.01

Maharashtra VAT Act, 2002 VAT 0.14

Odisha Value Added VAT 5.26 Tax Act, 2004

Odisha Value Added VAT 1.43 Tax Act, 2004

Odisha Value Added VAT 0.71 Tax Act, 2004

Rajasthan VAT Act, 2003 VAT 0.01

UP VAT Act VAT 0.51

Uttarakhand VAT Act, 2005 VAT 0.17

W.B VAT ACT, 2003 VAT 16.33

W.B VAT ACT, 2003 VAT 0.10

W.B VAT ACT, 2003 VAT 0.16

W.B VAT ACT, 2003 VAT 6.07

W.B VAT ACT, 2003 VAT 1.75

Nature of Statute Period to Which the Forum Where the Dispute amount relates is Pending

Finance Act,1944 2008-09 to 2009-10, 2012-13 Commissioner

Finance Act,1944 2003-05, 2009-10, 2010,-11, Commissioner (Appeals)

2010-12

Finance Act,1944 2009-12 Assistant Commissioner

Andra Pradesh VAT Act,2005 2006-07, 2007-08 Sales Tax Appellate Tribunal

Andra Pradesh VAT Act,2005 2007-08, 2008-09 Tribunal

Bihar VAT Act,2005 2008-09 Joint Commissioner (Appeals)

Jharkhand VAT Act,2005 2010-11 Tribunal

Jharkhand VAT Act,2005 2010-11 Commissioner of Commercial Taxes

Maharashtra VAT Act,2002 2008-09, 2012-13 Deputy Commissioner

Maharashtra VAT Act.2002 2005-06, 2007-07, 2008-09, Joint Commissioner (Appeals) Odisha Value Added Tax Act, 2004 2009-10 Commissioner

Odisha Value Added 2006-07, 2007-08, Tax Act,2004 2008-09 CTC TRIBUNAL

Odisha Value Added 2005-06 High Court Tax Act,2004

Rajasthan VAT Act,2003 2008-09 Deputy Commissioner

UP VAT Act 2010-11, 2011-12 Additional Commissioner (Appeals)

Uttarakhand VAT Act,2005 2013-14 High Court

W.B VAT Act,2003 2007-08, 2008-09, 2009-10, Revisional Board

2010-11

W.B VAT Act,2003 2005-06 Senior Joint Commissioner

W.B VAT Act,2003 2006-07 Sales Tax Appellate Tribunal

W.B VAT Act,2003 2005-06, 2006-07, 2007-08, West Bengal Appellate &

2008-09, 2009-10 Revisional Board

W.B VAT Act,2003 2011-12 Additional Commissioner, Commercial Taxes

(c) The amount required to be transferred to Investor Education and Protection Fund has been transferred within the stipulated time in accordance with the provisions of the Companies Act, 1956 and the rules made thereunder.

viii. The Company has accumulated losses exceeding fifty percent of its networth as at the end of the financial year and it has also incurred cash losses during the financial year ended on that date and in the immediately preceding financial year.

ix. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

x. In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year. Accordingly, the provisions of Clause 3(x) of the Order are not applicable to the Company.

xi. In our opinion, and according to the information and explanations given to us, the term loans have been applied, on an overall basis, for the purposes for which they were obtained.

xii. 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 neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For Price Waterhouse

Firm Registration Number: 301112E

Chartered Accountants

Prabal Kr. Sarkar Kolkata Partner

October 19, 2015 Membership Number 52340


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Kesoram Industries Limited (the "Company"), which comprise the Balance Sheet as at 31st March, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

2. The Company''s Managment 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'' of India (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.

Auditors'' 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 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. 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 the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

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

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

7. As required by ''the Companies (Auditor''s Report) Order, 2003'', as amended by ''the Companies (Auditor''s Report) (Amendment) Order, 2004'', issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement 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 written representations received from the directors as on 31st March, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

Annexure to Auditors'' Report

Referred to in paragraph 7 of the Auditors'' Report of even date to the members of Kesoram Industries Limited on the financial statements as of and for the year ended 31st March, 2013

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of 3 years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

(c) In our opinion, and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

ii. (a) The inventory excluding stocks with third parties has been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. (a) The Company has granted unsecured loans, to a company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans aggregated to Rs. 14.80 crores and Rs. 6.15 crores, respectively. The Company has not granted any secured / unsecured loans to firms or other parties covered in the register maintained under section 301 of the Act.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the aforesaid loans, the Company is regular in repaying the principal amount, as stipulated, and is also regular in payment of interest, as applicable.

(d) In respect of the aforesaid loans, there is no overdue amount more than Rupees One Lakh.

(e) The Company has taken unsecured loan, from two companies covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans aggregated to Rs. 5.00 crores and Rs. nil, respectively. The Company has not taken any secured /unsecured loans to firms or other parties covered in the register maintained under Section 301 of the Act.

(f) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

iv. In our opinion, and according to the information and explanations given to us, exceptfor deficiencies in relation to information technology general controls (ITGC) for sale of tyre, for which the management is yet to take remedial measures there is an adequate internal control system commensurate with the size of the Company and the nature of its business for purchase of inventory and fixed assets and for the sale of goods and further on the basis of our examination of books and records of the company and according to the information and explanations given to us, except for aforesaid deficiency in ITGCfor sale of tyre we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

v. (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act and the ''Companies (Acceptance of Deposits) Rules, 1975'' with regard to the deposits accepted from the public. According to the information and explanations given 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.

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

viii. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (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 generally regular in depositing undisputed statutory dues in respect of Provident Fund, Service tax, Tax Deducted at Source and Value Added Tax, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including , investor education and protection fund, employees'' state insurance, income tax, wealth tax, customs duty, excise duty and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth tax, customs duty, which have not been deposited on account of any dispute. The particulars of dues of income tax, sales tax, service tax and excise duty as at March 31, 2013 which have not been deposited on account of a dispute, are as follows -

Name of Statute Nature of Amount Dues Rs. / crore

Andhra Pradesh General Sales Tax 0.80 Sales Tax Act, 1957

Bombay Sales Tax Act, 1959 Sales Tax 0.71

Central Excise Act, 1944 Excise Duty 0.60

Central Excise Act, 1944 Excise Duty 0.19

Name Periods to which Forum where dispute the Amount relates is pending

Andhra Pradesh General 2006-07 to 2009-10 Andra Pradesh High

2001-02 Court

Bombay Sales Tax Act 2004-05, 2003-04 Deputy Commissioner 2002-03 (Appeal)

Central Excise Act, 1944 2002 - 03, 1999 -00 Additional Commissioner

Central Excise Act, 1944 1979-1981, 1980-1981 Assistant Commissioner 1982-1983, 2003-2004,

2004-2005, 2002-2004

1995-1996

Name of Statute Nature of Amount Dues Rs. / crore

Central Excise Act, 1944 Excise Duty 38.23

Central Excise Act, 1944 Excise Duty 1.65

Central Excise Act, 1944 Excise Duty 29.40

Central Excise Act, 1944 Excise Duty 0.76

Central Sales Tax Act, 1956 Sales Tax 0.37

Central Sales Tax Act, 1956 Sales Tax 6.26

Central Sales Tax Act, 1956 Sales Tax 0.55

Central Sales Tax Act, 1956 Sales Tax 0.05

Central Sales Tax Act, 1956 Sales Tax 0.11

Central Sales Tax Act, 1956 Sales Tax 8.48

Name Periods to which Forum where dispute the Amount relates is pending

Central Excise Act, 1944 2004-06, 2006-08, Commissioner

2003-05, 1995-96,

1985-90, 2000-04,

1986-87 to 1989-90,

2009-10, 2007-11

Central Excise Act, 1944 2006-07, 1995-96, Commissioner (Appeal)

2001-02, 2002-03,

2004-05, 2009-10,

2010-11, 2011-12

Central Excise Act, 1944 2006-07 to 2007-08, Customs, Excise &

Central Excise Act, 1944 2004-05 to 2005-06, Service Tax Appellate

Central Excise Act, 1944 2007-08 to 2008-09 Tribunal

2002-03, 2004-05,

1999-03, 2005-06,

2010-12, 2004-06,

2006-08, 2007-08,

2007-09, 2008-09,

2009-10, 2006-07 to

2009-10, 2010-11

Central Excise Act, 1944 2005-06 Tribunal

Central Excise Act, 1944 1997-98, 2008-09, Additional Commissioner

2007-08,1999-2000

1995-96, 2006-07, West Bengal

1996-97, 2003-04, Commercial Taxes

2004-05, 2005-06, Appellate and Revision

Central Excise Act, 1944 2006-07 Board

Central Excise Act, 1944 2004-05, 1996-97, Assistant Commissioner

Central Excise Act, 1944 1998-99, 2008-09,

Central Excise Act, 1944 2009-10, 2010-11,

Central Excise Act, 1944 2011-12

Central Excise Act, 1944 2005-06 Commissioner

Central Excise Act, 1944 2007-08, 2008-09, Deuty Commissioner

2009-10

Central Excise Act, 1944 2003-04, 2006-07, Odisha High Court

2008-09

Name of Statute Nature of Amount Dues Rs. / crore

Central Sales Tax Act, 1956 Sales Tax 0.18

Central Sales Tax Act, 1956 Sales Tax 4.65

Central Sales Tax Act, 1956 Sales Tax 2.88

Central Sales Tax Act, 1956 Sales Tax 0.01

Central Sales Tax Act, 1956 Sales Tax 0.06

Central Sales Tax Act, 1956 Sales Tax 16.99

Delhi Sales Tax Act, 1975 Sales Tax 0.42

Finance Act, 1994 Service Tax 0.46

Finance Act, 1994 Service Tax 0.35

Finance Act, 1994 Service Tax 0.02

Income Tax Act, 1961 Income Tax 9.20

Tamil Nadu General Sales Tax 0.18

Sales Tax Act, 1959

UP Trade Tax Act, 1948 Sales Tax 0.09

West Bengal Sales Tax Act, 1994 Sales Tax 0.07

West Bengal Sales Tax Act, 1994 Sales Tax 3.90

West Bengal Sales Tax Act, 1994 Sales Tax 0.21

West Bengal Sales Tax Act, 1994 Sales Tax 0.38

Name Periods to which Forum where dispute the Amount relates is pending

Central Sales Tax Act, 1956 2001-02, 2002-03 Tribunal

Central Sales Tax Act, 1956 2003-04 Karnataka High Court

Central Sales Tax Act, 1956 2008-09, 2007-08 Sr. Joint Commissioner

Central Sales Tax Act, 1956 2006-07 Jt. Commissioner

Central Sales Tax Act, 1956 2001-02, 2004-05 Sr. Jt. Commissioner (Appellate Authority)

Central Sales Tax Act, 1956 2000-01, 2001-02, Supreme Court 2002-2003

Central Sales Tax Act, 1956 1999-2000 Additional Commissioner

Central Sales Tax Act, 1956 2008-09 to 2009-10 Commissioner

Central Sales Tax Act, 1956 2010-11, 2009-10, Commissioner (Appeals),

Central Sales Tax Act, 1956 2010-11, 2008-09, Central Excise,Customs

Central Sales Tax Act, 1956 2009-10 & Service Tax.

Central Sales Tax Act, 1956 2007-09 Additional Commissioner of Service Tax

Central Sales Tax Act, 1956 2005-06, 2007-08, CIT (Appeal)

Central Sales Tax Act, 1956 2010-11, 2003-04

Central Sales Tax Act, 1956 1999-2000 Chennai High Court

Central Sales Tax Act, 1956 2005-06,2006-07 Additional Commissioner

Central Sales Tax Act, 1956 2008-09, 1999-2000 Additional Commissioner

Central Sales Tax Act, 1956 1998-99, 1995-96, West Bengal

Central Sales Tax Act, 1956 1996-97, 1987-88, Commercial Taxes

Central Sales Tax Act, 1956 2003-04, 2004-05 Appellate and Revision Board

Central Sales Tax Act,1956 1995-96, 1997-98, Deputy Commissioner

Central Sales Tax Act, 1956 2001-02, 2004-05 Sr. Jt. Commissioner (Appellate Authority)

x. The Company has no accumulated losses as at the end of the financial year and it has incurred cash losses in the financial year ended on that date and in the immediately preceding financial year.

xi. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of Clause 4(xii) of the Order are not applicable to the Company

xiii. As the provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company, the provisions of Clause 4(xiii) of the Order are not applicable to the Company.

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

xv. In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year. Accordingly, the provisions of Clause 4(xv) of the Order are not applicable to the Company.

xvi. In our opinion, and according to the information and explanations given to us, the term loans have been applied, on an overall basis, for the purposes for which they were obtained.

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 the Company has used funds raised on short-term basis for long-term investment. The company has excess current liabilities over current assets amounting to Rs. 990.59 crores on a short term basis which has been used for non current assets.

xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year. Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable to the Company.

xix. The Company has not issued any debentures during the year and does not have any debentures outstanding as at the beginning of the year and at the year end. Accordingly, the provisions of Clause 4(xix) of the Order are not applicable to the Company

xx. The Company has not raised any money by public issues during the year. Accordingly, the provisions of Clause 4(xx) of the Order are not applicable to the Company.

xxi. 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 neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For Price Waterhouse

Firm Registration Number: 301112E

Chartered Accountants

Prabal Kr. Sarkar

Kolkata Partner

27th April, 2013 Membership Number 52340


Mar 31, 2010

1. We have audited the attached Balance Sheet of Kesoram Industries Limited (the "Company") as at 31st March, 2010, the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of Section 227 (4A) of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we further report tha:

3.1 (a) The Company is maintaining proper records showing full particulars (other than details regarding revaluations made during 1982-83) including quantitative details and situation of its fixed assets.

(b) The fixed assets of the Company are physically verified by the Management according to phased programmes designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to such programmes [without any coverage for items of Companys Spun Pipes & Foundries Unit (which is under suspension of work effective 2nd May, 2008 having year-end book value of Rs.4,09,93,039)], a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

3.2 (a) The inventories [excluding stocks with third parties and pertaining to the aforesaid Spun Pipes & Foundries Unit (year-end book value Rs. 99,23,767)] have been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of physical verification 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 nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventories other than work-in-process. As in earlier years, work-in-process has been determined by the Management on the basis of physical verification as mentioned in paragraph 3.2 (a) above. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3;3 The Company has neither granted nor taken during the year any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

3.4 In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. The Company has not provided any service during the year. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

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

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time other than transactions of special nature for which competitive quotations are not available.

3.6 In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given 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.

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

3.8 We have broadly reviewed the books of account maintained by the Company in respect of products at its Cement, Tyre, Rayon and Chemicals Units where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1 )(d) of the Act and are of the opinion that prima facte, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

3.9 (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 generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund [other than arrears of Rs. 56,307 (pertaining to cases under litigation) outstanding for a period of more than six months as on 31st March, 2010], employees state insurance, income-tax (other than arrears of Rs. 19,23,892 outstanding for a period of more than six months as on 31st March, 2010), sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty and cess as at 31st March, 2010 which have not been deposited on account of a dispute (there being no such cases with regard to wealth tax, custom duty and cess), are as follows -

Name of the Statute Nature of Amount Period to which the the dues Rs. amount relates Income Tax Act, 1961 Income Tax 50,000 2000-01 cantral Sales Tax Act, 1956 Sales Tax 16,99,42,317 2000-01 to 2002-03 3,07,99,841 2001-02,2003-04, 2004-05,2006-07 4,65,12,981 2003-04 2,62,95,867 1999-00,2003-04, 2004-05 29,25,145 1991-92 to 2002-03 1,47,85,118 2006-07 28,37,124 2005-06,2007-08 4,48,082 1999-00 6,23,26,761 1997-98,2001-02, 2003-04 to 2005-06 42,92,465 1991-92 to 2001-02, 2004-05 West Bengal Sates Tax Act, Sales Tax 2,62,30,154 1987-88,2003-04, 1994 2004-05 5,72,943 1999-00 2,83,64,540 1995-96,1997-98, 1999-00,2001-02, 2003-04,2004-05, 2008-09 Delhi Sales Tax Act, 1975 Sates Tax 41,70,263 1999-00 Jammu & Kashmir Sales Sales Tax 9,90,252 1999-00 Tax Act, 1962 Tamil Nadu General Sales Sales Tax 18,07,934 1999-00 Tax Act, 1959 Andhra Pradesh General Sales Tax 25,66,651 2001-02 Sales Tax Act, 1957 Madhya Pradesh Sales Tax 6,36,696 2000-01 Commercial Tax Act, 1994 U.P. Trade Tax Act, 1948 Sales Tax 8,88,138 2005-06,2006-07 Finance Act, 1994 Service Tax 3,85,55,392 2005-06 to 2007-08 Central Excise Act, 1944 Excise Duty 1,72,232 1993-94,1994-95 4,96,64,997 2003-04 to 2007-08 8,63,13,775 1986-87 to 1989-90 1994-95 to 1996-97 1999-00,2000-01 2002-03 to 2005-06 19,43,327 2003-04 18,86,987 1979-80 to 1982-83 1995-96, 2001-02 to 2004-05

Name of the Statute Forum where dispute is pending

Income Tax Act, 1961 Commissioner

Central Sales Tax Act, 1956 Supreme Court

Orissa High Court

Kamataka High Court

West Bengal Commercial Taxes Apellate and Revisional Board

Tribunal

Sr. Joint Commissioner

Commissioner

Additional Commissioner

Deputy Commissioner

Assistant Commissioner

West Bengal Commercial Taxes Appellate and Revisional Board

Additional Commissioner

Deputy Commissioner

Delhi Sales Tax Act, 1975 Additional Commissioner

Jammu & Kashmir Deputy Commissioner Tax Act, 1962

Tamil Nadu General Chennai High Court Tax Act,1959

Andhra Pradesh General Tribunal Sales Tax Act,1957

Madhya Pradesh Deputy Commissioner Commercial Tax Act,1994

U.P. Trade Tax Act, 1948 Additional

Finance Act, 1994 Customs Excise & Service Tax Appellate Tribunl

Central Excise Act, 1944 Calcutta High Court

Customs Excise & Service Tax Appellate Tribunal

Commissioner

Deputy Commissioner

Assistant Commissioner

3.10 The Company has no accumulated losses as at 31st March, 2010 and it has not incurred any cash losses in the financial year ended on that date and in the immediately preceding financial year.

3.11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

3.12 The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

3.13 The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.

3.14 In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

3.15 In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

3.16 In our opinion, and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained other than term loans in the region of Rs. 100 crores (obtained towards the end of the financial year) which, according to management, has been temporarily used for working capital purposes / repayment of certain short term borrowings pending eventual utilization for specific purposes.

3.17 On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.

3.18 The Company has not made any preferential allotment of shares during the year.

3.19 The Company has not created any security or charge in respect of Short-term debentures aggregating Rs.145 Crores issued during the year and outstanding at year-end. The Company has not created security or charge in respect of short term debentures issued and repaid during the year. The Company has created security or charge (other than mortgage on certain immovable properties of the Company) in respect of long term debentures aggregating Rs. 1,00,00,00,000 issued during the year and outstanding at year end.

3.20 The Company has not recently raised any money by public issues.

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

4. Further to our comments 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, 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, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Act;

(e) On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274 (1) (g) of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, and subject to Note 7(c) regarding Directors remuneration of Rs. 27,805 for which shareholders approval is yet to be obtained, 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 the affairs of the Company as at 31st March, 2010;

(ii) in the case of the Profit and Loss Account, its profit for the year ended on that date; and

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

For Price Watemouse place: Kolkata Firm Registration No. 301112E Date: 28th April, 2010 Chartered Accountants

(SK.Deb) Partner Membership No. 13390

 
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