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Auditor Report of Khaitan Chemicals & Fertilizers Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Khaitan Chemicals & Fertilizers Limited ('the Company') which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flaw Statement far the period then ended, and the Nates ta Financial Statements comprising af a summary of significant accounting policies and other explanatory information.

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

3. Auditors'Responsibility

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

We conducted aur audit in accordance with the Standards on Auditing specified under Section 143(10) af the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit ta 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 af the risks of the material misstatement af the financial statements, whether due to error orfraud. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation af the financial statements that give a true and fair view in order ta design audit procedures that are appropriate in the circumstances, but not far the purpose af expressing an opinion an whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness af such controls. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness af the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation af the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate ta provide a basis far aur audit opinion an the financial statements.

4. Opinion

In our opinion and ta the best af our information and according ta the explanations given ta 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 af affairs of the Company as at 31 March 2015, and its profit and its cash flows far the period ended an that date.

5. Report on Other Legal and Regulatory Requirements

(a) As required by the Companies (Auditors' Report) Order, 2015 ('the Order') issued by the Central Government af India in terms af sub Section 11 of Section 143aftheAct,wegiveinthe Annexure a statement on the matters specified in paragraphs 3 and 4 af the Order.

(b) As required under provisions af Section 143(3) of the Act, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryforthe purpose of auraudit;

ii. In aur opinion, proper baaks af accounts as required by law have been kept by the Company so far as appears from aur examination af those books;

iii. The Balance Sheet, Statement of Profit and Lass and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts;

iv. In ourapinion, the Balance Sheet, Statement of Profit and Lass and Cash Flaw Statement comply with the Accounting Standards referred ta in Section 133 af the Act read with Rule 7 of the Company (Accounts) Rules, 2014.

v. On the basis af written representations received from the Directors, as on 31" March, 2015 and taken an record by the Board of Directors, none af the Directors is disqualified as on 31" March, 2015, from being appointed as a Director in terms of Section 164 (2) af the Act.

(As referred to in paragraph 5(a) of aur report ta the members af Khaitan Chemicals & Fertilizers Limited an the accounts as at and for the period ended 31 " March, 2015)

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

(b) The fixed assets are physically verified by the management according ta a phased programme designed ta caver all the items aver a period af three years, which in aur opinion, is reasonable having regard ta the size af the Company and the nature af its assets. Pursuant ta the programme, a portion af the fixed assets has been physically verified by the management during the year and no material discrepancies were noticed an such verification.

(ii) (a) The inventory af the Company has been physically verified by the management during the year (except far stack af Rack Phosphate, Sulphur end Single Super phosphate far which stackis taken an estimetian besisendfarthe stackin transit end stack lying with outside parties). In aur opinion, the frequency af verification is reasonable.

(b) In aur opinion, the procedures af physical verification af inventory fallowed by the management are reasonable and adequate in relation to the size af the Company and the nature af its business.

(c) In aur opinion and according ta the information and explanations given ta us, the Company is maintaining proper records af inventory. The discrepancies noticed an verification between the physical stocks and the book records were not material and have been properly dealt with in the books af accounts.

(iii) As per the information given to us, the Company has not granted any loan, secured or unsecured, ta Companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 ("The Act"). Accordingly, clauses 3 (iii) (a)and (b) af the Order are not applicable.

(iv) In aur opinion and according ta the information and explanations given to us, there are adequate internal control systems commensurate with the size af the Company and the nature af its business with regard ta purchase af inventory, fixed assets and with regard ta the sale af goads and services.

Further, an the basis af aur examination af the books and records af the Company carried out in accordance with the generally accepted auditing practices in India and according ta the information and explanations given ta us, we have neither came across nor have been informed af any continuing failure ta correct major weaknesses in the aforesaid internal control system.

(v) As per the information and explanations provided ta us, the Company has not accepted any deposits and therefore provisions af Sections 73 ta 76 ar any other relevant provisions af the Companies Act and rules there under are not applicable to the Company.

(vi) We have broadly reviewed the books af accounts maintained in pursuance ta sub Section (1) af Section 148 af the Act in respect af single super phosphate, sulphuric acid and refined vegetable ail manufactured by the Company and are af the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination af such records to verify its authenticity and accuracy.

(vii) (a) According ta the information and explanations given ta us, and the records af the Company examined by us, in aur opinion, the Company is generally regular in depositing undisputed statutory dues in respect af provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According ta the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues were outstanding, as at 31" March, 2015 far a period af mare than six months from the date they became payable.

(c) According ta the information and explanations given ta us, there are no material dues af wealth tax, custom duty, and service tax which have not been deposited with appropriate authorities on account af dispute. However, according ta the information and explanations given ta us the fallowing dues af income tax, sales tax, excise duty, value added taxes,

S. Name of Nature Amount No the Statute of dues (Rs.)

1. M.P. Commercial Tax Act, 1974 Sales Tax/Trade Tax 0.48 Lacs

2. UP Trade Tax 1948 Sales Tax/Trade Tax 3.28 Lacs (Principal)

15.94 Lacs (Interest)

3. M.P. Commercial TaxAct, 1974 Entry tax 0.11 Lacs

4. Mines and Minerals (Development Royalty on rock 118.77 Lacs and Regulation) Act, 1957 Phosphate

5. Purchase TaxAct Purchase Tax 63.38 Lacs

6. Central ExciseAct Penalty 17.78 Lacs

7. UP Trade Tax 1948 Sales Tax 1.00 Lacs

8. M.P. Entry Tax Act 1976 Entry Tax 28.27 lacs

9. Central Excise Act Excise Duty & Penalty 16.85 lacs



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

M.P. Commercial TaxAct, 1974 2001-02 Tribunal Commercial Tax, Bhopal

UP Trade Tax 1948 Before 1996 Joint Commissioner of Trade Tax, Lucknow

M.P. Commercial TaxAct, 197 1991-92 Tribunal Commercial Tax, Bhopal

Mines and Minerals (Development2004-05 High Court, Rajasthan and Regulation) Act, 1957

Purchase TaxAct 2004-05 High Court of Madhya Pradesh, Jabalpur

Central Excise Act 2007-08 Custom Excise and Service Tax Appellate Tribunal

UP Trade Tax 1948 2006- 07 The Deputy Commission Commercial Tax, Jhansi

M.P. Entry Tax Act 1976 2007- 08 MP Commercial Tax Appellate Board, Bhopal

Central Excise Act 2007-09 Commissioner (Appeal)-I, Bhopal

purchase tax, entry tax and Royalty/cess, have not been deposited by the Company on account of any disputes: -

(d) According to the information and explanations given to us, the amounts which were required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time.

(viii) The Company does not have any accumulated losses as at 31" March, 2015 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(ix) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(x) As per the information given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xii) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended 31st March, 2015.

For S.S. KOTHARI MEHTA & CO. Chartered Accountants Firm Regn. No. 000756N

HARISH GUPTA Place : Gurgaan Partner Date : 16th May, 2015 Membership No. 098336


Mar 31, 2014

1. We have audited the accompanying financial statements of Khaitan Chemicals & Fertilizers Limited (the ''Company'') which comprise the Balance Sheet as at 31" March, 2014, and the statement of Profit and Loss and cash flow statement for the year then ended, and the Notes to Financial Statements comprising of a summary of significant accounting policies and other explanatory information.

2. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956 (''the Act'') read with 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 controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

3. Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of the material misstatement of the financial statements, whether due to error of fraud. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31" March 2014;

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.

5. Emphasis of Matter

We draw attention to Note No 36 of the notes to the financial statements for the year ended on 31" March 2014 regarding the fact that the Company has decided not to provide for mopping up of subsidy on raw material of fertilizer as on 31-3-2011 in term of Office Memorandum NO.2311/1/2010-MPR dated 11-07-2011 issued by Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR (pt) dated 22.08.2012 and decided not to effect recovery till a policy in this regard is formulated. The impact on Revenue from operations and Profit after tax is unascertainable at this stage.

6. Report on Other Legal and Regulatory Requirements

(a) As required by the Companies (Auditor''s Report) Order, 2003 (''the Order'') issued by the Central Government of India in terms 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.

(b) As required under provisions of section 227(3) of the Act, we report that:

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

ii. In our opinion, proper books of accounts as required bylaw have been kept by the Company so far as appears from our examination of those books;

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

iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.;

v. On the basis of written representations received from the directors, as on 31" March, 2014 and taken on record by the Board of Directors, none of the directors is disqualified as on 31" March, 2014 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(As referred to in paragraph 6(a) of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended31"March2014)

(i) (a) The company has maintained 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 were 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 of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). In our opinion, the frequency of verification is reasonable.

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

(C) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts. (iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 659.32 lacs and Rs. 96.86 lacs respectively.

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the yearin respect of above loans/advances.

(e) The Company has taken loan from three Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 720 lacs and Rs.621.33 lacs respectively.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control procedures.

(v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1) (d) of Companies Act, 1956 in respect of single super phosphate, Sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

(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, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) Further, According to information & explanations given to us, there were no undisputed amounts outstanding at the year- end for a period of more than six months from the date they became payable.

(c) 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, custom duty wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows: -

Sr. Name of Nature Amount Period to which Forum where the

N0 the Statute of dues (Rs) the amount relates dispute is pending

1. M.P. Commer cial Tax Act, 1974 Sales Tax/ Trade Tax 0.48 Lacs 2001-02 Tribunal Commercial Tax, Bhopal

2. UPTrade Tax1948 Sales Tax/ Trade Tax 3.28 Lacs (Princi pal) Before 1996 Joint Commissioner of Trade Tax,

15.94 Lacs (Inter est) Lucknow

3. M.P. Commer cial Tax Act, 1974 Entrytax 0.11 Lacs 1991-92 Tribunal Commercial Tax, Bhopal

4. Mines and Minerals (Develop ment Royalty on rock 11.8 77 Lacs 2004-05 High Court, Rajasthan and Regu lation) Act, 1957 Phosphate

5. Purchase TaxAct Purchase Tax 63.38 Lacs 2004-05 High Court of Madhya Pradesh, Jabalpur

6. Central Excise Act Penalty 17.78 Lacs 2007-08 Custom Excise and Service Tax Appellate

Tribunal

7. UPTrade Tax1948 Sales Tax 1.00 Lacs. 2006-07 The Deputy Commission Commercial Tax,

Jhansi

8. M.P. Entry TaxAct 1976 EntryTax 28.27 lacs 2007-08 MP Commercial Tax Appellate Board, Bhopal

9. UPTrade Tax1948 Sales Tax/ Trade Tax 11.73 lacs 2009-10 The Deputy Commission Commercial Tax,

Jhansi

10. Income TaxAct 1961 Income Tax 21.70 lacs AY 2010 -11 CIT(Appeal), New Delhi

11. Income TaxAct 1961 Income Tax 109.39 lacs AY 2011 -12 CIT(Appeal), New Delhi

(x) The company does not have any accumulated losses as at 31" March 2014 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

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

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

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

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31,2014.

For S.S. KOTHARI MEHTA & CO

Chartered Accountants Firm Regn.No. 000756N

HARISH GUPTA

Partner Place:New Delhi (Membership No. 98336)

Date : 20th May2014


Mar 31, 2013

1. We have audited the accompanying financial statements of Khaitan Chemicals & Fertilizers Limited (the Company''] which comprise the Balance Sheet as at 31" March, 2013, and the statement of Profit and Loss and cash flow statement for the year then ended, and the Notes to Financial Statements comprising of a summary of significant accounting policies and other explanatory information.

2. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 19S6 (''the Act'']. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

3. Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of the material misstatement of the financial statements, whether due to error of fraud. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and 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 qualified audit opinion.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a] In the case of the Balance Sheet, of the state of affairs of the Company as at Sl''March, 2013;

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

c] In the case of the Cash Flow Statement, of the cash flows for theyear ended on that date.

5. Emphasis of Matter

We draw attention to Note No 36 of the notes to the financial statements for the year ended on 31st March 2013 regarding the fact that the Company has decided not to provide for mopping up of subsidy on raw material of fertilizer as on 31-3-2011 in term of Office Memorandum No.2311/1/2010- MPR dated 11-07-2011 issued by Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR (pt] dated 22.08.2012 and decidednotto effect recovery till apolicy in this regardis formulated. The impacton RevenuefromOperationsand Profit after tax is unascertainobleatthisstoge.

6. Report on Other Legal and Regulatory Requirements

[a] As required by the Companies (Auditor''s Report] Order, 2003 (''the Order''] issued by the Central Government of India in terms of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and S of the Order.

[b] As requiredunder provisions of section 227(3] of the Act, we reportthat:

i. 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; ii. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; iii. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account; iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C] of section 211 of the Companies Act, 19S6; v. 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 beine appointed as a director in terms of Clause (el of sub-section (11 of Section 274 ofthe Companies Act, 19S6

[As referred to in paragraph 6(a) of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended 31st March 2013)

[I) (a) The company has maintained 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 were 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 of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur ond Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). In our opinion, the frequency of verification is reasonable.

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

[c) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts.

[hi) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 19S6. The maximum amount involved during the year and the year-end balance of such loans was Rs. 1120 lacs and Rs. 317.68 lacs respectively.

[b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

[c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

[d) There is no overdue amount outstanding at the end of the year in respect of above loans /advances.

[e) The Company has taken loan from two Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 19S6. The maximum amountinvolvedduringthe year and the year-end balance of such loans was Rs. S1S.12 lacs and Rs.110 lacs respectively.

[iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control procedures.

[v) [a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered. [b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

[vi) The company has not accepted any deposits from the public within the meaning of Section S8A and S8AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

[viii) We have broadly reviewed the books of account maintained in pursuance to section 209 [1) (d) of Companies Act, 19S6 in respect of single super phosphate, Sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

[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 regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

[b) Further, According to information & explanations given to us, there were no undisputed amounts outstanding at the year-end for a period of more than six months from the date they became payable.

(x) The company does not have any accumulated losses as at 31st March, 2013 and it has not incurred any cash losses during the financial year ended on that date or in the immediately precedingfinancial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank duringtheyear.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

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

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

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

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31,2013.

For S.S. KOTHARIMEHTA & CO

Chartered Accountants Firm Regn.No. 000756N

Palce : Dahej HARISH GUPTA

Partner

Date : 14.05.2013 (Membership No. 98336]


Mar 31, 2012

1. We have audited the attached balance sheet of Khaitan Chemicals & Fertilizers Limited as at 31st March, 2012, the statement of profit and loss and also the cash flow statement for the year ended as on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 {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 Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we consider appropriate and according to the information and explanation given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. We draw our attention to Note No 18 of the financial statement for the year ended on 31st March 2012 regarding recognition of subsidy income, on SSP manufactured from the carried over quantity of raw materials for fertilizers as on 31-3-2011, which is not in line with Office Memorandum No. 23011/1/2010-MPR dated 11-07-2011 issued by the Ministry of Chemicals & Fertilizers, Govt, of India and also constitutes a departure from the Accounting Standards -12 referred to in sub-section (3C) of section 211 of the Companies Act, 1956. The impact on Revenue from Operations and Profit after-tax is unascertainable.

5. Further to our comments in the Annexure referred to in Para 3 above and subject to Para 4 above, we report that:

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

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

iii. The balance sheet, statement of profit & loss and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, statement of profit & 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 Companies Act, 1956, except Accounting Standards -12

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

vi. Subject to our observation in Para (4) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of balance sheet, of the state of affairs of the Company as at 31st March, 2012;

b) in the case of statement of profit and loss, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

(As referred to in paragraph '3' of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for The year ended 31stMarch 2012)

(i) (a) The company has maintained 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 were 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 of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 3006.75 lacs and Rs. Nil lacs respectively.

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the year in respect of above loans/advances.

(e) The Company has taken loan from two Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 600 lacs and Rs.500 lacs respectively.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control procedures.

(v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1) (d) of Companies Act, 1956 in respect of single super phosphate. Sulphuric acid and refined vegetable oil etc. manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

(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, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities though there has been slight delay in few cases.

(b) Further, According to information & explanations given to us, there were no undisputed amounts outstanding at the yearend for a period of more than six months from the date they became payable.

(c) 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, custom duty, wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows: -

S. Name of the Statute Nature of dues Amount Period to No. (Rs.) which the amount relates

1. M.P. Commercial Tax Act, 1974 Sales Tax/Trade Tax 0.48 2001-02 Lacs

2. UP Trade Tax 1948 Sales Tax/Trade Tax 3.28 Lacs (Principal) Before

15.94 1996 Lacs (Interest)

3. M.P. Commercial TaxAct, 1974 Entry tax 0.11 1991-92 Lacs

4. Mines and Minerals (Development Royalty on rock phosphate 118.77 2004-05 Lacs and Regulation) Act,1957

5. Purchase Tax Act Purchase Tax 63.38 2004-05 Lacs

6. Central Excise Act Penalty 17.78 2007-08 Lacs

7. UP Trade Tax 1948 Sales Tax 1.00 2006-07 Lacs 8. M.P.Entry Tax Entry Tax Act 1976 28.27 2007-08 lacs

9. Income Tax Act 1961 Income Tax 8.37 2008-09 Lacs

Name of the Statute Forum where the dispute is pending

M.P. Commercial Tax Act,1974 Tribunal Commercial Tax, Bhopal

UP Trade Tax 1948 Joint Commissioner of Trade Tax, Lucknow

M.P. Commercial Tax Act,1974 Tribunal Commercial Tax, Bhopal

Mines and minerals (Development High Court, Rajasthan and Regulation) Act,1957

Purchese Tax Act High Court of Madhya Pradesh, Jabalpur

Central Excise Act Custom Excise and Service Tax Appellate Tribunal

UP Trade Tax Act 1976 The Deputy Commission Commercial Tax-Jhansi

M.P.Entry Tax Act 1976 MP Commercial Tax Appellate Board, Bhopal ' 2008-09 Income Tax Act 1961 CIT(Appeal), New Delhi

(x) The company does not have any accumulated losses as at 31st March 2012 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund ora society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

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

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

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

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2012.

For S.S.KOTHARI MEHTA & CO.

Chartered Accountants

Firm Regn.No. 000756N

NAVEEN AGGARWAL

Place: New Delhi Partner

Date: 29th May, 2012 Membership No. 94380


Mar 31, 2011

1. We have audited the attached balance sheet of Khaitan Chemicals & Fertilizers Limited as at 31st March, 2011, the profit and loss account and also the cash flow statement for the year ended as on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 {as amended by the Companies (Auditors Report) (Amendment) Order, 2004} issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we consider appropriate and according to the information and explanation given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

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

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

iii. The balance sheet, profit & loss account and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, profit & loss account 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 Companies Act, 1956,;

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

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

a) in the case of balance sheet, of the state of affairs of the Company as at 31st March, 2011;

b) in the case of profit and loss account, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(As referred to in paragraph 3 of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended 31st March 2011)

(i) (a) The company has maintained 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 yearand no material discrepancies were 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 of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 2286.09 lacs and Rs. 621.82 lacs respectively.

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the year in respect of above loans/advances.

(e) The Company has taken loan from two Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 500 lacs and Rs.500 lacs respectively.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control procedures. (v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1) (d) of Companies Act, 1956 in respect of single super phosphate, Sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribedrecords and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

(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, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities though there has been slight delay in few cases.

(b) Further, According to information & explanations given to us, undisputed amount of Sa/es Tax and Advance Income Tax of Rs. 1.55 lacs and Rs 181.90 lacs respectively were outstanding as at the Balance Sheet Date for more than six months from the date they become payable.

(c) 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, custom duty, wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows: -

S. Name of the Statute Nature of Amount Period to Forum where the dispute is pending No. dues (Rs.) which the

amount relates

I. MP.Commerc- ial Tax Sales Tax 0.48 Lacs 2001-02 Tribunal Commercial Tax, Bhopal Act,1974 Trade Tax 3.98 lacs

2 UP Trade Tax 1948 Sales Tax (princi- pal) Before 1996 Joint Commissio- ner of Trade Tax, Lucknow Trade Tax

15.94 Lacs

(Inter- est)

3. MP. Comme- rcial Tax Entry tax 0.11 Lacs 1991-92 Tribunal Commer- cial Tax, Bhopal 1974

4. Mines and Minerals Royalty on 118.77 2004-05 High Court, Rajasthan (Develop- ment and rock Lacs Regulation) Act, 1957 phosphate

5. Purchase Tax Act Purchase Tax 63.38 Lacs 2004-05 High Court of MadhyaPradesh, Jabalpur

6. Income Tax Act 1961 Income Tax 36.87 Lacs 2007-08 CIT(Appeal),New Delhi

7. Central Excise Act Penalty 17.78 Lacs 2007-08 Custom Excise and Service Tax Appellate Tribunal

8. UP Trade Tax 1948 Sales Tax 0.49 Lacs 2007-08 The Deputy Commission Commercial Tax-Jhansi

9. UP Trade Tax 1948 Sales Tax 0.93 Lacs 2005-06 The Deputy Commission Commercial Tax-Jhansi

10. UPTrade Tax1948 Sales Tax 1.00 Lacs. 2006-07 The Deputy Commission Commercial Tax-Jhansi

II. MP. Entry TaxAct 1976 EntryTax 35.37 lacs 2007-08 MP Commercial TaxAppellate Board,Bhopal

x) The company does not have any accumulated losses as at 31st March 2011 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society. (xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

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

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

(xx) The Company has no raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2011.

For: S.S.KOTHARI MEHTA & CO.

Chartered Accountants Firm Regn.No. 000756N

NAVEEN AGGARWAL

Partner Membership No. 94380

Place : New Delhi Date : 18th May 2011


Mar 31, 2010

1. We have audited the attached balance sheet of Khaitan Chemicals & Fertilisers Limited as at 31st March, 2010, the profit and loss account and also the cash flow statement for the year ended as on that date annexed thereto These financial statements are the responsibility of the Companys management Our responsibility is to express an opinion on these financial statements based on our audit,

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

3. As required by the Companies (Auditors Report) Order, 2003 {as amended by the Companies (Auditors Report) (Amendment) Order. 2004} issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we consider appropriate and according to the information and explanation given to us. we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

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

ii. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books except in case of leave encashment as mentioned in (vi) below;

iii. The balance sheet, profit & loss account and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, profit & loss account 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 Companies Act. 1956, except as stated in (vi) below regarding pending compliance of Accounting Standard-15 (Employee Benefits) issued by the Institute of Chartered Accountants of India;

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

vi. The gratuity and leave encashment are accounted for and disclosed as stated in the Note No. 6-9 of Schedule 19 of the Financial Statement. The unprovided liability for gratuity and leave encashment is unascertained. The aforesaid provision and disclosure is not in accordance with the requirements of AS-15 (Employee Benefits) issued by the Institute of Chartered Accountants of India Impact of the same on the current years Profit & Loss A/c is unascertained.

vii. Without qualifying our opinion, attention is drawn to Note no. B-13 of Schedule 19, wherein the remuneration to Managing Director is subject to the approval of shareholders in the ensuing General Meeting.

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

a) in the case of balance sheet, of the state of affairs of the Company as at 31st March, 2010;

b) in the case of profit and loss account, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

Annexure to Auditors Report" (As referred to in paragraph 3 of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended 31st March 2010)

(i) The company has maintained 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 cove: 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 were 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 of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate and Sulphur for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the records of inventory in our opinion the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts

(iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans advances to two companies covered in the register maintained under Section 301 of the Companies Act 1956 The maximum amount involved during the year and the year-end balance of such loans was Rs 2060 61 lacs and Rs 552.73 lacs respectively

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the year in respect of above loans advances

(el The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act 1956 Consequently the requirements of Clauses (iii)(f) and (iii)(g) of paragraph of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us there are adequate interna! control procedures 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 Further, on the basis of out examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have been informed of any instance of continuing failure to correct major -weaknesses in the aforesaid internal control procedures

(v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of 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 information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to pre,ailing market prices at the relevant time

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act 1956 and the rules framed there under

(vii) In our opinion the company has an adequate internal audit system commensurate with the size and nature of its business

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1 ) (d) ol Companies Act 1 956 in respect of single super phosphate, Sulphuric acid and refined vegetaoie oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained However we have not carried out a detailed examination of such records to verify its authenticity and accuracy

(ix) (a) According to the information and explanations given to us and the records of the company examined by us in out opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund investor education and protection fund, employees state insurance,income tax. sales tax. wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities Further, there were no undisputed amounts outstanding at the year-end for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us the particulars of dues of income tax. sales tax, custom duty, wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows. -

S. Name of Nature of Amount

No. the Statute dues (Rs.)

1. M.P. Commercial Tax Sales Tax/ 0.48 Lacs

Act. 1974 Trade Tax

2. UP Trade Tax 1948 Sales Tax/ 3.28 Lacs

Trade Tax (Principal)

15.94 Lacs (Interest)

3. MP Commercial Tax Entry tax 0.11 Lacs

Act. 1974

4 Mines and Minerals Royalty on 118.77 Lacs (Development and rock Regulation) Act,1957 phosphate

5 Purchase Tax Act Purchase Tax 192 84 Lacs

6 Income Tax Act 1961 Income Tax 65.20 Lacs

7. Central Excise Act Penalty 17.78 Lacs

8. Central Sales Tax Act Sales Tax 1.87 Lacs

9 UP Trade Tax 1948 Sales Tax 0.49 Lacs

10 UP Trade Tax 1948 Sales Tax 0.93 Lacs

11 UP Trade Tax 1948 Sales Tax 1.53 Lacs

S Period to which the Forum where the NO. amount relates dispute is pending

1. 2001-02 Tribunal Commercial Tax, Bhopal

2. Before Joint Commissioner of Trade Tax.

1996 Lucknow

3. 1991-92 Tribunal Commercial Tax, Bhopal

4. 2004-05 High Court, Rajasthan

5. 2004-05 & High Court of Madhya Pradesh, Jabalpur 2005-06

6. 2006-07 CIT(Appeal), New Delhi

7. 2007-08 Custom Excise and Service Tax Appellate Tribunal

8. 2005-06 Additional Commissioner of Commercial Tax-lndore

9. 2007-08 The Deputy Commission Commercial Tax-Jhansi

10. 2005-06 The Deputy Commission Commercial Tax-Jhansi

11. 2006-07 The Deputy Commission Commercial Tax-Jhansi

(x) The company does not have any accumulated losses as at 31st March 2010 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year

(xii) Based on our examination of cuments and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares debentures and other securities. (xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us. in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

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

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

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

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31.2010,

for S.S. KOTHARI MEHTA & CO.

Chartered Accountants Firm Reg, No, 00756N (CA ATUL SEKSARIA)

Place : New Delhi Partner

Date : 14.05.2010 Membership No. 86370

 
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