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Auditor Report of Lime Chemicals Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Lime Chemicals Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, 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.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these 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 notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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 auditor''s 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 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.

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

Basis for Qualified Opinion

In our opinion, the qualification is material, but not pervasive to the financial statements.

As stated in Note No. 42, the Company has accepted deposits amounting to Rs. 637.08 lac without complying the provisions of Section 58A of the Act.

Qualified Opinion

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

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

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 the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

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

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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, the 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, the Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

e) On the basis of written representations received from the directors, as on 31st March, 2014 and taken on record by the Board of Directors, two of the directors are disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

Annexure to Independent Auditor''s Report

Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

(i)

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

(b) The fixed assets have been physically verified by the management during the year. As explained to us no discrepancies were noticed on such verification.

(c) The Company has not disposed off any fixed assets and hence this clause of paragraph 4 of the Order is not applicable.

(ii)

(a) The inventories have been physically verified by the management. In our opinion, the frequency of verification is reasonable;

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to size of the Company and the nature of its business;

(c) The Company is maintaining proper records of inventories. No material discrepancy was noticed between physical verification of stocks and book records.

(iii)

(a) During the year, the Company has not granted any loans, secured or unsecured, to the companies, firms or other parties listed in the Register maintained under section 301 of the Companies Act, 1956 and hence clauses (iii.a) to (iii.d) of paragraph 4 of the Order are not applicable.

(b) During the year, the Company has taken interest free unsecured loan from one party listed in the register maintained under Section 301 of the Companies Act, 1956 amounting to Rs. 67.42lac. The year end balance of such loan was Rs. 855.32 lac. (Maximum amount outstanding during the year was Rs. 925.32 lac). The year end balance of unsecured loans taken earlier from three parties listed in the Register maintained under section 301 of the Companies Act, 1956 was Rs. 676.09 lac. (Maximum amount outstanding during the year was Rs. 717.72 lac).

(c) Since the unsecured loans taken are interest free, the same are not prima-facie prejudicial to the interest of the Company.

(d) Since the unsecured loans taken are interest free, there is no payment of interest. No stipulations have been made regarding repayment of the principal amount.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have neither come across nor have we been informed of any major weaknesses in the aforesaid internal control procedures.

(v)

(a) According to the information and explanations given to us, the contracts that need to be entered into the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) Where each of such transaction is in excess of Rs. 5 lac in respect of any party, the transactions have been made at prices which are prima facie 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 not complied with the provisions of section 58A and 58AA of the Act and Companies (Acceptance of Deposits) Rules, 1975 with regard to the acceptance/renewal/repayment of the deposits accepted from the public, maintenance of liquid assets, advertisements, statement in lieu of advertisement and filing its Annual Return of Deposits.

(vii) The Company did not have an internal audit system commensurate with its size and nature of its business. The Company did not have any independent internal auditor.

(viii) According to the information and explanations given to us, the Central Government has prescribed maintenance of cost records u/s.209(1)(d) of the Companies Act, 1956. However, the Company has not maintained the cost records during the year.

(ix)

(a) According to the information and explanations given to us and the records of the Company examined by us the Company has not been regular in depositing with the appropriate authorities undisputed dues, including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable to it.

(b) According to the information and explanations given to us by the management and the records of the Company examined by us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable except sales tax amounting to Rs. 338.69 lac, provident fund amounting to Rs. 64.16 lac, income tax amounting to Rs. 20.07 lac,staff profession tax amounting to Rs. 0.58 lac, excise/service tax amounting to Rs. 16.92 lac and employees'' state insurance amounting to Rs. 13.91 lac.

(c) According to the information and explanations given to us and the records of the Company examined by us, disputed amounts in respect of the aforesaid dues which have not been deposited as at 31st March 2014 are given below.

Name of Statute Nature of the Amount (Rs.) Period to which Dues amount relates

Income Tax Act, Income Tax 2,017,000/- A.Y 1994-95 1961

Income Tax Act, Income Tax 469,000/- A.Y 1997-98 1961

Income Tax Act, Income Tax 6,410,000/- A.Y 2005-06 1961

Income Tax Act, Income Tax 25,15,770/- A.Y 2005 -06 1961 (penalty u/s271(i)(C)

Bombay Sales Tax BST/CST 9,134,000/- F.Y 2004-05 Act, 1959/ Central Sales Tax Act, 1956

Profession Tax Profession Tax 8,72,555/- F.Y 2005-06 to Act, 1975 2009-10

Name of Statute Forum where dispute is pending

Income Tax Act, Delhi High Court 1961

Income Tax Act, Delhi High Court 1961

Income Tax Act, Income Tax 1961 Appellate Tribunal

Income Tax Act, Commissioner of 1961 Income Tax (Appeals)

Bombay Sales Tax Joint Commissioner Act, of Sales Tax 1959/ Central Sales (Appeals) Tax Act, 1956

Profession Tax Joint Commissioner Act, 1975 of Profession Tax (Appeal)

(x) The Company has accumulated losses at the end of the financial year which is more than fifty per cent of its net worth. The Company has not incurred cash losses during the financial year covered by our audit. However, the Company has incurred cash losses in the immediately preceding financial year.

(xi) The Company has defaulted in repayment of dues to bank/financial institutions. The amount of default towards principal is Rs. 124.15 lac for the period 2007-08 to 2013-14 and interest is Rs. 343.28 lac for the period 2007-08 to 2013-14. The Company does not have any debenture holders.

(xii) As per the books and records of the Company examined by us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Hence, clause (xiii) of paragraph 4 of the Order is not applicable.

(xiv) During the year the Company had not dealt in or traded in shares, securities, debentures or other investments. All shares, debentures and other investments have been held by the Company in its own name.

(xv) According to the information and explanations given to us, the Company has given corporate guarantee for loans taken from ICICI Bank by Himachal Polyolefins Ltd. However, terms and conditions thereof are not prejudicial to the interest of the Company.

(xvi) On the basis of our review and related information and explanation as made available to us the Company has not taken any term loans during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis amounting to Rs. 2,394.92 lac have been used for long term investments.

(xviii) The Company has not made any preferential allotment of shares during the year and hence, clause (xviii) of paragraph 4 of the Order is not applicable.

(xix) The Company has neither issued any debentures during the year nor has any outstanding debenture as at year end and hence, clause (xix) of paragraph 4 of the Order is not applicable.

(xx) The Company has not raised any money by way of public issue during the year and hence, clause (xx) of paragraph 4 of the Order is not applicable.

(xxi) According to the information to and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of the audit.

For A. N. Damania & Co. Chartered Accountants Firm Reg. No.102077W

Ashvin Damania Proprietor M. No. 040166

Date: 30th May, 2014 Place: Mumbai


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying fnancial statements of M/s Lime Chemicals Limited ("the Company"), which comprise the Balance Sheet as at 31st March , 2013, the Statement of Proft and Loss and the Cash Flow Statement for the year then ended, and a summary of the signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. The Company''s Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these fnancial 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free from material misstatement.

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fnancial 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 Proft and Loss, of the loss of the Company for the year ended on that date, and

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

Report on Other Legal and Regulatory Requirements

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

2. As required by Section 227(3) of the Act, and subject to the limitations of the audit as indicated in paragraph 1 to 5 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 it appears from our examination of those books.

(c) The Balance Sheet, Statement of Proft 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 Balance Sheet, Statement of Proft and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

(e) On the basis of the written representations received from the directors as on 31st March, 2013 taken on record by the Board of Directors, we have to report that two of the directors are disqualifed 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.

(f) Attention is invited to the following:

i. The company continues to disclose its results on the concept of going concern in spite of the fact of erosion of 100% of its net worth, relying on the possible outcome of the BIFR application, one time settlement reached with lender banks and fnancial institutions and creditors and resumed operations of the new manufacturing unit. In addition the management explanations this regard have been relied upon. (refer para x of CARO report).

ii. (a) Trade receivables Rs. 55,793,519/-, and Trade Payables Rs. 130,633,963/-, are subject to confrmations from the respective customers/suppliers.

iii. Note No. 39, in respect of deposits u/s. 58A of Companies Act, 1956 without complying various provisions referred in para vi of CARO report.

iv. Note No. 40, regarding payment of remuneration to managing directors, as the company is not eligible for payment of Remuneration considering the provisions of Schedule XIII of the Companies Act, 1956.

v. No interest, if any, in respect of Trade payable under MSMED Act is provided by the Company as

a Company has not identifed the Trade payables under MSMED Act for the Year ended 31st March 2013. (Refer note 9) Consequential impact of the above cannot be quantifed and fully ascertained and thus not provided for.

vi. During the year under report, a sum of Rs. 2,53,35,636.00 representing the principal outstanding balance waived in the cash credit facility enjoyed with Bank of Baroda and 70,42,944.00 representing the balance outstanding waived in the term loan account with Bank of Baroda have been transferred to General reserves. In the opinion of the management, the company stands absolved of the above liability pursuant to the repayment of principal amount due and payable in terms of one time settlement entered into with the bank. However no dues certifcate in respect of the said accounts settled with the bank is yet to be obtained by the company.

3. Subject to para 2 (e) & (f) above, In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the others notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2013 and ii. in the case of Statement of Proft & Loss Account, of the loss for the year ended on that date; and iii. in the case of cash fow statement, of the cash fows for the year ended on that date.

ANNEXURE REFERED TO IN PARAGRAFH (1) OF REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS TO THE MEMBERS OF LIME CHEMICALS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2013

i. In respect of its Fixed Assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fxed assets except in respect of Roha factory, where details are maintained from 1st July, 1981. In case of Poanta factory, we are informed that assets register was under preparation upto 31st March, 1998 and the same has been misplaced upto this date. However Assets Register is duly maintained from 1st April 1998.

b) The Fixed assets have been physically verifed by the management as program of verifcation followed by the company. In our opinion, the frequency of the verifcation of the fxed Assets by the management is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us no material discrepancies were noticed on such verifcation.

c) No fxed assets of the company have been disposed off during the year so as to have any impact on the going concern status of the company. (To be read with 2f(i))

ii. In respect of its Inventories:

a) As explained to us, inventories have been physically verifed during the year by the management at reasonable intervals.

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

c) In our opinion and according to the information and explanations given to us, the company has maintained proper records of its inventories and no material discrepancies were noticed on physical verifcation.

iii. In respect of the loans, secured or unsecured, granted or taken by the company to / from companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

a) According to information and explanations given to us, the Company has not granted any secured and unsecured loan to parties covered in the registered maintained under section 301 of the Companies Act, 1956. Accordingly, clause 4(iii)(a), (b) and (c) of the Companies ( Auditor''s Report) Order, 2003 are not applicable to the Company.

b) According to information and explanation given to us, the company has taken interest free loan of Rs.15, 39, 27,309/- from parties covered in the registered maintained under section 301 of the companies Act, 1956. In respect of the said loan, the maximum amount outstanding at any time during the year is Rs.16,27,66,938/- c) In our opinion, the rate of interest and other term and condition on which loans have been taken from parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

d) There is no stipulation as regards repayment in respect of unsecured loan during the year.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchases of inventory and fxed assets and for the sale of goods.

v. In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanation given to us:

(a) The particulars of transactions referred to in Section 301 of Companies Act, in the register required to be maintained have been so entered.

(b) Such transactions have been made at prices which are reasonable in relation to the prevailing market prices.

vi. In our opinion and according to the information and explanations given to us, the Company has not complied with the provisions of sections 58A and 58AA of the Companies Act, 1956 and Companies

(Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public in respects of acceptance/renewal of deposits, maintenance of liquid asset, advertisements, statement in lieu of advertisement, return of deposit, etc.

vii. In our opinion and according to the information and explanations given to us, no internal audit function is carried out during the year. Even though the company is having an average annual turnover exceeding required limits, the company has not appointed any internal auditor.

viii. According to information and explanation given to us, the provision of ‘The Companies ( Cost accounting Regards) Rules, 2011'' published by the Central Government under Clause (d) of Sub-Section (1) of Section 209 of the Companies Act, 1956 for the maintenance of cost records is applicable to the company as the company is engaged in the manufacturing activity. However the Company has not maintained the cost records during the year.

ix. In respect of statutory dues

According to the information and explanations given to us, the Company has defaulted in depositing undisputed statutory dues as stated in Note no. 28, and other material statutory dues with appropriate authorities during the period.

According to information and explanation given to us, no undisputed amounts payable in respect of, income tax, customs duty, excise duty and cess were in arrears , as at 31st March, 2013 for a period of more than six months from the date they became payable, except sales Tax amounting to Rs. 3,44,16,389/- Provident Fund amounting to Rs.37,75,473 /-, Income Tax/TDS amounting to Rs. 12,42,925/- & Staff Professional Tax amounting Rs. 8,72,555/-, ESIC amounting to Rs. 6,55,905/-.

i. The accumulated losses as at the end of the fnancial year are not less than 50% of the net worth of the company. Also, the company has incurred cash losses Rs. 27,036,785/- during the fnancial year covered by our audit and the Rs 64,605,232/- during the immediately preceding fnancial year. However accounts of the company continues to be prepared on the going concern basis for the reason mentioned in clause 2 (f) (i) of our report of even date.

ii. In our opinion and according to the explanations and information given to us, and in terms of the One Time Settlement with fnancial institutions and banks, there is a delay in repayment of dues including interest to fnancial institutions and banks, particularly with reference to the amounts payable to Bank of Baroda, Development Credit Bank Ltd and Pegasus Assets reconstruction Pvt Ltd.. The company has no dues to debenture holders during the year. The amounts involved in question as on 31st March 2013 is a sum of Rs. 69.00 lacs in respect of interest payable to Bank of Baroda on OTS and 20.45 lacs in respect of principal and interest payable to Pegasus Assets reconstruction Pvt Ltd.

iii. In our opinion and according to the explanations and information given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Company''s (Auditor''s report) Order, 2003 are not applicable to the company.

iv. In our opinion, the company is not a nidhi/mutual beneft fund/society. Therefore the provisions of clause 4 (xiii) of the Company''s (Auditor''s report) Order, 2003 are not applicable to the company.

v. In our opinion and according to the explanations and information given to us, the company is not dealing in or trading in shares, securities or other investments. Accordingly, the provisions of clause 4 (xiv) of the Company''s (Auditor''s report) Order, 2003 are not applicable to the company.

vi. According to the explanations and information given to us, the company has given corporate guarantee for loan taken by Himachal Polyolefn''s Ltd from ICICI Bank; However terms and conditions thereof are not prejudicial to the interest of the company.

vii. To the best of our knowledge and belief and according to the information and explanations given to us , no term loans from banks/fnancial institutions have been obtained during the year under report.

viii. According to the explanations and information given to us, and on an overall examination of the balance sheet of the company, funds raised on short term basis have, prima facie, not been used during the year for long term purpose. No long term funds have been used to fund short term assets, other than temporary deployment pending application.

ix. According to the information and explanations given to us, The company has not made preferential allotment of shares to parties and companies covered in the register maintained under sec 301 of the Companies Act,1956

x. In our opinion and according to the information and explanations given to us, The Company does not have any debenture outstanding during the period covered by our Report. Accordingly, the provisions of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company

xi. During the period covered by our Audit report. The company has not raised any money by public issues. Accordingly, the provisions of clause 4(xx) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company

xii. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported during the year.

For DIVAKAR HARI & ASSOCIATES

(Chartered Accountants)

Place : MUMBAI DIVAKAR S. KOTIAN

Date : 30th May 2013 PARTNER

MRN NO.039125

Firm''s Regn No: 122057W


Mar 31, 2011

1. We have audited the attached Balance Sheet of Lime Chemicals Limited (The Company), as at 31st March 2011, and the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the respond - suability 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, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

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

c) The Balance Sheet, 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, Profit and 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.

e) 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, except one being disqualified to be appointed as director of the Company, none of the directors are 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;

f) Attention is invited to the following:

(i) The Company continues to disclose the results on a going concern basis, despite erosion of over 50 % of the net worth and closure of one of the factory unit, relying upon the improving profitability/net worth position for a Company as a whole. In addition, the management explanations in this regard have been relied upon.

(ii) The Company continues to value finished goods of Rs. 2184 thousands based on work certified and the same has been relied upon.

(iii) a. Sundry Debtors Rs.35435 thousand, Sundry Creditors Rs.9134 thousand, Other Liabilities Rs.78659 thousand, Loans and Advances Rs.27630 thousand, Secured Loans Rs.332463 thousand and Unsecured Loans Rs.92527 thousand are subject to confirmations.

b. Of the Above, Sundry Debtors Rs.14067 thousand, Sundry Creditors Rs.24777 thousand, Loans and Advances Rs.10045 thousand, Secured Loans Rs.72904 thousand and Unsecured Loans Rs.26989 thousand are outstanding for more than one year and may need adjustments to the stated amount.

(iv) Note No 24 to schedule 20, in respect of deposits without complying various provisions referred in para vi of CARO report.

(v) Note no 11 and 12 regarding payment of remuneration of Rs 3252 thousand to managing director/ managers as the Company is not eligible for payment of remuneration considering the provisions of Schedule XIII of the Companies Act, 1956.

(vi) Company does not have any confirmations regarding creditors registered under MSMED Act as on 31st March 2011. However reliance has been placed on the list of MSMED parties available in the earlier financial statements of the Company. Consequential impact of all the above cannot be quantified and fully ascertained and thus not provided for.

5. Subject to para 4 (f) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2011. ii. in the case of the Profit and Loss Account, of the Loss for the year ended on that date; and iii. in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFFERED TO IN PARAGRAPH (3) OF THE AUDITORS' REPORT TO THE MEMBERS OF LIME CHEMICALS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2011

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in respect of Roha factory, where details are maintained from 1st July 1981. In case of Poanta factory, we are informed that assets register was under preparation up to 31st March ,1998 and the same has been misplaced upto this date. However assets register is duly maintained from 1st April,1998

(b) The Fixed Assets have been physically verified by the management as per the program of verification followed by the Company. In our opinion, the frequency of the verification of the fixed assets by the management is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. (ii) In respect of its inventories:

(a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) According to information and explanation given to us, the Company has granted an interest free loan to a party covered in the registered maintained under section 301 of the Companies Act 1956. In respect of the said loan, the maximum amount outstanding at any time during the year is Rs.1432 Thousands and the year end balance is Rs. Nil.

(b) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and condition for loans given by the Company, are prima facie not prejudicial to the interest of the Company.

(c) The principal amount is received during the year.

(d) According to information and explanation given to us, the Company has taken interest free loan from a party covered in the registered maintained under section 301 of the companies Act 1956. In respect of the said loan, the maximum amount outstanding at any time during the year is Rs. 561 Thousands and the year end balance is Rs. 556 Thousands.

(e) In our opinion , the rate of interest and other term and condition on which loans have been taken from parties listed in the register maintained under section 301 of the Companies Act, 1956 are not , prima facie, prejudicial to the interest of the Company.

(f) The Company is regular in paying the principal amount.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods except in respect of some of the transactions directly routed through the personal bank accounts of the directors and we have not observed any continuing failure to correct major weaknesses in such internal controls.

(v) In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The transactions that needed to be entered into the register have been so entered.

(b) Where each of such transactions (excluding loans reported under paragraph (iii) above) is in excess of Rs 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie 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 not complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public in respect of acceptance/renewal of deposits, maintenance of liquid asset, advertisement, statement in lieu of advertisement, return of deposits, etc.

(vii) In our opinion and according to the information and explanations given to us, no internal audit function is carried out during the year.

(viii) As explained to us, the Central Government has not prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 for the year under audit. Accordingly the provisions of clause 4(viii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(ix) In respect of statutory dues

(a) According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues except as stated in Note no 4 to Schedule 20, and any other material statutory dues with the appropriate authorities during the Period though there has been a slight delay in a few cases.

(b) According to information and explanation given to us, no undisputed amounts payable in respect of, income tax, customs duty, excise duty and cess were in arrears, as at 31st March 2011 for a Period of more than six months from the date they became payable, except Sales Tax/Vat amounting to Rs. 23241 thousand, CST amounting to Rs 12729 thousand, Provident Fund amounting to Rs.2065 thousand ,Employees State Insurance amounting to Rs. 584 thousand , Staff Professional Tax amounting Rs.889 thousand & Income tax for AY 2006-07Rs 457 thousand.

(c) According to the information and explanations given to us, details of disputed sales tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited as on 31st March 2011 on account of any dispute are given below:

Name of statute Nature of the dues Amount (Rs. in Period to which the Forum where dispute is pending thous -and) amount relates

Income Tax Act, 1961 Income Tax 2017 A.Y 1994-95 Delhi High Court

Income Tax Act, 1961 Income Tax 469 A.Y 1997-98 Delhi High Court

Income Tax Act, 1961 Income Tax 6411 A.Y. 2005-06 Income Tax Appellate Tribunal

Bombay Sales Tax Act, BST /CST 9134 FY 2004-05 Joint Commiss ioner of Sales 1959/ Central Tax (Appeals) Tax Act, 1956

(x) The accumulated losses as at the end of the financial year are not less than 50% of the net worth of the Company. Also, the Company has incurred cash losses Rs.116725 thousand during the financial year covered by our audit and the Rs 38062 thousand during the immediately preceding financial year. However accounts of the company are continued to be prepared on going concern basis.

(xi) In our opinion and according to the information and explanations given to us, the Company has made default in the repayment of dues to financial institutions and banks. The Company had no dues to debenture holders during the year. The period of default is not ascertainable as there are many accounts however amount involved is Rs.332463 thousand (Previous year Rs 299146 thousand).

(xii) In our opinion and according to the information and explanation given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause

(xii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiii) In our opinion, the Company is not a nidhi/mutual benefit fund/ society. Therefore, the provisions of clause (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given Corporate Guarantee for loan taken by Himachal Polyolefins Ltd. from ICICI Bank; however terms and conditions thereof are not prejudicial to the interest of the Company.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application.

(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds raised on short term basis have, prima facie, been used during the year for long term purpose. No long term funds have been used to finance short term assets other than temporary deployment pending application.

(xviii) According to the information and explanations given to us, the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) In our opinion and according to the information and explanations given to us, the Company does not have any debentures outstanding during the period covered by our report. Accordingly, the provisions of clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xx) During the period covered by our audit report, the Company has not raised any money by public issues. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For CHOKSHI AND CHOKSHI

Chartered Accountants

Firm Reg. No.: 101872W Place: Mumbai. Dilip Parikh

Date: 25th August 2011 Membership No.: 35305

Partner


Mar 31, 2010

1. We have audited the attached Balance Sheet of Lime Chemicals Limited, as at 31st March 2010, and the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

b) In our opinion, proper books of accountas 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, Profit and 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 for short provisioning of gratuity liability amount which is not ascertained as actuarial valuation has not been done as required under Accounting Standard 15 on Accounting for Retirement Benefit in the Financial Statements of Employers issued by the Institute of Chartered Accountants of India and note no 5 in schedule no 18.

e) 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 are 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;

f) Attention is invited to the following notes in Schedule no 18;

I. Note no.2 regarding companys investment in Regent Chemicals Ltd., (cost Rs. 8280 thousands). We are unable to express our opinion on the shortfall in realisability of the investment and its consequent impact on the Profit and Loss account.

II. Note no.3 regarding overdue sundry debtors of Rs.5917/- thousands. We are unable to express our opinion on the short fall on realization-of these balances.

III. Note no 4 regarding out standing statutory dues of Rs.39,549/- thousands.

g) Subject to para 4 (f) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India:

i. ln the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010.

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

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

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date on the accounts for the Year ended 31st March. 2010 of Lime Chemicals Limited)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in respect of Roha factory, where details are maintained from 1st July 1981. In case of Poanta factory, we are informed that assets register was under preparation upto 31st March ,1998 and the same has been misplaced upto this date. However assets register is duly maintained from 1stApril,1998

(b) Some of the fixed assets were physically verified during the Year by the management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification at the Roha factory.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventories:

(a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) (a) According to information and explanation given to us, the company has not granted loan, unsecured or secured to Companies, Firms or other parties covered in registered maintained under section 301 of the companies Act 1956.

In view of the above paragraph 4 (iii), (b) (c) (d) of the order are not applicable.

(e) According to information and explanation given to us,the company has taken loans, unsecured from three parties covered in the registered maintained under section 301 of the companies Act 1956 and amount involved is Rs. 2,20,01,600.65/-.

(f) In our opinion, the rate of interest and other term and condition on which loans have been taken from parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(g) The company has not paid the principal amount as stipulated and has not made any interest payment.

(Iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and we have not observed any continuing failure to correct major weaknesses in such internal controls.

(v) In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The transactions that needed to be entered into the register, have been so entered.

(b) Where each of such transactions (excluding loans reported under paragraph (iii) above) is in excess of Rs 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie 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 58 and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975(except Rule No.4) with regard to the deposits accepted from the public.

(vii) In our opinion and according to the information and explanations given to us, no internal audit function carried out during the year.

(viii) We are informed that maintenance of Cost records has not been prescribed by the central government under section 209 (1) (d) of the Companies Act, 1956 for the products of the company. Accordingly the provisions of clause 4(viii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(ix) In respect of statutory dues

(a) According to the information and explanations given to us, the Company has been irregular in depositing undisputed statutory dues (except Providend Fund, Employees State Insurance, Sales Tax, Professional Tax, Refer to note no 4 of Notes to Accounts), and any other material statutory dues with the appropriate authorities during the Period though there has been a slight delay in a few cases.

(b) According to information and explanation given to us, no undisputed amounts payable in respect of, income tax, customs duty, excise duty and cess were in arrears, as at 31st March 2010 for a Period of more than six months from the date they became payable, except sales tax amounting to Rs. 3,12,81,820/-,Providend Fund Roha amounting to Rs.8,69,903/- & Employees State Insurance amouting to Rs. 584590/-

(c) According to the information and explanations given to us, details of disputed sales tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited as on 31st March 2010 on account of any dispute are given below:

Name of statute Nature of the dues Amount Period to which Forum where (Rs.) the amount relates dispute is pending

Income Tax Act, 1961 Income Tax 20,16,993 A.Y 1994-95 Income Tax Appellate Tribunal

Income Tax Act, 1961 Income Tax 4,68,905 A.Y 1997-98 Commissioner of Income Tax (Appeals)

Income Tax Act 1961 Income Tax 64,10,841 A.Y. 2005-06 Commissioner of Income Tax (Appeals)

(x) The company has accumulated losses. The Company has incurred cash losses (Rs.3,35,19,246.95)during the financial year covered by our audit and the immediately preceding financial year (5,00,86,651.12).

(xi) In our opinion and according to the information and explanations given to us, the company has defaulted in the repayment of dues to financial institutions and banks. The company had no dues to debenture holders during the year.

(xii) In our opinion and according to the information and explanation given to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xiii) In our opinion, the company is not a nidhi/mutual benefit fund/ society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xiv) In our opinion and according to the information and explanation given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company

(xv) According to the information and explanations given to us, the company has given guarantee for loan taken by Himachal Polyolefins Ltd. from ICICI Bank, however terms and conditions thereof are not prejudicial to the interest of the Company.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, were applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application.

(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds raised on short term basis have, prima facie, have been used during the year for long term investment No long term funds have been used to finance short term assets other than temporary deployment pending application.

(xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956

(xix) in our opinion and according to the information and explanations given to us, the company does not have any debentures outstanding during the period covered by our report. Accordingly, the provisions of clause 4 (xix) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xx) During the period covered by our audit report, the company has not raised any money by public issues. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For V. M. D. & Co.

Chartered Accountants

V. M. DESAI

Place: Mumbai. Partner

Date : 26/07/2010 Membership No.: F 9219

Firm No.: 125002W

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