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Auditor Report of Meghmani Organics Ltd.

Mar 31, 2016

We have audited the accompanying Standalone Financial Statements of Meghmani Organics Limited, which comprise the Balance Sheet as at 31st March, 2016 the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (Act) with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these Standalone Financial Statements based on our audit.

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016 and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

As required by ''The Companies (Auditors'' Report) Order, 2016'', issued by the Central Government of India in terms of sub section (11) of Section 143 of the Act (hereinafter referred to as the "Order") and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the order.

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

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

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

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

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

(e) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure A"

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

i. The Company does not have any pending litigations which would impact its financial position.

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

iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31, 2016.

Referred to in Paragraph 1 of the Report on Other Legal & Regulatory Requirements of Independent Auditors'' Report of Even date On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report to the extent:

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

(b) Fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable.

(c) The title deeds of immovable properties as disclosed in Note 11 on Fixed Assets to the Financial Statements, are held in the name of the Company, except for the freehold land of Agro I division which amounts to Rs, 5,58,39,820 whose title deeds are not held in Companies name.

ii. As explained to us, inventories have been physically verified during the year by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification.

iii. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has granted loans, secured or unsecured, to its one subsidiary company listed in the register maintained under Section 189 of the Companies Act, 2013.

(a) In respect of aforesaid loans, the Company has not charged interest on loan given to subsidiary, other terms and conditions of loan given by the Company are prima facie not prejudicial to the interest of the Company.

(b) The said interest free loan given to its subsidiary of the Company is repayable on demand.

(c) Total amount overdue for more than Ninety days is Rs, 4,13,41,928.

iv. In our opinion, and according to the information and explanations given to us, the Company has complied with provision of Section 185 and 186 of the Companies Act, 2013 in respect of loans and investment made, guarantees and security provided by it.

v. The Company has not accepted any deposits from the public covered under the provision of Section 73 to 76 of the Companies Act, 2013 and the rules framed there under to the extent notified.

vi. The Central Government has prescribed maintenance of Cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended by sub Section (1) of Section 148 of the Companies Act, 2013. We have broadly reviewed the books of accounts maintained by the company under SAP environment. We are of the opinion that prima facie cost records have been maintained by the Company. We have not however made detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees'' State Insurance, Sales Tax, Income Tax, Service Tax, Duty of Customs, Duty of Excise, VAT, Cess and any other statutory dues, to the extent applicable, have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2016 for a period of more than six months from the date they become payable;

(b) According to the information and explanations given to us, the statutory dues which have not been deposited on account of disputes are given below: Name of Statue Nature of Dues Figures (in Rs,) Forum where dispute is pending

Labour laws Compensation Claim 1,87,65,930 Labour Court

Income Tax Act Income Tax/ Penalty for 5,72,81,720 Commissioner of Income Tax ( Appeal)/ various Financial Year Income Tax Appellate Tribunal/High Court

Central Excise Excise Duty/ Penalty/ 29,16,79,024 Commissioner Central Excise Director Tariff Act Interest General of Central Excise /Audit team of Central Excise Central Excis Service Tax Appellate Tribunal

Service Tax Service Tax/ Penalty/ 4,64,51,114 Commissioner of Central Excise / Deputy Interest Commissioner of Central Excise / Central ExciseServices Tax Appellate Tribunal

viii. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders as at the balance sheet date.

ix. The Company has not raised any money through initial public offer or further public offer. In our opinion and according to the information and explanations given to us, the term loans were applied for the purposes for which those are raised.

x. During the course of our examination of books and record of the company, carried out in accordance with the generally accepted auditing practice in India, and according to the information and explanations given to us, we have neither come across any instance or material fraud by the Company or on the Company by its officer or employee noticed or reported during the year, nor have been informed of any such case by the Management.

xi. The Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V of the Companies Act, 2013.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of clause (xii) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with provision of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statement as required under Accounting Standard (AS) 18, related Party Disclosure specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

xiv. The Company has not made any preferential allotment or private placement of shares or Fully or Partly Convertible Debenture during the year under review. Therefore, the provisions of clause (xiv) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or person connected with him. Therefore, the provisions of clause (xv) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act,1934. Therefore, the provisions of clause (xvi) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company.

FOR KHANDWALA & KHANDWALA

CHARTERED ACCOUNTANTS

FRN 107647W

M.M.KHANDWALA

PLACE: AHMEDABAD PARTNER

DATE : 28th May, 2016 M.NO.: 32472


Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

i. The Company does not have any pending litigations which would impact its financial position.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 33 to the financial statements.

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

Referred to in Paragraph 1 of the Report on Other Legal & Regulatory Requirements of Independent Auditor's Report of Even date

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report to the extent:

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

(b) Fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable.

ii. (a) As explained to us, inventories have been 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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

iii. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has granted loans, secured or unsecured, to its two subsidiary Companies listed in the register maintained under Section 189 of the Companies Act, 2013.

(b) In respect of aforesaid loans, the Company has not charged interest on loan given to subsidiaries, other terms and conditions of loan given by the Company are prima facie not prejudicial to the interest of the Company.

(c) The said interest free loan given to subsidiaries of the Company is repayable on demand.

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

v. The Company has not accepted any deposits from the public covered under the provision of Section 73 to 76 of the Companies Act, 2013 and the rules framed there under to the extent notified.

vi. The Central Government has prescribed maintenance of cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended by sub Section (1) of Section 148 of the Companies Act, 2013. We have broadly reviewed the books of accounts maintained by the Company under SAP environment. We are of the opinion that prima facie cost records have been maintained by the Company. We have not however made detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the information & explanations given to us and the records of the Company examined by us, in our opinion, undisputed statutory dues including Provident Fund, Employees' State Insurance, Sales Tax, Income Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues, to the extent applicable, have been generally regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31,2015 for a period of more than six months from the date they become payable;

(c) According to the information and explanations given to us, the statutory dues which have not been deposited on account of disputes are given below:

Name of Statute Nature of Dues Figures (in Rs.) Forum where dispute is pending

Central Excise Custom Duty 99,78,587 Directorate of Revenue Tariff Act Intelligence (DIR)

Labour Laws Compensation Claim 1,76,44,659 Labour Court

d) According to the information and explanations given to us, there is no amount required to transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 and Rules made there under has been transferred to such fund within time.

viii. The Company does not have any accumulated loss and has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

ix. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to financial institution, bank or debenture holders as at the balance sheet date.

x. According to the information and explanations given to us, the Company has given guarantees for loan taken by Subsidiary Companies from a bank or financial institution. The terms and condition whereof in our opinion are not prima facie prejudicial to the interest of the Company.

xi. According to the information and explanation given to us, all term loans obtained are used for the purpose for which they have been obtained other than temporary deployment pending application.

xii. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

FOR KHANDWALA & KHANDWALA CHARTERED ACCOUNTANTS FRN 107647 W M. M. KHANDWALA PLACE : AHMEDABAD PARTNER DATE : 22nd MAY, 2015 M. NO.: 32472


Mar 31, 2014

We have audited the accompanying financial statements of Meghmani Organics Limited, which comprise the Balance Sheet as at March 31, 2014, 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 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 read with the General Circular 15/2013 dated 13th September 2013 of Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on 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 material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s Internal Control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, We give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the order.

Report on Other Legal and Regulatory Requirements

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

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

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

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of 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 March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

ANNEXURE TO AUDITOR''S REPORT

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report to the extent:

1. (a) The company has maintained records under SAP showing full particulars including quantitative details and

situation of its fixed assets.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

2. (a) As explained to us, inventories have been 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 are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has granted loans, secured or unsecured, to three Subsidiaries Companies, listed in the register maintained under Section 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstanding at anytime during the year is Rs. 11,19,44,047/- and year-end balance is Rs. 10,47,55,650/-.

(b) In our opinion and according to the information and explanation given to us the company has not charged interest on loan given to Subsidiaries. The other loans are interest free and rate of interest and other terms and conditions of loan given by the company are prima facie not prejudicial to the interest of the Company.

(c) The said interest free loan given to the Subsidiaries of the company is repayable on demand.

(d) In respect of the loan given by the company, no overdue amount arises as the loans are repayable on demand.

(e) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year Company has taken unsecured loan of Rs. 7,00,00,000/- from Meghmani Finechem Limited, a subsidiary company, listed in the register maintained under Section 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstanding at anytime during the year is Rs. 32,04,25,584/- and year-end balance is Rs. NIL.

(f) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions of loan taken by the company are prima facie not prejudicial to the interest of the Company.

(g) As informed to us, company is regular in repayment of principal amount and interest as per terms.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventories, fixed assets, payment for expenses and for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be mainta -ined under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for items stated to be of specialized nature where no comparison is possible.

6. The Company has not accepted any deposits from the public covered under Section 58A and 58AA of the Companies Act, 1956.

7. The company has appointed a firm of Chartered Accountants as Internal Auditors. In our opinion the system of internal audit is commensurate with its size and the nature of its business.

8. The Central Government has prescribed maintenance of cost records vide Notification F/52/26/CAB-2010 dated 24th January 2012 issued by Government of India, in respect of product of the Company. We have broadly reviewed the books of accounts maintained by the company under SAP environment. We are of the opinion that prima facie records have been maintained. We have not however made detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including, Provident Fund, Investor Education Protection Fund, Employers'' State Insurance, Income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues as applicable to it with the appropriate authorities. According to the information given to us, no undisputed amount payable in respect of aforesaid statutory dues were outstanding as at 31st March, 2014 for the period more than six months from the date they become payable.

(b) According to the information and explanations given to us, the statutory dues which have not been deposited on account disputes are given below:

Name of Statute Nature of Dues Figures (in Rs.)

Income Tax Income Tax/ Penalty for Various 6,45,90,593 Financial Years 2000-2001, 2002-2003 to 2008-2009

Central Excise Excise Duty/ Penalty/ Interest 3,87,26,873 Tariff Act

Service Tax Service Tax/ Penalty/ Interest 2,81,86,979

Labour Laws Compensation Claims 1,76,65,351

Value Added Tax Input Tax Credit 2,29,13,312

Name of Statute Forum where dispute is pending

Income Tax Commissioner of Income Tax (Appeal)/Income Tax Appellate Tribunal/High Court

Central ExciseTariff Act Commissioner of Central Excise /Director General of Central Excise/ Audit Team of Central Excise / Central Excise Services Tax Appellate Tribunal

Service Tax Commissioner of Central Excise / Deputy Commissioner of Central Excise/Central Excise Services Tax Appellate Tribunal

Labour Laws Labour Court

Value Added Tax The Joint Commercial Tax Appeals

10. The Company does not have any accumulated loss and has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

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

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not trading in Shares, Mutual funds and other Investments. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

15. According to the information and explanations given to us, the Company has given guarantees for loan taken by Subsidiary Companies from a bank or financial institution. The terms and condition whereof in our opinion are not prima facie prejudicial to the interest of the Company.

16. According to the information and explanation given to us, all term loans obtained are used for the purpose for which they have been obtained.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor we have been informed of such case by the management.

FOR KHANDWALA & KHANDWALA

CHARTERED ACCOUNTANTS

FRN 107647 W

M. M. KHANDWALA

PLACE: AHMEDABAD PARTNER

DATE : 23rd MAY, 2014 M. NO.: 32472


Mar 31, 2013

We have audited the accompanying financial statements of MEGHMANI ORGANICS LIMITED, which comprise the Balance Sheet as at 31st March, 2013 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 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. 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 mis-statement, whether due to fraud or error.

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 mis-statement.

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 material mis-statement 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 audit 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 31st 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 the year ended on that date.

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards 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, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO AUDITOR''S REPORT

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

1. (a) The company has maintained records under SAP showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

2. (a) As explained to us, inventories have been 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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has granted loans, secured or unsecured, to Four Subsidiaries Companies, listed in the register maintained under Section 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstanding at anytime during the year is Rs. 23,18,50,572/- and year-end balance is Rs.12,74,10,002/-

(b) In our opinion and according to the information and explanation given to us the Company has charged interest on loan given to PT Meghmani Organics Indonesia and Meghmani Overseas FZE Dubai. The other loans are interest free and rate of interest and other terms and conditions of loan given by the Company are prima facia not prejudicial to the interest of the Company.

(c) The said interest free loan given to the Subsidiaries of the Company is repayable on demand.

(d) In respect of the loan given by the Company, no overdue amount arises as the loans are repayable on demand.

(e) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year the Company has taken unsecured loan of Rs. 46,13,00,000/- from Meghmani Finechem Limited, a subsidiary company, listed in the register maintained under Section 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstanding at anytime during the year is Rs. 46,13,00,000/- and year-end balance is Rs. 30,51,91,165/-.

(f) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions of loan taken by the Company are prima facie not prejudicial to the interest of the Company.

(g) As informed to us, the Company is regular in repayment of principal amount and interest as per terms.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventories, fixed assets, payment for expenses and for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for items stated to be of specialized nature where no comparison is possible.

6. The Company has not accepted any deposits from the public covered under Section 58A and 58AA of the Companies Act, 1956.

7. The Company has appointed a firm of Chartered Accountants as Internal Auditors. In our opinion the system of internal audit is commensurate with its size and the nature of its business.

8. The Central Government has prescribed maintenance of cost records vide Notification F/52/26/CAB-2010 dated 24th January, 2012 issued by Government of India, in respect of product of the Company. We have broadly reviewed the books of accounts maintained by the Company. We are of the opinion that prima facie records have been maintained. We have not however made detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including, Provident Fund, Investor Education Protection Fund, Employee''s State Insurance, Income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues as applicable to it with the appropriate authorities. According to the information given to us, no undisputed amount payable in respect of aforesaid statutory dues were outstanding as at 31st March, 2013 for the period more than six months from the date they become payable.

10. The Company does not have any accumulated loss and has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

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

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not trading in Shares, Mutual funds and other Investments. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

15. According to the information and explanations given to us, the Company has given guarantees for loan taken by Subsidiary Companies from a bank or financial institution. The terms and condition whereof in our opinion are not prima facie prejudicial to the interest of the Company.

16. According to the information and explanation given to us, all term loans obtained are used for the purpose for which they have been obtained.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

FOR M/S PATEL & KHANDWALA

CHARTERED ACCOUNTANTS

FRN 107647

W M. M. KHANDWALA

PLACE : AHMEDABAD PARTNER

DATE : 30th MAY, 2013 M. NO.: 32472


Mar 31, 2012

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

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

As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, a statement on the matters specified in paragraphs 4 and 5 of the said order is annexed thereto.

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

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

b) In our opinion proper books of accounts as required by the law have been kept by the Company so far as appears from our examination of the books of the Company:

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

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

e) On the basis of the written representations received from the directors as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the director 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.

In our opinion and to the best of our information and according to the explanations given to us, the account read in conjunction with the notes and schedules attached thereto, give the information required under the Companies Act, 1956 in the manner so required and present a true and fair view :-

i. In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2012

ii. In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date AND

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

ANNEXURE TO AUDITORS' REPORT

i. (a) The Company has maintained division wise records of fixed assets under SAP to show full particulars including quantitative details and situation of fixed assets.

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

(c) The Company has not disposed of substantial part of the fixed assets during the year.

ii. (a) The inventories have been physically verified during the year by the management. Inventory with third parties at year end have been verified by the management with reference to confirmations or statement of accounts or correspondence of third parties or subsequent receipt of the goods.

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

(c) The Company is maintaining proper records of the inventories and no serious discrepancies have been noticed on physical verification of inventories as compared to the book record.

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

(a) The Company has given loan to Four Subsidiaries. In respect of the said loans, the maximum amount outstanding at anytime during the year is Rs. 545,033,287 and year-end balance is Rs. 191,967,467.

(b) In our opinion and according to the information and explanations given to us, the Company has charged interest on Loan given to PT Meghmani Organics Indonesia, Meghmani Chemtech Limited and Meghmani Europe 8V8A. The other Loans are interest free and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(c) The said interest free loan given to the Subsidiaries and Associates of the Company is repayable on demand.

(d) In respect of the loan given by the Company, the same is repayable on demand and therefore the question of overdue amount does not arise.

(e) The Company has not taken unsecured loans from the companies/firms or other parties covered In the register maintained under Section 301 of the Companies Act, 1956. Therefore Sub-clause (f) and (g) are not applicable.

iv. In our opinion and according to the information and explanations given to us during the course of our audit, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of Inventory, fixed assets and for sale of goods. We have not observed any major weaknesses in internal control system established by the Company.

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

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for items stated to be of specialized nature, where no comparison is possible.

vi. The Company has not accepted deposits from the public and therefore the directives issued by the Reserve Bank of India and provisions of Section 58-A and Section 58 AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under do not apply to the Company.

vii. The Company has appointed a firm of Chartered Accountants as Internal Auditors. In our opinion the system of internal audit is commensurate with size and nature of the business of the Company.

viii. The Central Government has prescribed maintenance of Cost records under section 209(1)(d) of the Companies Act 1956, in respect of insecticides product of the Company. We have broadly reviewed the books of accounts maintained by the Company, in this connection and are of the opinion that prima facie records have been maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including, Provident Fund, Investor Education Protection Fund, Employees' State Insurance, income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess, and any other statutory dues as applicable to it with the appropriate authorities. Through there has been delay in some cases of Provident Fund and Professional Tax payments, which were not in areas at the end of the year. According to the information and explanations given to us, no undisputed amount payable in respect of Income Tax, Sales Tax, VAT, Wealth tax, Custom Duty, Service Tax and Excise Duty, were outstanding at the period end for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, the statutory dues which have not been deposited on account of disputes are given below.

Name of Statute Nature of Dues Figures in Rs. Income Tax Act. Income Tax/Penalty for various 80,242,733 Financial Years 1999-2000 to 2006-2007

Central Excise Excise Duty (Financial Year 63,939,585 Traiff Act. 2007-2008 to 2010-2011)

Labour Laws Compensation Claims 10,196,217

Value Added Tax Input Tax Credit 45,82,628



Name of Statute Forum where Dispute is pending

Income Tax Act. Commissioner of Income Tax(Appeal)/ Income tax Appellale Tribunal/High Court

Central Excise Commissioner of Central Excise/ Director General of Central Excise/ Audit team of Central Excise/Central Excise Service tax Appellate Tribunal

Labour Laws Labour Court

Value Added Tax The Joint Commercial Tax Commissioner Appeal 1

x. In our opinion, the company has no accumulated losses at the end of the financial year. The Company has not incurred any cash losses in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution of bank or Debentures holders.

xii. According to information and explanations 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.

xiii. In our opinion the Company is not a chit fund or a nidhi/mutual benefit fund/society. The provisions of nidhi/mutual benefit fund/societies are not applicable to the company.

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

xv. According to information and explanation given to us, the company has given guarantee for loans taken by Subsidiary Company from Bank. The terms and conditions where of in our opinions are not prima facie prejudicial to the interest of the Company.

xvi. According to information and explanation given to us, the term loans obtained by the company is used for the purpose for which it is obtained.

xvii. The Company has not utilized any funds raised on short term basis for long term investments.

xviii. According to information and explanation given to us, the company has not made any preferential allotment of any shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. According to information and explanation given to us, the company has not issued debentures during the year.

xx. The company has not raised any money by public issues during the year.

xxi. According to information and explanation given to us, no fraud on or by Company has been noticed or reported during the year ended on 31 March, 2012.

For M/S PATEL & KHANDWALA

CHARTERED ACCOUNTANTS

FRN - 107647W

M.M. KHANDWALA

PARTNER

Membership No. 32472

Place: Ahmedabad

Date: 25.05.2012

 
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