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Auditor Report of Orient Paper & Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Orient Paper & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 effectiveness of such controls. An audit also includes evaluating the appropriateness of 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 financial statements.

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 of the state of affairs of the Company as at March 31, 2015, of its loss, and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to note 35 regarding non provision of water tax demand amounting to Rs.37248.55 lacs (including interest and penalty of Rs. 35835.62 lacs) against which the Company has filed writ petition with the Hon''ble High Court and obtained an interim stay on the recovery, as more fully described therein. Pending final decision in the matter, its impact on the financial statements is presently not ascertainable and accordingly no adjustments are considered necessary at this stage.

Our opinion is not qualified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

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

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 it 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 aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

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

(f) The matter described under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company, in case of an unfavourable decision;

(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 has disclosed the impact of pending litigations on its financial position in its financial statements - Refer note 34, 35 and 37 to the financial statements;

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.

Annexure to the Independent Auditors'' Report

(Referred to in our report of even date to the members of Orient Paper & Industries Limited as at and for the year ended 31st March, 2015)

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of Rs.735.46 lacs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. FIs informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non-verification of fixed assets for the reasons mentioned above.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of Rs.32.90 lacs at Brajrajnagar unit, due to suspension of production activities.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in (a) above.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us and having regard to the explanation that purchases of some of the items of inventories and certain fixed assets are of a proprietary nature for which alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) The Company has not accepted any deposit from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriate

authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales- tax, wealth-tax, service tax, custom duty, excise duty, value added tax, cess and other material statutory dues applicable to it though there have been slight delays in few cases and also certain payments are not yet made as indicated in (b) below:

(b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, wealth- tax, service tax, sales-tax, customs duty, excise duty, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable are as follows:

name of the nature of Amount Period to Due Date Date of statute the Dues (Rs. in which the Payment lacs) amount relates

Orissa Industrial 25.32 1996-97 Beginning Not yet Municipal Licence to of the Paid Act Fees 2013-14 respective years

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty, value added tax & cess on account of any dispute, are as follows :-

Central Disallowance of 1979-83, 435.42 Deputy/Assistant Excise and Cenvat credit 1986-98, Commissioner/ Customs on inputs and 2000-2014 Commissioner/ Act, 1944 capital goods High Court/ CESTAT

Inclusion of 1994-96 10.99 Dy. Commissioner/ interest in Commissioner Assessable value

Disallowance 1976-77 149.06 Deputy Commissioner of refund on to post manu 1983-84 -facturing expenses of paper

Differential 1975 to 81.74 Asst Commissioner/ duty on manu 1977, 1978 Deputy -facture of to 1985, Commissioner/ paper/ duty on 1993-97, Commissioner various inputs 2000-01, Appeals/Fddl. due to 2002-03 Commissioner/ difference in & 2005-07 Jt. Commissioner classification/ Duty on shortage /excess etc.

MP Sales Demand with 1998-99, 54.23 Deputy Commissioner Tax Fct, respect to 2000-02 & Fppeals/Fppellate 1961/ disallowance of 2005-06 Board/ Central cash discount, High Court Sales Tax levy of higher Act 1956 rate of purchase tax, difference in classification of goods etc.

Other Sales tax on Various 262.41 Asst. Commissioner/ State/ stock transfer/ Deputy Central export sales, non Commissioner/ Sales Sales Tax submission of Tax officer / Sales Acts forms, penalty Tax Appellate etc. Tribunal/ High court/ Supreme Court

Income Disallowance of 2005-06 to 163.54 Commissioner Tax Act, certain 2012-13 (Appeals) 1961 Expenditure, Tax deducted at source & Interest thereon

M.P Upkar Energy develop 2001-2002 4,925.53 Supreme Court Adhinium, -ment cess on to 2004 consumption of 2011-12 Captive power including surcharge

(d) According to the information and explanations given to us, the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

(viii) The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash loss in the current year and in the immediately preceding financial year.

(ix) Based on our audit procedures and as per 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 institutions, banks or debenture holders.

(x) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions

(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no material fraud on or by the Company has been noticed or reported during the year.

For S.R. BRTLIBOI & Co. LLP Chartered Accountants Firm Registration Dumber: 301003E

per Raj Agrawal Place: Dew Delhi Partner Date: 11th May, 2015 Membership Dumber: 82028


Mar 31, 2014

We hove audited the accompanying financial statements of Orient Paper & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 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 financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Recounting Standards notified under the Companies Ret, 1956 read with General Circular 8/2014 dated 4 Rpril 2014, issued by the Ministry of Corporate Rffairs. 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.

Hn 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 entity''s internal control. Hn 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.

Basis For qualified opinion

Rs stated in Rote 35, no provision has been mode tor Water Tax demand amounting to ^35908.15 lacs (including interest and penaltg) since the Compang''s application tor waiver thereof is under consideration bg the Government of Madhga Pradesh Had the above liability been considered, there would have been a loss of ^Z3Z79.33 lacs (after considering tax impact) as against the reported profit of ^4Z3.64 lacs and reserves & surplus as at the balance sheet date would have been ^1754Z. 79 lacs as against the reported figure of f 4IZ45.76 lacs

Our audit opinion on the financial statements for the previous gear was also gualified in respect of the above matter

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter stated in the Basis for Qualified Opinion paragraph the financial statements give the information required by the Hct 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 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. Hs required by the Companies (Huditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4H) of section 227 of the Hct, we give in the Hnnexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. Hs required by section 227(3) of the Hct, we report that:

(a) We hove 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) Except for the matter stated in the Basis tor Qualified Opinion paragraph, in our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Recounting Standards notified under the Companies Hct, 1956 read with General Circular 8/2014 dated 4 Rpril 2014 issued by the Ministry of Corporate Affairs;

(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 Hct, 1956.

Annexure to the Independent Auditors'' Report

(Referred to in our report oF even dote to the members oF Orient Paper 6 Industries Limited os ot ond For the year ended 31st March, 2014)

(i) (a) The Company has maintained proper records showing Full particulars, including quantitative details and situation oF Fixed assets.

(b) HII Fixed assets have not been physically verified by the management during the year but there is a regular programme oF verification (except for assets ot the written down value ot Rs.931.78 lacs at Brajrajnagar unit due to suspension of production activities) which, in our opinion, is reasonable having regard to the size oF the Company and the nature oF its assets. Hs informed, no material discrepancies were noticed on such verification. However, discrepancies if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of ^3Z.90 lacs at Brajrajnagar unit due to suspension of production activities

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in (a) above.

(iii) (a) Recording to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Hct, 1956. Accordingly, the provisions of clause 4 (iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon.

(b) Recording to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Hct, 1956. Accordingly, the provisions of clause 4 (iii) (e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of some of the items of inventories and certain fixed assets are of proprietary nature for which alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) Recording to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Hct, 1956 that need to be entered into the register maintained under the above section, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Hct, 1956 in respect of paper, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty and other material statutory dues applicable to it though there have been slight delays in few cases and also certain payments are not yet made as indicated in (b) below.

(b) Recording to the information and explanations given to us, undisputed amounts pagable in respect of provident Fund, investor education and protection fund, empiogees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom dutg excise dutg, cess and other material statutorg dues outstanding at the gear end for a period of more than six months from the date theg became pagable, are as follows :-

Nameof the Staute : Orisso Municipal Act

Nature of the Due : Industrial Licence Fees

Amount in lacs : 23.92

Period to which the : 1996-97 to 2012-13 amount relates

Due Date : Beginning of the respective years.

Date of Payment : not yet Paid

(c) Recording to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :-

Name of the Statute Nature of the Dues Period to which the amount relates

Central Excise and Disallowance of Cenvat credit 1979-83, Customs Ret, 1944 on inputs and capital goods 1986-98,2000-2010

Disallowance on cenvat credit 2004-05 to 2007-08, on various input services 2010-11 & 2011-12 Inclusion of interest in 1994-96 Assessable value

Disallowance of refund on 1976-77 to 1983-84 post manufacturing expenses of paper

Differential duty on 1975 to 1977,1978 manufacture of paper/ duty to 1985,1993-97, on various inputs due to 2000-01, 2002-03 & difference in classification/ 2005-07 Duty on shortage /excess etc. classification/ Duty on shortage /excess etc.

MP Sales Tax Demand with respect 1998-99, 2000-02 & Rct,1961/Central to disallowance of cash 2005-06 Sales Tax ACt discount, levy of higher rate 1956 of purchase tax, difference in classification of goods etc.

Other State/Central Sales tax on stock transfer/ Various Sales Tax Act export sales, non submission of forms, penalty etc.

Income Tax Tax deducted at source & 2006-07 to 2008-09 Act,1961 interest thereon MP. Upkar Energy development cess 2001-2002 to 2011-12 Rdhinium, 2004 on consumption of Captive power including surcharge

Name of the Statute Amount In Lacks Forum where dispute is Pending

Central Excise and 347.58 Deputy/Rssistant Customs Act 1944 Commissioner / Commissioner/ High Court/ CESTRT 29.03 Deputy/Rssistant

Commissioner / Commissioner 10.99 Dy. Commissioner/ Commissioner

149.06 Deputy Commissioner

78.74 Asst Commissioner/ Deputy Commissioner/ Commissioner Appeals/Rddl. Commissioner/ Jt. Commissioner

MP Sales Tax 59.28 Deputy Commissioner Act 1961 / Central Appeals/Rppellate Board/ Sales Tax Act 1956 High Court

Other State/ Central 205.75 Asst. Commissioner/ Sales Tax Act Deputy Commissioner/ Sales Tax officer / Sales Tax Appellate Tribunal/ High court/ Supreme Court

Income tax Act 1961 24.89 Commissioner (Rppeals) M.P.Upkar 4,173.56 Supreme Court Adhinium 2004

(x) The Company has no occumuloted losses ot the end of the Financial year without considering the impact ot the matter sated in the Basis for Qualified Opinion paragraph. The Company has not incurred cash loss in the current year but it had incurred cash loss in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any bank and financial institutions. Further, the Company did not have any outstanding debentures during the year.

(xii) Recording to the information and explanations given to us and based on the documents and records produced 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.

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

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

(xv) Recording to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

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

(xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Ret, 1956.

(xix)The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BRTLIBOI 6 Co. LLP Chartered Accountants Firm Registration Plumber: 301003E

per Raj Rgrawal Place: Flew Delhi Partner Date: 8th May, 2014 Membership Plumber: 82028


Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Orient Paper & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

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 accounting principles generally accepted in India, including 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 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 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.

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.

BASIS FOR QuALIFIED OPINION

As stated in to Note 38, no provision has been made for Water Tax demand amounting to Rs. 28030.34 lacs (including interest and penalty) since the Company''s application for waiver thereof is under consideration by the Government of Madhya Pradesh. Had the above liability been considered, loss for the year would have been Rs. 22159.39 lacs (after considering tax impact) as against the reported loss of Rs. 3223.49 lacs and reserves & surplus as at the balance sheet date would have been Rs. 22861.65 lacs as against the reported figure of Rs. 41797.55 lacs.

Our audit opinion on the financial statements for the previous year was also qualified in respect of the above matter.

QuALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of the matter stated 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 March 31, 2013;

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

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

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 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 subsection (3C) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956.

(Referred To In Our Report Of Even Date To The Members Of Orient Paper & Industries Limited As At And For The Year Ended 31St March, 2013)

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

(b)All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of Rs. 1150 lacs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of Rs. 32.90 lacs at Brajrajnagar unit, due to suspension of production activities.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in (a) above.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (a) to

(d) of the Order are not applicable to the Company and hence not commented upon.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of some of the items of inventories and certain fixed assets are of proprietary nature for which alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services.. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

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

(b) I n our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of paper, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty and other material statutory dues applicable to it though there have been slight delays in few cases and also certain payments are not yet made as indicated in (b) below.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues outstanding at the year end for a period of more than six months from the date they became payable, are as follows :-

Name of the Nature of the Amount (Rs in Period to which statute dues lacs) the amount relates

Orissa Municipal Industrial Licence 22.51 1996-97 to 2011- Act Fees 12

Electricity Duty Interest on duty 74.43 1998-99 to 2009- Act (Orissa) payable on own 10 generation of power

Name Due Date Date of Payment

Orissa Municipal Beginning of the Not yet Paid respective years

Electricity Duty Subsequent Not yet Paid month after accrual

(c) According to t he records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :-

Name of the Nature of dues Period to which the statute amount relates

Central Excise and Disallowance of Cenvat credit 1979-83, Customs Act, 1944 on inputs and capital goods 1986_98 2000.2010

Disallowance on cenvat credit 2004-05 to 2007-08, on various input services 2010-11

Inclusion of interest in 1994-96 Assessable value

Disallowance of refund on post 1976-77 to 1983-84 manufacturing expenses of paper

Differential duty on 1975 to 1977, 1978 manufacture of paper/ duty to 1985, 1993-97, on various inputs due to 2000-01, 2002-03 & difference in classification/ 2005-07 Duty on shortage / excess etc.

MP Sales Tax Demand with respect to 1998-99, Act,1961/ Central disallowance of cash discount, 2000-02 & 2005-06 Sales Tax Act 1956 levy of higher rate of purchase tax, difference in classification of goods etc.

Other State/ Central Sales tax on stock transfer/ Various Sales Tax Acts export sales, non submistion of forms, penalty etc.

Income Tax Tax deducted at source & 2006-07 to 2008-09 Act,1961 interest thereon

M.P. Upkar Energy development cess 2001-2002 to Adhinium, 2004 on consumption of Captive 2011-12 power including surcharge

Name Amount (Rs Forum where dispute is in lacs) pending

Central Excise 310.48 Deputy/Assistant Commissioner / Commissioner/ High Court/ CESTAT

30.26 Deputy/Assistant Commissioner / Commissioner

10.99 Dy. Commissioner/ Commissioner 149.06 Deputy Commissioner

41.19 Asst Commissioner/ Deputy Commissioner/ Commissioner Appeals/Addl. Commissioner/ Jt. Commissioner 59.28 Deputy Commissioner Appeals/Appellate Board/ High Court

234.45 Asst. Commissioner/ Deputy Commissioner/ Sales Tax officer / Sales Tax Appellate Tribunal/ High court/ Supreme Court

2,632.27 Commissioner (Appeals)

3,537.17 Supreme Court

(x) The Company has no accumulated losses at the end of the financial year. The Company has incurred cash loss in the current year but it had not incurred cash loss in the immediately preceding financial year.

(xi) Based on our audit procedures and as per 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 institutions, banks or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced 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.

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

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

(xv) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that Rs. 11335 lacs raised on short term basis have been used for long- term investment (without considering permanent capital) representing mainly acquisition of fixed assets.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company had created security in respect of debentures issued in earlier years. The said debentures have been transferred to another Company under a scheme of arrangement approved by Hon''ble High Court of Orissa.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI & CO. LLP

Chartered Accountants

Firm Registration Number: 301003E

per Raj Agrawal

Place: New Delhi Partner

Date: 8th May, 2013 Membership Number: 82028


Mar 31, 2012

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

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

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) 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. As stated in to Note No.40, no provision has been made for Water Tax demand amounting to Rs.21879.32 lacs (including interest and penalty) since the Company's application for waiver thereof is under consideration by the Government of Madhya Pradesh. Had the above liability been considered, profit for the year would have been Rs. 6447.01 lacs (after considering tax impact) as against the reported profit of Rs. 21227.58 lacs and reserves & surplus as at the balance sheet date would have been Rs.95027.79 lacs as against the reported figure of Rs.109808.36 lacs.

In respect of above, the previous year's audit report was similarly modified.

5. Further to our comments in the Annexure referred to above :-

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

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

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

iv) In our opinion, the Balance Sheet, the Statement of Profit & Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

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

vi) In our opinion and to the best of our information and according to the explanations given to us, the said statements of account, except for the possible impact of our comments on the matter stated in para

(4) above, 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, 2012;

ii) in the case of the Statement of Profit & Loss, of the profit of the Company 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 our report of even date to the members of orient paper & industries limited as at and for the year ended 31st march, 2012)

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

b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of Rs.1416.86 lacs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

c) There was no disposal of a substantial part of fixed assets during the year.

ii) a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of Rs.32.90 lacs at Brajrajnagar unit, due to suspension of production activities.

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

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in

(a) above.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (a) to (d) of the Order are not applicable to - the Company and hence not commented upon.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (e) to (g) of the Order are not applicable to the Company and hence not commented upon.

iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items purchased are of a proprietary nature and alternate sources do not exist for obtaining quotations thereof, it appears that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposit from the public.

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

viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of paper, cement, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

ix) a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty and other material statutory dues applicable to it though there have been slight delays in certain cases and also certain payments are not yet made as indicated in (b) below.

b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues outstanding at the year end for a period of more than six months from the date they became payable, are as follows :

Name of the statute Nature of the Amount Period to which the Due Date Date of Payment dues (Rs in lacs) amount relates

Orissa Municipal Act Industrial Licence 21.10 1996-97 to Beginning of the Not yet Paid Fees 2010-11 respective years

Electricity Duty Act (Orissa) Interest on duty payable 74.43 1998-99 to Subsequent Not yet Paid on own generation of power 2009-10 month after accrual

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :

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

Central Excise and Disallowance of Cenvat credit 1979-83, 778.08 Deputy/ Assistant Commissioner/ Customs Act, 1944 on inputs and capital goods 1986-98, Commissioner /High

2000-2010 Court/ CESTAT

Inclusion of interest in Assessable value 1994-96 10.99 Dy. Commissioner/ Commissioner

Disallowance of refund on post 1976-77 to 149.06 Deputy Commissioner manufacturing expenses of paper 1983-84

Differential duty on manufacture of 1975 to 1977, 47.49 Asst Commiss -ioner/ Deputy paper/ duty on various inputs due to 1978 to 1985, Commissioner/ Commissioner difference in classification/ Duty on 1993-97, 2000-01, Appeals/Addl. Commissioner/ shortage /excess etc. 2002-03 & 2005-07 Jt. Commissioner

A. P. Sales Tax/AP Vat Act/ Demand on second sales and freight 1983-85, 1990-91, 282.23 Asst. Commissioner/ Appellate Central Sales Tax Act, 1956 charges realized separately by raising 1993-94 to Dy. Commissioner/ Sales Tax Appellate debit invoices and other matters 2004-05 & 2009-10 Tribunal/ High Court.

MP Sales Tax Act, 1961/ Demand with respect to disallowance of 1998-99, 59.27 Deputy Commissioner Appeals/ Central Sales Tax Act 1956 cash discount, levy of higher rate of 2000-02 & 2005-06 Appellate Board/High Court purchase tax, differ -ence in classific ation of goods etc.

Other State /Central Sales Tax Acts Sales tax on stock transfer/ export sales, Various 212.51 Asst. Commiss ioner/ Deputy non submission of forms, penalty etc. commissioner/ Sales Tax officer/Sales Tax Appellate Tribunal/ High court/ Supreme Court

Income Tax Act,1961 Tax deducted at source & interest thereon 2006-07 to 2008-09 2,699.77 Commissioner (Appeals)

M.P. Upkar Adhinium, 2004 Energy development cess on consumption 2001-2002 to 3,090.61 Supreme Court of Captive power including surcharge 2011-12

x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year and in the immediately preceding financial year.

xi) Based on our audit procedures and as per 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 institutions, banks or debenture holders.

xii) According to the information and explanations given to us and based on the documents and records produced 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.

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

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

xv) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

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

xviii) The Company has made preferential allotment of shares to a company covered in the register maintained under section 301 of the Companies Act, 1956. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company.

xix) According to the information and explanations given to us, the Company had created security in respect of debentures issued in earlier years and outstanding during the year.

xx) The Company has not raised any money through a public issue during the year.

xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI & CO.

Firm Registration Number : 301003E

Chartered Accountants

per Raj Agrawal

Place : New Delhi. Partner

Date : 2nd May,2012 Membership No. 82028


Mar 31, 2010

1. We have audited the attached Balance Sheet of ORIENT PAPER & INDUSTRIES LIMITED, as at 31st March, 2010 and also the Profit & 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 the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) 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. Attention is drawn to Note No.8 on Schedule 24 regarding non disclosure of Companys proportionate interest in the Joint Ventures assets, liabilities, income, expenses etc. for the reasons mentioned therein which, however, is not in compliance with the disclosure requirement of Accounting Standard-27 notified under the Companies Accounting Standards Rules, 2006 but does not have any impact on the profit for the year.

In the previous year, our report was similarly modified for the above.

5. Without qualifying our report, attention is drawn to Note. No.9 on Schedule -24 regarding demand on account of Water Tax which is under reconsideration by the Madhya Pradesh State Government.

6. Further to our comments in the Annexure referred to above:-

(i) We have obtained all the information and explanations, subject to para 4 above, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(ii) 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;

(iii) The Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, except for the matter referred to in para 4 above

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

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said statements of account, 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, 2010;

(ii) in the case of Profit & Loss Account, of the profit of the Company 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

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

(c) There was no substantial disposal of fixed assets during the year

(ii) (a) The management has conducted physical verification of nventory at reasonable intervals during the year except for Brajrajnagar unit, due to suspension of production activities.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of stocks for the reasons mentioned in (a) above.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, clauses iii (b) to (d) of the Order are not applicable

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, clauses iii (f) & (g) of the Order are not applicable

iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items purchased are of a special nature and alternate sources do not exist for obtaining quotations thereof, it appears that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financia year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time

(vi) The Company has not accepted any deposit from the public

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Centra Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of paper, cement, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company has been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income- tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other statutory dues with appropriate authorities though there had been slight delays in certain cases and also certain payments are not yet made as indicated in (b) below.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding at the year end for a period of more than six months from the date they became payable, are as follows:

Name of the statute Nature of Amount Period to Due Date Date of

the dues (Rs in lacs) which the Payment

amount relates

Orissa Municipal Act Industrial Licence Fees 18.29 1996-97 to Beginning of the

2008-09 respective years Not yet Paid

Electricity Duty Act (Orissa) Interest on duty payable 73.64 1998-99 to Subsequent month

on own generation of power 2009-10 after accrual Not yet Paid

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :-

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per 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 institutions, banks or debenture holders

(xii) According to the information and explanations given to us and based on the documents and records produced 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.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutua benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

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

(xv) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

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

(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company had issued 50 and 25 debentures of Rs.100 lacs each. The Company has created security/ charge in respect of the debentures issued

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. Batliboi & Co.

Firm Registration Number-301003E Chartered Accountants

Per Raj Agrawal

New Delhi Partner

4th May, 2010 Membership No. 82028

 
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