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Auditor Report of Oudh Sugar Mills Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of The Oudh Sugar Mills 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 judgements 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 misstatements, 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the 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 qualified audit opinion on the financial statements.

Basis for Qualified Opinion

As indicated in Note 14 to the financial statements, the Company has recognized Deferred Tax Asset (DTA) (net) of Rs. 12,904.91 lacs (including Rs. 3,777.71 lacs for the year) up to March 31, 2015, based on the future profitability projections made by the management. In our opinion, in the absence of virtual certainty about the above projections, as required in terms of Accounting Standard - 22, had the above impact been considered, loss for the year would have been Rs. 20,292.01 lacs (including DTA of Rs.. 9,001.60 lacs recognised up to March 31, 2014) as against the reported loss of Rs. 7,387.10 lacs and Reserves & surplus as at the balance sheet date would have been (-) Rs. 28,012.88 lacs as against the reported figure of (-) Rs. 15,107.97 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 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 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 40 to the financial statements, regarding significant losses leading to material uncertainty about the Company's ability to continue as a going concern and based on mitigating factor, as fully described therein, the accompanying financial statements have been prepared under the going concern assumption.

Report on Other Legal and Regulatory Reauirements

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 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) Except for the matter described in the Basis for Qualified Opinion paragraph, 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) Except for the matter described in the Basis for Qualified Opinion paragraph, 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) Except for the matter stated in the Basis for Qualified Opinion paragraph, 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) The matters discussed in the Basis for Qualified Opinion and Emphasis of matter paragraph above in our opinion, may have an adverse effect on functioning of the Company.

(f) 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;

(g) The qualification relating to the maintenance of accounts and the other matters connected therewith are stated in the Basis for qualified opinion paragraph above.

(h) 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 7 & 36 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(Referred to in our report of even date to the members of The Oudh Sugar Mills Limited as at and for the year ended 31st March, 2015)

(i) (a) The Company has maintained proper records showing full parti -culars, 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 which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(ii) (a) The management has conducted physical verification of inve -ntory at reasonable intervals during the year.

(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.

(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, 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. 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. There is no sale of services during the year.

(v) The Company has not accepted any deposits 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 in respect of its products 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.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection 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.

(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:-

Name of the statute Nature of dues Amount (Rs. in lacs)

Bihar Finance Act, 1981 Tax on sale of Alcohol 4.19 for non submission of declaration forms

U.P. Tax on Entry of Goods Interest demand on Entry 0.74 Act,2007_ Tax on Sugar_



Central Sales Tax Act, 1956 Central Sales Tax demand 16.00 on Stock transfer

Taxability on alcohol sale 10.46

Demand for Sales Tax 9.31 due to non submission of Declaration Forms_

Demand for VAT on sale of 12.35 country spirit and various other matter

Central Excise Act,1944 Disallowance of Cenvat 4,372.31 Credit on Certain inputs / capital items / input services

Excise Duty on burnt / waste 37.21 and loss on storage of molasses etc._

Demand towards 43.47 differential amount of sugar cess on duty paid stock_

State Act Administration Charges on 116.29 Molasses

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

Bihar Finance Act, 1981 1995-96 Appellate Tribunal, Patna

U.P. Tax on Entry of Goods 2008-09 Joint Commissioner Appeal Act, 2007



Central Sales Tax Act, 1956 1999- 00,1993-94, Joint Commissioner 1996-97 to 1997-98, High Court, Allahabad (Appeals) / 2007-08, 2008-09

1977-78 to 1981-82 High Court, Allahabad Bench Lucknow

2003-04, 2006-2007 Appellate Tribunal, Patna/ Lucknow

1985-86 to 1989-90, High Court, Lucknow, Tribunal,

2001- 02, 2006-2007, Lucknow, 1st appeal Sitapur,

2009-10 Hon'ble High Court, Patna

Central Excise Act,1944 2000-01 to 2014-15 Commissioner Appeal /CESTAT / High Court, Allahabad 1977-78, 1991-92, Commissioner (Appeals) / CESTAT 2002-03 to 2005-06 & / High Court, Allahabad

2010-11 2007-08 CESTAT

State Act 2009-10 Supreme court of India

(d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company in accordance with the relevant provisions of the Companies Act,1956 (1 of 1956) and rules made thereunder.

(viii) Without considering the consequential effects, if any, of the matter stated in the Basis for Qualified Opinion paragraph of our auditor's report, the Company's accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has 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 and banks or debenture holders.

(x) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from a bank, the terms and conditions whereof, in our opinion, are not prima- facie prejudicial to the interest of the Company. According to the informa -tion and explanations given to us, the Company has not given any guarantee for loans taken by others from other 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 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 Kamal Agarwal

Place : Kolkata Partner

Date : 07th May 2015 Membership Number: 58652


Mar 31, 2014

We have audited the accompanying financial statements of The oudh Sugar Mills 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 Accounting Standards notified under the Companies Act, 1956 read with General Circular 8/2014 dated 4th April 2014, issued by the Ministry of Corporate Affairs. 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 but not for the purpose of expressing an opinion on the effectiveness of the entity''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.

BASIS FOR QUALIFIED OPINION

As indicated in Note 14 to the financial statements, the Company has recognised Deferred Tax Asset (DTA) (net) of Rs. 9,001.60 lacs (including Rs. 2,862.64 lacs for the year) up to March 31, 2014, based on the future profitability projections made by the management. In our opinion, in the absence of virtual certainty about the above projections, as required in terms of Accounting Standard - 22, had the above impact been considered, loss for the year would have been 14,461.58 lacs (including DTA of Rs.6,138.96 lacs recognised up to March 31,2013) as against the reported loss of Rs. 5,459.98 lacs and reserves & surplus as at the balance sheet date would have been (-) Rs. 16,484.42 lacs as against the reported figure of (-) Rs. 7,482.82 lacs.

Our audit opinion on the financial statements for the previous period 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 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, 2014;

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

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

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) Except for the matter stated in the Basis for Qualified opinion paragraph, in our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with General Circular 8/2014 dated 4th April 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 Act, 1956.

Annexure to the Independent Auditors'' Report

(REFERRED To IN OUR REPORT OF EVEN DATE TO THE MEMBERS OF THE OUDH SUGAR MILLS LIMITED AS AT AND FOR THE YEAR ENDED 31 ST March, 2014)

(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 which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(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.

(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 physical verification.

(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 clauses 4 (iii) (a) to (d) of the Companies (Auditor''s Report) order, 2003 (as amended) are not applicable to the Company and hence not commented upon.

(b) According to 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 Companies (Auditor''s Report) order, 2003 (as amended) 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, 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. 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. There is no sale of services during the year.

(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 that need to be entered into the register maintained under Section 301, 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) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, the directives issued by the Reserve Bank of india and the provisions of Sections 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the rules framed thereunder, to the extent applicable, have been complied with by the Company. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii) 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 209(1) (d) of the Companies Act, 1956 in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company has generally 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 material statutory dues with appropriate authorities.

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

(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 and cess on account of any dispute are as follows :-

Name of the statute Nature of dues Amount (Rs. in lacs)

Bihar Finance Act, 1981 Tax on sale of Alcohol for non- 4.19 submission of declaration forms

U.P. Tax on Entry of Interest demand on Entry Tax on 0.74 Goods Act, 2007 Sugar

Central Sales Tax Central Sales Tax demand on 6.40 Act, 1956 Stock transfer

Taxability on alcohol sale 10.46

Demand for Sales Tax due to 9.31 non-submission of Declaration Forms

Demand for VAT on sale of 31.48 country spirit and various other matter

Central Excise Act, Disallowance of Cenvat Credit on 1065.02 1944 Certain inputs / capital items / input services

Excise Duty on burnt / waste and 39.09 loss on storage of molasses etc.

Demand towards differential amount 43.47 of sugar cess on duty paid stock





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

Bihar Finance Act, 1981 1995-96 Appellate Tribunal, Patna

U.P. Tax on Entry of 2008-09 Joint Commissioner Appeal Goods Act, 2007

Central Sales Tax 1999-00, 1993-94, Joint Commissioner Act, 1956 1996-97, 1997-98, (Appeals) / High Court, 2007-08, 2008-09 Allahabad

1977-78 to 1981-82 High Court Allahabad Lucknow Bench

2003-04, 2006-2007 Appellate Tribunal, Patna / Lucknow

1985-86 to 1989-90, High Court,Lucknow/ 2001-02, 2006-07, Patna, Tribunal, Lucknow, 2009-10 1st appeal Sitapur,

Central Excise Act, 2000-01 to 2013-14 Commissioner (Appeals) / CESTAT / high Court, Allahabad

1977-78, 1991-92, Commissioner (Appeals) / 2002-03 to 2005-06 CESTAT / high Court, & 2010-11 Allahabad

2007-08 CESTAT

(x) The Company''s accumulated losses at the end of the financial year are more than fifty percent of its net worth and it has incurred cash loss during the year. however, it has not incurred cash losses in the immediately preceding period.

(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) According to the information and explanations given to us and based on the documents and records produced before 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. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) order, 2003 (as amended) are not applicable to the Company.

(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 Companies (Auditor''s Report) order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from a bank, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from 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.24,336 lacs raised on short-term basis have been used for long-term investment (without considering permanent working capital) mainly towards acquisition of fixed assets and repayment of loans.

(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) 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. Batliboi & Co. LLP

Chartered Accountants Firm Registration Number: 301003E

per Bhaswar Sarkar Partner Membership Number: 55596

Place : Kolkata Date : 13th May, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of The Oudh Sugar Mills 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 nine months period then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The 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 the 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 indicated in Note 15 to the financial statements, the Company has recognized Deferred Tax Asset (DTA) (net) of Rs. 6,138.96 lacs (after adjusting reversal of Rs. 1,393.02 lacs during the period) up to March 31, 2013, based on the future profitability projections made by the management. In our opinion, in the absence of virtual certainty about the above projections, as required in terms of Accounting Standard - 22, had the above impact been considered, the reported profit of Rs.2,908.02 lacs for the period (after adjusting DTA of Rs. 7,531.98 lacs recognised up to June 30, 2012) would turn into a loss of Rs. 3,230.94 lacs and the reserves and surplus balance would be Rs.(-) 8,164.97 lacs as against the reported figure of Rs.(-) 2,026.01 lacs as on the balance sheet date.

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 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 profit for the period ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the period 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) except for the matter stated in the Basis for Qualified Opinion paragraph, 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.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(REFERRED TO IN OUR REPORT OF EVEN DATE TO THE MEMBERS OF THE OUDH SUGAR MILLS LIMITED AS AT AND FOR THE PERIOD ENDED MARCH 31, 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 period but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

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

(ii) a) The management has conducted physical verification of inventory at reasonable intervals during the period.

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 physical verification.

(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 clauses 4(iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon.

b) According to 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 clauses 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, 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 section 301 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 lacs entered into during the financial period, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(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 account 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 its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities except for Cane Purchase Tax of Rs.167.42 lacs relating to the sugar unit in Bihar which remains unpaid as on the Balance sheet date, pending disposal by the State Government of the representation made by the Bihar Sugar Mills Association for its remission.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty cess and other material statutory dues were outstanding, at the period end, for more than six months from the date they became payable.

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

Name of the statute Nature of dues Amount (Rs.in lacs)

Bihar Finance Tax on sale of Alcohol 4.19 Act, 1981 for non submission of declaration forms

U.P. Tax on Entry of Interest demand on Entry 0.74 Goods Act, 2007 Tax on Sugar

Central Sales Tax Central Sales Tax demand 6.17 Act, 1956 on Stock transfer

Taxability on alcohol sale 10.46

Demand for Sales Tax 3.36 due to non submission of Declaration Forms

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

Bihar Finance 1995-96 Appellate Tribunal, Patna

U.P. Tax on Entry of 2008-09 Joint Commissioner Appeal

Central Sales Tax 1993-94 & 2007- Joint Commissioner 08 (Appeals) / High Court, 1981 - High Court, Allahabad 82 Lucknow Bench

Name of the statute Nature of dues Amount (Rs in lacs)

Central Excise Act, Disallowance of Cenvat 1078.17 1944 Credit on Certain inputs /capital items /input services Excise Duty on burnt / 23.85 waste and loss on storage of molasses etc.

Demand towards differential 43.47 amount of sugar cess on duty paid stock

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

Central Excise Act 2001 -02 to 2011 - Commissioner 12 (Appeals)/CESTAT/ High Court, Allahabad

1992-93,2002- Commissioner 03 to 2005-06 & (Appeals)/CESTAT/

2010-11 High Court, Allahabad 2007-08 CESTAT

(x) The Company''s accumulated losses at the end of the financial year are more than fifty per cent of its net worth. The Company has not incurred cash loss in the current period 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 a financial institution and bank. Further, the Company did not have any outstanding debentures during the period.

(xii) According to the information and explanations given to us and based on the documents and records produced before 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. Therefore, the provisions of clause 4(xiii) of the Order, 2003 are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from a bank, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from 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 loans 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.20,587 lacs raised on short term basis have been used for long- term investment (without considering permanent capital) mainly towards acquisition of fixed assets.

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

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

(xx) The company has not raised any money by way of public issue during the period.

(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 period.

For S.R. Batliboi & CO. LLP

Firm Registration Number 301003E

Chartered Accountants

per R.K. Agrawal

Place: Kolkata. Partner

Date: 15th May, 2013 Membership Number: 16667


Jun 30, 2012

1. We have audited the attached Balance Sheet of The Oudh Sugar Mills Limited ("the Company") as at 30th June, 2012 and also the Statement of Profi t and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These fi nancial 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 inaccordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) 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 specifi ed in paragraphs 4 and 5 of the said Order.

4. Attention is drawn to Note 15 regarding recognition of Deferred Tax Asset (DTA) (net) of 7,531.98 lacs (including 5,398.01 lacs recognised in earlier years) up to 30th June, 2012 based on the future profi tability projections made by the management. In our opinion in the absence of virtual certainty required in terms of Accounting Standard-22 of the aforesaid projections, had the impact of above been considered, there would be a loss of 12,024.59 lacs as against the reported loss of 4,492.61 lacs for the year and the reserve and surplus balance would be (-) 12,472.59 lacs as against the reported figure of (-) 4,940.61 lacs as on the balance sheet date.

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

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

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

ii. In our opinion, proper books of 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, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, except for our comments in para 4 above;

v. On the basis of the written representations received from the Directors, as on 30th June, 2012, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30th June, 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter stated in paragraph 4 above, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:-

a) in the case of the balance sheet, of the state of affairs of the Company as at 30th June , 2012;

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 cash flow statement, of the cash fl ows for the year ended on that date.

Annexure to the Auditors' Report (Referred to in our report of even date to the members of The Oudh Sugar Mills Limited as at and for the year ended 30th June, 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 verifi cation which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

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

(ii) a) The management has conducted physical verification of inventory at reasonable intervals during the year.

b) The procedures of physical verifi cation 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 physical verification.

(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 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, 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. 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. There is no sale of services during the year.

(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 section 301 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) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii) 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 209(1)(d) of the Companies Act, 1956 in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty 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.

c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows

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

Bihar Finance Tax on sale of 4.19 1995-96 Act, 1981 Alcohol for non submission of declaration forms

Central Sales Central Sales Tax 9.29 1993-94-to 2004-05 Tax demand on Act, 1956 interstate sale Taxability on alcohol sale 4.15 1977-78 to 1981-82

Demand for Sales Tax due to non 3.36 2003-04 submission of Declaration Forms

Central Excise Disallowance of Act, 1956 Cenvat Credit on 1,126.62 2001-02 to 2011-12

Certain inputs/ capital items

Excise Duty on burnt / waste and 37.76 1992-93, 2002-03 loss on storage of molasses etc. to 2005-06

Demand towards differential amount of 43.47 2007-08 sugar cess on duty paid stock

Name of the statue Form where dispute is pending

Bihar Finance Act, 1981 Appeellate Tribunal, Patna

Central Sales Tax Act, 1956 Joint Commissioner Appeals

high Court, Allahabad

Appellate Tribunal Patna

central Excise Act, 1944 Commissioner [Appeals] / CESTAT / / High Court, Allahabad

Commissioner [Appeals] / CESTAT / / High court, Allahabad

CESTAT, New Delhi

(x) The Company's accumulated losses at the end of the financial year are more than fifty per cent of its net worth and it has incurred cash losses in the current and 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 financial institution and bank. Further the Company did not have any outstanding debentures during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced before 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 benefi t fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

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

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from a bank, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans 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 24,512 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) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by way of 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 SANJOY K. GUPTA Place : 22, Camac Street, Partner

3rd Floor,

Kolkata - 700 016 Dated : 8th August, 2012 Membership No. 54968


Jun 30, 2010

1. We have audited the attached Balance Sheet of THE OUDH SUGAR MILLS LIMITED as at 30th June, 2010 and also the Profit and Loss Account and the 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 fi nancial 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 signifi cant 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 specifi ed in paragraphs 4 and 5 of the said Order.

4. Without qualifying our opinion, we draw attention to Note No. 7 on Schedule 23, regarding accounting of Sugarcane purchases at Hargaon & Rosa Sugar units in Uttar Pradesh @ Rs. 110 per quintal for sugar season 2007-2008 as against the State Advised Price (SAP) of Rs. 125 per quintal in view of the interim order dated 8th September 2008 of the Honble Supreme Court. The maximum liability on account of above comes to Rs. 2422.74 Lakh. However, since the matter is subjudice, the actual impact, if any, is presently undeterminable and hence, no provision thereof has been made in the accounts.

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

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the 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 and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account as submitted to us;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, subject to our comments in para (vi) below.

(v) On the basis of written representations received from the directors as on 30th June, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualifi ed as on 30th June, 2010 from being appointed as a director in terms of Clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

(vi) Attention is drawn to Note No. 8(a) on schedule 23 regarding recognition of Deferred Tax Asset (DTA) (net) of Rs. 3,054.68 Lakh up to 30th June 2010, based on the future profitability projections made by the management. However, we are unable to express any opinion on the above projections and their consequent impact, if any, on such recognition of Deferred Tax Asset. Had the impact of above been considered, there would be a loss of Rs. 11,282.58 Lakh as against the reported loss of Rs. 8,227.90 Lakh for the year and the profit and loss account debit balance would be Rs. 8,046.06 Lakh as against the reported figure of Rs. 4,991.38 Lakh as on the balance sheet date.

In our opinion and to the best of our information and according to the explanations given to us, the said Statements of Account, Subject to the matters stated in para (vi) 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:

(a) in the case of Balance Sheet, of the state of affairs of the Company as at 30th June, 2010;

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

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

Annexure To The Auditors Report (referred to in our report of even date to the members of The Oudh Sugar Mills Limited as at and for the year ended 30th June, 2010)

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

(b) Fixed Assets have been physically verifi ed by the management during the year based on a phased programme of verifying all the assets over a period of two years, which in our opinion, is reasonable having regard to the size of the Company and the nature and value of its assets. As informed, no material discrepancies were noticed on such verifi cation.

(c) There was no substantial disposal of fi xed assets during the year.

(ii) (a) The management has conducted physical verifi cation of inventory at reasonable intervals during the year.

(b) The procedures of physical verifi cation 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 verifi cation.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirements of clauses (iii) (b) to (d) of the order are not applicable.

(b) The Company has taken loans of Rs. 500 Lakh from a company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding during the year as well as the year-end balance of such loan was Rs. 500 Lakh.

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

(d) There are no stipulations for repayment of the above loans but the same are stated to be repayable on demand. As informed, the lenders have not demanded repayment of the above loan during the year and thus, there has been no default on the part of the company. Further, interest on the above loans, as informed, was regularly paid by the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fi xed 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 and we have not observed any continuing failure to correct major weakness in internal control system of 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 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 fi ve Lakh entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the rules framed thereunder, to the extent applicable, have been complied with by the Company. We are informed by the management that no order has been passed by the Company law Board, National Company Law Tribunal or Reserve Bank of India or any other Tribunal.

(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 account 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 its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company has generally 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 material statutory dues with appropriate authorities except for Cane Purchase Ta x of Rs. 75.75 Lakh relating to the sugar unit in Bihar which has remained unpaid as on the Balance sheet date.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

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

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

Name of the statute Nature of dues Amount (Rs in Lakh)

Tax on sale of Alcohol to country vendors& non Bihar Finance Act, 1981 31.95 submission of declaration forms

The Uttar Pradesh Tax on On Sales of sugar 3.50 entry of goods Act, 2000

On Sales of Baggasse 19.05 Central Sales Tax Act, Central Sales Tax demand on 9.29 1956 interstate sale

Various Sales Tax / Entry tax 4.15 demands on assessment

Interstate Baggasse sales 11.17

Demand for Sales Tax / non – submission of Declaration 3.36 Forms

Disallowance of Cenvat Central Excise Act, 1944 Credit on certain inputs / 307.74 capital items

Excise Duty on burnt / waste and loss on storage of 41.27 molasses etc.

Non-payment of Sugar Cess 86.18

Reversal of excise duty on 36.50 Baggasse sales

Excise duty on loss on 47.48 reprocessing of brown sugar



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

Joint Commissioner Bihar Finance Act, 1981 1984-85 to 1989-90, (Appeals); Appellate 1995-96, 2002-03 Tribunal; High Court, Patna

The Uttar Pradesh Tax on entry of goods Act, 2000 2000-01 High Court, Allahabad

Additional Commissioner 2006-07 (Appeals)

Central Sales Tax Act, 1956 Joint Commissioner 1993-94 to 2004-05 Appeals

Appellate Tribunal, 1977-78 to 1981-82, Lucknow / High Court, 2000-01 Allahabad

2001-02, 2006-07 High Court, Lucknow

Joint Commissioner 2003-04 (Appeals) / High Court, Allahabad

Central Excise Act, 1944 Commissioner (Appeals) 1998-99, 2001-02 to / CESTAT / High Court, 2008-09 Allahabad

Commissioner (Appeals) 1992-93, 2002-03 to / CESTAT / High Court, 2005-06 Allahabad

2007-08 Commissioner (Appeals) 2009-10 Commissioner (Appeals)

1988-89, 2003-04, Commissioner Appeals; 2006-07 to 2008-09 CESTAT, Delhi

(x) The Companys accumulated losses at the end of the financial year (after considering the impact of deferred tax assets), are more than fi fty per cent of its net worth and it has incurred cash losses 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 any bank and / or fi nancial institution, read with the fact that the due date of 30th June, 2010 for loan repayment of Rs. 2,197 Lakh (including interest) has been reseheduled by the bank and hence, there is no default as on the balance sheet date. There were no debentures outstanding during the year.

(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 and therefore, the provisions of clause 4(xiv) of the order are not applicable.

(xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from a bank, the terms and conditions whereof are stated to be not prima-facie prejudicial to the interest of the Company.

(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. 19,784 Lakh approx. raised on short-term basis have been used for long-term investment (without considering permanent working capital).

(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) 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 course of our audit.

For S. R. BATLIBOI & CO.

Firm Registration No. 301003E

Chartered Accountants

Per R. K. AGRAWAL Place: Kolkata Partner

Dated: 27th August, 2010 Membership No. 16667

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