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Auditor Report of Paramount Printpackaging Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of PARAMOUNT PRINTPACKAGING 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 responsibility for the financial Statement

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) read with the general circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on 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.

Opinion

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

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

b) in the case of the Profit and Loss Account, 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, as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (hereinafter referred to as the “Order”), and on the basis of such checks of the books and the records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. Qualifying our report, we draw attention to, note no. 30 for pending reconciliation with excise authorities and note no. 28 for pending confirmation and reconciliation, if any, of some of the parties appearing under Sundry Debtors, Loans and Advances and Sundry Creditors.

3. 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 notified under the Companies Act 1956 read with the general circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect with section 133 of the Companies Act 2013.

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

ANNEXURE TO THE AUDITOR''S REPORT TO THE MEMBERS OF PARAMOUNT PRINTPACKAGING LIMITED FOR THE YEAR ENDED 31ST MARCH, 2014 (Referred to in paragraph 1 of our report of even date)

1)

a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information.

b) Physical verification of the fixed assets is done by the management as per regular programme of verification, which in our opinion needs to be strengthened having regards to the size of company and nature of assets. As informed, no material discrepancies were noticed on such verification.

c) In our opinion, the company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the company is not affected.

2)

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

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

c) In our opinion and according to the information and explanation given to us, the company has maintained adequate records of its inventories and the discrepancies noticed on such physical verification between physical stock and the book records have been adequately dealt with in the books of account.

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

a) The company has granted interest bearing unsecured loan to 2 parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 6,136,014/- and the year-end balance is Rs. 5,636,014/- .

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

c) The Loan granted is repayable on demand and we are given to understand that these loans have not yet been recalled.

d) The company has taken interest free unsecured loan from one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 3,000,000/- and the year-end balance is Rs. 750,000/-.

e) In our opinion and according to the information and explanation given to us, terms and conditions on which loans have been taken from parties listed in the register maintained under section 301 of the Companies Act, 1956 are prima facie, not prejudicial to the interest of the company.

f) The Loan taken is repayable on demand.

4) In our opinion, and according to the information and explanations given to us, the company is having inadequate internal control systems commensurate with the size of the Company and the nature of its business with regards to purchase of fixed assets, sale of goods and services. During the course of our audit, we have noticed inadequate internal control system with respect to (a) review and reconciliation of book balances of customers, vendors, Loan and Advances given and (b) reconciliation of balance with excise authorities and hence in our opinion, internal control system of the company needs to be strengthened.

5)

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

b) The transaction of purchase of goods and material and sale of goods, material and services, made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the act and exceeding the value of rupees five lacs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanation given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the act and rules framed there under, with regard to the deposits accepted from the public.

7) In our opinion, the company has its in house internal audit system. In our opinion, the scope and coverage of Internal audit needs to be strengthened to commensurate with the size of the Company and nature of business.

8) The company is covered under the cost audit rules from F.Y. 2013-14 and we are informed that the audit is under progress.

9) a) Based on verification of the records of the company, we are of the opinion that the company is not regular in depositing undisputed statutory dues including Provident fund, employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. According to the information and explanation given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as on 31st March, 2014 for a period of more than six months from the day they became payable except as referred below:-

Nature of Dues ( Amount Rs. )

Provident Fund 8,909,137

Profession Tax 17,500

Maharashtra Value Added Tax 34,065

Central Sales Tax 5,625,193

Service Tax 1,489,710

Wealth Tax F.Y.2010-2011 45,000

Wealth Tax F.Y.2011-12 38,000

Tax Deducted at Source 6,850,007

Income Tax (Incl. Interest) F.Y. 2011-2012 989,035

ESIC 757,557

Excise Duty 20,288,269

Central Sales Tax (2005-06) 2,841,171

b. According to information and explanation given to us, the details of disputed sales tax demand that have not been deposited on account of disputes are given below:-

Name of Status Nature of dues Amount Period to which amount relates

Maharashtra Value Sales Tax 21,22,504 2003-2004 Added Tax Act

Central Sales Sales Tax 8,56,538 2003-2004 Tax Act

Maharashtra Value Sales Tax 2,683,596 2004-2005 Added Tax Act

Central Sales Sales Tax 1,215,147 2004-2005 Tax Act



Name of Status Forum where dispute pending

Maharashtra Value Added Tax Act Deputy Comm. of Sales Tax (Appeals)

Central Sales Tax Act Deputy Comm. of Sales Tax (Appeals)

Maharashtra Value Added Tax Act Deputy Comm. of Sales Tax (Appeals)

Central Sales Tax Act Deputy Comm. of Sales Tax (Appeals)

Name of Status Nature of dues Amount Period to which amount relates

Maharashtra Value Sales Tax 20,984,013 2008-2009 Added Tax Act

Central Sales Sales Tax 4,377,379 2008-2009 Tax Act



Name of Status Forum where dispute pending

Maharashtra Value Added Tax Act Deputy Comm. of Sales Tax (Appeals)

Central Sales Tax Act Deputy Comm. of Sales Tax (Appeals)

10) The Company’s accumulated losses at the end of Financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current year as well as during the immediately preceding financial year.

11) On the basis of audit procedures performed by us, and according to the information, explanation and representation given to us by the management, we state that the company had defaulted in certain repayment of dues (including interest) of domestic financial institutions and banks. The default in principal amount and the interest aggregates to Rs. 178,001,706/- and Rs. 4,861,851/- respectively. However upto the date of approval of the accounts, the company has not paid the principal amount and the interest aggregates with respect to above stated dues.

12) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4 (xii) of the order are not applicable to the Company.

13) As the provisions of any Special Statue applicable to Chit funds, Nidhis or mutual Benefit funds / Societies are n o t applicable to the company, the provisions of clause 4(xiii) of the order are not applicable to the Company.

14) The company is not dealing in or trading in shares, securities, debentures, or other investments and hence, requirement of paragraph 4(xiv) are not applicable to the company.

15) In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions during the year. Accordingly, the provisions of clause 4 (xv) of the order are not applicable to the Company.

16) On the basis of the review of the utilization of funds pertaining to term loans on overall basis and related information as made available to us by the Company, prima facie, the term loans taken by the Company were applied for the purpose for which they had been raised.

17) According to Cash flow statements and other records examined by us and on the basis of the information and explanation given to us, on an overall basis, funds raised on short term basis have, prima facie, not been used for Long Term Investment.

18) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. Accordingly the provisions of clause 4 (xviii) of the order are not applicable to the Company.

19) The company has not issued any debentures during the year and does not have any debentures outstanding as at the beginning of the year and at the year end. Accordingly, the provisions of clause 4 (xix) of the Order are not applicable to the Company.

20) The Company has not raised any money by public issue during the year.Accordingly, the povisions of clause 4 (xx) of the Order are not applicable to the Company.

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

For Laxmikant Kabra & Co. Chartered Accountants Firm Registration No: 117183W

Sd/- Laxmikant Kabra (Partner) Membership No. :101839 Place: Thane Date: May 17, 2014


Mar 31, 2013

Report on financial statements

We have audited the accompanying financial statements of PARAMOUNT PRINTPACKAGING 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 responsibility for the financial Statement

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). 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.

Opinion

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

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Profit and Loss Account, 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. Without qualifying our report, we draw attention to, note no. 30 for pending confirmation and reconciliation, if any, of some of the parties appearing under Sundry Debtors, Loans and Advances and Sundry Creditors.

3. 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.

ANNEXURE TO THE AUDITOR''S REPORT TO THE MEMBERS OF PARAMOUNT PRINTPACKAGING LIMITED FOR THE YEAR ENDED 31ST MARCH, 2013

(Referred to in paragraph 3 of our report of even date)

1)

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

b) Physical verification of the fixed assets is done by the management as per regular programme of verification, which in our opinion needs to be strengthened having regards to the size of company and nature of assets. As informed, no material discrepancies were noticed on such verification.

c) No disposal of substantial part of the fixed assets of the company has taken place during the year other than certain plant and machineries which were of no commercial use in the opinion of the management and the sale deed for the new land was subsequently cancelled.

2)

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

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

c) In our opinion and according to the information and explanation given to us, the company has maintained adequate records of its inventories and the discrepancies noticed on such physical verification between physical stock and the book records have been adequately dealt with in the books of account.

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

a) The company has granted interest bearing unsecured loan to 2 parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 60,63,771/- and the year-end balance is Rs. 60,63,771/- .

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

c) The Loan granted is repayable on demand and we are given to understand that these loans have not yet been recalled.

d) The company has taken interest free unsecured loan from 6 parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 4,27,80,411/- and the year-end balance is Rs. 30,00,000.

e) In our opinion and according to the information and explanation given to us, terms and conditions on which loans have been taken from parties listed in the register maintained under section 301 of the Companies Act, 1956 are prima facie, not prejudicial to the interest of the company.

f) The Loan taken is repayable on demand.

4) In our opinion, and according to the information and explanations given to us, the company is having inadequate internal control systems commensurate with the size of the Company and the nature of its business with regards to purchase of fixed assets, sale of goods and services. During the course of our audit, we have noticed inadequate internal control system with respect to (a) review and reconciliation of book balances of customers, vendors, Loan and Advances given and hence in our opinion, internal control system of the company needs to be strengthened.

5)

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

b) The transaction of purchase of goods and material and sale of goods, material and services, made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the act and exceeding the value of rupees five lacs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanation given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the act and rules framed there under, with regard to the deposits accepted from the public.

7) The company has its in house internal audit department. In our opinion, the scope and coverage of internal audit needs to be strengthened to commensurate with the size of the company and nature of its business.

8) The company is covered under the cost audit rules from F.Y. 2012-13 and we are informed that the audit is under progress

9)

Based on verification of the records of the company, we are of the opinion that the company is not regular in depositing undisputed statutory dues including Provident fund, employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom Duty, excise Duty and other statutory dues with the appropriate authorities. According to the information and explanation given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as on 31st March, 2013 for a period of more than six months from the day they became payable except as referred below:- Nature of Dues ( Amount Rs. ) Provident Fund 45,86,718 Profession Tax 17,500 Central Sales Tax 17,44,779 Wealth Tax F.Y.2010-2011 45,000 Wealth Tax F.Y.2011-12 38,000 Tax Deducted at Source 6,529,833 Income Tax (Incl. Interest) F.Y. 2011-2012 6825301

10) During the year under review, though the company has incurred cash loss, it has no accumulated losses at the end of the financial year which is more than fifty percent of its net worth.

11) On the basis of audit procedures performed by us, and according to the information, explanation and representation given to us by the management, we state that the company had defaulted in certain repayment of dues (including interest) of domestic financial institutions and banks. The default in principal amount and the interest aggregates to Rs. 5230000/- and Rs. 7801291/- respectively. However upto the date of approval of the accounts, the company has paid the principal amount and the interest aggregates to Rs. nil and Rs. 1362244/- respectively with respect to above stated dues.

12) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) The provisions of any Special Statue applicable to Chit funds, Nidhis or mutual Benefit funds / Societies are not applicable to the company.

14) The company is not dealing in or trading in shares, securities, debentures, or other investments and hence, requirement of paragraph 4(xiv) are not applicable to the company.

15) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16) On the basis of the review of the utilization of funds pertaining to term loans on overall basis and related information as made available to us by the Company, prima facie, the term loans taken by the Company were applied for the purpose for which they had been raised.

17) According to Cash flow statements and other records examined by us and on the basis of the information and explanation given to us, on an overall basis, funds raised on short term basis have, prima facie, not been used for Long Term Investment.

18) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19) Since the company does not have any debentures, the question of creation of securities for debentures does not arise.

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

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

For Laxmikant Kabra & Co.

Chartered Accountants

Firm Registration No: 117183W

Sd/-

Laxmikant Kabra (Proprietor)

Membership No.: 101839

Place: Navi Mumbai

Date: May 29, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Paramount Printpackaging Limited as at 31st March, 2012, the Statement of 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 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 accounting 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 by the Companies (auditor's report) (amendment) order, 2004 (together 'the order') issued by the Central Government of India in terms of sub-section (4a) of section 227 of the Companies act, 1956, and on the basis of the information and explanation given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we give in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Without qualifying our report, we draw attention to:

i) Note No. 29 for pending reconciliation of Balances with Excise Authorities and

ii) Note No. 30 for pending confirmation and reconciliation (if any) of some of the parties appearing under sundry debtors, Loans and advances given and creditors.

5. Further to our comment in the Annexure referred in clause 3 and para 4 as above , we report that:

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

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

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

d. In our opinion, the Balance Sheet, the statement of Profit and Loss Account and the 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 to the extent applicable;

e. On the basis of written representation received from the directors, as on 31s1 March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. In our opinion and to the best of our information and according to the explanation given to us, the said accounts, read together with notes thereon and in particular, 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 the balance sheet, of the state of affairs of the Company as at 31st March, 2012;

ii) in the case of the statement of profit and loss account, of the profit for the Year ended as on that date; and

iii) in the case of the cash flow statement, of the cash flow statement for the Year ended as on that date.

ANNEXURE TO THE AUDITOR'S REPORT TO THE MEMBERS OF PARAMOUNT PREPACKAGING LIMITED FOR THE YEAR ENDED 31ST MARCH, 2012

(Referred to in paragraph 3 of our report of even date)

a) The company is in the process of compiling records showing full particulars including quantitative details and situation of fixed assets.

b) Physical verification of the fixed assets is done by the management as per regular programme of verification, which in our opinion needs to be strengthened having regards to the size of company and nature of assets. As informed, no material discrepancies were noticed on such verification. However, in absence of complete information in fixed asset register as stated in clause (a) above, we are unable to comment on the discrepancies, if any.

c) No disposal of substantia! part of the fixed assets of the company has taken place during the year.

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

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

c) In our opinion and according to the information and explanation given to us, the company has maintained adequate records of its inventories and the discrepancies noticed on such physical verification between physical stock and the book records have been adequately dealt with in the books of account.

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

a) The company has granted interest bearing unsecured loan to 2 parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 59,28,772/- and the year-end balance is Rs. 59,28,772/-.

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

c) The Loan granted is repayable on demand and we are given to understand that these loans have not yet been recalled.

d) The company has taken interest free unsecured loan from 6 parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 2,73,00,411/- and the year-end balance is Rs. Nil.

e) In our opinion and according to the in{ormation and explanation given to us, terms and conditions on which loans have been taken from parties listed in the register maintained under section 301 of the Companies Act, 1956 are prima facie, not prejudicial to the interest of the company. -

f) The Loan taken is repayable on demand.

4) In our opinion, and according to the information and explanations given to us, the company is having inadequate internal control systems commensurate with the size of the Company and the nature of its business with regards to purchase of fixed assets, sale of goods and services. During the course of our audit, we have noticed inadequate internal control system with respect to (a) review and reconciliation of book balances of customers, vendors, Loan and Advances given and (b) reconciliation of balance with excise authorities and hence in our opinion, internal control system of the company needs to be strengthened.

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

b) The transaction of purchase of goods and material and sale of goods, material and services, made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the act and exceeding the value of rupees five lacs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanation given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the act and rules framed there under, with regard to the deposits accepted from the public.

7) The company has appointed a firm of Chartered Accountants to carry out its internal audit function. In our opinion, the scope and coverage of internal audit needs to be strengthened to commensurate with the size of the company and nature of its business.

8) We are informed that the Central Government has not prescribed maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 for any products of the Company.

9) a) Based on verification of the records of the company, we are of the opinion that the company is not regular in depositing undisputed statutory dues including Provident fund, employees' State Insurance, Income tax, Sales tax, Wealth tax, Sen/ice tax, Custom Duty, excise Duty, Cess and other statutory dues with the appropriate authorities. According to the information and explanation given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as on 31st March, 2012 for a period of more than six months from the day they became payable except as referred below:-

Nature of Dues Amount

Provident Fund 8,25,575

Profession Tax 15,000

Maharashtra Value Added Tax 51,45,870

Central Sales Tax 14,24,913

Wealth Tax F. Y.2010-2011 45,000

Cess Tax 58,97,270

Tax Deducted at Source 85,81,399

Income Tax F. Y. 2010-2011 1,12,88,420

b) According to information and explanation given to us, the details of disputed sales tax demand that have not been deposited on account of disputes are given below:-

Name of Status Nature of Amount Period to Forum where dispute pending dues which amount relates

Maharashtra Value Added Tax Act Sales Tax 3,177,854 2003-2004 Deputy Comm, of Sales Tax (Appeals)

Central Sales Tax Act Sales Tax 3,180,606 2003-2004 Deputy Comm, of Sales Tax (Appeals)

Maharashtra Value Added Tax Act Sales Tax 2,683,596 2004-2005 Deputy Comm, of Sales Tax (Appeals)

Central Sales Tax Act Sales Tax 1,215,147 2004-2005 Deputy Comm, of Sales Tax (Appeals)

10) The Company has no accumulated losses and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

11) On the basis of audit procedures performed by us, and according to the information, explanation and representation given to us by the management, we state that the company had defaulted in certain repayment of dues (including interest) of domestic financial institutions and banks. The default in principal amount and the interest aggregates to Rs. 48,82,000/- and Rs. 13,03,671/- respectively. However upto the date of approval of the accounts, the company has paid the principal amount and the interest aggregates to 121,31,000/- andt 1,12,037/- respectively with respect to above stated dues.

12) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) The provisions of any Special Statue applicable to Chit funds, Nidhis or mutual Benefit funds / Societies are not applicable to the company.

14) The company is not dealing in or trading in shares, securities, debentures, or other investments and hence, requirement of paragraph 4(xiv) are not applicable to the company.

15) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16) On the basis of the review of the utilization of funds pertaining to term loans on overall basis and related information as made available to us by the Company, prima facie, the term loans taken by the Company were applied for the purpose for which they had been raised.

17) According to Cash flow statements and other records examined by us and on the basis of the information and explanation given to us, on an overall basis, funds raised on shortterm basis have, prima facie, not been used for Long Term Investment.

18) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19) Since the company does not have any debentures, the question of creation of securities for debentures does not arise.

20) The Company has raised net proceeds of Rs. 45,82,96,125/- by way of intial public offering (IPO) during the year ended 31st March 2012. As per the object of the issues, the Company has utilized Rs. 34,36,20,164/- towards construction of new project, Rs. 4,24,01,890/- towards Working capital and balance Rs. 7,22,74,071/- towards IPO expenses. The company has disclosed the end use of money in note no 31 of the enclosed financial statements.

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

For M.V.Damania & Co.

Firm Registration No.: 102079W

Chartered Accountants

Sd/-

C.A.Bharat Jain

Partner

Membership No.: 100583

Place : Mumbai

Date : 30th May, 2012.

 
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