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Auditor Report of Parrys Sugar Industries Ltd.

Mar 31, 2016

To The Members of M/s. Parrys Sugar Industries Limited Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of M/s. Parrys Sugar Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

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

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 there under.

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2016, and

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

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

Emphasis of Matter

We draw attention to Note 25(1)(b) to the financial statements, with regard to the preparation of the financial statements on a going concern basis despite erosion in the net worth of the Company.

Our opinion is not qualified in this matter.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in the Annexure-A a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

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

(d) In our opinion, the aforesaid 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 going concern matter described in sub-paragraph (b) under the Emphasis of Matters paragraph above, in our opinion, does not have an adverse effect on the functioning of the Company.

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

(2) of the Act.

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

(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 in Note No. 29 of 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. The Company has not delayed in transferring amounts, required to be transferred, to the Investor Education and Protection Fund.

Annexure-A referred to in Paragraph of Report on Other Legal and Regulatory Requirements of our report of even date on the Accounts of the Company, for the year ended 31st March 2016.

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

(b) Fixed Assets are physically verified by the Management, according to a phased programme designed to cover all items over a period of two years which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. As part of the programme, the Company has physically verified the fixed assets during the year and no material discrepancies were noticed.

(c) The title deeds of the immovable properties (land) is in the erstwhile name of the Company.

(ii) The inventory has been physically verified by the Management during the year. In our opinion, frequency of verification is reasonable no material discrepancies were noticed during the course of physical verification..

(iii) The Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act.

(iv) The provisions of Section 185 and 186 of the Act are not applicable, since the Company has not granted any loans to Directors nor has granted any loan or guarantee or security to any company, body corporate or to any person. The investment made by the Company is in compliance with Section 185 and 186 of the Act.

(v) The Company has not accepted deposits during the year. Hence, Clause 3(v) of the Order is not applicable.

(vi) Maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act. We have broadly reviewed the books and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been maintained. We have, however, not made a detailed examination of the records to ascertain whether they are accurate and complete.

(vii) (a) According to the information and explanations given to us, and records of the Company examined by us, in our opinion, the

Company is generally regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess, and any other statutory dues to the appropriate authorities. There are no arrears of undisputed statutory dues outstanding as at March 31, 2016 for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, and the records of the Company examined by us, there are no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax, cess have not been deposited on account of any dispute, except the following:

Name of Statute

Nature of dues

Amount (Rs, in lakh), excluding interest, if any

Period to which amounts relate

Forum where the dispute is pending

The Finance Act, 1994

Service Tax

225.38

2012-13

CESTAT

Central Excise Act, 1944

Central Excise

2.53

2012-13

Assistant Commissioner, Belgaum

Central Excise Act, 1944

Central Excise

6.49

2013-14

Additional Commissioner, Belgaum

(viii) According to the information and explanations given to us, and records of the Company examined by us, the Company has not defaulted in repayment of loans or borrowing to any financial institution or bank or government. The Company has not raised any debentures.

(ix) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The term loans obtained by the Company were applied for the purposes for which these were raised.

(x) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanation given to us, we have neither observed any instance of fraud by the Company or any fraud on the Company by its officers or employees of the Company nor have we been informed of such case by the Management, during the year.

(xi) The Company has not paid any managerial remuneration and hence the provisions of Section 197 read with Schedule V to the Act are not applicable.

(xii) The Company is not a Nidhi Company and hence, Clause 3(xii) of the Order is not applicable.

(xiii) All the transactions with the related parties are in compliance with Section 177 and 188 of the Act where applicable and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review, and hence, Clause 3(xiv) is not applicable.

(xv) According to the information and explanation provided to us and based on our examination of records, the Company has not entered into any non-cash transactions with Directors or persons connected with him and hence Clause 3(xv) is not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934 and hence, Clause 3(xvi) is not applicable.

Annexure-B referred to in Clause (h) of Paragraph of Report on Other Legal and Regulatory Requirements of our report of even date on the Accounts of the Company, for the year ended 31st March 2016.

We have audited the internal financial controls over financial reporting of Parrys Sugar Industries Limited (''the Company'') as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. Management''s Responsibility for Internal Financial Controls

The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting and the Standards of Auditing, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and Directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

According to the information and explanations given to us and based on our audit, have, in all material respects, an adequate internal financial control over financial reporting and such internal financial control over financial reporting were operating effectively as at March 31, 2016 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

For R.G.N. Price & Co.,

Chartered Accountants

Firm''s Registration No: 002785S

Mahesh Krishnan

Chennai Partner

May 2, 2016 Membership No. 206520


Mar 31, 2015

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

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's 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 operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 31,2015;

(b) in the case of 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

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

1. As required by the Companies (Auditor's Report) Order 2015 issued by the Central Government in terms of Section 143 (11) 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) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

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

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

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements which has been referred by us in Paragraph (vii)(b) of CARO 2015. - Refer Note 29 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 pending amounts which were, required to be transferred, to the Investor Education and Protection Fund by the Company.

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our Audit Report of even date to the members of Parrys Sugar Industries Limited on the Financial Statements of the Company for the year ended on March 31, 2015)

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

b) Generally, fixed assets are physically verified by the Management, according to a phased programme designed to cover all items over a period of two years which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. As part of the programme, the Company has physically verified the fixed assets and no material discrepancies were noticed.

(ii) a) The inventory has been physically verified by the Management during the year. In our opinion, frequency of verification is reasonable.

b) In our opinion, the procedures for 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) On the basis of our examination of Inventory records, in our opinion, the Company is maintaining proper records of Inventory and no material discrepancies were noticed on physical verification.

(iii) 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.

(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. Further on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) The Company has not accepted any deposits during the year. Hence Clause 3(v) of the Order is not applicable.

(vi) Maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Companies Act. We have broadly reviewed the books and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been maintained. We have, however, not made a detailed examination of the records to ascertain whether they are accurate and complete.

(vii) (a) According to the information and explanations given to us, and records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, employees'state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues as applicable, with the appropriate authorities. There are no arrears of undisputed statutory dues outstanding as at March 31, 2015 for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, and the records of the Company examined by us, there are no dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited on account of any dispute except the following:

Name of Statute : The Finance Act, 1994

Nature of dues : Service Tax

Amount (Rs in lakhs), excluding interest, if any : 225 38

Period to which amounts relate : 2012-13

Forum where the dispute is pending : CESTAT

(c) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(viii) The Company has accumulated losses. The Company has incurred cash losses during the financial year covered by the audit and has incurred cash losses in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institutions or Banks or Debenture holders during the year.

(x) 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. Accordingly, Clause 3(x) of the Order is not applicable.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

(xii) During the course of our examination of the Books and Records of the Company carried out in accordance with the Generally Accepted Auditing Practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year nor have we been informed of such case by the Management

For RGN Price & Co., Chartered Accountants Firm Regn No. 002785S

H. S. Venkatesh Partner Membership No. 26666


Mar 31, 2014

We have audited the accompanying Financial Statements of Parrys Sugar Industries Limited ("Company"), which comprise the Balance Sheet as at 31st March 2014, and the Statement of profit and Loss for the year then ended, 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 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 Companies Act, 1956 and Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act") which as per a clarifcation issued by the Ministry of Corporate Afairs continue to apply under Section 133 of the Companies Act, 2013 (which has superseded section 211(3C) of the Companies Act, 1956 with efect from 12th September 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the Financial Statement that gives a true and fair view and is 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 the 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 efectiveness 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 sufcient and appropriate to provide a basis for our audit opinion.

As required by the Companies (Auditor''s Report) Order, 2003 (as amended) issued by the Central Government in terms of sub-section (4A) of Section 227 of the Act, we enclose in the Annexure, a Statement on the matters specifed in Paragraphs 4 and 5 of the said Order.

Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the financial statements of the Company for the year ended 31st March, 2014 are prepared, in all material respects, give the information required by the "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 afairs of the Company as at 31st March 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 fows for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

As required under the provisions of 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 accounts as required by law, have been kept by the Company, in 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. The Balance Sheet and Statement of profit and Loss comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 which as per a clarifcation issued by the Ministry of Corporate Afairs continue to apply under Section 133 of the Companies Act 2013 (which has superseded section 211(3C) of the Companies Act 1956 with efect from 12th September 2013). In our opinion, the Balance Sheet, the 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 Act".

e. On the basis of the written representations received from the Directors as on 31st March, 2014 and taken on record by the Board of Directors, we report that none of the directors is disqualifed as on 31st March 2014 from being appointed as director in terms of Section 274(1)(g) of the Companies Act, 1956.

Annexure referred to in Auditor''s Responsibility Paragraph of our report of even date on the Accounts of Parrys Sugar Industries Limited, for the period ended 31st March 2014.

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fxed assets.

(b) As explained to us and based on our examination of the records, the Management has carried out the physical verifcation of the fxed assets, which is considered reasonable having regard to the size of the Company and nature of its business and no discrepancies were observed during the course of verifcation.

(ii) (a) The Raw Material, Stores and Spare Parts, Tools, Work in Progress inventory with the Company have been physically verified during the period by the Management. In our opinion, the frequency of verifcation is reasonable. In case of Finished Goods, stock verifcation was done at the year end.

(b) The procedures of physical verifcation of Raw Material, Stores and Spare Parts, Tools, Work in Progress Inventory and Finished Goods followed by the Management are generally 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. The discrepancies noticed on verifcation between the physical stocks and the book records were not material and have been appropriately dealt in the books.

(iii) The Company has not granted / taken any loans to / from parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. 4 (iii) of Companies Audit Report Order, 2003, as amended in 2004, is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fxed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and Section 58AA of the Companies Act, 1956 and rules framed thereunder.

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

(viii) The Company, pursuant to the Companies (Cost Accounting) Rules 2011 made by the Central Government for the maintenance and audit of cost records under Section 209(1)(d) of the Companies Act, 1956 has maintained cost records. The Cost Records are duly audited by a Cost Auditor. We are of the opinion that prima facie the prescribed cost accounts and cost records have been made and maintained. We have not, however, made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty, Excise Duty, and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed payable in respect of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty were in arrears, as at 31st March 2014 for a period of six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty which have not been deposited on account of any dispute except as follows:

Sl. No. Statute Nature of Dues Forum where the dispute is pending

1 Service Tax Service Tax dues CESTAT

Statue Amount (Rs.In Lakhs) Period to which the matter pertains

Service Tax 225.38 2012-13

(x) The Company has accumulated losses amounting to Rs. 15272.17 Lakhs as at March 31, 2014 and the same has exceeded 50% of the Net Worth. The Company has incurred cash losses during the period ending March 31, 2014 as well as for the previous year ended March 31, 2013 i.e., immediately preceding financial period. During the financial year ended March 31, 2012, the Company has informed BIFR under Section 23(1) of Sick Industrial Companies (Special Provisions) Act, 1985 since accumulated losses exceed 50% of the networth as on June 30, 2011.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank and financial institutions at the Balance Sheet date.

(xii) According to the information furnished, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit / society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 as amended in 2004 are not applicable to the Company.

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

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions during the period except for Agricultural purposes availed by the Sugarcane suppliers from Banks, the repayment of which is out of Cane price payable and in our opinion the terms and conditions of which, are not prima facie prejudicial to the Company.

(xvi) In our opinion, based on our examination of books on an overall basis, the term loans have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for Long Term investment.

(xviii) The Company has not made preferential allotment of shares to persons covered under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures and hence Clause 4(xix) of CARO 2003 is not applicable to the Company.

(xx) The Company has not raised money by Public Issues and hence Clause 4(xx) of CARO 2003 is not applicable to the Company.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the period nor have we been informed of any such case by the Management, that causes the financial statements to be materially misstated.

For RGN Price & Co., Chartered Accountants Firm Regn No: 002785 S

H.S. Venkatesh

Chennai Partner

April 28, 2014 Membership No: 026666


Mar 31, 2013

Report on the financial statements:

We have audited the accompanying Financial Statements of parrys sugar Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Proft and Loss for the year then ended, Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

management’s responsibility for the financial statements:

The Company’s Management is responsible for the preparation of these Financial Statements that give a true and fair view of the fnancial position, fnancial performance and Cash Flows of the Company in accordance with the Companies Act, 1956 and 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 Statement that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

auditor’s responsibility:

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

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

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

As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government in terms of sub-section (4A) of Section 227 of the Act, we enclose in the Annexure, a Statement on the matters specifed in Paragraphs 4 and 5 of the said Order.

opinion:

In our opinion and to the best of our information and according to the explanations given to us, the fnancial statements of the Company for the year ended March 31, 2013 are prepared, in all material respects, 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 afairs of the Company as at March 31, 2013,

b. In the case of the Statement of Proft and Loss, of the Loss of the Company, for the year ended on that date; and

c. In the case of the Cash Flow Statement, of the cash fows for the year ended on that date.

report on other Legal and regulatory requirements:

As required under the provisions of 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 accounts, as required by law, have been kept by the Company in so far as it appears from our examination of those books.

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

d. In our opinion, the Balance Sheet, the Statement of Proft 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 Act.

e. On the basis of the written representations received from the Directors as on March 31, 2013 and taken on record by the Board of Directors, we report that none of the directors is disqualifed as on March 31, 2013 from being appointed as director in terms of Section 274(1)(g) of the Companies Act, 1956.

anneXure to tHe InDepenDent auDItors’ report

annexure referred to in auditor’s responsibility paragraph of our report of even date on the accounts of parrys sugar Industries Limited, for the year ended march 31, 2013.

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fxed assets.

(b) As explained to us and based on our examination of the records, the Management has carried out the physical verifcation of the fxed assets, which is considered reasonable having regard to the size of the Company and nature of its business and no discrepancies were observed during the course of verifcation.

(c) During the year the Company has disposed of substantial portion of the fxed assets, under a scheme of demerger as referred to in Note No. 37 of the fnancial statements, however; in our view such disposal of the fxed assets though substantial in nature would not afect the going concern.

(ii) (a) The Raw Material, Stores and Spare Parts, Tools, Work in Progress inventory with the Company have been physically verifed during the period by the Management. In our opinion, the frequency of verifcation is reasonable. In case of Finished Goods, stock verifcation was done at the year end.

(b) The procedures of physical verifcation of Raw Material, Stores and Spare Parts, Tools, Work in Progress Inventory and Finished Goods followed by the Management are generally 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. The discrepancies noticed on verifcation between the physical stocks and the book records were not material and have been appropriately dealt in the books.

(iii) The Company has not granted / taken any loans to / from parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. 4 (iii) of Companies Audit Report Order, 2003, (as amended in 2004), is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fxed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and Section 58AA of the Companies Act, 1956 and rules framed thereunder.

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

(viii) The Company pursuant to the Companies (Cost Accounting) Rules 2011 made by the Central Government for the maintenance and audit of cost records under Section 209(1)(d) of the Companies Act, 1956 has maintained cost records. The Cost Records are duly audited by a Cost Auditor. We are of the opinion that prima facie the prescribed cost accounts and cost records have been made and maintained. We have not, however, made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty, Excise Duty, and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed payable in respect of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty were in arrears, as at March 31, 2013 for a period of six months from the date they became payable.

(x) The Company has accumulated losses amounting to Rs. 2,213.17 Lakhs as at March 31, 2013 and the same has exceeded 50% of the Net Worth. The Company has incurred cash losses during the year ended March 31, 2013. However, the Company has not incurred cash losses during the nine months period ended March 31, 2012. i.e., immediately preceding fnancial year. During the previous fnancial year, the Company has informed BIFR under Section 23(1) of Sick Industrial Companies (Special Provisions) Act, 1985 since accumulated losses exceed 50% of net worth as on June 30, 2011.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank and fnancial institutions at the Balance Sheet date.

(xii) According to the information furnished, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi/ mutual beneft/ society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended in 2004) are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(xv) The Company has not given any guarantee for loans taken by others from banks or fnancial institutions during the period except for Agricultural purposes availed by the Sugarcane suppliers from Banks, the repayment of which is out of Cane price payable and in our opinion the terms and conditions of which, are not prima facie prejudicial to the Company.

(xvi) In our opinion, based on our examination of books on an overall basis, the term loans have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for Long Term investment.

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

(xix) The Company has not issued any debentures and hence Clause 4(xix) of CARO 2003 is not applicable to the Company.

(xx) The Company has not raised money by Public Issues and hence Clause 4(xx) of CARO 2003 is not applicable to the Company.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the period nor have we been informed of any such case by the Management, that causes the fnancial statements to be materially misstated.

for r.G.n price & Co.,

Chartered Accountants

Firm Regn. No. 002785S

H.s. Venkatesh

Partner

Membership No. 026666

Chennai April 24, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Parrys Sugar Industries Limited as at 31st March 2012, the Statement of Profit and Loss and also the Cash Flow Statement for the nine months period ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

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

e. On the basis of written representations received from the Directors as on 31st March, 2012 and taken on record by the Board of Directors, none of the Directors is disqualified from being appointed as Director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and the Notes forming part of 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:

i) In the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012,

ii) In the case of the Statement of Profit and Loss, of the Loss of the Company, for the nine months period ended on that date.

iii) In the case of Cash Flow Statement, of the Cash Flow for the nine months period ended on that date.

Annexure referred to in Para 3 of our report of even date on the Accounts of Parrys Sugar Industries Limited, for the nine months period ended 31st March 2012

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

(b) As explained to us, the management has generally carried out the physical verification of a portion of the fixed assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the nine months period.

(c) During the nine months period, the Company has not disposed off substantial portion of the fixed assets.

(ii) (a) The Raw material, Stores and Spare Parts, Tools, Work in Progress inventory with the Company have been physically verified during the period by the management. In our opinion, the frequency of verification is reasonable. In case of finished goods, stock verification was done at the nine months period end.

(b) The procedures of physical verification of Raw material, Stores and Spare Parts, Tools, Work in Progress inventory and Finished goods followed by the management are generally 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. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been appropriately dealt in the books.

(iii) The Company has not granted / taken any loans to / from parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. 4 (iii) of Companies Audit Report Order, 2003, as amended in 2004, is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58 A and 58 AA of the Companies Act, 1956 and rules framed thereunder.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not , however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Service Tax, Sales Tax(VAT), Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Service Tax, Sales Tax(VAT), Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute except as follows:

Sl. No. Statute Nature of Dues Forum where the Amount Period to which dispute is pending (Rs In Lakhs) the matter pertains

1. Central Excise Act, Central Excise The Additional 16.74 2011-12 1944 Duty Commissioner of Central Excise and Customs

CENVAT Credit The Additional 3.42 2008-09 Commissioner of Central 166.10 2011-12 Excise & Service Tax 0.96 2008-09

3.86 2009-10

The Assistant 0.45 2007-08 Commissioner of Central 6.16 2011-12 Excise and Customs

The Commissioner of 39.69 2007-08 Central Excise

The Superintendent 0.25 2010-11 of Central Excise and Customs

Goods cleared The Additional 1.50 2008-09 without excise Commissioner of Central invoice Excise and Customs

2. Finance Act, 1994 GTA on Outward Commissioner of Central 60.48 2011-12 (Service Tax) Freight Excise & Customs

The Additional 1.68 2008-09 Commissioner of Central Excise and Customs

The Assistant 4.63 2011-12 Commissioner of Central Excise and Customs

Non-payment of The Assistant 3.11 2008-09 Service Tax Commissioner of Central Excise and Customs

3. Karnataka Tax on Levy of Entry Tax Deputy Commissioner 18.95 2010-11 Entry of Goods Act, of Commercial Taxes 1979 (Audit-1)

4. Andhra Pradesh Excess ITC claimed Appellate Deputy 3.27 2010-11 General Sales Tax Commissioner Act, 1956 Asst. Commissioner (CT) 1.85 2010-11 LTU

Sales Tax High Court of Andhra 37.01 2004-05 Pradesh

5. Andhra Pradesh Electricity Duty Government of Andhra 314.63 2004-05 to 2011-12 Electri city Duty Pradesh - Electrical Act, 1939 Inspectorate

(x) The Company has accumulated losses amounting to Rs 66.35 crores as at March 31, 2012 and the same has exceeded 50% of net worth. The Company has not incurred cash losses during the nine months period. However the Company has incurred Cash losses of Rs 67.88 Crores in the immediately preceding financial period. During the period, the Company has informed BIFR under Section 23 (1) (a) of Sick Industrial Companies (Special Provisions) Act, 1985 since accumulated losses exceeded 50% of networth as on 30th June 2011.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank and financial institutions at the Balance Sheet date.

(xii) According to the information furnished, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) 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 are not applicable to the company.

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

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions during the period except for Agricultural loans availed by Sugarcane suppliers from Banks, the repayment of which is out of Cane price payable and in our opinion the terms and conditions of which, are not prima facie prejudicial to the Company.

(xvi) In our opinion, based on our examination of books on an overall basis, the term loans have been applied for the purposes for which they were obtained.

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

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

(xix) The Company has not issued any debentures.

(xx) The Company has not raised money by Public Issues and hence Clause 4 (xx) of CARO 2003 is not applicable to the Company.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the period nor have we been informed of any such case by the management, that causes the financial statements to be materially misstated.

For R.G.N Price & Co.,

Chartered Accountants

Firm Regn. No.: 002785S

H. S. Venkatesh

Chennai Partner

April 24, 2012 Membership No. 026666


Jun 30, 2011

1. We have audited the attached Balance Sheet of Parrys Sugar Industries Limited (the "Company") as at June 30, 2011, and the related Profit and Loss Account and Cash Flow Statement for the fifteen months period ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and signifcant 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 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' of India (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order.

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

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

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

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

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the applicable accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on June 30, 2011 and taken on record by the Board of Directors, none of the directors is disqualifed as on June 30, 2011 from being appointed as a director in terms of clause (g) of sub- section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, 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 June 30, 2011;

(ii) in the case of the Profit and Loss Account, of the loss for the fifteen-months period ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash fows for the fifteen-months period ended on that date.

ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of the Auditors' Report of even date to the members of Parrys Sugar Industries Limited on the financial statements for the fifteen months period ended June 30, 2011.

1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets of the Company have been physically verifed by the Management during the period and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verifcation is reasonable.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the period.

2. (a) The inventory (excluding stocks with third parties) has been physically verifed by the Management during the period. In respect of inventory lying with third parties, these have substantially been confrmed by them. In our opinion, the frequency of verifcation is reasonable.

(b) In our opinion, the procedures of physical verifcation 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) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verifcation of inventory as compared to book records were not material.

3. (a) The Company has granted unsecured loan to one company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the period and the period-end balance of such loans aggregates to Rs. 1,312.65 Lakhs and Rs. 1,312.65 Lakhs respectively.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the aforesaid loans, the terms of principle and interest repayment are not stipulated.

(d) In view of our comment in paragraph 3(c) above, it is not possible to ascertain whether there is any overdue amount.

(e) The Company has not taken any loans, secured or unsecured, from companies, frms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses 3(f) and 3(g) of Paragraph 4 of the Order are not applicable.

4. 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, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed thereunder.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the 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 as applicable with the appropriate authorities. .

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty and cess as at June 30, 2011 which have not been deposited on account of a dispute are as follows:

Sl. Statute Nature of dues Forum where the dispute is pending No.

1 Central Excise Act, CENVAT Credit Additional Commissioner/ Deputy 1944 Commissioner/Commissioner, Central Excise & Customs

2 Andhra Pradesh Electricity duty Government of Andhra Pradesh-Electrical Electricity Duty Inspectorate Act, 1939

3 Entry tax Orissa Sales Tax Commissioner sales Tax

4 The Andhra Pradesh Sales tax High Court General Sales Tax Act, 1956

5 Value Added Tax Act VAT Commissioner (Appeals), Central Excise & Customs

Sl. No. Amount Period to which (in Lakhs) the matter pertains

1 158.75 2005-06 7.62 2006-07 95.85 2007-08 7.75 2008-09 3.25 2009-10

2 281.85 2004-05 to 2010-11

3 4.76 2004-05

4 5.52 1999-00 14.55 2000-01 22.46 2005-06 0.74 2007-08 5.12 2009-10

5 31.37 2006-07

10. The Company has accumulated losses as at June 30, 2011 amounting to Rs. 8,167.10 Lakhs which exceeds ffty per cent of its net worth. The Company has incurred cash losses in the financial period ended on that date amounting to Rs. 6,787.82 Lakhs and in the immediately preceding financial year amounting to Rs. 3,296.16 Lakhs.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

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

13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

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 banks or financial institutions during the year except in respect of repayment, out of its cane price dues to its sugarcane suppliers, of the agricultural loans taken by them from banks, the terms and conditions of which, in our opinion are not prima facie prejudicial to the company.

16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the period.

19. The Company has not issued any debentures during the period.

20. The Company has not raised any money by public issues during the period.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, except for misappropriation of Company's funds during the year, aggregating Rs. 47,98,316/- by a unit fnance head of the Company by way of creating certain false and misleading records and documents, and from whom the aforesaid amount has been recovered on the basis of identifcation of the aforesaid fraud by the Management and consequential investigation carried out by it and an external frm of chartered accountants, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year.

For and on behalf of

Price Waterhouse

Firm Registration Number: 301112E

Chartered Accountants

J. Majumdar

Place: Chennai Partner

Date: July 25, 2011 Membership Number F-51912.


Mar 31, 2010

1. We have audited the attached Balance Sheet of GMR Industries Limited (the “Company”) as at March 31, 2010, and the related Proft and Loss Account and Cash Flow Statement for the year ended on that date, annexed thereto, which we have signed under reference to this report. These fnancial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes assessing the accounting principles used and signifcant estimates made by Management, as well as evaluating the overall fnancial 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’ (the ‘Act’) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order.

4. Without qualifying our opinion, we draw attention to Note 6 of Schedule 19 to the fnancial statements regarding carrying value of long term investment amounting to Rs.1,368.09 lakhs (2009: Rs.519.06 lakhs) in the subsidiary company which exceed its net worth and loans amounting to Rs.1,134.00 lakhs (2009: Rs.250 lakhs) given to the subsidiary company. Considering the strategic location of the project and the nearby high recovery sugar cane rich belt which is the lifeline of a sugar industry, the Company’s Management considers that the acquisition cost is reasonable and believes that the intrinsic value of the acquisition including the embedded value of the sugar license held by the said subsidiary company is far in excess of the carrying cost of investments and loan given, and therefore, no provision is considered necessary at this stage in respect of aforementioned amounts.

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

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

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

(c) The Balance Sheet, Proft and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Proft 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 Act;

(e) On the basis of written representations received from the directors, as on March 31, 2010 and taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub- section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said fnancial statements, together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act 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 March 31, 2010

(ii) in the case of the Proft and Loss Account, of the loss for the year ended on that date; and

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

Annexure to Auditors’ Report

Referred to in paragraph 3 of the Auditors’ Report of even date to the members of GMR Industries Limited on the financial statements for the year ended March 31, 2010

1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fxed assets.

(b) The fxed assets of the Company have been physically verifed by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verifcation is reasonable.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fxed assets has not been disposed off by the Company during the year.

2. (a) The inventory has been physically verifed by the Management during the year. In our opinion, the frequency of verifcation is

reasonable.

(b) In our opinion, the procedures of physical verifcation 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) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of the inventory. The discrepancies noted on physical verifcation of inventory as compared to book records were not material.

3. (a) The Company has granted an unsecured loan to one Company covered in the register maintained under Section 301 of the Act. The

maximum amount involved during the year and the year end balance of such loan aggregate to Rs.1,134 Lakhs and Rs.1,134 Lakhs respectively.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the aforesaid loans, the terms of principal and interest repayment are not stipulated.

(d) In respect of aforesaid loans, there is no overdue payment of more than Rupees one Lakh.

(e) The Company has not taken any loans, secured or unsecured, from companies, frms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses 3(f) and 3(g) of Paragraph 4 of the Order are not applicable.

4. 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, fxed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to

in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs 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. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed thereunder.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the

Company is generally regular in depositing undisputed statutory dues including investor education and protection fund, employees’ state insurance, income-tax, wealth tax, service tax, excise duty and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax,wealth-tax, service-tax, customs duty, excise duty and cess, which have not been deposited on account of a dispute, are as follows:

Sr. Statute & nature of dues Nature of dues Forum where the No. dispute is pending 1. Central Excise Act, 1944 CENVAT Credit Additional Commissioner,Central Excise & Customs 2. Central Excise Act, 1944 Clearance of goods Additional Commissioner,Central Excise & Customs 3. Andhra Pradesh Electricity duty Government of Andhra Pradesh-Electrical Electricity Duty Act,1939 Inspectorate 4. Entry tax Orissa Sales Tax Commissioner sales Tax 5. The Andhra Pradesh Sales tax High Court General Sales Tax Act, 1956 6. Value Added Tax Act VAT Assistant Commissioner (CommercialTaxes)(LTU)

Sr. Amount Period which the No. (in Lakhs) matter pertains 1. 21.70 2005-06 126.48 2006-07 0.57 2007-08 8.24 2008-09 2. 30.73 2007-08 3. 166.03 2009-10 4. 4.76 2004-05 5. 14.55 2000-01 22.46 2004-05 6. 10.69 2005-06

10. The Company has no accumulated losses as at March 31, 2010 and there was no cash loss in the immediately preceding fnancial year. However, it has incurred cash losses of Rs.3,296.16 lakhs in the fnancial year ended on that date.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any fnancial institution or bank or debenture holders as at the balance sheet date.

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

13. The provisions of any special statute applicable to chit fund / Nidhi / mutual beneft fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

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 banks or fnancial institutions during the year except in respect of repayment, out of its cane price dues to its sugarcane suppliers, of the agricultural loans taken by them from banks, the terms and conditions of which, in our opinion are not prima facie prejudicial to the company.

16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, funds amounting to Rs. 10,980 lakhs raised on a short-term basis have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not raised any money by public issues during the year.

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

For Price Waterhouse Firm Registration Number: 0075688 Chartered Accountants J. Majumdar Place: Bangalore Partner Date: April 23, 2010 Membership Number: F-51912

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