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Auditor Report of Pasupati Spinning & Weaving Mills Ltd.

Mar 31, 2015

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

Management's responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and 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 financial statements.

Basis of Qualified Opinion

The company has claimed additional compensation in respect of part of factory land acquired. The additional compensation demand is Rs.61464287 (including amount upto previous year Rs. 61464287), which according to the management shall be accounted for as and when received. Had the additional compensation been accounted for the profit for the year and other current assets would have been higher by the said amount.(Refer Note no. 12 of the accompanying notes to the financial statements).

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the basis for qualified opinion paragraph above, 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 state of affairs of the Company as at 31st March, 2015, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory requirements

As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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) As per information and explanations given to us, we report that as on 31.3.2015 none of the directors of the company are disqualified from being appointed as a director of the company under Section 164((2) of the Companies Act, 2013 As the company had not redeemed its debentures on due dates and as the default continued for more than a year, directors of the company were not qualified for being appointed as directors of any other public company in terms of provision of Section 164(2) of the Companies Act, 2013 as amended by the companies Amendment Act, 2000. Board for Industrial and Financial Reconstruction (BIFR) has sanctioned rehabilitation scheme for the company vide its order dated 17.2.2012. The said scheme has approved payments of the settled amount to debenture-holders in instalments. The payment as approved by BIFR has been made and there is no default in such payment. Besides, four of the directors have been appointed after the scheme has been sanctioned. They have certified that they are not disqualified from being appointed as a director in any other company.

f) In our opinion, the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls are adequate.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 21 to the financial statements;

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure referred to in paragraph (1) under the heading of "Report on Other Legal and Regulatory requirements" of our report of even date

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

(b) All the fixed assets have been physically verified by the management according to a regular program, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies with respect to book records were noticed on such verification.

(ii) (a) Physical verification of inventory (except material in transit and lying with third party) has been conducted by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

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

(c) The company is maintaining proper records of inventory. Discrepancies noticed on verification of inventory as compared to book records were not material.

(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 Act and as such clauses (iii) (a) and (b), of the order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) According to the information and explanation given to us, the company has not accepted any deposit from the public.

Therefore, the provisions of clause (v) of the order are not applicable to the company.

(vi) We have broadly reviewed the books of account maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 148(1) of the Act, and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of such accounts and records.

(vii) (a) The company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, duty of custom, duty of excise, value added tax, cess and any other statutory dues applicable to it. According to the information and explanations given to us, undisputed amounts payable in respect thereof outstanding as at 31st March,2015 for a period of more than six months from the date they became payable are as under:-

Name of the statue Nature of dues Amount (Rs.) Period to which amount relates

Income Tax Act Tax deducted at source 555089 31.03.2014

(b) According to the records of the company, dues of income-tax or Sales tax or wealth-tax or service tax or duty of custom or duty of excise or value added tax or cess which have not been deposited on account of any dispute are as under:-

Name of the statue Nature of dues Amount (Rs.) Forum where pending

Central Excise Act Excise Duty 2670382 Hon'ble Supreme Court

Central Excise Act Excise Duty 2583953 Central Excise & Service Tax Tribunal

Haryana Value Added Tax Act VAT 4222661 Sales Tax Tribunal

Service Tax Act Service Tax 229316 Central Excise & Service Tax Tribunal

Income Tax Act, 1961 Income Tax 465270 Income Tax Tribunal

(c) No amount was required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under.

(viii) There were no accumulated losses at the end of the financial year. The company has not incurred any cash losses during the financial year and in the immediately proceeding financial year.

(ix) In our opinion and according to the information and explanations given to us, the delay in repayment of dues to a financial institution or bank or debenture holders are as under :

Nature of Limit Name of the Bank Limit Balance Excess Remarks (Rs. in lacs) as per Bank (Rs. in lacs) (Rs. in lacs)

Cash Credit Canara Bank 457.50 462.40 4.90 Due to interest charged

State Bank of Patiala 104.00 104.93 0.93 by bank on 31.03.2015

ING Vysya Bank Ltd 187.25 191.31 4.06 and paid subsequently Packing Credit State Bank of Patiala 317.00 319.54 2.54

Nature of Limit Name of the Bank Amount overdue (Rs.) Due Date Remarks

Bill discounted/ Bank of Baroda 2261158 13.03.2015 Realized on 06.04.2015 purchased State Bank of Patiala 5201022 30.03.2015 Realized on 08.04.2015

(x) In our opinion, the company has not given guarantee for loans taken by others from banks or financial institutions.

(xi) In our opinion, the term loans have been applied for the purposes for which they were obtained.

(xii) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For B.K.Shroff & Co.

Chartered Accountants

Reg. No. : 302166E

O.P.Shroff Partner

Membership No. 06329

Place: New Delhi

Date : May 28, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Pasupati Spinning & Weaving Mills Limited ("the Company") which comprise the Balance Sheet as at 31 March 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("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 entity''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Basis of Qualified Opinion

The company has claimed additional compensation in respect of part of factory land acquired. The additional compensation demand is Rs. 61464287 (including amount upto previous year Rs. 24276787), which according to the management shall be accounted for as and when received. Had the additional compensation been accounted for the profit for the year and other current assets would have been higher by the said amount. (Refer Note no. 12 of the accompanying notes to the financial statements).

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis of Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31 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 flows for the year ended on that date.

Report on Other Legal and Regulatory requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

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

(v) As per information and explanations given to us, we report that as on 31.3.2014 none of the directors of the company are disqualified from being appointed as a director of the company under Section 274((1)(g) of the Companies Act, 1956. As the company had not redeemed its debentures on due dates and as the default continued for more than a year, directors of the company were not qualified for being appointed as directors of any other public company in terms of provision of Section 274(1)(g) of the Companies Act, 1956 as amended by the Companies Amendment Act, 2000. Board for Industrial and Financial Reconstruction (BIFR) has sanctioned rehabilitation scheme for the company vide its order dated 17.2.2012. The said scheme has approved payments of the settled amount to debenture-holders in instalments. The payment as approved by BIFR has been made and there is no default in such payment. Besides, one of the directors has been appointed after the scheme has been sanctioned. He has certified that he is not disqualified from being appointed as a director in any other company.

ANNEXURE REFERRED TO IN PARAGRAPH (1) UNDER THE HEADING OF ''REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS'' OF OUR REPORT OF EVEN DATE

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

b) As explained to us, all the fixed assets have been physically verified by the management according to a regular program which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies with respect to book records were noticed on such verification.

(c) In our opinion and according to explanations given to us, fixed assets disposed off during the year were not substantial and as such the disposal has not affected the going concern concept of the company.

(ii) (a) As explained to us, physical verification of inventory (except material in transit and lying with third parties) has been conducted by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. Discrepancies noticed on verification of inventory as compared to book records were not material and these have been properly dealt with in the books of accounts.

(iii) (a) On the basis of the records of the company, the Company has not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence para (iii) (a) to (d) of the order are not applicable to the company;

(b) On the basis of the records of the company, the following are the particulars of loans taken by the company from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(c) In our opinion the rate of interest and other terms and conditions on which unsecured loans have been taken from Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 are not pirma facie prejudicial to the interest of the company.

(d) In our opinion, the company is regular in repaying the principal amount as per stipulations and has been regular in payment of interest whenever applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. No major weakness in the internal control system was observed during the course of audit.

(v) According to the information and explanations given to us, during the year there were no transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraphs v (a) and (b) of the aforesaid order are not applicable.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public as per provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules 1975. No order has been passed by the Company Law Board or National Company law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of such accounts and records.

(ix) (a) According to the records of the company, the company is not regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to it. According to information and explanations given to us the undisputed amounts outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable are as under:

(b) According to the records of the company dues in respect of Sales Tax / Income Tax / Customs duty / Wealth Tax / Service Tax / Excise Duty / Cess which have not been deposited on account of any dispute are as under:

(x) As at 31.03.2014, the accumulated losses of the company are not more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

(xi) The company has defaulted in payment of dues to financial institutions, banks and debenture-holders. Details as per company''s books of accounts are as under:

The limits with banks were overdrawn for most of the year and were within limits for the remaining part of the year. The overdrawn limits as on 31.03.2014 are as under:

(xii) Based on our examination of documents and records maintained by the company, we are of the opinion that since the company has not granted any loan and advance on the basis of security by way of pledge of shares, debenture and other securities, it is not required to maintain records in respect thereof.

(xiii) In our opinion the company is neither a chit fund nor nidhi / mutual benefit fund/society and hence paragraph 4 (xiii) of the aforesaid order is not applicable.

(xiv) In our opinion the company is not dealing in or trading in shares, securities, debentures and other investments and accordingly the provisions of paragraph 4(xiv) of the aforesaid order is not applicable.

(xv) Based on our examination of the records we are of the opinion that the company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion, term loans received during the year have been applied for the purpose for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that funds raised on short term basis have not been used for long term investments.

(xviii) During the year the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of Companies Act, 1956.

(xix) During the year the company had not issued any debentures. The company has created security or charge in respect of debentures issued in earlier years.

(xx) During the year under review no money was raised by public issue.

(xxi) During the course of our examination of the books and records of the company, carried out in accordance with auditing standards generally accepted in India, we have not come across any instance of fraud by the company or on the company, noticed or reported during the year. We have also not been informed of any such case by the management.

For B. K. SHROFF & CO., Chartered Accountants Firm Registration No. 302166E

3/7-B, Asaf Ali Road, New Delhi-110 002. O. P. SHORFF Dated : May 27, 2014 Partner Membership No. 06329


Mar 31, 2013

Report on the Financial Statements

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

Management''s responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

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

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

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

Basis of Qualified Opinion

a. Interest payable on amount of Rs. 600 lacs due to JMFARC, which was to be converted into OCCD is not determinable as the negotiations are not yet finalized. In these accounts, the company has paid/provided interest on the loan amount @ 23% p.a. Difference, if any will be accounted for after finalisation of negotiations (Refer Note no. 4(v)(c) of the accompanying notes to the financial statements).

b. The company has claimed additional compensation in respect of part of factory land acquired in earlier years. The additional compensation of Rs. 24276787 will be accounted for as and when received. Had the additional compensation been accounted for the profit for the year and other current assets would have been higher by the said amount. (Refer Note no. 12 of the accompanying notes to the financial statements).

c. The company has paid remuneration of Rs. 1877359 (including Rs. 1187496 relating to earlier years) to directors for which approval of Central Government is yet to be received. Had the remuneration not been paid the profit for the year and cash and cash equivalents would have been higher by the said amount. (Refer Note no. 37(b) and 37(c) of the accompanying notes to the financial statements).

d. The company has during the year written back provision of Rs. 27555087 (net of payment of Rs. 3734000) towards excise duty demands on legal advice. The company has been advised that no liability is likely to arise against the demands and hence provision is not required. We are unable to comment as the demands are still contested in appeals (Refer Note no. 22 of the accompanying notes to the financial statements).

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis of Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

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

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

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

Report on Other Legal and Regulatory requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

(iv) Except for the possible effects of the matters described in the Basis of Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act; and

(v) As per information and explanations given to us, we report that as on 31.3.2013 none of the directors of the company are disqualified from being appointed as a director of the company under Section 274((1)(g) of the Companies Act, 1956. As the company had not redeemed its debentures on due dates and as the default continued for more than a year, directors of the company were not qualified for being appointed as directors of any other public company in terms of provision of Section 274(1)(g) of the Companies Act, 1956 as amended by the Companies Amendment Act, 2000. Board for Industrial and Financial Reconstruction (BIFR) has sanctioned rehabilitation scheme for the company vide its order dated 17.2.2012. The said scheme has approved payments of the settled amount to debenture-holders in instalments. The payment as approved by BIFR is being made and there is no default in such payment. Besides, one of the directors has been appointed after the scheme has been sanctioned. He has certified that he is not disqualified from being appointed as a director in any other company.

ANNEXURE REFERRED TO IN PARAGRAPH (1) UNDER THE HEADING OF ''REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS'' OF OUR REPORT OF EVEN DATE

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

(b) As explained to us, all the fixed assets have been physically verified by the management according to a regular program which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies with respect to book records were noticed on such verification.

(c) In our opinion and according to explanations given to us, fixed assets disposed off during the year were not substantial and as such the disposal has not affected the going concern concept of the company.

(ii) (a) As explained to us, physical verification of inventory (except material in transit and lying with third parties) has been conducted by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. Discrepancies noticed on verification of inventory as compared to book records were not material and these have been properly dealt with in the books of accounts.

(iii) (a) On the basis of the records of the company, the Company has not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence para (iii) (a) to (d) of the order are not applicable to the company;

(b) On the basis of the records of the company, the following are the particulars of loans taken by the company from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

Name of the Party Relationship Opening Loan with Balance taken the company Rs. Rs.

Sulabh Impex Ltd. Associate 5700000

Pasupati Olefin Ltd. Associate 6800000

Name Loan Year Maximum repaid end Balance balance Outstanding during the year Rs. Rs. Rs.

Sulabh Impex Ltd. 5700000 5700000

Pasupati Olefin Ltd. 6800000 6800000

(c) In our opinion the rate of interest and other terms and conditions on which unsecured loans have been taken from Companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not pirma facie prejudicial to the interest of the company.

(d) In our opinion, the company is regular in repaying the principal amount as per stipulations and has been regular in payment of interest whenever applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. No major weakness in the internal control system was observed during the course of audit.

(v) According to the information and explanations given to us, during the year there were no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs v (a) and (b) of the aforesaid order are not applicable.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public as per provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975. No order has been passed by the Company Law Board or National Company law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of such accounts and records.

(ix) (a) According to the records of the company, the company is not regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to it. According to information and explanations given to us the undisputed amounts outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable are as under :

Name of the statue Nature of dues Amount Period to which Rs. amount relates

Sales Tax Haryana Demand 339148 2006-07

Service Tax Act Service Tax 380586 2009-10

Service Tax Act Service Tax 6472 2012-13

(x) As at 31.03.2013, the accumulated losses of the company are not more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

(xi) The company has defaulted in payment of dues to financial institutions, banks and debenture-holders. Details as per company''s books of accounts are as under :

Does not include amount for which one time settlement (OTS) has been negotiated with the lenders and repayment of dues has been rescheduled or the dues have been settled / rescheduled by BIFR vide its order dated 17.2.2012 and payments are being made accordingly.

(xii) Based on our examination of documents and records maintained by the company, we are of the opinion that since the company has not granted any loan and advance on the basis of security by way of pledge of shares, debenture and other securities, it is not required to maintain records in respect thereof.

(xiii) In our opinion the company is neither a chit fund nor nidhi / mutual benefit fund / society and hence paragraph 4 (xiii) of the aforesaid order is not applicable.

(xiv) In our opinion the company is not dealing in or trading in shares, securities, debentures and other investments and accordingly the provisions of paragraph 4(xiv) of the aforesaid order is not applicable.

(xv) Based on our examination of the records we are of the opinion that the company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion, term loans received during the year have been applied for the purpose for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that funds raised on short term basis have not been used for long term investments.

(xviii) During the year the company has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of Companies Act, 1956. Since the allotment has been made in pursuance to the rehabilitation scheme sanctioned by BIFR, in our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

(xix) During the year the company had not issued any debentures. The company has created security or charge in respect of debentures issued in earlier years.

(xx) During the year under review no money was raised by public issue.

(xxi During the course of our examination of the books and records of the company, carried out in accordance with auditing standards generally accepted in India, we have not come across any instance of fraud by the company or on the company, noticed or reported during the year. We have also not been informed of any such case by the management.

For B. K. SHROFF & CO.,

Chartered Accountants

Firm Registration No. 302166E

3/7-B, Asaf Ali Road,

New Delhi-110 002. O. P. SHORFF

Dated : May 27, 2013 Partner

Membership No. 06329


Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s. PASUPATI SPINNING & WEAVING MILLS LIMITED as at 31st March, 2012 and also the Profit and Loss Account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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 auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 as amended by the Companies (Auditors' Report) (Amendment) order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to above, we report that :

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

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

iii. The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

iv. In our opinion the Balance Sheet, Profit & Loss Account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, subject to our observations in paragraph (vi) below.

v. As per information and explanations given to us, we report that as on 31.3.2012 none of the directors of the company are disqualified from being appointed as a director of the company under Section 274((1)(g) of the Companies Act, 1956. As the company had not redeemed its debentures on due dates and as the default continued for more than a year, directors of the company were not qualified for being appointed as directors of any other public company in terms of provision of Section 274(1)(g) of the Companies Act, 1956 as amended by the Companies Amendment Act, 2000. Board for Industrial and Financial Reconstruction has sanctioned rehabilitation scheme for the company vide its order dated 17.2.2012. The said scheme has approved payments of the settled amount to debenture holders in instalments. The payment as approved by BIFR is being made and there is no default in such payment. Besides, one of the directors has been appointed after the scheme has been sanctioned. He has certified that he is not disqualified from being appointed as a director in any other company.

vi. Reference is drawn to :

(a) Note No. 32 of accompanying notes to the financial statements relating to accounts of the company for the year-ended 31.03.2012 having been prepared on the basis that the company is a going concern.

(b) Note No 4(v)(b) of accompanying notes to the financial statements relating to non- provision of interest amounting to Rs. 59109302 (including Rs. 26614936 for earlier years) on loan of Rs.10 Crores of JMFARC which is proposed to be converted into Equity / Optionally Cumulative Convertible Debentures as per the rehabilitation scheme sanctioned by BIFR resulting in the profit for the year to be higher and other current liabilities to be lower by the said amount.

(c) Note No. 4(v)(c) of accompanying notes to the financial statements relating to waiver of loan of Rs. 6.45 Crores of JMFARC not being written back pending full implementation of rehabilitation scheme sanctioned by BIFR, resulting in the profit for the year to be lower and long term borrowings to be higher by the said amount.

(d) Note No. 4(vii)(g) of accompanying notes to the financial statements relating to non- provision of interest on 14% and 15% redeemable partly convertible debentures amounting to Rs. 23939987(including Rs. 21944988 for earlier years) resulting in the profit for the year to be higher and other current liabilities to be lower by the said amount.

(e) Note No. 3 of accompanying notes to the financial statements relating to non provision of Debenture Redemption Reserve amounting to Rs. 18761301 which has no effect on the profit for the year.

(f) Note No. 30(b) of accompanying notes to financial statements relating to payment of remuneration of Rs.1187496(including Rs. 579606 for previous year) to a director for which approval of Central Government is to be obtained resulting in the profit for the year and cash & cash equivalents to be understated by the said amount.

(g) Note No. 11 of the accompanying notes to the financial statements relating to non provision of additional compensation on acquisition of part of factory land amounting to Rs. 24276787, demanded by the company, resulting in the profit for the year and other current assets to be lower by the said amount.

(h) We further report that had the observations made by us in paragraph vi(b), vi(c), vi(d), vi(f) and vi(g) above been considered, the profit for the year would have been Rs. 18987624 (as against the reported figure of Rs. 12072180), long term borrowings would have been Rs. 47910478 (as against the reported figure of Rs. 112410478), cash & cash equivalents would have been Rs.30687858 (as against the reported figure of Rs. 29499912), other current liabilities would have been Rs. 429178322 (against the reported figure of Rs. 346129033) and other current assets would have been Rs. 34731633 (against the reported figure of Rs. 10454846).

Subject to the above, 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 accompanying notes 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 and

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

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

(b) As explained to us, all the fixed assets have been physically verified by the management according to a regular program which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies with respect to book records were noticed on such verification.

(c) In our opinion and according to explanations given to us, fixed assets disposed off during the year were not substantial and as such the disposal has not affected the going concern concept of the company.

(ii) (a) As explained to us, physical verification of inventory (except material in transit and lying with third parties) has been conducted by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. Discrepancies noticed on verification of inventory as compared to book records were not material and these have been properly dealt with in the books of accounts.

(iii) The company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence paragraph (iii)(a) to (iii)(g) of the aforesaid order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. No major weakness in the internal control system was observed during the course of audit.

(v) According to the information and explanations given to us, during the year there were no transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraphs v (a) and (b) of the aforesaid order are not applicable.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public as per provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975. No order has been passed by the Company Law Board or National Company law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of such accounts and records.

(ix) (a) According to the records of the company, the company is not regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to information and explanations given to us the undisputed amounts outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable are as under :

Name of the Statue Nature of dues Amount Period to which Rs. amount relates

Sales Tax Haryana Demand 339148 2006-07

Central Excise Act Excise Duty 27555087 April' 84 to Oct.' 93

Service Tax Act Service Tax 380586 2009-10

(b) According to the records of the company, dues in respect of Sales Tax/Income Tax / Customs Duty/Wealth Tax/Service Tax/Excise Duty/Cess which have not been deposited on account of any dispute are as under :

Name of Nature of dues Amount Forum where pending the Statue Rs.

Haryana Value VAT 4407602 Joint Excise & Taxation Added Tax Act Commissioner

Uttar Pradesh VAT 106000 Joint VAT Act, 2007 Commissioner (Appeals)

Income Tax Income Tax 16364611 Assessing Authority Act, 1961

(x) A s at 31.03.2012 the accumulated losses of the company are more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

(xi) The company has defaulted in payment of dues to financial institutions, banks and debenture holders. Details as per company's books of accounts are as under :

The limits with banks were overdrawn for most of the year and were within limits for the remaining part of the year. The overdrawn limits as on 31.03.2012 are as under :

Nature of Limit Name of the Bank Limit Balance as per Banks (Rs. in Lacs) (Rs. in Lacs)

Demand Loan Nainital Bank Limited 27.40 27.75

State Bank of Travancore 82.20 82.60

Canara Bank 98.00 99.40

Bank of Baroda 136.00 137.88

Packing Credit State Bank of Patiala 315.50 317.83

ING Vysya Bank Ltd. 114.50 115.61

Bank of Baroda 350.00 368.25

Cash Credit State Bank of Patiala 105.50 105.94

Canara Bank 225.00 230.05

State Bank of Travancore 375.80 378.28

Nature of Limit Excess Remarks (Rs. in Lacs)

Demand Loan 0.35 Borrowings 0.40 in excess 1.40 of limit 1.88

Packing Credit 2.33

1.11

18.25

Cash Credit 0.44

5.05

2.48

Nature of Limit Name of the Bank Amount Due Remarks Overdue Date (Rs.)

Bill Discounted/ Bank of Baroda 290377 11.03.2012 Payment pending on due date Purchased 421413 11.03.2012

Does not include amount for which one time settlement (OTS) has been negotiated with the lenders and repayment of dues has been rescheduled or the dues have been settled / rescheduled by BIFR vide its order dated 17.02.2012 and payments are being made accordingly.

(xii) Based on our examination of documents and records maintained by the company, we are of the opinion that since the company has not granted any loan and advance on the basis of security by way of pledge of shares, debenture and other securities, it is not required to maintain records in respect thereof.

(xiii) In our opinion the company is neither a chit fund nor nidhi / mutual benefit fund / society and hence paragraph 4 (xiii) of the aforesaid order is not applicable.

(xiv) In our opinion the company is not dealing in or trading in shares, securities, debentures and other investments and accordingly the provisions of paragraph 4 (xiv) of the aforesaid order is not applicable.

(xv) Based on our examination of the records we are of the opinion that the company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion, term loans received during the year have been applied for the purpose for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that funds raised on short term basis have not been used for long term investments.

(xviii) During the year the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of Companies Act, 1956.

(xix) During the year the company had not issued any debentures. The company has created security or charge in respect of debentures issued in earlier years.

(xx) During the year under review no money was raised by public issue.

(xxi) During the course of our examination of the books and records of the company, carried out in accordance with auditing standards generally accepted in India, we have not come across any instance of fraud by the company or on the company, noticed or reported during the year. We have also not been informed of any such case by the management.

for B.K. SHROFF & CO.,

Chartered Accountants

Firm Registration No. 302166E

3/7-B, Asaf Ali Road,

New Delhi-110 002. O.P. SHORFF

Dated : 30th May, 2012 Partner

Membership No. 06329


Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s. PASUPATI SPINNING & WEAVING MILLS LIMITED as at 31st March, 2010 and also the Profit and Loss Account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) order, 2004, issued by the Central Government of India in terms of subsection (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 above, we report that:

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

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

iii. The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

iv. In our opinion the Balance sheet, Profit & Loss Account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956, subject to our observations in paragraph (vi) below.

v As per information and explanations given to us, we report that as on 31.3.2010 none of the directors of the company are disqualified from being appointed as a director of the company under Section 274((1)(g) of the Companies Act, 1956. As the company has not redeemed its debentures on due dates and as the default continues for more than a year, all directors of the company are not qualified for being appointed as directors of any other public company in terms of provision of Section 274(1 )(g) of the Companies Act, 1956 as amended by the Companies Amendment Act, 2000.

vi. Reference is drawn to:

(a) Note No. 4 on Schedule 21 relating to accounts of the company for the year-ended 31.03.2010 having been prepared on the basis that the company is a going concern.

(b) Note No. 5 on Schedule 21 relating to assignment of outstanding dues of IDBI/SASF in favour of JMFARC. As the terms and conditions of dues of JMFARC are yet to be finalized by BIFR, the accounts have been prepared as per terms and conditions agreed to with IDBI/SASF. The effect thereof on the loss for the year cannot be determined.

(c) Note No. 6(g) on Schedule 21 relating to non-provision of interest on 14% and 15% redeemable partly convertible debentures amounting to Rs. 20339120 (including Rs. 18338237 for earlier years) resulting in the loss for the year before tax and secured loans to be lower by the said amount.

(d) Note No. 9 on Schedule 21 relating to non provision of Debenture Redemption Reserve amounting to Rs. 1674150 which has no effect on the loss for the year before tax.

(e) Note No. 23(iii) on Schedule 21 relating to payment of remuneration of Rs. 3090 to Shri S.K. Chhajer, Whole time director, for the period from 29.03.2010 to 31.03.2010 for which approval of Central Government is awaited resulting in the loss before tax for the year to be overstated and Cash & Bank Balance to be understated by the said amount.

(f) We further report that had the observations made by us in paragraph vi(c) and vi(e) above been considered, the loss for the year before tax would have been Rs. 62396971 (as against the reported figure of Rs. 42060941), secured loans would have been Rs. 719147328 (as against the reported figure of Rs. 698808208) and cash & bank balance would have been Rs. 29093118 (as against the reported figure of Rs. 29090028).

Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with other notes appearing in Schedule 21 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, 2010; and

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

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

(b) As explained to us, all the fixed assets have been physically verified by the management according to a regular program which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies with respect to book records were noticed on such verification.

(c) In our opinion and according to explanations given to us, fixed assets disposed off during the year were not substantial and as such the disposal has not affected the going concern concept of the company.

(ii) (a) As explained to us, physical verification of inventory (except material in transit and lying with third parties) has been conducted by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. Discrepancies noticed on verification of inventory as compared to book records were not material and these have been properly dealt with in the books of accounts.

(iii) The company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence paragraph (iii)(a) to (iii)(g) of the aforesaid order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the , nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. No major weakness in the internal control system was observed during the course of audit.

(v) According to the information and explanations given to us, during the year there were no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs v (a) and (b) of the aforesaid order are not applicable.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public as pep provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules 1975. No order has been passed by the Company Law Board or National Company law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of such accounts and records.

(ix) (a) According to the records of the company, the company is not regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to information and explanations given to us the undisputed amounts outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable are as under:



Name of the Statue Nature of dues Amount Period to which Rs. amount relates

Sales Tax Haryana Sales Tax 110525 April 2009 to September 2009

Sales Tax Chennai Sales Tax 120461 March 2008

Sales Tax Haryana Demand 567396 2006-07

Sales Tax Mumbai Sales Tax 198277 August 2009

Central Excise Act Excise Duty 27555087 April 84 to Oct. 93



(b) According to the records of the company, dues in respect of Sales Tax/Income Taxi Customs Duty /Wealth Tax/Service Tax/Excise Duty /Cess which have not been deposited on account of any dispute are as under:

Name of Nature of dues Amount Forum where pending the Statue Rs.

Haryana Value VAT 4407602 Joint Excise & Taxation Added Tax Act Commissioner



(x) As at 31.03.2010 the accumulated losses of the company are more than fifty percent of its net worth. The company has incurred cash losses during the financial year covered by our audit. Cash loss was not incurred in the immediately preceding financial year.

(xi) The company has defaulted in payment of dues to financial institutions, banks and debenture holders. Details as per company s books of accounts are as under:



Name of Institu tion / Bank Nature of Dues Due Dates Remarks Principal Interest Rs. Rs.

Debentures- 14% 2407547 21.12.1999

2427614 21.12.2000

432054 Since 30.09.1998

6769226 Since 01.04.2000 Not provided in

Books of Accoun

ts (Refer No

te No. 6(g)

in Schedule 21)

Debentures- 15% 2894911 09.12.2000

2894911 09.12.2001

3256775 09.12.2002

1138090 Since 30.09.1998

13569894 Since 01.04.2000 Not provided in

Books of Accou

nts (Refer No

te No. 6(g)

in Schedule 21)

Debentures- 19% 1666666 03.01.2000

1666667 03.01.2001

1666666 03.01.2002

48405390 Since 03.01.2000



Note : Does not include amount for which one time settlement (OTS) has been negotiated with the lenders and repayment of dues has been rescheduled and payments are being made as per reschedulement. (Refer Note No. 5(d) and 6 (d) on Schedule 21).

The limits with banks were overdrawn for most of the year and were within limits for the remaining part of the year. The overdrawn limits as on 31.03.2010 are as under:



Nature of Limit Name of the Bank Limit Balance as Excess Remarks per Banks (Rs. i n Lacs) (Rs. in Lacs) (Rs. in Lacs)

Demand Loan Nainital Bank Limited 27.40 27.55 0.15 Borrowings

State Bank of Travancore 82.20 83.05 0.85 in excess

Canara Bank 98.00 98.04 0.04 of limit

Bank of Baroda 136.00 137.39 1.39

Packing Credit Canara Bank 277.00 282.01 5.01

Cash Credit ING Vysya Bank Ltd. 6.05 6.07 0.02

Canara Bank 225.00 226.10 1.10

State Bank of Travancore 375.80 378.25 2.45

Nainital Bank Limited 75.60 75.61 0.01

Nature of Limit Name of the Bank Amount Due Remarks Overdue Date (Rs.)

Bill Disc ounted/ State Bank of Patiala 3305946 15.03.2010 Payment pending on due date

Purchased Bank of Baroda 952826 19.03.2010

-2180455 12.02.2010

2001527 19.03.2010

3501264 23.03.2010

2343440 23.03.2010



(xii) Based on our examination of documents and records maintained by the company, we are of the opinion that since the company has not granted any loan and advance on the basis of security by way of pledge of shares, debenture and other securities, it is not required to maintain records in respect thereof.

(xiii) In our opinion the company is neither a chit fund nor nidhi / mutual benefit fund / society and hence paragraph 4 (xiii) of the aforesaid order is not applicable.

(xiv) In our opinion the company is not dealing in or trading in shares, securities, debentures and other investments and accordingly the provisions of paragraph 4(xiv) of the aforesaid order is not applicable.

(xv) Based on our examination of the records we are of the opinion that the company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion, term loans received during the year have been applied for the purpose for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that during the year net long term investments of Rs. 1643370 has been made from funds raised on short term basis.

(xviii) During the year the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of Companies Act, 1956.

(xix) During the year the company had not issued any debentures. The company has created security or charge in respect of debentures issued in earlier years.

(xx) During the year under review no money was raised by public issue.

(xxi) During the course of our examination of the books and records of the company, carried out in accordance with auditing standards generally accepted in India, we have not come across any instance of fraud by the company or on the company, noticed or reported during the year. We have also not been informed of any such case by the management.

For B.K. SHROFF & CO.,

Chartered Accountants

Firm Registration No. 302166E

3/7-B, Asaf Ali Road,

New Delhi-110 002. O.P. SHORFF

Dated : SEPTEMBER 04, 2010 Partner

Membership No. 06329



 
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