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Auditor Report of Prag Bosimi Synthetics Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of PRAG BOSIMI SYNTHETICS LIMITED, which comprise the Balance Sheet as at 31st March, 2015 and the Statement of Profit and Loss and Cash Flow Statement for the period 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 and presentation of these standalone financial statements that give a true and fair view of financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified u/s 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014. Thus 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act and the Rules made there under, including 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 Standard on Auditing specified u/s 143(10) of the Act and other authoritative pronouncement issued by the Institute of Chartered Accountants of Inada. Those Standards and pronouncements 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 judgments, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risks 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 adequate internal financial controls systems over financial reporting and operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies unused and reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating 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 standalone 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 31st March, 2015.

(b) In the case of the Statement of Profit and Loss, of the loss of the Company for the period ended on that date.

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("The Order") issued by the Central Government in terms of sub-section (11) of section 143 of the Act (hereinafter referred to as the "Order") 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 statement on matters specified in the paragraph 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 standalone financial statements comply with the Accounting Standards specified u/s. 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

The Annexure referred to in our Independent Auditors Report to the members of the company on the standalone financial statements for the period ended 31st March 2015, we report that:

(i) In respect of its Fixed Assets:

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

(b) The assets have been physically verified by the management in accordance with the phased programmed of verification adopted by the Company. In our opinion, the frequency of the verification is reasonable having regard to the size of the Company and nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the period.

(c) No substantial part of the fixed assets has been disposed off during the period.

(ii) In respect of its Inventories:

(a) As explained to us, the inventories were physically verified during the period by the Management at reasonable intervals. Inventory lying with the third parties and in transit have been verified by the management with reference to the confirmation received from them and/or subsequent receipt of goods.

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

(c) The Company has maintained proper records of its inventories. The discrepancies noticed on verification between physical stocks and book records were not material.

(iii) (a) The Company has not granted any loans secured or unsecured to companies, firms or parties covered in the Register maintained under section 189 of the Act.

(b) The company has taken unsecured loans of Rs.54,85,27,581/- from Managing Director and other related parties during the period. The terms of the loan repayment are not prima facie prejudicial to the interest of the Company.

(c) The Company has not taken any loans, secured or unsecured, except as stated in iii (b) above from companies, firms or other parties covered in the register maintained under section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) No deposits within the meaning of Section 73 to 76 or any other relevant provision of the Act and Rules framed there under have been accepted by the Company.

(vi) We are informed that the cost records maintained by the Company pursuant to the Order of the Central Government under section 209(1)(d) of the Act have been checked and verified by the cost auditor and hence we are not required to comment on it.

(vii) The Company has following undisputed amounts outstanding towards statutory dues for more than 6 months as on 31st March, 2015:

The Act applicable Details of outstanding Amount Amount (Rs. in Lacs)

The Assam Professions, Trades, Callings and Employments Taxation Act, 1947 Professional Tax 12.23

(viii) The accumulated losses of the Company at the end of the financial period are not more than fifty per cent of its net worth. The Company has incurred cash losses during the financial period covered by our audit and in the immediately preceding financial period.

(ix) In our opinion and according to the information and explanations given to us, the Company has not made regular payments towards dues to financial institutions, banks and debenture holders.

(x) During the period, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xi) The Company is not a dealer or trader in shares, securities, debentures and other investments.

(xii) In our opinion and according to information and explanations given to us, the Company has not given guarantee for loans taken by others from Banks or financial institutions except reported in the accounts.

(xiii) According to the information and explanations given to us, in our opinion, funds raised on short term basis have not been used for long term basis or vice versa.

(xiv) During the period, the Company has not made any preferential allotment of shares to the parties and companies covered and recorded in the Register maintained under section 189 of the Act.

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

(xvi) During the period, no fraud on or by the Company has been noticed or reported during the course of our audit.

For Bharat Shroff & Co. For AMD & Associates Chartered Accountants Chartered Accountants (Firm Reg. No.131026W) (Firm Regn.No.318191E)

Bharat B. Shroff Debashish Bordoloi Proprietor Partner (Membership No. 014822) (Membership No. 068018)

Place : Guwahati Date : 30th May, 2015


Sep 30, 2013

Report on the Financial Statement

We have audited the accompanying financial statements of PRAG BOSIMI SYNTHETICS LIMITED, which comprise the Balance Sheet as at 30th September, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the period then ended, and a summary of the 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 Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956. 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. 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 management, as well as evaluating the overall financial statement presentation.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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 30th September, 2013.

(b) In the case of the Statement of Profit and Loss, of the loss of the Company for the period ended on that date.

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

(d) The company has not provided any depreciation on a major part of its Plant & Machinery which is not put to use during the accounting period under review as per the accounting policy followed by the company.

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 in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 and the Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet and the Statement of Profit and Loss, comply with the Accounting Standards referred to in Section 211 (3C) of the Act.

(e) On the basis of the written representations received from the directors as on 30th September, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 30* September, 2013 from being appointed as a director in terms of Section 274(1 )(g) of the Act.

Annexure referred to in paragraph 5 (1) of Independent Auditors'' Report of even date on the financial statements for the period ended 30th September, 2013 of Prag Bosimi Synthetics Limited.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

(i) In respect of its Fixed Assets:

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

(b) The assets have been physically verified by the management in accordance with the phased programmed of verification adopted by the Company. In our opinion, the frequency of the verification is reasonable having regard to the size of the Company and nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the period.

(c) No substantial part of the fixed assets has been disposed off during the period. (ii) In respect of its Inventories:

(a) As explained to us, the inventories were physically verified during the period by the Management at reasonable intervals. Inventory lying with the third parties and in transit have been verified by the management with reference to the confirmation received from them and/or subsequent receipt of goods.

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

(c) The Company has maintained proper records of its inventories. The discrepancies noticed on verification between physical stocks and book records were not material.

(iii) (a) The Company has not granted any loans secured or unsecured to companies, firms or parties covered in the Register maintained under section 301 of the Act.

(b) The company has taken interest free unsecured loans of Rs. 40,72,70,350/- from Managing Director and other related parties during the period. The terms of the loan repayment are not prima facie prejudicial to the interest of the Company.

(c) The Company has not taken any loans, secured or unsecured, except as stated in iii (b) above from companies, firms or other parties covered in the register maintained under section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) (a) According to the information and explanation given to us, we are of the opinion that 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) According to the information and explanation given to us , no transitions were made with parties whose names are entered in the register maintained under section 301 of the Act.

(vi) No deposits within the meaning of Section 58A or any other relevant provision of the Act and Rules framed there under have been accepted by the Company.

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

(viii) We are informed that the cost records maintained by the Company pursuant to the Order of the Central Government under section 209(1 )(d) of the Act have been checked and verified by the cost auditor and hence we are not required to comment on it.

(ix) The Company has following undisputed amounts outstanding towards statutory dues for more than 6 months as on 30th September, 2013:

The Act applicable Details of outstanding Amount Amount (Rs. in Lacs)

The Assam Professions, Trades, Callings and Professional Tax 11.30

Employments Taxation Act, 1947

(x) The accumulated losses of the Company at the end of the financial period are not more than fifty per cent of its net worth. The Company has incurred cash losses during the financial period covered by our audit and in the immediately preceding financial period.

(xi) In our opinion and according to the information and explanations given to us, the Company has not made regular payments towards dues to financial institutions, banks and debenture holders.

(xii) During the period, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) The Company is not a dealer or trader in shares, securities, debentures and other investments.

(xiv) In our opinion and according to information and explanations given to us, the Company has not given guarantee for loans taken by others from Banks or financial institutions.

(xv) According to the information and explanations given to us, in our opinion, funds raised on short term basis have not been used for long term basis or vice versa.

(xvi) During the period, the Company has not made any preferential allotment of shares to the parties and companies covered and recorded in the Register maintained under section 301 of the Act.

(xvii) As per the High Court order dated 2i8t December, 2012 the company has cancelled the Cumulative Convertible Preference Shares (CCPS) of Rs. 10,00,00,000/- (1,00,000 shares of Rs. 100/- each) and Redeemable Convertible Cumulative Preference Shares (RCCPS) of Rs. 71,46,25,000/- (71,46,250 shares of Rs. 100/- each) both totaling to Rs. 81,46,25,000/- on 16th February, 2013 from accounts.

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

(xix) During the period, no fraud on or by the Company has been noticed or reported during the course of our audit.

For Bharat Shroff & Co. For AMD & Associates

Chartered Accountants Chartered Accountants

(Firm Reg. No:-131026W) (Firm Regn.No.318191E)

Bharat B. Shroff Debashish Bordoloi

Proprietor Partner

(Membership No. 014822) (Membership No. 068018)

Place : Guwahati

Date : 9th December, 2013


Mar 31, 2012

1 We have audited the attached Balance sheet of Prag Bosimi Synthetics Limited as at 31st March, 2012; statement of Profit and Loss Account for the eighteen months ended on that date and also Cash Flow Statement for the eighteen months ended on that date annexed thereto. These financial statements are 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 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, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (hereinafter referred to as the "Act"), we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said order, to the extent applicable.

4 Further to our comments in the Annexure referred to in paragraph 3 above and subject to the following:-

i. The Financial Statements have been prepared in accordance with the fundamental accounting assumption that the company is a going concern,

ii. Sundry debit/credit balances are subject to confirmation pending reconciliation as referred to in Note No.11 of Schedule 18;

5. The Company has not provided for depreciation on major part of its plant & machinery on the ground of non user. Such depreciation, not so provided, is computed to be Rs. 21,86,85,089/-. If the Company had provided full depreciation on its entire paint and machinery the net loss of the Company would be increased by the said amount.

The Company has written back depreciation on its plant and machinery on the ground of non user. Such depreciation written back is computed to be Rs. 2,49,000/- for the accounting period 01.04.2008 to 30.09.2009 and Rs. 11,62,80,208/- in the accounting period 01.10.2009 to 30.09.2010. If the Company had not written back depreciation on its Plant & Machinery, the net loss of the company would be increased by the said amount.

We report that: -

a. We have obtained all 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, subject to matter stated in paragraph 5 above the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting Standards referred to in sub section (3C) of Section 211 of the Act, to the extent applicable,.

e. On the basis of written representations received from directors as on 31st March, 2012 and taken on record by the Board of Directors, wherever applicable, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director of the Company 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 'significant accounting policies and notes to accounts' in Note 1 and other notes appearing elsewhere in the accounts, 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:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

ii. In the case of the statement of Profit and Loss Account, of the Loss of the Company for the period ended on that date; and

iii. In the case of the Cash Flow Statement, of the cash flows for the period ended on that date.

Annexure referred to in paragraph 3 of Auditors' Report of even date on the financial statements for the period ended 31st March, 2012 of Prag Bosimi Synthetics Limited.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

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

b) The assets have been physically verified by the management in accordance with the phased programmed of verification adopted by the Company. In our opinion, the frequency of the verification is reasonable having regard to the size of the Company and nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the period,

q) No substantial part of the fixed assets has been disposed off during the period.

2 a) The inventory has been physically verified by the management at reasonable intervals during the period.

Inventory lying with the third parties and in transit have been verified by the management with reference to the confirmation received from them and/or subsequent receipt of goods.

b) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records were not material.

3 a) The Company has not granted any loans, secured or unsecured to companies, firms or parties covered in the register maintained under section 301 of the Act.

b) The Company has taken interest free unsecured loan of Rs. 7,25,50,000.00 from Managing Directorand other related party during the period. The rate of interest and terms of the loan repayment are not prima facie prejudicial to the interest of the Company.

c) The Company has not taken any loans, secured or unsecured, except as stated in 3b. above from companies, firms or other parties covered in the register maintained under section 301 of the Act.

4 In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation, there are adequate internal control systems commensurate with the size of the company and the nature of it's business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

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

b) According to the information and explanation given to us, no transactions were made with parties whose names are entered in the register maintained under section 301 of the Act.

6 No deposits within the meaning of Section 58A or any other relevant provision of the Act and Rules framed there under have been accepted by the Company.

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

8 We have broadly reviewed the cost records maintained by the Company pursuant to the Order of the Central Government under section 209(1 )(d) of the Act and are of the opinion, prima facie that the prescribed records have been made and maintained. We are, however not required to make detailed examination of the records with a view to determine whether they are accurate or complete.

9 The Company has following undisputed amounts outstanding towards statutory dues for more than 6 months as on 31stMarch, 2012

The Act applicable Details of outstanding Amount Amount Rupees in Lacs

The Assam Professions, Trades, Callings and Employments Taxation Act, 1947 Professional Tax 9.08

The Income Tax Act 1961 Tax Deducted at Source 5.25

10 During the period, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities. .

11 The Company is not a dealer or trader in shares, securities, debentures and other investments.

12 In our opinion and according to information and explanations given to us, the Company has not given guarantee for loans taken by others from Banks or financial institutions.

13 According to the information and explanation given to us, in our opinion, the term loans were applied for the purpose for which they were raised.

14 According to the information and explanations given to us, in our opinion, funds raised on short term basis have not been used for long term basis or vice versa.

15 During the period the Company has not made any preferential allotment of shares to the parties and companies covered and recorded in the Register maintained under section301 of the Act.

16 The Company has created securities in respect of debentures issued in the past.

17 The Company has not raised any money by way of public issue during the period.

18 During the period no fraud on or by the Company has been noticed or reported during the course of our audit.

For Bharat Shroff & Co.

Bharat B. Shroff

Date: 01/09/2012 Proprietor

Chartered Accountants (Firm Regn No.131026W) M.No.014822


Sep 30, 2010

1 We have audited the attached Balance Sheet of the Prag Bosimi Synthetics Limited as at 30th September 2010, the Profit and Loss Account for the year ended on that date and also Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. 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 requited by the Companies (Auditors Report) Order, 2003. as amended by the Companies (Auditors 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 (hereinafter referred to as the "Act"), we give in the Annexure a statement or, the matters specified in paragraphs 4 and 5 of the said order, to the extent applicable.

4 Further to our comments in the Annexure referred to In paragraph 3 above and subject to the following:-

i. The Financial Statements have been prepared in accordance with the fundamental accounting assumption that the company is a going concern,

ii. Sundry debit/credit balances are subject to confirmation cendlng reconciliation as referred to in Note No.11 of Schedule 13;

We report that: -

a. We have obtained all 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 accounting Standards referred to in sub section (3C) of Section 211 of the Act, to the extent applicable,

e. On the basis of written representations received from directors as on 30th September 2010, and taken on record by the Board of Directors, wherever applicable, we report that none of the directors is disqualified as on 30th Sepiember 2010 from being appointed as a director of the Company 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 significant accounting policies and notes to accounts in schedule 18 and other notes appearing elsewhere in the accounts, 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:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 30th September 2010;

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 the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30th SEPTEMBER 2010 OF THE PRAG BOSIMI SYNTHETICS LIMITED.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit. we state that:

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

b) The assets have been physically verified by the management in accordance with the phased programme of verification adopted by the Company. In our opinion, the frequency of the verification is reasonable having regard to the size of the Company and nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the year,

c) No substantial part of the fixed assets has been disposed off during the year.

2 a) The inventory has been physically verified by the management at reasonable intervals during the year. Inventory lying with the third parties and in transit have been verified by the management with reference to the confirmation received from them and/or subsequent receipt of goods.

b) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records were not material.

3 a) The Company has not granted any loans, secured or unsecured to companies, firms or parties covered in the register maintained under section 301 of the Act.

b) The Company has taken interest free unsecured loan of Rs. 106,795,300 from Managing Director and other related parties during the year. The rate of interest and terms of the loan repayment are not prima facie prejudicial to the interest of the Company.

c) The Company has not taken any loans, secured or unsecured, except as stated in 3b above from companies, firms or other parties covered in the register maintained under section 301 of the Act.

4 In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

5 a) According to the information and explanations given to us. we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanation given to us. no transactions were made with parties whose names are entered in the register maintained under section 301 of the Act.

6 No deposits within the meaning of Section 58A or any other relevant provision of the Act and Rules framed there under have been accepted by the Company.

7 In our opinion, the Company has an internal audit system

commensurate with the size of the Company and nature of its business,

8 We have broadly reviewed the cost records maintained by the Company pursuant to the Order of the Central Government under section 209(1)(d) of the Act and are of the opinion, prima facie that the prescribed records have been made and maintained. We are, however not required to make detailed examination of the records with a view to determine whether they are accurate or complete.

9 Due to suspension of production from February, 2006, the Company could not make full payment of statutory dues. The Company has following undisputed amounts outstanding towards statutory dues for more than 6 months as on 30th September, 2010.

The Act applicable Details of outstanding Amount Amount Rs. in Lacs

Employees Provident Funds and Contribution 64.95

Miscellaneous Provisions Act 1952 to Provident Fund

The Assam Sales Tax Act. Assam Sales Tax 4.87

The Assam/Mumbai Professions, Professional Tax 6.94 Trades.Callings and Employments Taxation Act 1947

The Income Tax Act 1961 Tax Deducted at Source 46.88

The Income Tax Act 1961 Fringe Benefits Tax 11.72

Of the above, the Company has paid contribution to Professional Tax Rs. 0.11 Lacs, P.F. Rs. 5.21 Lacs and Tax Deducted at source Rs. 0.24 Lacs as on the date of this report.

10 During the year the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

11 The Company is not a dealer or trader in shares, securities, debentures and other investments.

12 In our opinion and according to information and explanations given to us, the Company has not given guarantee for loans taken by others from Banks or financial institutions.

13 According to the information and explanation given to us, in our opinion, the term loans were applied for the purpose for which they were raised.

14 According to the information and explanations given to us, in our opinion, funds raised on short term basis have not been used for long term basis or vice versa.

15 During the year the Company has not made any preferential allotment of shares to the parties and companies covered and recorded in the Register maintained under section 301 of the Act,

16 The Company has created securities in respect of debentures issued in the past.

17 The Company has not raised any money by way of public issue during the year.

18 During the year no fraud on or by the Company has been noticed or reported during the course of our audit.

NOTES:

A. SECURED DEBENTURES: The debentures are secured by First legal mortgage in favour of the trustees of all the companys immovable and moveable properties present and future, ranking pari-passu with the mortgages and charges created and/or to be created in favour of Financial institutions, and floating charge on all the assets of the company subject to prior charges created/to be created In favour of Companys Bankers on the Companys stock of raw material, semi-finished and finished goods, consumable stores and such other moveables as may be agreed by the trustees for securing the borrowing for working capital requirement in the ordinary course of business and also secured by a guarantee from erstwhile Company of the Promoter excluding AIDC.

B. TERM LOANS: The Term Loans are secured by a first mortgage of ail immoveable properties, both present and future, and first charge by way of hypothecation of all movables (save and except debts) including movable machinery, spares, tools & accessories, present and future, ranking pari-passu with the mortgages and charges created and/or to be created in favour of Financial institutions/debenture trustees, subject to prior charges created and/or to be created in favour of Bankers on stocks, stores and such other movables for working capital requirements and also secured by a guarantee from erstwhile Company of the Promoter excluding AIDC.

C. WORKING CAPITAL: Working Capital demand loans and Cash Credit are secured by a mortgage on second charge basis by deposit of title deeds in respect of Companys immovable properties, both present and future, and by hypothecation of whole present and future, stock in process, finished goods, consumables, spares, book debts etc, & other materials and stores whether raw or in process of manufacture and all articles manufactured therefrom whether stored at or be in or about the Companys godowns or premises at sipajhar, District Darrang, Assam or wherever else or in transit and Companys present and future book debts, outstanding money receivables, claims, bills, contracts, engagements, securities, Investments.assets and also personal guarantee of the Managing Director.

D. OTHER SECURED LOAN: The Company has taken loan from Srei Infrastructure Finance Ltd. during the year towards Upfront Payment for settlement of existing secured Loan and Revival of Plant & Machinery; secured by mortgage of all assets of the Company, charged on Escrow Account of all State and Central Subsidies receivable and personal guarantee of the Managing Director.

H.Khaund & Co. Bharat Shroff & Co Chartered Accountants Chartered Accountants (Firm Regn. No. 307031E) (Firm Regn. No. 131026W)

H.Khaund Bharat B. Shroff Proprietor Proprietor (M. No.011406) (M.No. 014822) Date: 31.05.2011


Sep 30, 2009

1 We have audited the attached Balance sheet of the Prag Bosimi Synthetics Limited as at 30th September 2009, the Profit and Loss Account for the eighteen months ended on that date and also Cash Flow Statement for the eighteen months ended on that date annexed thereto. These financial statements are responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis- statement. 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, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (hereinafter referred to as the "Act"), we annexe hereto a statement on the matters specified in paragraphs 4 and 5 of the said order, to the extent applicable.

4 Further to our comments in the Annexure referred to in paragraph 3 above and subject to the following:-

i. The Financial Statements have been prepared in accordance with the fundamental accounting assumption that the company is a going concern,

ii. Sundry debit/credit balances are subject to confirmation pending reconciliation as referred to in Note No. 15 of Schedule 18;

We report that: -

a. We have obtained all 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 accounting Standards referred to in sub section (3C) of Section 211 of the Act, to the extent applicable,

e. On the basis of written representations received from directors as on 30th September 2009, and taken on record by the Board of Directors, wherever applicable, we report that none of the directors is disqualified as on 30th September 2009 from being appointed as a director of the Company 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 significant accounting policies and notes to accounts in Schedule 18 and other notes appearing elsewhere in the accounts, 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:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 30thSeptember 2009;

ii. In the case of the Profit and Loss Account of the Profit of the Company for the period ended on that date; and

iii. The case of the Cash Flow Statement, of the cash flows for the period ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30th SEPTEMBER 2009 OF THE PRAG BOSIMI SYNTHETICS LIMITED.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

1 a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixed assets.

b) The assets have been physically verified by the management in accordance with the phased programme of verification adopted by the Company. In our opinion, the frequency of the verification is reasonable having regard to the size of trie Company and nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the year,

c) No substantial part of the fixed assets has been disposed off during the year.

2 a) The inventory has been physically verified by the

management at reasonable intervals during the year. Inventory lying with the third parties and in transit have been verified by the management with reference to the confirmation received from them and/or subsequent receipt of goods.

b) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records were not material.

3 a) The Company has not granted any loans, secured or unsecured to companies, firms or parties covered in the register maintained under Section 301 of the Act.

b) The Company has taken interest free unsecured loan of Rs. 35,588,538 from a relative of Managing Director during the period. The rate of interest and terms of the loan repayment are not prima facie prejudicial to the interest of the Company.

c) The Company has not taken any loans, secured or unsecured, except as stated in 3b above from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4 In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

5 a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section. b) According to the information and explanation given to us, no transactions were made with parties whose names are entered in the register maintained under Section 301 of the Act.

6 No deposits within the meaning of Section 58A or any other relevant provision of the Act and Rules framed there under have been accepted by the Company.

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

8 We have broadly reviewed the cost records maintained by the Company pursuant to the Order of the Central Government under Section 209(1)(d) of the Act and are of the opinion, prima facie that the prescribed records have been made and maintained. We are, however not required to make detailed examination of the records with a view to determine whether they are accurate or complete.

9 Due to suspension of production from February, 2006 Company could not make full payment of statutory dues. The Company has following undisputed amounts outstanding towards statutory dues for more than 6 months as on 30th September 2009

The Act applicable Details of outstanding Amount Amount Rupees in Lacs

Employees Provident Funds Contribution to 67.88 and Miscellaneous Provisions Provident Fund Act 1952

The Assam Sales Tax Act. Assam Sales Tax 4.87

The Assam Professions.Trades, Professional Tax 7.33 Callings and Employments Taxation Act 1947

The Income Tax Act 1961 Tax Deducted at Source 57.87

The Income Tax Act 1961 Fringe Benefits Tax 11.72

Of the above, the Company has paid contribution to Professional Tax Rs.0.22 Lacs, P.F. Rs.16.32 Lacs and Tax Deducted at source Rs. 11.58 Lacs as on the date of this report.

10 During the period, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

11 The Company is not a dealer or trader in shares, securities, debentures and other investments.

12 In our opinion and according to information and explanations given to us, the Company has not given guarantee for loans taken by others from Banks or financial institutions.

13 According to the information and explanation given to us, in our opinion, the term loans were applied for the purpose for which they were raised.

14 According to the information and explanations given to us, in our opinion, funds raised on short term basis have not been used for long term basis or vice versa.

15 During the period the Company has not made any preferential allotment of shares to the parties and companies covered and recorded in the Register maintained under Section301 of the Act.

16 The Company has created securities in respect of debentures issued in the past.

17 The Company has not raised any money by way of public issue during the period.

18 During the period no fraud on or by the Company has been noticed or reported during the course of our audit. H.Khaund & Co. Chartered Accountants (Firm Regn.No.307031E)

Place: Guwahati H.Khaund

Date: 19.11.2010 Proprietor

(M. No.011406)

 
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