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Auditor Report of Punjab Chemicals and Crop Protection Ltd.

Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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, of the state of affairs of the Company as at March 31, 2015,its profit and its 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, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that:

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

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

(c) The Balance Sheet, Statement of Profit and Loss, and 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 under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 33 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; and

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

Annexure to the Auditor's Report

Annexure referred to in paragraph 1 under the heading "Report on Other legal and Regulatory Requirement 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 except for furniture, fixture and equipments for certain location where item wise particulars in fixed asset register and tagging of fixed assets are in the process of updation.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Accordingly a portion of the fixed assets were verified during the year and no material discrepancies were noticed on such verification.

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

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of section73 to 76 or any other relevant provisions of the Companies Act, 2013, and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

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

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

Name Nature of Amount Period Forum of Dues (Rs. in to where Statute Lacs) which dispute (net of amount is advances relates pending paid)

The Excise Duty/ 572 2005-06 Deputy Central Service Tax to Commissioner Excise demands 2012-13 Central Excise, Act Commissioner and CESTAT

Income Tax / Interest 616 2007-08 Income Tax Tax Act, and Appellate 1961 2008-09 Tribunal.

The Penalty 11 2004-05 Entry Tax Punjab Officer, Sales Tax Shambhu Act Barrier

(c) According to the information and explanations given to us, the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

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

(ix) Based on our audit procedures and as per the information and explanations given by the management, the Company had delayed in certain repayments of dues (including interest) to banks. The delayed principal amount and the interest aggregate to Rs. 4,692 lacs and Rs. 942 lacs respectively (delays ranging from 1 day to 913 days). Of the above, Rs. 4,074 lacs sheet date and is pertaining to period post Corporate Debt Restructuring Scheme (CDR) which is effective and as approved by Corporate Debt Restructuring Empowered Group (CDR EG). Out of the outstanding balance as at March 31,2015, Rs. 236 lacs have been repaid subsequently, Rs. 1,588 lacs pertains to amounts due to State Bank of India for which the State Bank of India has sanctioned the One Time Settlement to the Company (as referred in Note 46 of the attached financial statements). The Company has not defaulted in repayment of dues to financial institutions and the Company did not have any outstanding dues in respect of debenture holders during the year.

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

(xi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S R B C & CO LLP ICAI Firm registration number: 324982E Chartered Accountants

per Ravi Bansal Partner Membership No.: 49365

Place of signature: Mumbai Date: May 28, 2015


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 ("the Act"), read with General Circular 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

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

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

(b) in the case of the 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.

Emphasis of Matter

We draw attention to Note 33 to the financial statements regarding managerial remuneration amounting to Rs. 48.48 lacs which was paid/provided during the period from November 14, 2012 to March 31, 2014 for which the Company has applied for the Central Government''s approval for regularization of conditions specified in Schedule XIII to Companies Act, 1956, in respect of default in repayment of debts and interest thereon for continuous period of thirty days in the preceding financial period. Pending receipt of approval, no adjustments has been considered necessary in these financial statements. Our opinion is not qualified in respect of this matter.

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 paragraphs4 and 5 of the Order.

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

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

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

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

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Affairs;

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

Annexure to the Auditor''s Report

The Annexure referred to in our report to the members of Punjab

Chemicals and Crop Protection Limited (''the Company'') for the year ended March 31, 2014. We report that:

(i) (a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixed assets except for furniture, fixture and equipments for certain location where item wise particulars in fixed asset register and tagging of fixed assets are in the process of updation.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

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

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

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted unsecured loan to one party

covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 30 lacs and the year-end balance of loan/advances granted to such party is Rs. NIL.

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

(c) The loan granted and the interest is re-payable on demand. As informed, the company has not demanded repayment of any such loan and interest during the year, thus, there has been no default on the part of the parties to whom the money has been lent.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company had taken loans from one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of loans taken from such party is Rs. 787 lacs. Further, the Company has taken fixed deposits from parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the period is Rs. 7.15 lacs and the year-end balance of the said fixed deposits is Rs. Nil.

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

(g) In respect of loans and fixed deposits taken, repayment of the principal amount is as stipulated and payments of interest have been regular.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

(v) (a) According to the information and explanations provided by

the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time except in respect of certain transactions of sale of goods and services, where because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at the prevailing market prices at the relevant time.

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

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, profession tax, investor education and protection fund, or employees'' state insurance, income-tax, sales-tax, wealth- tax, service tax, customs duty, excise duty have not been regularly deposited with the appropriate authorities and there have been delays in large number of cases.

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

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

Name of Nature Amount statue Dispute (Rs.in Lacs) (net of advances paid)

The Modvat taken on 599 Central sale in transit, Excise recovery of Act cenvat credit/cess, Excise duty on job-work, Tax on product registration expenses

Income Disallowance 616 Tax Act under Transfer Pricing and sec. 14A

The Improper 11 Punjab Documents Sales Tax Act

Name Period Forum of to Where statue Which disput amount is relates pending

The 2005-06 Deputy to Commissioner Central to Central Excise, Excise 2012-13 Commissioner Act and CESTAT Income 2007-08 Income Tax Tax Act and Appellate 2008-09 Tribunal.

The 2004-05 Entry Tax Punjab Officer, Sales Tax Shambhu Act Barrier

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

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company had delayed in certain repayments of dues (including interest) to financial institutions and banks. The delayed principal amount and the interest aggregate to Rs. 3,743 lacs and Rs. 1,485 lacs respectively (delays ranging from 1 day to 548 days). Of the above, Rs. 4,246 lacs is outstanding at the balance sheet date. The above amount includes principal and interest amount of Rs. 3,373 lacs and Rs. 874 lacs respectively pertaining to period post Corporate Debt Restructuring Scheme (CDR) which is effective and as approved by the Corporate Debt Restructuring Empowered Group (CDR EG).

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet and cash flow statement of the Company, we report that the Company has used funds raised on short-term basis amounting Rs. 2,765 lacs for long-term purposes. The Company has utilised such short- term loans from banks towards purchase of fixed assets and funding of operating losses.

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

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

(xx) The Company has not raised any money through public issue during the period.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. Batliboi& Co. LLP ICAI Firm registration number: 301003E Chartered Accountants

per Ravi Bansal Partner Membership No.: 49365

Place: Mumbai Date: May 29, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Punjab Chemicals and Crop Protection Limited (‘the Company''), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the period from October 1, 2012 to March 31, 2013 (''the period'') and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

Opinion

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

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

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

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

Emphasis of Matter

We draw attention to Note 35 to the financial statements regarding managerial remuneration amounting to Rs. 13.29 lacs which was paid/provided during the period from November 14, 2012 to March 31, 2013 for which the Company has applied for the Central Government''s approval for regularization of conditions specified in Schedule XIII to Companies Act, 1956, in respect of default in repayment of debts and interest thereon for continuous period of thirty days in the preceding financial period. Pending receipt of approval, no adjustments has been considered necessary in these financial statements. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in i subsection (3C) of section 211 of the Companies Act, 1956; and

(e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS'' REPORT

The Annexure referred to in our report to the members of Punjab Chemicals and Crop Protection Limited (''the Company'') for the period ended March 31, 2013. We report that :

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except for furniture, fixture and equipments for certain location where item wise particulars in fixed asset register and tagging of fixed assets are in the process of updation.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

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

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

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted unsecured loan to one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of loan/advances granted to such party is Rs. 30 lacs.

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

(c) The loan granted and the interest is re-payable on demand. As informed, the company has not demanded repayment of any such loan and interest during the year, thus, there has been no default on the part of the parties to whom the money has been lent.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company had taken loans from one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 787 lacs and the year-end balance of loans taken from such party was Rs. 787 lacs. Further, the Company has taken fixed deposits from parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount

l involved during the year was Rs. 8.35 lacs and the year-end balance of the said fixed deposits was Rs. 7.15 lacs.

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

(g) In respect of loans and fixed deposits taken, repayment of the principal amount is as stipulated and payments of interest have been regular.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time except in respect of certain transactions of purchases and sale of goods and services, where because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at the prevailing market prices at the relevant time.

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

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, profession tax, investor education and protection fund, or employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty have not been regularly deposited with the appropriate authorities and there have been delays in large number of cases.

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

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

Name of Statute Nature of Dispute Amount (Rs. in Lacs)

The Central Excise Act Modvat taken on sale in transit, 606 recovery of cenvat credit/cess, Excise duty on job-work, Tax on product registration expenses

Income Tax Act Disallowance under Transfer Pricing 993 and Sector 14-A.

The Punjab Sales Tax Act Improper Documents 11

NAME Period to which Forum where dispute amount relates is pending

Income Tax Act 2005-06 to Deputy Commissioner Central 2011-12 Excise, Commissioner and CESTAT

Income Tax Act 2007-08 and Dispute Resolution Panel 2008-09

2004-05 Entry Tax Officer, Shambhu Barrier

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

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company had delayed in certain repayments of dues (including interest) to financial institutions and banks. The delayed principal amount and the interest aggregate to Rs. 5,018 lacs and Rs. 269 lacs respectively (delays ranging from 1 day to 183 days). Of the above, Rs. 3,103 lacs is outstanding at the balance sheet date. above amount includes principal and interest amount of Rs. 2,970 lacs and Rs. 133 lacs respectively pertaining to period post Corporate Debt Restructuring Scheme (CDR) which is effective and as approved by the Corporate Debt Restructuring Empowered Group (CDR EG) and as more fully explained in Note 36 of the attached financial statements.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet and cash flow statement of the Company, we report that the Company has used funds raised on short-term basis amounting Rs. 3,025 lacs for long-term purposes. The Company has utilised such short-term loans from banks towards purchase of fixed assets and funding of operating losses.

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

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

(xx) The Company has not raised any money through public issue during the period.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number : 301003E

per Ravi Bansal

Partner

Membership Number : 49365

Place : Mumbai

Date : May 29, 2013


Mar 31, 2011

1. We have audited the attached Balance Sheet of Punjab Chemicals and Crop Protection Limited as at March 31, 2011 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 (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters 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 purposes of our audit;

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

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

iv. We are of the opinion that the balance sheet, the profit and loss account and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, read with para vi below;

v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

vi. Without qualifying our audit report, we draw attention to Note 19 of Schedule T to the financial statement. As per Scheme of Arrangement u/s 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Courts of Punjab & Haryana at Chandigarh and High Courts of Gujarat at Ahmedabad vide orders dated March 11, 2011 and March 23, 2011 respectively, the company has been allowed to create Business Reconstruction Reserve by revaluation of Fixed Assets for adjusting certain expenses as defined in the scheme. Accordingly, expenses amounting to Rs. 9,534 lacs have been adjusted against the Business Reconstruction Reserve;

vii. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2011;

b) in the case of the profit and loss account, of the loss for the year ended on that date; and

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

ANNEXURE TO THE AUDITORS' REPORT (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 except for furniture, fixture & equipment for certain location where item wise particulars in the fixed asset register and tagging of fixed assets are in the process of updation.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, material discrepancies were identified on such verification. These have been properly dealt with in the books of accounts.

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

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

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted unsecured loan/advance to one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of loan/advances granted to such party is Rs. 40 lacs.

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

(c) The loan/advance granted and the interest is re-payable on demand. As informed, the company has not demanded repayment of any such loan/advance and interest during the year, thus, there has been no default on the part of the parties to whom the money has been lent.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company had taken loans from one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 557 lacs and the year-end balance of loans taken from such party was Rs. 557 lacs. Further, the Company has taken fixed deposits from parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of the said fixed deposits was Rs. 29 lacs.

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

(g) In respect of loans and fixed deposits taken, repayment of the principal amount is as stipulated and payments of interest have been regular.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time except in respect of certain transactions of purchases and sale of goods and services, where because of the unique and specialized nature of the items involved and in absence of any comparable prices, we are unable to comment whether the transactions were made at the prevailing market prices at the relevant time.

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

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, or employees' state insurance, income-tax, sales tax, wealth-tax, service tax, customs duty, excise duty have not been regularly deposited with the appropriate authorities and there have been serious

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

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

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

Name of Statute Nature of Dispute Amount (Rs.in Lacs)

The Central Excise Modvat taken on sale in transit, 328 Act recovery of cenvat credit/cess, Excise duty on job-work.

The Punjab Sales Improper Documents 11 Tax Act

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

The Central Excise 2005 -06 Deputy Commissioner Act Central Excise, Commissioner and CESTAT The Punjab Sales 2004-05 Entry Tax Officer, Shambhu Tax Act Barrier (x) The Company's accumulated losses at the end of the financial year are less than fifty percent of its net worth and it has incurred cash losses in the current year and in the immediately preceding financial year.

(xi) On the basis of audit procedures performed by us, and according to the information, explanation and representations given to us by the management, the Company had delayed in certain repayments of dues (including interest) to financial institutions and banks. The delayed principal amount and the interest excluding dues covered by restructured agreement aggregates to Rs. 1,231 lacs and Rs. 2,416 lacs respectively and delays range from 1 day to 243 days. Further, during the year, the company has restructured loan arrangement with financial institutions and bank whereby dues have been rescheduled.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet and cash flow statement of the Company, we report that the Company has used funds raised on short-term basis amounting, Rs. 8,241 lacs for long-term purposes. The Company has utilised such short-term loans from banks towards purchase of fixed assets and funding of operating losses.

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

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

(xx) The Company has not raised any money through public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. Batliboi & Co. Firm registration number: 301003E Chartered Accountants

Per Ravi Bansal Partner Membership No.: 49365

Place: Mumbai Date: May 30, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Punjab Chemicals and Crop Protection Limited as at March 31,2010 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) 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. The Company has not provided for diminution other than temporary, in value of certain long term investment amounting to Rs.98lacs as required by AS- 13 "Accounting for Investments" issued by the Institute of Chartered Accountants of India. Had the impact of our observation been considered, then net loss before tax for the year would have been higher and reserves and surplus as at March 31,2010 would have been lower by Rs.98 lacs. Similar qualification was made in the audit report for the year ended March 31,2009.

5. Furtherto our comments in the Annexure referred to above, we reportthat:

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

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

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

iv. We are of the opinion that the balance sheet, the profit and loss account and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, except for the effect of matter specified in paragraph 4 above.

v. On the basis of the written representations received from the directors, as on March 31,2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31,2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

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

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31,2010;

b) in the case of the profit and loss account, of the loss for the year ended on that and

c) in the case of cash flow statement, of the cash flows f orthe year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(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 except in case of certain assets where item wise particulars and tagging of fixed assets are in the process ofupdationin the fixed asset register.

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

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

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

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted unsecured loan / advance to parties covered in the register maintained under section 301 of the Companies Act, 1956 The maximum amount involved during the year and the year- end balance of loan/advances granted to such party is Rs 34 lacs.

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

(c) The loan / advance granted and the interest is re-payable on demand. As informed, the company has not demanded repayment of any such loan / advance and interest during the year, thus, there has been no default on the part of the parties to whom the money has been lent.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has taken loans from companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.1,017 lacs and the year-end balance of loans taken from such parties was Rs.422 lacs. Further, the Company has taken fixed deposits from parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of the said fixed deposits was Rs.20 lacs.

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

(g) In respect of loans and fixed deposits taken, repayment of the principal amount is as stipulated and payments of interest have been regular.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 oftheAct that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time except in respect of certain transactions of purchases and sale of goods and services, where because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the trarjsactions were made at the prevailing market prices at the relevant time.

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

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protectioh fund, or employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows:

Name of the statute Nature of Amount (Rs in Period to which Due Date Date of the dues Lacs) the amount relates Payment

Value Added Tax & Sales tax Sales Tax 3 FY 2008-09 Various Not yet paid

Sales Tax 21 FY 2009-10 Various April 2010

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

Name of Statute Nature of Dispute Amount Period to which Forum where dispute is (Rs. in Lacs) amount relates pending

The Central Modvat taken on sale in transit, 328 2005-06 Deputy Commissioner Excise Act recovery of cenvat credit/cess, Central Excise. Excise duty on job-work Commissioner and CESTAT

Modvat taken on sale in transit, 4 1995-96 Additional Commissioner. duplicate copy issue and other Central Excise matters.

Erroneous Availment of Cenvat 1 2005-06 CESTAT Credit Availment of Credit on Capital 1 2008-09 CESTAT Goods as MS Angle, Channel plates, etc.

Cenvat taken on input used for 4 2004-05 Additional Commissioner. intermediate goods in Pharma Centrai Excise Division damaged in Flood

The Punjab Improper Documents 11 2004-05 Entry Tax Officer, Sales Tax Act Shambhu Barrier

(x) The Companys accumulated losses at the end of the financial year are less than fifty per cent of its net worth and it has incurred cash iosses in the current year and not incurred cash loss in the immediately preceding financial year.

(xi) On the basis of audit procedures performed by us, and according to the information, explanation and representations given to us by the management, the Company had delayed in certain repayments of dues (including interest) to domestic financial institutions and banks. The delayed principal amount and the interest aggregates to Rs 4,531 lacs and Rs 721 lacs respectively, and delays range from 1 day to 199 days.

(xii) According to the information and explanations given to us and based on the documents and records produced to us. the Comoany has not granted ioans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii)ln our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

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

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

(xvi) Based on information and explanations given to us bythe management, term loans were applied torthe purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet and cashflow statement of the Company, we report that the Company has used funds raised on short-term basis amounting Rs 4,229 lacs for long-term purposes. The Company has utilised short- term loans from banks aggregating to Rs. 4,229 lacs towards purchase of fixed assets, investments and funding of operating losses.

(xviii) The Company has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. In our opinion the price at which shares have been issued is not prejudicial to the interest of the Company.

(xix) The Company did not have any outstanding debentures duringthe year.

(xx) The Company has not raised any money through public issue during the year.

(xxi) Based upon the audit procedures performed forthe purpose of reporting the true and fair view of the financial statements and as perthe information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. Batliboi & Co.

Firm registration number: 301003E Chartered Accountants

Per Ravi Bansal Partner

Membership No.: 49365

Place: Mumbai Date: May 26, 2010

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