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Auditor Report of Radha Madhav Corporation Ltd.

Mar 31, 2015

Report on the Financial Statements

We have audited the accompanying financial statements of Radha Madhav Corporation Limited, which comprise the Balance Sheet as at 31st March 2015, the statement of Profit and Loss and the cash flow statement for the year ended on that date, 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 financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

a) Regarding preparation of accounts on the basis of going concern in spite of brought forward losses of Rs.4204.03 millions which has resulted into negative net worth of Rs.1286.20 millions as at 31st March, 2015. The company also has working capital deficiency. These factors raise doubts about, the company's ability to continue as a going concern which is dependent upon infusion of long terms funds for its future operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of assets and classification of liabilities that might result, should the company be unable to continue as a going concern

b) The Outstanding balances as at the end of the year under consideration in respect of sundry debtors, loans & advances and sundry creditors are subject to confirmation from respective parties and consequential reconciliation and adjustments arising there from if any. Consequential impact thereof on the financial statements is not ascertainable.

c) Non provision/non accounting of interest payable to the Banks/ financial institutes/ Asset Reconstruction Company from whom various secured loans have been obtained of Rs 658.38 million for the year under consideration and Rs 1862.29 million till the date of Balance Sheet including reversal of interest of Rs.645.75 million in preceding year.

d) During the period under consideration one of the secured creditor State Bank of India has assign the financial assistance granted by it to Alchemist Asset Reconstruction Company Limited (AARCL) u/s 5 of SERFAESI Act, together with all underlying securities, rights, title and interest in respect thereof. The company has on the basis of its offer letter of the company which is pending approval from the said AARCL has accounted for gain on settlement of dues of Rs. 980.46 million.

e) Above mention para. c & d has effect of showing higher EPS before / after extraordinary by Rs. 28.86 and diluted EPS before extraordinary items Rs.27.89 and consequential effect on showing accumulated losses lower by Rs 2842.75 million.

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

i. in the case of the Balance sheet, of the state of affairs of the Company as at 31st March, 2015,

ii. in the case of Statement of Profit and Loss, the profit of the Company for the year ended on that date.

iii. in the case of Cash Flow Statement, of the cash flow 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 the paragraph 3 and 4 of the Order, to the extent applicable.

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

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

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

c) the balance sheet, the statement of profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account;

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

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

and

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

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any on long-term contracts including derivative contracts and

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

On the basis of checks as considered appropriate and in terms of the information and explanations given to us, we report as under:

1. FIXED ASSETS:

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

(b) As per the information and explanations given to us, physical verification of fixed assets has been carried out in terms of the phased programme of verification of its fixed assets adopted by the Company and no material discrepancies were noticed on such verification. In our opinion the frequency of verification is reasonable, having regard to the size of the Company and nature of its business.

2. INVENTORIES:

(a) As per the information furnished, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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 except for material lying on shop floor (work in process) and stock in trade. In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. LOANS:

(a) As per the information furnished, 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.

(b) As 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 , the Clause (iii)(a) and (iii)(b) are not applicable.

4. INTERNAL CONTROL SYSTEM:

In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory 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 controls of the company.

6. PUBLIC DEPOSITS:

The Company has not accepted any deposits during the period from the public within the meaning of the provision of Section 73 to 76 or any other relevant provisions of the Companies Act, and rules made there under. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or other Tribunal.

8. COST RECORDS:

According to the information and explanations given to us the Central Government has not prescribed the maintenance of Cost Records Under Section 148 (1) of the Companies Act 2003, in respect of the Company's products.

9. STATUTORY DUES:

(a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise-duty cess and other statutory dues wherever applicable except the due tabulated as which were outstanding as at 31st March 2015 for a period of more than six months from the date they became payable .

SR. NO. PARTICULARS AMOUNT (In millions)

1 Service Tax 0.88

2 Provident Fund Contnbution 1.93

3 ESIC Contribution 0.33

4 VAT & CST 0.44

(b) According to the records of the Company, no dues of sales tax, income- tax, customs, wealth-tax, service tax, excise duty, cess which have not been deposited on account of disputes except as mentioned below;

Nature of Dues Disputed Unpaid disputed Authority where dispute is pending Liability Liability (in millions) (in millions)

Excise & 14.45 11.45 High Court Service Tax

Excise & 7.80 7.80 Customs, Excise & Service Tax Service Tax Appellate tribunal

Excise & 7.78 7.52 Commissions (Appeal) Service Tax Central Excise & Customs

Sales Tax 14.94 14.94 Deputy Commission commercial Tax office

Provident Fund 12.28 12.28 Employee's Provident Fund Appellate Tribunal

(c) According to the information and explanations given to us no amount required to be transferred to investor education and protection fund in accordance with the relevant provision of the Companies Act, 2013 and rule made there under has been transferred to such fund.

10. ACCUMULATED LOSSES:

The accumulated losses of the Company are more than fifty percent of its net worth at the end of the financial period. The Company has not incurred cash losses during the financial year covered by our audit but has incurred cash losses during the immediately preceding financial year.

11. REPAYMENT OF DUES OF FINANCIAL INSTITUTIONS:

Based on our Audit procedures and the information and explanation given by the management , we are of the opinion that the Company has defaulted in repayment of dues to Financial Institutions as on 31.03.2015.

Default in Payment

Particulars Period of Default Amount (RS. In millions)

Dues to Banks

Principal 42 months 2562.45

Interest (not accounted/ provided in Books of accounts 43 months 1862.29

Total 4424.73

15. GUARANTEE:

According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

16. UTILIZATION OF TERM LOAN FUND:

In our opinion, the company has not obtained any term loan during the year covered by our report.

21. FRAUD ON OR BY THE COMPANY:

As per the information and explanations given to us, no fraud on or by the Company has been noticed or reported during this period except for Forgery of cheques of Rs. 6.00 million by a supplier, company has filed Forgery case under Negotiable Instrument Act against the supplier.

For H. P. SHAH ASSOCIATES

FRN. No. 109588W

Sd/-

H. P. SHAH

PROPRIETOR

CHARTERED ACCOUNTANTS Place : Vapi

MEMBERSHIP No. 39093 Date : 19.05.2015


Mar 31, 2014

We have audited the accompanying financial statements of Radha Madhav Corporation Limited, which comprise the Balance Sheet as at 31st March 2014, the statement of Profit and Loss and the cash flow statement for the year ended on that date, 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 and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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 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 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 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 the accounting policies used and the reasonableness of the accounting estimates made by the 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

Subject to:

a) Note No. 33 regarding preparation of accounts on the basis of going concern in spite of loss of Rs. 793.56 million incurred during the year and brought forward losses of Rs.3410.47 millions which has resulted into negative net worth of Rs.2931.92 millions as at 31st March, 2014. The company also has working capital deficiency. These factors raise doubts about, the company''s ability to continue as a going concern which is dependent upon infusion of long terms funds for its future operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of assets and classification of liabilities that might result, should the company be unable to continue as a going concern.

b) The Outstanding balances as at the year end under consideration in respect of some sundry debtors, loans & advances and sundry creditors are subject to confirmation from respective parties and consequential reconciliation and adjustments arising there from if any. Consequential impact thereof on the financial statements is not ascertainable.

c) Interest on various loans accounted by the Company of Rs. 645.75 millions in prior years has been reversed by way of credit to statement of profit & Loss for the period starting from the date of its treatment by bank as Non Performing Assets.

d) non provision/non accounting of interest paid/payable to the Banks from whom various secured loans have been obtained amounting to Rs 558.16 millions for the year under consideration and Rs1057.85 millions till the date of Balance Sheet.

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

i. in the case of the Balance sheet, of the state of affairs of the Company as at 31st March, 2014,

ii. in the case of Profit and Loss Statement, the Loss of the Company for the year ended on that date.

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

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we give in the Annexure a statement on the matters specified 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 accounts as required by law, have been kept by the Company, so far as it appears from examination of such books.

c) The Balance Sheet and the statement of Profit & Loss and the cash flow statement dealt with by this report are in agreement with the books of Account.

d) In our opinion ,the Balance Sheet, statement of Profit and Loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 (which continue to be applicable in respect of section 133 of the Companies Act 2013 in terms of general circular 15/2013 dt. 13th September, 2013 of the Ministry of Corporate Affairs) and other recognized accounting practice and policies.

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

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, nor cess is due and payable by the Company.

ANNEXURE

On the basis of checks as considered appropriate and in terms of the information and explanations given to us, we report as under:

1. FIXED ASSETS:

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

(b) As per the information and explanations given to us, physical verification of fixed assets has been carried out in terms of the phased programme of verification of its fixed assets adopted by the Company and no material discrepancies were noticed on such verification. In our opinion the frequency of verification is reasonable, having regard to the size of the Company and nature of its business.

(c) During the period, the Company has not disposed of any substantial/major part of fixed assets.

2. INVENTORIES:

(a) As per the information furnished, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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 except for material lying on shop floor (work in process). In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. LOANS:

(a) As per the information furnished, the Company has not granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1956.

(b) As the Company has not granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956, the Clause (iii)(b), (iii)(c) and (iii)(d) are not applicable.

4. INTERNAL CONTROL SYSTEM:

In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory 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 controls of the company.

5. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTY:

(a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangement with related party 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 transaction made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the period, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. PUBLIC DEPOSITS:

The Company has not accepted any deposits during the period from the public within the meaning of the provision of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and rules made there under. Hence the Clause (vi) of the order is not applicable No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or other Tribunal.

7. INTERNAL AUDIT SYSTEM:

The Company does not have an internal audit system commensurate with the size of the company and nature of its business.

8. COST RECORDS:

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,

9. STATUTORY DUES:

(a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise-duty, cess and other statutory dues wherever applicable except the due tabulated as which were outstanding as at 31st March 2014 for a period of more than six months from the date they became payable .

SR. NO. PARTICULARS AMOUNT (In millions)

1 Service Tax 0.66

2 Provident Fund Contribution 1.62

3 ESIC Contribution 0.27

4 VAT & CST 0.38

(b) According to the records of the Company, no dues of sales tax, income- tax, customs, wealth-tax, service tax, excise duty, cess which have not been deposited on account of disputes except as mentioned below;

Nature of Dues Disputed Unpaid disputed Authority where dispute Liability Liability (in is pending (in millions) millions)

Excise & Service 22.81 19.81 Customs, Excise & Tax Service Tax Appellate tribunal

Excise & Service 1.63 1.63 Commissions Tax (Appeal)Central Excise & Customs

Sales Tax 5.68 4.53 Deputy Commission commercial Tax office

Provident Fund 36.26 36.26 Regional PF commissioner Sub Regional office.

10. ACCUMULATED LOSSES:

The accumulated losses of the Company are more than fifty percent of its net worth at the end of the financial period. The Company has incurred cash losses during the financial period covered by our audit and also during the immediately preceding financial period.

11. REPAYMENT OF DUES OF FINANCIAL INSTITUTIONS:

Based on our Audit procedures and the information and explanation given by the management , we are of the opinion that the Company has defaulted in repayment of dues to banks as on 31.03.2014.

Default in Payment

Particulars Period of Amount Default (RS. In millions)

Dues to Banks

Principal 30 months 2547.70 Interest (not 31 months 1058.06

accounted/provided in Books of accounts

Total 3605.76

12. LOANS & ADVANCES AGAINST SHARES, DEBENTURES AND OTHER SECURITIES:

Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. CHIT FUND COMPANY OR NIDHI/MUTUAL BENEFIT FUND/SOCIETY:

Clause (xiii) of the Order is not applicable to the Company as the Company as is not a chit fund Company or nidhi/mutual benefit fund/society.

14. MAINTENANCE OF RECORDS FOR DEALING/TRADING IN SHARES, SECURITIES, DEBENTURES & OTHER INVESTMENTS:

The Company is not dealing or trading in shares, securities, debenture or other investments hence the Clause (xiv) of the Order is not applicable to the Company.

15. GUARANTEE:

According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

16. UTILIZATION OF TERM LOAN FUND:

In our opinion, the term loans have been applied for the purpose for which they were raised.

17. MISMATCH BETWEEN SHORT TERM/LONG TERM FUNDS:

According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the company has utilized fund raised on short-term bases for Investment on Long Term bases to the extent of Rs. 800.74 millions.

18. PREFERENTIAL ALLOTMENT OF SHARES:

According to the information and explanations given to us the Company has not made preferential allotment of shares to parties covered in the Register maintained under section 301 of the Act.

19. CREATION OF SECURITIES FOR ISSUE OF DEBENTURE:

According to the information and explanations given to us during the period covered by our audit report, the Company has not issued any secured debenture.

20. END USE OF MONEY RAISED BY PUBLIC ISSUE:

The Company has not raised any money by public issues during the period covered by our report.

21. FRAUD ON OR BY THE COMPANY:

As per the information and explanations given to us, no fraud on or by the Company has been noticed or reported during this period.

*Note: Share/warrant Application Money

-Terms and conditions: There are no defined terms and conditions as the share application money were brought in by the promoters in terms of covenants Finance availed from bankers.

-No. of shares proposed to be issued: It could not be ascertained as the price of shares is to be determined at the time of issue as per Regulation 76 of SEBI (ICDR) 2009. -The amount of premium: The premium could not be worked out as it depends of the working the issue price of shares determined as per

Regulation 76 of SEBI (ICDR) 2009.

-The period before which shares are to be allotted: The period could not be defined as it depends upon various prior approvals of regulatory authority before allotment.

-Whether the company has sufficient authorized share capital to cover the share capital amount on allotment of shares out of share applicationmoney.: Yes.

-Interest accrued on amount due for refund.: The share application money (amount) is not due for refund as defined under section 73 of The Companies Act, 1956 and therefore there is no interest -The period for which the share application money has been pending Beyond the period for allotment as mentioned in the share application form along with the reasons for such share application money being pending: The period is not defined as it depends upon various prior approvals of regulatory authority therefore no such period is defined in share application form.

Depreciation on Tangible Fixed Assets is provided on Written Down Value Method at the rates and in manner prescribed in Schedule XIV to the Companies Act, 1956 except on the office equipment (other than Air condisnor) having gross value of Rs. 1.78 million depreciation calculated @ 52.70% (previous year @ 52.70%) on WDV basis. Depreciation on additions to assets during the year is provided on pro-rata basis.

Reversal of Interest:

Interest on various loan accounted by the company of Rs. 645.75 million has been reversed, for the period starting from the date of its treatment by the bank as Non performing assets.

Labour Claim and Awards:

Labour claim/awards of Rs. 268.61 million has been granted by the competent authority.

Impairment Loss:

While carrying the exercise of identifing the impairment loss if any in carrying amount of fixed assets, looking to the past trend, future prospect and Valuation Report of Registered Valuer Mr. Yogeshkumar J. Joshi of Joshi & Associates dtd. 06-05-2014, company has identified impairment loss in carrying amount of Rs. 520.93 million during the year.

For H. P. SHAH ASSOCIATES FRN No.109588W

Sd/-

H. P. SHAH PROPRIETOR Place : Vapi CHARTERED ACCOUNTANTS Date : 29.05.2014 MEMBERSHIP No. 39093


Mar 31, 2013

We have audited the attached Balance Sheet of Radha Madhav Corporation Limited as at 31st March 2013, the statement of Profit and Loss Account for the period ended on that date and the cash flow statement for the period ended on that date annexed hereto. These financial statements are the responsibility of the Company's management. Our responsibility is to ex- press an opinion on these financial statements based on our audit.

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 esti- mates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003 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.

Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowl- edge and belief were necessary for the purpose of our audit.

b) In our opinion, proper books of accounts as required by law, have been kept by the Com- pany, so far as it appears from examination of such books.

c) The Balance Sheet and the Profit & Loss Account referred to in this report are in agree- ment with the books of accounts.

d) In our opinion the Balance sheet and Profit & Loss Account, comply with the Accounting Standards as referred to in sub section (3C) of section 211 of the Companies Act, 1956, to the extent applicable.

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

f) As stated in Note No. 15 to the financial statement, inadequate provisions have been made for Bad and Doubtful Debts to the extent of Rs.113.97 millions which has resulted into loss for the year, provision for Bad and Doubtful Debts, Balance in profit and loss statement being understated by Rs. 113.97 millions.

I n our opinion, and to the best of our information and according to the explanation given to us, the said Balance Sheet and the Statement of Profit & Loss Account read together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in so far as it relates to the Balance sheet, of the state of affairs of the Company as at 31st March, 2013,

ii. in so far as it relates to the Statement of Profit and Loss Account, the Loss of the Company for the period ended on that date, and

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

ANNEXURE

On the basis of checks as considered appropriate and in terms of the information and explanations given to us, we report as under:

1. FIXED ASSETS:

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

(b) As per the information and explanations given to us, physical verification of fixed assets has been carried out in terms of the phased programme of verification of its fixed assets adopted by the Company and no material discrepancies were noticed on such verification. In our opin- ion the frequency of verification is reasonable, having regard to the size of the Company and nature of its business.

(c) A uring the period, the Company has not disposed of any substantial/major part of fixed assets.

2. INVENTORIES:

(a) As per the information furnished, the inventories have been physically verified during the pe- riod by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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 except for material lying on shop floor (work in process). In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. LOANS:

(a) As per the information furnished, the Company has not granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1956.

(b) As the Company has not granted nor taken any loans, secured or unsecured to/from compa- nies, firms or other parties covered in the register maintained under section 301 of the Compa- nies Act 1956, the Clause (iii)(b), (iii)(c) and (iii)(d) are not applicable.

4. INTERNAL CONTROL SYSTEM:

In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory 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 controls of the company.

5. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTY:

(a) Based on the audit procedures applied by us and according to the information and explana- tions provided by the management, we are of the opinion that the particulars of contracts or arrangement with related party 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 transaction made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the pe- riod, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. PUBLIC DEPOSITS:

The Company has not accepted any deposits during the period from the public within the meaning of the provision of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and rules made there under. Hence the Clause (vi) of the order is not applicable No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or other Tribunal.

7. INTERNAL AUDIT SYSTEM:

The Company has an internal audit system commensurate with the size of the company and nature of its business. The internal Audit is being conducted by a firm of Chartered Accountants appointed by the management.

8. COST RECORDS:

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,

9. STATUTORY DUES:

(a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise-duty, cess and other statu- tory dues wherever applicable except as mentioned below. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st March 2013 for a period of more than six months from the date they became payable except as mentioned below;

SR. NO. PARTICULARS AMOUNT (In millions)

1 Service Tax 0.01

2 Provident Fund Contribution 0.71

3 ESIC Contribution 0.12

4 VAT & CST 0.19

(b) According to the records of the Company, no dues of sales tax, income- tax, customs, wealth- tax, service tax, excise duty, cess which have not been deposited on account of disputes except the excise liability of Rs.15.36 millions out of which unpaid liability is Rs.12.36 millions. Dispute is pending before Excise and Custom Appellate Tribunal and disputed unpaid income tax liability of Rs. 0.91 miilions, disputed is pending before commissioner of Income Tax (Appeals)

10. ACCUMULATED LOSSES:

The accumulated losses of the Company are more than fifty percent of its net worth at the end of the financial period. The Company has incurred cash losses during the financial period covered by our audit and also during the immediately preceding financial period.

11. REPAYMENT OF DUES OF FINANCIAL INSTITUTIONS:

Based on our Audit procedures and the information and explanation given by the management, we are of the opinion that the Company has defaulted in repayment of dues to a financial Institution, banks or debenture holder as on 31.03.2013.

Default in Payment

Particulars Period of Default Amount (Rs. In Millions)

Dues to Banks

Principal 18 months 2549.97

Interest 19 months 644.76

Total 3194.73

12. LOANS & ADVANCES AGAINST SHARES, DEBENTURES AND OTHER SECURITIES:

Based on our examination of the records and the information and explanations given to us, the Com- pany has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. CHIT FUND COMPANY OR NIDHI/MUTUAL BENEFIT FUND/SOCIETY:

Clause (xiii) of the Order is not applicable to the Company as the Company as is not a chit fund Com- pany or nidhi/mutual benefit fund/society.

14. MAINTENANCE OF RECORDS FOR DEALING/TRADING IN SHARES, SECURITIES, DEBENTURES & OTHER INVESTMENTS:

Che Company is not dealing or trading in shares, securities, debenture or other investments hence the Clause (xiv) of the Order is not applicable to the Company.

15. GUARANTEE:

According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

16. UTILIZATION OF TERM LOAN FUND:

In our opinion, the term loans have been applied for the purpose for which they were raised.

17. MISMATCH BETWEEN SHORT TERM/LONG TERM FUNDS:

According to the information and explanations given to us and on an overall examination of the Bal- ance Sheet of the Company, we are of the opinion that the company has utilized fund raised on short- term bases for Investment on Long Term bases to the extent of Rs. 2636.19 millions.

18. PREFERENTIAL ALLOTMENT OF SHARES:

According to the information and explanations given to us the Company has not made preferential allotment of shares to parties covered in the Register maintained under section 301 of the Act.

19. CREATION OF SECURITIES FOR ISSUE OF DEBENTURE:

According to the information and explanations given to us during the period covered by our audit report, the Company has not issued any secured debenture.

20. END USE OF MONEY RAISED BY PUBLIC ISSUE:

The Company has not raised any money by public issues during the period covered by our report.

21. FRAUD ON OR BY THE COMPANY:

As per the information and explanations given to us, no fraud on or by the Company has been noticed or reported during this period.

For H. P SHAH ASSOCIATES FRN. No. 109588W

sd H. P. SHAH PROPRIETOR Place: Vapi CHARTERED ACCOUNTANTS Date : 24.05.2013 MEMBERSHIP No. 39093


Jun 30, 2012

We have audited the attached Balance Sheet of Radha Madhav Corporation Limited as at 30th June 2012, the statement of Profit and Loss Account for the 15 months period ended on that date and the cash flow statement for the 15 months period ended on that date annexed hereto. These financial statements are the responsibility of the Company's management. Our responsi- bility is to express an opinion on these financial statements based on our audit.

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.

As required by the Companies (Auditor's Report) Order, 2003 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.

Further to our comments in the Annexure referred to above, we report that:

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

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

c) The Balance Sheet and the Profit Loss Account and cash flow statement referred to in this report are in agreement with the books of accounts.

d) In our opinion the Balance sheet, Profit & Loss Statement and cash flow statement com- ply with the Accounting Standards as referred to in sub Section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable except as mentioned in para f to i.

e) On the basis of written representations received from the directors, as on 31st March 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th June 2012 from being appointed as a director in terms of clause (g) of sub-Section (1) of Section 274 of the Companies Act, 1956;

f) As stated in Note No 16 to the Financial Statement, Inadequate provisions have been made for Bad and Doubtful Debts to the extent of Rs. 73.93 millions which has resulted into the loss for the year, Provision for Bad and Doubtful Debts, Balance in Profit and Loss Statement being understated by Rs. 73.93 millions.

g) As stated in Note No 15 to the Financial Statement, Valuation of Inventories for the year has not been carried out by the company as per the provision of AS 2 and as per the accounting policy followed by Company according to which Work in progress has been valued at Rs. 654.61 millions but on the basis of Information and explanation given by the Management and physical condition of Work in progress noticed while attending the Physical Verification of Inventories and had this accounting policy been followed, the Valuation of Work in progress would have been Rs. 519.11 millions, this Overvaluation of Rs.135.50 millions in work in progress has resulted into understatement of Loss and over statement of inventories to the same extent.

h) Note No. 32 regarding preparation of accounts on the basis of going concern in spite of loss of Rs. 644.55 millions incurred during the year and brought forward losses of Rs. 783.88 millions which has resulted into negative net worth of Rs.156.32 millions as at 30th June, 2012. The company also has working capital deficiency. These factors raise doubts about, the company's ability to continue as a going concern which is dependent upon infusion of long terms funds for its future operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of assets carrying amount and classification of liabilities that might result, should the company be unable to continue as a going concern.

i) The Outstanding balances as at 30th June, 2012 in respect of some sundry debtors, loans & advances and sundry creditors are subject to confirmation from respective parties and consequential reconciliation and adjustments arising there from if any. Consequential im- pact thereof on the financial statements is not ascertainable

In our opinion, and to the best of our Information and according to the explanation given to us, the said account, subject to our comments in paragraph 2 (f to i) above consequential effect thereof is not ascertainable and read together with significant accounting policies and notes thereon, give the Information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance sheet, of the state of affairs of the Company as at 30th June, 2012,

ii. in the case of Profit and Loss Statement, the Loss of the Company for the 15 months period ended on that date.

iii. in the case of Cash Flow Statement, of the cash flow for the 15 months period ended on that date.

ANNEXURE

On the basis of checks as considered appropriate and in terms of the Information and explanations given to us, we report as under:

1. FIXED ASSETS:

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

(b) As per the Information and explanations given to us, physical Verification of fixed assets has been carried out in terms of the phased programme of Verification of its fixed assets adopted by the Company and no material discrepancies were noticed on such Verification. In our opin- ion the frequency of Verification is reasonable, having regard to the size of the Company and nature of its business.

(c) During the period, the Company has not disposed of any substantial/major part of fixed assets.

2. INVENTORIES:

(a) As per the Information furnished, the inventories have been physically verified during the period by the management. In our opinion, having regard to the nature and Location of stocks, the frequency of the physical Verification is reasonable.

(b) In our opinion and according to the Information and explanations given to us, 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 except for material lying on shop floor. In our opinion, discrepancies noticed on physical Verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. LOANS:

(a) As per the Information furnished, the Company has not granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1956.

(b) As the Company has not granted nor taken any loans, secured or unsecured to/from compa- nies, firms or other parties covered in the register maintained under Section 301 of the Compa- nies Act 1956 the Clause (iii)(b), (iii)(c) and (iii)(d) are not applicable.

4. INTERNAL CONTROL SYSTEM:

In our opinion and according to the Information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory 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 controls of the company.

5. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTY:

(a) Based on the audit procedures applied by us and according to the Information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangement with related party 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 transaction made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the period, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. PUBLIC DEPOSITS:

The Company has not accepted any deposits during the period from the public within the meaning of the provision of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and rules made there under. Hence the Clause (vi) of the order is not applicable No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or other Tribunal.

7. INTERNAL AUDIT SYSTEM:

The Company has an internal audit system commensurate with the size of the company and nature of its business. The internal Audit is being conducted by a firm of Chartered Accountants appointed by the management.

8. COST RECORDS:

We have broadly reviewed the books of account and records 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.

9. STATUTORY DUES:

(a) According to the Information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise-duty, cess and other statutory dues wherever applicable. According to the Information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st March 2012 for a period of more than six months from the date they became payable.

(b) According to the records of the Company, no dues of sales tax, income- tax, customs, wealth- tax, service tax, excise duty, cess which have not been deposited on account of disputes except the excise duty liability of Rs.15.36 millions out of which unpaid liability is Rs.12.36 millions. Dispute is pending before Excise and Custom Appellate Tribunal and disputed unpaid income tax liability of Rs. 0.91 millions, disputed is pending before commissioner of Income Ta x (Appeals).

10. ACCUMULATED LOSSES:

The accumulated losses of the Company are more than ffy percent of its net worth at the end of the financial period. The Company has incurred cash losses during the financial year covered by our audit and also during the immediately preceding financial year.

11. REPAYMENT OF DUES OF FINANCIAL INSTITUTIONS:

The Company has defaulted in repayment of dues to Banks from April 2010 and subsequently approached its lenders for restructuring of debt liabilities through Corporate Debt Restructuring Cell. Re- structuring proposal of the Company was approved by the CDR Cell on 18th November, 2010 and was implemented during March and April 2011. Even afiter this CDR the Company defaulted in payment of liabilities. According to the records examine by us and the Information and explanation given to us the delay/default in repayment of dues to Bank is given below; Delay in Payments

Particulars Due Date Date of Payments Amount (Rs Delay in No. in Mill -ions) of month

Dues to Banks

PRINCIPAL ON THE LAST DAY WITHIN 90 DAYS 12.90 UP TO 3 of Every Quarter from due date months

Interest On the last day Within 5 months 17.46 Up to 5 of Every month from due date months

Total 30.36

Default in Payment

Particulars Period of Default Amount (Rs. In Millions)

Dues to Banks

Principal 9 months 234.89

Interest 10 months 185.28

Total 420.17

12. LOANS & ADVANCES AGAINST SHARES, DEBENTURES AND OTHER SECURITIES:

Based on our examination of the records and the Information and explanations given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other Securities.

13. CHIT FUND COMPANY OR NIDHI/MUTUAL BENEFIT FUND/SOCIETY:

Clause (xiii) of the Order is not applicable to the Company as the Company as it is not a chit fund Company or nidhi/mutual benefit fund/society.

14. MAINTENANCE OF RECORDS FOR DEALING/TRADING IN SHARES, SECURITIES, DEBENTURES & OTHER INVESTMENTS:

The Company is not dealing or trading in shares, Securities, debenture or other investments hence the Clause (xiv) of the Order is not applicable to the Company.

15. GUARANTEE:

According to the Information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

16. UTILIZATION OF TERM LOAN FUND:

In our opinion, the term loans have been applied for the purpose for which they were raised.

17. MISMATCH BETWEEN SHORT TERM/LONG TERM FUNDS:

According to the Information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the company has utlized fund raised on short- term bases for Investment on Long Term bases to the extent of Rs. 234.58 millions.

18. PREFERENTIAL ALLOTIMENT OF SHARES:

According to the Information and explanations given to us the Company has not made preferential allotment of shares to parties covered in the Register maintained under Section 301 of the Act.

19. CREATION OF SECURITIES FOR ISSUE OF DEBENTURE:

According to the Information and explanations given to us during the period covered by our audit report, the Company has not issued any secured debenture.

20. END USE OF MONEY RAISED BY PUBLIC ISSUE:

The Company has not raised any money by public issues during the period covered by our report.

21. FRAUD ON OR BY THE COMPANY:

As per the Information and explanations given to us, no fraud on or by the Company has been noticed or reported during this period.

For H. P. SHAH ASSOCIATES FRN. No. 109588W

sd/-

H. P. SHAH

PROPRIETOR Place : Vapi

CHARTERED ACCOUNTANTS Date : 28.07.2012 MEMBERSHIP No. 39093


Mar 31, 2010

We have audited the attached Balance Sheet of Radha Madhav Corporation Limited as at 31st March 2010 and the Profit and Loss Account for the year ended on that date annexed thereto and also the cash flow statement for the year ended on that date. 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.

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 atest 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.

As required by the Companies (Auditors Report) Order, 2003 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.

Further to our comments in the Annexure referred to above, we report that:

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

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

c) The Balance Sheet and the Profit & Loss Account referred to in this report are in agreement with the books of accounts.

d) In our opinion the Balance sheet and Profit & Loss Account, comply with the Accounting Standards as referred to in sub section (3C) of section 21 1 of the Companies Act, 1956, to the extent applicable.

e) On the basis of written representations received from the directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed

as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

In our opinion, and to the best of our information and according to the explanation given to us, the said Balance Sheet and the Profit & Loss Account read together with the notes thereon give the information required by the Companies Act, 1 956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in so far as it relates to the Balance sheet, of the state of affairs of the Company as at 31 st March, 201 0,

ii. in so far as it relates to the Profit and Loss Account, the Loss of the Company for the year ended on that date, and

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

ANNEXURE

On the basis of checks as considered appropriate and in terms of the information and explanations given to us, we report as under:

1. FIXED ASSETS:

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

(b) As per the information and explanations given to us, physical verification of fixed assets has been carried out in terms of the phased programme of verification of its fixed assets adopted by the Company and no material discrepancies were noticed on such verification. In our opinion the frequency of verification is reasonable, having regard to the size of the Company and nature of its business.

(c) During the year, the Company has not disposed of any substantial/major part of fixed assets.

2. INVENTORIES:

(a) As per the information furnished, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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 except for material lying on shop floor. In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. LOANS:

(a) As per the information furnished, the Company has not granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1 956.

(b) As the Company has not granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1 956 the Clause (iii)(b), (iii)(c) and (iii)(d) are not applicable.

4. INTERNAL CONTROL SYSTEM:

In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory 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 controls of the company.

5. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTY:

(a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangement with related party 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 transaction made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. PUBLIC DEPOSITS:

The Company has not accepted any deposits during the year from the public within the meaning of the provision of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1 956, and rules made there under. Hence the Clause (vi) of the order is not applicable No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or other Tribunal.

7. INTERNAL AUDIT SYSTEM:

The Company has an internal audit system commensurate with the size of the company and nature of its business. The internal Audit is being conducted by a firm of Chartered Accountants appointed by the management.

8. COST RECORDS:

As explained to us the Central Government has not prescribed the maintenance of Cost Records Under Section 209(1 )(d) of the Companies Act 1 956, in respect of the Companys products.

9. STATUTORY DUES:

(a) According to the information and explanations

given to us and the records examined by us, the

Company is regular in depositing with appropriate

authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise- duty, cess and other statutory dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st March 2010 for a period of more than six months from the date they became payable.

(b) According to the records of the Company, no dues of sales tax, income- tax, customs, wealth-tax, service tax, excise duty, cess which have not been deposited on account of disputes except the excise liability of Rs.l .54 crore out of which unpaid liability is Rs.l.24 crore. Dispute is pending before Excise and Custom Appellate Tribunal.

10. ACCUMULATED LOSSES:

There are accumulated losses of the Company as on 31st March 2010 of Rs.25.20 crore. The Company has incurred cash losses during the financial year covered by our audit and not during the immediately preceding financial year.

1 1. REPAYMENT OF DUES OF FINANCIAL INSTITUTIONS:

Based on our audit procedures and the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holder.

12. LOANS & ADVANCES AGAINST SHARES, DEBENTURES AND OTHER SECURITIES:

Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. CHIT FUND COMPANY OR NIDHI/MUTUAL BENEFIT FUND/SOCIETY:

Clause (xiii) of the Order is not applicable to the Company as the Company as is not a chit fund Company or nidhi/ mutual benefit fund/society.

14. MAINTENANCE OF RECORDS FOR DEALING/ TRADING IN SHARES, SECURITIES, DEBENTURES & OTHER INVESTMENTS:

The Company is not dealing or trading in shares, securities, debenture or other investments hence the Clause (xiv) of the Order is not applicable to the Company.

15. GUARANTEE:

According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

1 6. UTILIZATION OF TERM LOAN FUND:

In our opinion, the term loans have been applied for the purpose for which they were raised.

17. MISMATCH BETWEEN SHORT TERM/LONG TERM FUNDS:

According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the company has utilized fund raised on short-term bases for Investment on Long Term bases to the extent of Rs.38.37 crore.

1 8. PREFERENTIAL ALLOTMENT OF SHARES:

According to the information and explanations given to us the Company has not made preferential allotment of shares to parties covered in the Register maintained under section 301 of the Act.

19. CREATION OF SECURITIES FOR ISSUE OF DEBENTURE:

According to the information and explanations given to us during the year covered by our audit report, the Company has not issued any secured debenture.

20. END USE OF MONEY RAISED BY PUBLIC ISSUE:

The Company has not raised any money by public issues during the year covered by our report.

21. FRAUD ON OR BY THE COMPANY:

As per the information and explanations given to us, no fraud on or by the Company has been noticed or reported during this year.

For H.P. SHAH ASSOCIATES

Sd/-

H. P. SHAH

Place :Vapi CHARTERED ACCOUNTANTS

Date : 28th May, 2010. MEMBERSHIP No. 39093



 
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