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Auditor Report of Rainbow Papers Ltd.

Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these 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 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 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 31st March, 2015, and 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 Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

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

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

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified 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 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164(2) of the Act.

(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 20(a) to the 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 – Refer Note 4(d)(iii) to the financial statements;

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

ANNEXURE TO INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date.)

(i) In respect of its fixed assets :

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

(b) As explained to us, the Company has a phrased program of physical verification of its fixed assets, which in our opinion, is reasonable having regard to the size of the Company and the nature of its business. During the year the Company has physically verified some of the assets and no material discrepancies were noticed on such verification.

(ii) In respect of its Inventories :

(a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

(c) The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

(iii) During the year the Company has not given any loans secured or unsecured to the companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Hence Clause (iii) (a) and (b) are not applicable to the Company.

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

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit and hence the provisions of Section 73 to 76 or any other relevant provisions of the Companies Act and the Companies (Acceptance of Deposits) Rules, 2014, with regard to the deposits accepted are not applicable to the Company. Therefore, the provisions of clause (v) of paragraph 3 of the Order are not applicable to the company. According to the information and explanations given to us, no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the Cost Records with the view to determine whether they are accurate or complete.

(vii) In respect of statutory dues:

(a) According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance ,Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid statutory dues were in arrears as at 31st March,2015 for a period of more than six months from the date they became payable.

(b) The disputed Statutory dues aggregating to Rs. 487.46 /- Lacs, that have not been deposited on account of disputed statutory matters pending before appropriate authorities are as under:

Name of the statute Nature of dues Amt. under Periods to Forum where dispute not which the the dispute is pending yet depo- amount sited relates As on 31st ( F.Y) March 2015 Rs,In Lacs

Income Tax Act, 1961 Assessment 93.08/- Income Tax Proceedings 2011-12 Appellate Tribunal

394.38/- 2012-13 Commissioner of Income Tax (Appeals)

Total 487.46/-

(c) The Company has transferred amount to investor education and protection fund in accordance with the relevant provisions of the Companies Act,1956 (1 of 1956) and rules made there under.

(viii) The Company does not have any accumulated losses at the end of the Financial year. The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the financial institution or banks or debenture holders.

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

(xi) According to the information and explanation given to us, the term loans were applied for the purpose for which it is obtained.

(xii) Based on the audit procedures performed and representation obtained from management we report that, no case of material fraud on or by the Company has been noticed or reported for the year under audit.

For P A R Y & Co

Chartered Accountants

(Firm Reg No:007288C)



Place : Ahmedabad (Sushil Goenka)

Date : 29th May, 2015 (Partner)

Mem No:115465


Mar 31, 2014

We have audited the accompanying financial statements of Rainbow Papers Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 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 gives a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.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 controls 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 Company''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 aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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, 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 Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with this Report comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/ 2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.;

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 of the Companies Act, 1956:

ANNEXURE TO IN DEPEN DENT AUDITOR''S REPORT

(Referred to in paragraph 1 under the heading of"Report on Other Legal and Regulatory Requirements"of our report of even date.)

(i) In respect of its fixed assets:

(a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us, the Company has a phased program of physical verification of its fixed assets, which in our opinion, is reasonable, having regard to the size of the Company and nature of its business. During the year, the company has physically verified some of the assets and no material discrepancies were noticed on such verification.

(c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

ii) In respect of its Inventories:

(a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the records of the Company, we are of the opinion that the company is maintaining proper records of inventories. As explained to us, there was no material discrepancies noticed on physical verification of inventories as compared to the book records.

(iii) In respect of the Loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956

(a) The Company has not given any Loan during the year to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Paragraph 4 (iii) (b), (c) & (d) of the Order are not applicable.

(e) The Company has taken Loan from two parties. In respect of the said loans, the maximum amount outstanding at any time during the year was Rs. 7295 Lacs and year-end balance is Rs. 7295 Lacs.

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans taken by the Company, are not prejudicial to the interest of the Company.

(g) In respect of the said Loans and interest thereon, there are no overdue amounts.

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

(v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

(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 transactions 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 contracts/arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the company.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public and hence the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public are not applicable to the Company. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

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

(ix) In respect of statutory dues:

(a) According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee''s State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

(b) According to the records of the Company there are no dues of Value added Tax, Income-tax Sales Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other Statutory dues, etc which have not been deposited on account of any dispute.

(x) The Company does not have any accumulated losses at the end of the Financial year. The company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the banks. The Company does not have debentures.

(xii) In our opinion and according to explanations given to us and based on the information available, no loans and advances have been granted by company on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund / nidhi / mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the company.

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans, taken by others, from banks or financial institutions. (xvi) The Company has raised new Term Loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raise.

(xvii) According to information and explanation given to us and on an overall examination of the financial statements and other records of the company, we are of the opinion that funds raised on short term basis have not been used for long term investments.

(xviii) During the year the company has issued 2,52, 000 Equity shares at a price of Rs. 81 (Face Value Rs. 2) amounting to Rs. 204.12 lacs as preferential allotment of the share to the company covered in the register maintained u/s 301 of the Companies Act, 1956. The prices at which such shares has been issued is not prejudicial to the interest of the company.

(xix) During the year covered by our audit report, the Company has not issued any debentures. Accordingly, the provisions of clause (xix) of paragraph 4 of the Order are not applicable to the Company.

(xx) The Company has not raised any money by way of public issue during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of the Order are not applicable to the Company.

(xxi) Based on the audit procedures performed and representation obtained from management we report that, no case of material fraud on or by the Company has been noticed or reported for the year under audit.

For P A R Y & Co Chartered Accountants (Firm Reg No:007288C)

Place : Ahmedabad P. Vamshi Krishna Reddy Date : 30/05/2014 (Partner) Mem No:224674


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of RAINBOW PAPERS LIMITED ("the Company"), which comprise th Balance Sheet as at March 31,2013, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, an a summaryofsignificant 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 financia position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to i, sub-section (3C) of section 211 of the Companies Act, 1956("theAct").This responsibility includes the design, implementatio, and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a tru< 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 i, accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India.Those Standards requin thatwe comply with ethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhetherth, 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 o the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal contro relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures tha are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used anc the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of th. 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 aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2013;

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

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

Report on Other Legal and Regulatory Requirements

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

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

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe purposeofouraudit;

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, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreementwith 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 referred to in subsection (3C) of section 211 ofthe Companies Act, 1956;

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 ofthe Companies Act, 1956.

ANNEXURETO INDEPENDENT AUDITOR''S REPORT

(Referred to in paragraph 1 under the heading o"Report on Other Legal and Regulatory Requirements''of our report of even date.)

(i) In respect of its fixed assets:

(a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us, the Company has a phased program of physical verification of its fixed assets, which in our opinion, is reasonable, having regard to the size of the Company and nature of its business. During the year, the company has physically verified some of the assets and no material discrepancies were noticed on such verification.

(c) In ouropinion, the Company has not disposed off a substantial partof its fixed assets during the year and the going concern status of the Company is not affected.

(ii) In respect of its Inventories:

(a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the records of the Company, we are of the opinion that the company is maintaining proper records of inventories. As explained to us, there was no material discrepancies noticed on physical verification of inventories as compared to the book records.

(iii) In respect of the Loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956

(a) The Company has not given any Loan during the year to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Paragraph 4 (iii) (b), (c) & (d) of the Order are not applicable

(e) The Company has taken Loan from two parties. In respect of the said loans, the maximum amount outstanding at any time during the year was Rs. 7295 Lacs and year-end balance is Rs. 7295 Lacs.

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans taken by the Company, are not prejudicial to the interest of the Company.

(g) In respect of the said Loans and interest thereon, there are no overdue amounts.

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

(v) In respect ofthe contracts or arrangements referred to in Section 301 ofthe Companies Act, 1956:

(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 transactions 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

contracts/arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value ofRs. 5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the company.

(vi) In ouropiniorvand according to the information and explanations given to us, the Company has not accepted any deposit from the public and hence the provisions of Section 58Aand 58AAorany other relevant provisions ofthe Companies Act, 1956and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public are not applicable to the Company.Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

(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 cost records maintained by the Company pursuant to the Companies (Cost Accounting

Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) In respect of statutory dues:

(a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee''s State Insurance, Income- Tax, Sales-Tax, Wealth-Tax, ServiceTax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31 - March, 2013 for a period of more than six months from the date they became payable.

(b) According to the records of the Company there are no dues of Value added Tax, Income-tax Sales Tax, Wealth Tax, Custom Duty, ServiceTax, Excise Duty, Cess and other Statutory dues, etc which have not been deposited on account ofanydispute:

(x) The Company does not haveany accumulated losses atthe end ofthe Financial year. The company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the banks.The Company does not have debentures.

(xii) In our opinion and according to explanations given to us and based on the information available, no loans and advances have been granted by company on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund / nidhi/ mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the company.

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

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

(xvi) The Company has raised new Term Loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raise.

(xvii)According to information and explanation given to us and on an overall examination of the financial statements and other records of the company, we are of the opinion that funds raised on short term basis have not been used for long term investments.

(xviii) During the year the company has issued 60,00,000 Equity shares at a price ofRs. 61 (Face Value Rs. 2) and 1 5,00,000 Equity shares at a price of Rs. 81 (Face Value Rs. 2) amounting to Rs. 4875 lacs as preferential allotment of the share to the company covered in the register maintained u/s 301 of the Companies Act, 1 956The prices at which such shares has been issued is not prejudicial to the interest of the company.

(xix) During the year covered by our audit report, the Company has not issued any debentures. Accordingly, the provisions of clause (xix) of paragraph 4 of the Order are not applicable to the Company.

(xx) The Company has not raised any money by way of public issue during the year. However, we have verified the end use of money initially raised through GDR issue.The same is disclosed in the notes to the Financial Statements (Refer Note No. 3(e)).

(xxi) Based on the audit procedures performed and representation obtained from management we report that, no case of material fraud on or by the Company has been noticed or reported for the year under audit.

For Talati & Talati

Chartered Accountants

Firm Regn No:110758W

Place :Ahmedabad Anand Sharma

Date : 09/05/2013 (Partner)

Membership No:129033


Mar 31, 2012

1. We have audited the attached Balance Sheet of RAINBOW PAPERS LIMITED as at 31st March 2012, and also the Statement of Profit and Loss 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 the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

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

iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with this Report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

vi. 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 31st March, 2012 from being appointed as a Director in terms of Clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956;

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

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012.

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

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

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph (3) of our Report of even date)

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

b. As explained to us, the Company has a phased program of physical verification of its fixed assets, which in our opinion, is reasonable, having regard to the size of the Company and nature of its business. During the year, the company has physically verified some of the assets and no material discrepancies were noticed on such verification.

c. In our opinion, the Company has not disposed of substantial part of fixed assets during the year and hence the going concern status of the Company is not affected.

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

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

c. On the basis of our examination of the records of the Company, we are of the opinion that the company is maintaining proper records of inventories. As explained to us, there was no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii) In respect of the Loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has not given any Loan during the year to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clause 4 (iii) (b), (c)&(d) of the Order are not applicable.

e) The Company has taken Loan from one party. In respect of the said loans, the maximum amount outstanding at any time during the year was Rs. 2745 Lacs and year-end balance is Rs.2745 Lacs.

f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans taken by the Company, are not prejudicial to the interest of the Company.

g) In respect of the said Loans and interest thereon, there are no overdue amounts.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system & procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also with regard to the sale of goods and services. Duringthe course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system

v) In our opinion and according to the information and explanations given to us, there were no transactions exceeding Rs. 5 Lacs with any party covered under section 301 of the Companies Act, 1956 that needs to be entered into the register maintained under the said section. Hence clause 4 (v)

(b) of the Order is not applicable.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public and hence the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public are not applicable to the Company.

vii) The Company has appointed a firm of Chartered Accountants as its Internal Auditor for the year under audit. The internal audit for the year is therefore carried out by the said firm. In our opinion, the Company has an internal audit system commensurate with the size of the company and nature of its business.

viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209(l)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix) a. According to the information & explanations given to us, undisputed statutory dues including Provident Fund, Employee State Insurance, Income Tax, Sales tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2012 for a period of more than six months from the date of becoming payable.

b. According to the information and explanations given & the records of the Company examined by us, the details of disputed dues not paid are as follows:

Name of the Nature of Forum where Total Amount Period to Statue Dues Pending Amount paid under which it Rs. protest relates

Revenue Dept, Additional Gujarat Revenue 37.56 Lacs 18.78 lacs 2003 Gujarat State premium Tribunal, Interest on Land Ahmedabad **

** The Tribunal has cancelled the order regarding additional premium on Land and the matter is again referred to The Collectors, Mehsana for re-valuation of premium amount.

x) The Company does not have any accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the banks. The company does not have any debentures.

xii) In our opinion and according to the explanations given to us, the Company has not granted any loans against security by way of pledge of shares, debentures and other securities. Therefore the provisions of this clause 4 (xii) of the Order are not applicable to the Company.

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, clause4(xiii) of the Order is not applicable to the Company.

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

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

xvi)In our opinion and according to the information and explanations given to us, the Term Loans availed by the Company have been applied for the purpose for which they were obtained

xvii) According to information and explanation given to us and on an overall examination of the financial statements and other records of the company, we are of the opinion that funds raised on short term basis have not been used for long term investment. Further we report that unsecured loans raised from one bank are not considered as short term loans, as the said borrowings are rolled over and considered by the company available for long term period and the amount raised is used for long term purposes.

xviii)During the year, the Company has issued 40,00,000 Equity Shares at a price of Rs. 61/- (face value Rs. 2/- each) amounting to Rs. 2,440 Lacs as preferential allotment of shares to the company covered in the register maintained u/s 301 of the Companies Act, 1956. The price at which such shares has been issued is not prejudicial to the interest of the Company.

xix) During the year covered by our audit report, the Company has not issued any debentures. Accordingly, the provision of clause (xix) of the Order are not applicable to the Company.

xx) The Company has not raised any money by way of public issue during the year. However, we have verified the end use of money initially raised through GDR issue. The same is disclosed in the notes to the Financial Statements (Refer Note No. 3(e)).

xxi) Based on the audit procedures performed and representation obtained from management we report that, no case of fraud on or by the Company has been noticed or reported for the year under audit.

For Talati & Talati

Chartered Accountants

Firm Reg No:110758W

Anand Sharma

Place: Ahmedabad Partner

Date: May 24th 2012 Membership No: 129033


Mar 31, 2011

1. We have audited the attached Balance Sheet of RAINBOW PAPERS LIMITED as at 31st March 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 the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Further to our comments in the Annexure referred to above, we report that;

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

ii. In our opinion, proper books of accounts 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. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this Report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

v. On the basis of written representations received from the Directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 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. 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 31st March, 2011.

(b) In the case of the Profit and Loss Account, of the profit for the year ended on that date.

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

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph (3) of our Report of even date)

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

b. The Company has a phased program of physical verification of its fixed assets, which in our opinion, is reasonable, having regard to the size of the Company and nature of its business. During the year, the company has physically verified some of the assets and no material discrepancies were noticed on such verification.

c. In our opinion, the Company has not disposed of substantial part of fixed assets during the year and hence the going concern status of the Company is not affected.

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

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

c. On the basis of our examination of the records of the Company, we are of the opinion that the company is maintaining proper records of inventory. As explained to us, there was no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii) a. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms & other parties listed in the register maintained u/s. 301 of the Companies Act, 1956. Accordingly, clause 4 (iii) (b), (c) & (d) of the Order are not applicable.

e. According to information and explanation given to us, the Company has not taken any Loans, secured or unsecured, from companies, firms or other parties covered in the Register maintained u/s 301 of the Companies Act, 1956. Consequently, clause 4 (iii) (f) and (g) of the Order are not applicable.

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

v) In our opinion and according to the information and explanations given to us, there were no transactions exceeding Rs. 5 Lacs with any party covered under section 301 of the Companies Act, 1956 that needs to be entered into the register maintained under the said section. Hence clause 4 (v) (b) of the Order is not applicable.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public and hence the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public are not applicable to the Company.

vii) The Company has appointed a firm of Chartered Accountants as its Internal Auditor for the year under audit. The internal audit for the year is therefore carried out by the said firm. In our opinion, the Company has an internal audit system commensurate with the size of the company and nature of its business.

viii) The Central Government has prescribed maintenance of Cost Records under Section 209 (1) (d) of the Companies Act, 1956 in respect of the product of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed verification of the records with a view to determine whether they are accurate or complete.

ix) a. According to the information & explanations given to us, undisputed statutory dues including Provident Fund, Employee State Insurance, Income Tax, Sales tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2011 for a period of more than six months from the date of becoming payable.

b. According to the information and explanations given & the records of the Company examined by us, the details of disputed dues not paid are as follows:

Name of Nature of Dues Forum where Total Amount paid Period to which the Statue pending Amount under protest it relates

Revenue Dept, Additional Gujarat 37.56 Lacs 18.78 lacs 2003 Gujarat State premium on Land Revenue Interest Tribunal, Ahmedabad **

** The Tribunal has cancelled the order regarding additional premium on Land and the matter is again referred to The Collectors, Mehsana for re-valuation of premium amount.

x) The Company does not have any accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the banks. The company does not have any debentures.

xii) In our opinion and according to the explanations given to us, the Company has not granted any loans against security by way of pledge of shares, debentures and other securities. Therefore the provisions of this clause 4 (xii) of the Order are not applicable to the Company.

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

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

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

xvi) In our opinion and according to the information and explanations given to us, the Term Loans availed by the Company during the year were prima facie applied for the purpose for which they were obtained.

xvii)According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that funds raised on short-term basis have prime facie not been used for long term investment.

xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained u/s 301 of the Companies Act, 1956. (Refer Note No. 9 of schedule 18 B)

xix) During the year covered by our audit report, the Company has not issued any debentures. Accordingly, the provision of clause (xix) of the Order are not applicable to the Company.

xx) The Company has not raised money through public issue during the year. However, we have verified the end use of money initially raised through GDR issue. The same is disclosed in the notes to the Financial Statements (Refer Note No. 10 of Schedule 18 B).

xxi) Based on the audit procedures performed and representation obtained from management we report that, no case of fraud on or by the Company has been noticed or reported for the year under audit.

For Talati and Talati

Chartered Accountants

Firm Reg No: 110758W

Anand Sharma

Place : Ahmedabad Partner

Date : May 7th 2011 Membership No: 129033










Mar 31, 2009

1. We have audited the attached Balance Sheet ofRAINBOW PAPERS LIMITED, AHMEDABAD as at 31st March, 2009, the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto which we have signed under reference to this report. These 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 from any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Furthertoourcomments in the Annexure referred to in Paragraph I 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 ouraudit.

(b) In our opinion, the Company has kept proper books of accounts as required by law, so far as appear from ourexamination of those books.

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

(d) In our opinion the Balance Sheet, Profit and loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956

(e) On the basis of the written representations received from the Directors as on 31.03.2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31.03.2009 from being appointed as Director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956

(f) In our opinion and to the best of our information and according to explanations given to us, the aforesaid financial statements read with note no. 7 of Schedule 19-B regarding change in method of depreciation, the statement on Significant Accounting Policies and other notes to accounts 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 Balance Sheet, of the state of affairs of the Company as at 31st March, 2009;

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

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

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph (3) of our Report of even date)

i) a. The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b. The Company has a phased program of physical verification of its fixed assets, which in our opinion, is reasonable, having regard to the size of the Company and nature of its business. During the year, the Company has physically verified some of the assets and no material discrepancies were noticed on such physical verification.

c. In our opinion, the Company has not disposed of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii) a. As explained to us, the management has physically verified inventories (excluding those in transit) at reasonable intervals during the year!

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management 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 inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii) a. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to Companies, Firms & other parties listed in the register maintained u/s. 301 of the Companies Act, 1956. Accordingly, clause (iii) (b), (c) & (d) of the order are not applicable.

b. . According to the information & explanations given to us, the Company has taken interest free loans from a

Company listed in the register maintained u/s. 301 of the Companies Act, 1956. As at the year-end the outstanding balance of such loan taken is Rs. 1252.5 Lacs and the maximum amount involved during the year was Rs. 1252.5 Lacs.

c. In our opinion, terms and conditions on which loan has been taken from the Company listed in the register maintained u/s. 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

d. As regards the loan taken as stated in para b above, the term of repayment have not been stipulated.

iv) In our opinion and according to the information and explanations given to us, there is adequate internal control procedure commensurate with the size of the Company and the nature of .its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal controls.

v) In our opinion and according to the information and explanations given to us, there were no transactions exceeding Rs. 5 Lacs with any party covered under section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the said section. Hence clause (V) (b) of the order is not applicable.

vi) The Company has not accepted any deposits from the public.

vii) In our opinion, the coverage of Internal Audit functions carried out by a firm of Chartered Accountants appointed by the management is commensurate with the size of the Company and nature of its business.

viii) The Central Government has prescribed maintenance of Cost Records under Section 209 (1) (d) of the Companies Act, 1956 in respect of the product of the Company, We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) a. According to the information & explanations given to us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales tax. Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2009 for a period of more than six months from the date of becoming payable. b. According to information and explanations given & the records of the Company examined by us, the details of disputed dues not paid are as follows :

Nature of the Nature of Forum where Total Statue Dues Pending Amount

Income Tax IT Demand CIT (Appeals)- Rs. 6.56 lacs Act, 1962 Ahmedabad

Revenue Additional Gujarat Revenue 37.56 lacs Dept, Gujarat Premium Tribunal, + Interest State on Land Ahmedabad





Nature of the Amount paid Period to Statue under protest which it relates

Income Tax Act, 1962 NIL AY 07-08

Revenue Dept, Gujarat State 18.78 lacs 2003

x) The Company has no accumulated losses as on 31.3.2009 and has not incurred any cash losses during the financial year covered by our audit or in the immediately precedingfinancial year.

xi) Based on our audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank except marginal delays. The Company has no Debentures.

xii) In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company 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, clause 4 (xiii) of the Companies (Auditors Report) Order 2003 is not applicable to the Company.

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

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

xvi) In our opinion and according the information and explanations given to us, the Term loans avaiied by the company during the year were prima facie applied for the purpose for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the Balance sheet of the Company, we are of the opinion that funds raised on short-term basis have prima facie not been used during the year for longterm investment.

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

xix) The Company has not issued any debentures and therefore the question of creating security in respect thereof does not arise.

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

xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

FOR, PRAVIN M. SHAH & CO.

CHARTERED ACCOUNTANTS

(PRAVIN M. SHAH) PLACE : AHMEDABAD PROPRIETOR

DATE : 30th JUNE. 2009 M.No. F-14199

 
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