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Auditor Report of Raj Rayon Industries Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

The Company's Board of Director is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, 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 the 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 the internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design and 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 control system over financial reporting and the operating effectiveness of such controls. An audit also include 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.

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, of the state of affairs of the Company as at 31st March, 2015, its Loss for the year ended on that date, and cash flow statement for year ended on that date.

Emphasis of Matter

We draw attention to Note 2 of the accompanying financial statements in respect of contingency related to compensation payable in lieu of bank sacrifice, the outcome of which is materially uncertain and cannot be determined currently. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

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

(c) The Balance Sheet and Statement of Profit and Loss 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 31st March, 2015 taken on record by the Board of Directors, none of the directors are disqualified as on 31st March, 2015 from being appointed as a director in terms of section 164 (2) of the Act.

(f) The Company has adequate internal financial control and in our opinion the same is operating effectively.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

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

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

ANNEXURE REFERRED TO THE INDEPENDENT AUDITORS' REPORT

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

(i) a. In our opinion,the Company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.

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

(ii) a. As explained to us, physical verification of inventory has been conducted by the management at reasonable intervals. In our opinion frequency of verification is reasonable;

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

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

(iii) The Company has not granted any Unsecured Loan to Companies as covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) 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 sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in the internal control systems.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit within the meaning of section 73 to 76 of the Companies Act, 2013, and the rules framed there under.

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

(vii) a. According to the records of the Company and the information and explanations given to us, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employee's State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise duty, Value Added Tax, Cess and other statutory dues to the extent applicable to it. There are no undisputed statutory dues as referred to above as at 31st March, 2015 outstanding for a period of more than six months from the date they become payable.

b. The disputed statutory dues that have not been deposited on account of matters pending before the appropriate authority are as under -

Name of Nature of the Amount Rs. in Lacs the Statute Dues (Excluding penalties and interest, if any)

Central Excise Duty 23.89 Excise Duty 32.09

38.30

25.82

7.40

127.50

0.09#

2.95

3.35

2.84#

70.87

190.07

187.08

332.04

Textile Cess 0.35 Committee Act 0.88

2.13

3.10

1.37 7.82

Income Tax Income Tax 25.47 Act

Gujarat Tax Entry tax 558.83 on Entry of Specified Goods into Local Area Act, 2001



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

Central 1995-1996 Excise Duty 1996-1997

1997-1998

1998-1999

1999-2000 Additional Directorate of Anti Evasion.

1999-2000 The Company is in the process of refund.

2003-2004 Appellate Tribunal of Central Excise.

2003-2004 The Company has filed reply to & show Cause Notice received from 2004-2005 Superintendent of Central Excise.

2003-2004 The Company has filed the Appeal in the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad.

2005-2006 The Company has filed the reply to & Show cause notice received from 2006-2007 the Commissioner of Central Excise & Custom, Vapi.

2006-2007 The Company has filed the reply to & Show cause notice received from 2007-2008 the office of the Commissioner of Central Excise & Custom, Vapi.

2007-2008 The Company has filed the reply to Show cause notice received from the Commissioner of Central Excise & Custom, Vapi.

2009-2010 The Company has filed Appeal & Stay application with Custom Excise & Service Tax Appellate Tribunal, Ahmedabad.

Textile Cess 1997-1998 Textile Cess Appellate Tribunal. Committee Act 1998-1999

1999-2000

2000-2001

2001-2002

Income Tax 2004-2005* Application for giving effect to Act the order of CIT (A) is pending before the Assessing Officer. The Appeal was decided in favour of the Company.

Gujarat Tax 01.04.2012 The Company has filed reply to the on Entry of to Show Cause Notice issued by the Specified 31.01.2014 Commercial Tax Officer,Ahmedabad. Goods into Local Area Act, 2001

# Payment made under protest

* Assessment year

c) The amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of The Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund with in time

(viii) The accumulated losses of the Company at the end of the financial year are more than fifty per cent of its net worth. The Company has accumulated losses at the end of the financial year in the statement of Profit & Loss. It has incurred cash losses in the current financial year covered by the Audit and also incurred in immediately preceding financial year.

(ix) Based on our audit procedures and accordingly to the information and explanation given by the management, we are of the opinion that the company has generally not defaulted in repayment of dues to bank / financial institution except delay in making payment towards interest and principal.

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

(xi) In our opinion and as per the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

(xii) Based on the audit procedure performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For K. M. Garg & Co. Chartered Accountants (FRN - 120712W) Sd/- (CA. K K Garg) Place: Mumbai Partner Date: 30th May, 2015 M No. 033940




Mar 31, 2014

We have audited the accompanying financial statements of Raj Rayon Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March , 2014, the Statement of Profit and Loss and 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 Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards 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.

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 the 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 the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of 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

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 the Statement of Profit and Loss, of the Loss of the Company for the year ended on that date, and

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

Emphasis of Matter

We draw attention to Note 2 of the accompanying financial statements in respect of contingency related to compensation payable in lieu of bank sacrifice, the outcome of which is materially uncertain and cannot be determined currently. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, 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 comply with the Accounting Standards notified under the Companies Act, 1956 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; and.

(e) On the basis of the written representations received from the directors as on 31st March, 2014 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 REFERRED TO INDEPENDENT AUDITORS'' 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 its fixed assets on the basis of available information.

b. As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical 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 provided 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 nature of its business.

c. In our opinion, the company has maintained proper records of inventory. As explained to us, there were no material discrepancies noticed on physical verification of inventories as Compared to the book records.

(iii) In respect of 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 -

The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

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

(v) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956 -

a. To the best of our knowledge and belief 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 have been so entered.

b. According to the information and explanations given to us, where each of such transactions, if any, exceeding during the year by rupees five lakhs in respect of each party, have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) As per the information and explanations to us, the company has not raised any deposit during the year, which attracts the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder and the directives issued by the Reserve Bank of India.

(vii) In our opinion, the company has an internal audit system, which is commensurate with the size of the Company and the 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 and the in- formation and explanations given to us, the company is generally regular in depositing with appropriate authori- ties undisputed amount of statutory dues including Prov- ident Fund, Investor Education and Protection Fund, Em- ployees'' State Insurance, Income Tax, Sales tax, Wealth Tax, Service Tax, Custom Duty, Excise duty, Cess, and other statutory dues to the extent applicable to it and no undisputed amounts payable were outstanding as at 31st March, 2014 for a period of more than six months from the date they become payable.

b) The disputed statutory dues that have not been deposited on account of disputed matters pending before appropriate authorities are as under

Name of the Statute Nature of Dues Amount in Rs in Lacs Excluding penalities and Interest if any

Central Excise duty Excise Duty 32.09

38.30

25.82

7.40

127.50

0.09

2.95

3.35

2.84

70.87

190.07 187.08 332.04

Textile Committees Cess 0.35 Act 0.88

2.13 3.10

1.37

7.82

Income Tax Act Income Tax 25.47 Gujarat Tax on Entry Entry tax 558.83 of Specified Goods into Local Area Act, 2001

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

Central Excise Duty 1995-1996

1996-1997

1997-1998

1998-1999

1999-2000 Additional Directorate of Anti Evasion

1999-2000 The Company is in the process of refund

2003-2004 Appellate Tribunal of Central Excise

2003-2004 The Company has filed 2004-2005 reply to show Cause Notice received from Superintendent of Central Excise

2003-2004 The Company has fi led the Appeal in the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad

2005-2006 The Company hass filed the 2006-2007 reply to Show cause notice received from the Commissioner of Central Excise & Custom, Vapi

2006-2007 The Company has filed the 2007-2008 reply to Show cause notice received from the office of the Commissioner of Central Excise & Custom, Vapi

2007-2008 The Company has fi led the reply to Show cause notice received from the Commissioner of Central Excise & Custom, Vapi

2009-2010 The Company has filed Appeal & Stay application with Custom Excise & Service Tax Appellate Tribunal, Ahmedabad

1997-1998 Textile Cess Appellate

1998-1999 Tribunal

1999-2000

2000-2001

2001-2002

2004-2005 Application for giving effect to the order of CIT (A) is pending before the Assessing Officer. The Appeal was decided in favour of the Company

01.04.2012 The Company is to in the Process 31.01.2014 of filing reply to the Show Cause Notice issued by the Commercial Tax Officer, Ahmedabad.

(x) The Company has accumulated losses at the end of the financial year in the Statement of Profit & Loss. The Company has incurred cash losses during the financial year covered by the Audit but not incurred the cash losses in immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanation given to us, the Company has defaulted in repayment of dues to banks in respect of Term Loans, Letter of Credit, Working capital Facilities,

Interest Liabilities etc. The CDR Proposal of the Company has been approved by the CDR Empowered Group and a Master Restructuring Agreement was entered into which made good all defaults during the year to Banks.

(xii) In our opinion and according to the explanations given to us and based on the information available, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) The Company has maintained proper records of the transactions and Contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the company in its own name.

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

(xvi) On the basis of records examined by us, and relying on the information compiled by the Company for Co-relating the funds raised to the end use of the term loans, we have to state that, the Company has, prima-facie, applied the term loans for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the Company has used funds raised on short-term basis in the form of working capital and working capital loans for long-term purposes to fund losses incurred during the year.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given and the records examined by us, the Company has not issued any debentures.

(xx) The company has not raised any money by public issue during the year.

(xxi) Based on the audit procedure performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For K. M. Garg & Co. Chartered Accountants (FRN - 120712W)

SD/- (CA. K. K. Garg) Partner M No. 033940

Mumbai, May 30, 2014


Mar 31, 2013

We have audited the accompanying fnancial statements of Raj Rayon Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March , 2013, the Statement of Proft and Loss and the Cash Flow Statement for the year then ended, and a summary of the signifcant accountng policies and other explanatory informaton.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparaton of these fnancial statements that give a true and fair view of the fnancial positon, fnancial performance and cash fows of the Company in accordance with the accountng principles generally accepted in India including Accountng Standards referred to in sub-secton (3C) of secton 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementaton and maintenance of internal control relevant to the preparaton and presentaton of the fnancial 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 fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditng issued by the Insttute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free from material misstatement.

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

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

Opinion

In our opinion and to the best of our informaton and according to the explanatons given to us, the aforesaid fnancial statements give the informaton required by the Act in the manner so required and give a true and fair view in conformity with the accountng principles generally accepted in India:

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

b) in the case of the Statement of Proft and Loss, of the proft of the Company for the year ended on that date, and

c) in the case of the Cash Flow Statement, of the cash fows of the Company 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-secton (4A) of secton 227 of the Act, we give in the Annexure a statement on the maters specifed in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the informaton and explanatons 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 examinaton of those books.

(c) The Balance Sheet, Statement of Proft 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 Proft and Loss, and the Cash Flow Statement comply with the Accountng Standards referred to in sub-secton (3C) of secton 211 of the Act, except AS – 28 as referred to in note no. 30(i)(h) for non provision for doubtul debts, the proft for the year and also surplus in statement of Proft & Loss would have been lower by Rs. 88,60,803/-.

(e) On the basis of the writen representatons received from the directors as on 31st March, 2013 taken on record by the Board of Directors, none of the directors is disqualifed as on 31st March, 2013 from being appointed as a director in terms of clause (g) of sub-secton (1) of secton 274 of the Act.



ANNEXURE REFERRED TO INDEPENDENT AUDITORS'' 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 fxed assets –

a. The company has maintained proper records showing full partculars, including quanttatve details and situaton of its fxed assets on the basis of available informaton.

b. As explained to us, all the fxed assets have been physically verifed by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were notced on such physical verifcaton.

c. In our opinion, the company has not disposed of a substantal part of its fxed assets during the year and the going concern status of the Company is not afected.

(ii) In respect of its inventories –

a. The inventories have been physically verifed during the year by the management. In our opinion the frequency of verifcaton is reasonable.

b. In our opinion and according to the informaton and explanatons provided to us, the procedures of physical verifcaton of inventories followed by the management are reasonable and adequate in relaton to the size of the company and nature of its business.

c. In our opinion, the company has maintained proper records of inventory. As explained to us, there were no material discrepancies notced on physical verifcaton of inventories as Compared to the book records.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to / from companies, frms or other partes covered in the register maintained under Secton 301 of the Companies Act, 1956 –

a. The Company has not granted any loans, secured / unsecured to Companies, frms or other partes covered in the register maintained under secton 301 of the Act; therefore clause 4 (iii) (b) to (d) are not applicable to the Company.

b. During the year the company has taken interest free loan from one party covered in the register maintained under secton 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstanding at any tme during the year was Rs. 786.00 Lacs and the Year end outstanding balance is Rs. Nil.

c. In our opinion and according to the informaton and explanaton given to us, the rate of interest, wherever applicable, and other terms and conditons on which the loans have been taken are taken from the bodies corporate listed in the register maintained under secton 301 of the Act are not prima-facie prejudicial to the interest of the Company.

d. As per the informaton and explanaton given to us, the Loans are repayable over a period of three years and accordingly regularity of repayment is not applicable and interest on the aforesaid loans were regular.

(iv) In our opinion and according to the informaton and explanatons given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fxed assets and for sale of goods / services. During the course of our audit, no major weakness has been notced in the internal control.

(v) In respect of transactons entered in the register maintained in pursuance of secton 301 of the Companies Act, 1956 –

a. To the best of our knowledge and belief and according to the informaton and explanatons provided by the management, we are of the opinion that the transactons that need to be entered into the register have been so entered.

b. According to the informaton and explanatons given to us, where each of such transactons, if any, exceeding during the year by rupees fve lakhs in respect of each party, have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant tme.

(vi) As per the informaton and explanatons to us, the company has not raised any deposit during the year, which atracts the provisions of secton 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder and the directves issued by the Reserve Bank of India.

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

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accountng Records) Rules, 2011 prescribed by the Central Government under secton 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 examinaton 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 and the informaton and explanatons given to us, the company is generally regular in depositng with appropriate authorites undisputed amount of statutory dues including Provident Fund, Investor Educaton and Protecton Fund, Employees'' State Insurance, Income Tax, Sales tax, Wealth Tax, Service Tax, Custom Duty, Excise duty, Cess, and other statutory dues to the extent applicable to it and no undisputed amounts payable were outstanding as at 31st March, 2013 for a period of more than six months from the date they become payable.

b) The disputed statutory dues that have not been deposited on account of disputed maters pending before appropriate authorites are as under –

Name of the Nature Amount in Rs. Period to Statute of the (excluding penaltes and which the dues interest, if any) amount relates

Central Excise Excise 23,88,909 1995-1996 Act Duty

32,08,844 1996-1997

38,29,886 1997-1998

25,82,445 1998-1999

7,40,129 1999-2000

1,27,50,213

8,500# 1999-2000

2,95,032 2003-2004

3,35,298 2003-2004 & 2004-2005

2,83,594# 2003-2004

70,86,992 2005-2006 & 2006-2007

1,90,06,648 2006-2007 & 2007-2008

1,87,08,431 2007-2008

3,32,03,541 2009-2010

Textile Cess 34,715 1997-1998 Commitee Act 87,643 1998-1999

2,12,521 1999-2000

3,09,818 2000-2001

1,37,459 2001-2002

7, 82,156

Income Tax Income 25,46,695 2004-2005* Act tax





Name of the Forum where dispute is Statute pending

Central Excise Act Additonal Directorate of Ant Evasion

The Company is in the process of refund

Appellate Tribunal of Central Excise

The Company has fled reply to show Cause Notice received from Superintendent of Central Excise

The Company has fled the Appeal in the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad

The Company has fled the reply to Show cause notice received from the Commissioner of Central Excise & Custom, Vapi

The Company has fled the reply to Show cause notce received from the ofce of the Commissioner of Central Excise & Custom, Vapi

The Company has fled the reply to Show cause notice received from the Commissioner of Central Excise & Custom, Vapi

The Company has fled Appeal & Stay applicaton with Custom Excise & Service Tax Appellate Tribunal, Ahmedabad

Textile Textile Cess Appellate Committee Tribunal Act

Income Tax Applicaton for giving Act effect to the order of CIT (A) is pending before the Assessing Ofcer. The Appeal was decided in favour of the Company

# Payment made under protest

* Assessment year

(x) The Company does not have accumulated losses at the end of the fnancial year. The Company has incurred cash losses during the fnancial year covered by the Audit and in immediately preceding fnancial year.

(xi) Based on our audit procedures and according to the informaton and explanaton given to us, we are of the opinion that the Company has not defaulted in repayment of dues to fnancial insttutons & banks.

(xii) In our opinion and according to the explanatons given to us and based on the informaton available, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securites.

(xiii) In our opinion, the company is not a chit/ nidhi/ mutual beneft fund/ society. Therefore provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

(xiv) The Company has maintained proper records of the transactons and Contracts in respect of dealing or trading in shares, securites, debentures and other investments and tmely entries have been made therein. All shares, securites, debentures and other investments have been held by the company in its own name.

(xv) According to the informaton and explanatons given to us the company has not given any guarantee for loans taken by others from bank or fnancial insttutons.

(xvi) On the basis of records examined by us, and relying on the informaton compiled by the Company for Co-relatng the funds raised to the end use of the term loans, we have to state that, the Company has , prima-facie, applied the term loans for the purposes for which they were obtained.

(xvii) According to the records examined by us and according to informaton and explanatons given to us, on an over all basis, funds raised on short term basis have prima facie, not been used during the year for long term investment and vice versa, other than temporary deployment.

(xviii) The company has during the year, consequent upon conversion of share warrants issued in earlier year, made preferental allotment of equity shares, to a company covered in the register maintained under secton 301 of the Act, as per SEBI guidelines.

(xix) According to the informaton and explanatons given and the records examined by us, the Company has not issued any debentures.

(xx) The company has not raised any money by public issue during the year.

(xxi) Based on the audit procedure performed and informaton and explanatons given to us by the management, we report that no fraud on or by the Company has been notced or reported during the course of our audit.

For K. M. Garg & Co.

Chartered Accountants

(FRN – 120712W)

(CA. K K Garg)

Partner

M. No. 033940

Mumbai, July 31, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of RAJ RAYON INDUSTRIES LIMITED (hereinafter referred to as 'the company') as at 31st March, 2012, 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 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles and significant estimates made by the 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, (hereinafter referred to as 'the CARO 2003') issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, (hereinafter referred to as 'the Act') we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

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

(ii) in our opinion, proper books of account as required by law, have been kept by the company so far as appears from our examination of 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 by this report comply with the Accounting Standards ('AS') referred to in sub-section (3-C) of section 211 of the Act, except, AS-28 as referred to in note no. 27 (i) (h) for non provision of doubtful debts for recovery of which the company has filed legal suits amounting to Rs. 88,60,803/-;

(v) we, further report that, had the company made the respective provision for doubtful debts, the profit for the year and also surplus in Statement of Profit and Loss would have been lower by Rs. 88,60,803/-;

(vi) based on the written representation received from the directors as at 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as at 31st March, 2012 from being appointed as a director in terms of section 274 (1) (g) of the Act;

(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 Significant Accounting Policies and notes on 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 Balance Sheet, of the state of affairs of the company as at 31st March, 2012;

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

Referred to in paragraph 3 of our report of even date

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

(i) (a) the company has generally maintained proper records showing particulars, including quantitative details and situation of fixed assets;

(b) as explained to us, major portion of the fixed assets has been physically verified by management during the year at reasonable intervals. No material discrepancies were noticed on such verification; and

(c) during the year the company has not disposed off a substantial part of its fixed assets and the going concern status of the company is not affected;

(ii) (a) as explained to us, inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable;

(b) the procedures, explained to us, that followed by the management for physical verification of inventories, are, in our opinion, reasonable and adequate in relation to the size of the company and the nature of its business; and

(c) on the basis of examination of the inventory records of the company, we are of the opinion that the company is maintaining proper records of inventory. No material discrepancies have been noticed on physical verification of inventory as compared to book records;

(iii) (a) the company has not granted, during the year, secured or unsecured loans to companies, firms or other parties covered in the register maintained under section 301 of the Act; therefore provisions of clause 4(iii) (a) to (d) of the CARO, 2003 are not applicable to the company; and

(b) the company has taken unsecured loans from the companies covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 95600000 and year-end balance was Rs. 78600000 from a company;

(c) in our opinion, the rate of interest, wherever applicable, and other terms and conditions on which the loans have been taken from the bodies corporate listed in the register maintained under section 301 of the Act are not prima-facie prejudicial to the interest of the company; and

(d) since the aforesaid loans, as informed to us, are repayable on demand, the payment of principal amount and interest on the aforesaid loans were regular;

(iv) in our opinion , there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business, with regard to purchase of inventory and fixed assets and sale of goods and services. During the course of audit, no major weakness in internal control, has been noticed;

(v) (a) to the best of our knowledge and belief and representations given to us, we are of the opinion that the particulars of contracts or arrangements, referred to in section 301 of the Act have been entered in the register maintained under section 301 of the Act; and

(b) in our opinion the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act exceeding the value of Rs. 500000 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 where such market prices are available;

(vi) in our opinion , the company has not accepted any deposit from the public;

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

(viii) we have broadly reviewed the books of accounts 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 Act and are of the opinion that prima facie the prescribed records have been made and maintained. We have not, however, carried out detailed examination of same;

(ix) (a) the company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise euty, cess and other material statutory dues applicable to it. There were no arrears as at 31st March, 2012 for a period of more than six months from the date they became payable; and

(b) the disputed statutory dues in respect of income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are as under:-

Name of the Nature Amount in Rs. Statute of the (excluding penalties and dues interest, if any)

Central Excise Excise 23,88,909 Act Duty

32,08,844

38,29,886

25,82,445

7,40,129

1,27,50,213

8,500#

2,95,032

3,35,298

2,83,594#

70,86,992

1,90,06,648

1,87,08,431

3,32,03,541

Textile Cess 34,715 Committee Act 87,643

2, 12,521

3, 09,818

1, 37,459

7, 82,156

Income Tax Income 25,46,695 Act tax

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

Central Excise Act 1995-1996

1996-1997

1997-1998

1998-1999

1999-2000

Additional Directorate General of Anti-Evasion.

1999-2000 The Company is in process of getting refund.

2003-2004 Appellate Tribunal of Central Excise.

2003-2004 The company has filed & reply to show cause notice 2004-2005 to Superintendent of Central Excise.

2003-2004 The Company has filed appeal in the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad.

2005-2006 The company has filed & reply to Show Cause 2006-2007 Notice received from Commissioner of Central Excise & Customs, Vapi.

2006-2007 The Company has filed & reply to show cause notice 2007-2008 received from the Office of the Commissioner, Central Excise & Customs, Vapi.

2007-2008 The company has filed reply to Show Cause Notice received from Commissioner Central Excise & Customs, Vapi.

2009-2010 The company is in the process of replying to Show Cause Notice received from Commissioner Central Excise & Customs, Vapi.

Textile Committee Act 1997-1998

1998-1999

1999-2000

2000-2001

2001-2002 Textiles Cess Appellate Tribunal

Income Tax Act 2004-2205* Application for giving effect to the order of CIT(A) is pending before the Assessing Officer. The appeal was decided in favour of the company.

(x) the company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both, in the financial year under report and in the immediately preceding financial year;

(xi) according to the records examined by us, the company has not defaulted in repayment of dues to the banks. There are no dues to a financial institution or debenture holders;

(xii) as explained to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

(xiii) the company is not a chit fund or a nidhi mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the CARO, 2003 are not applicable to the company;

(xiv) the company has dealt or traded in shares, securities, debentures and other investments. The company has maintained proper records and made timely entries of such transactions and contracts. The company in its own name holds all the shares, securities and other investments;

(xv) the company has not given any guarantee for loans taken by others from banks or financial institutions;

(xvi) on the basis of the records examined by us, and relying on the information compiled by the company for co-relating the funds raised to the end use of the term loans, we have to state that, the company has, prima-facie, applied the term loan for the purpose for which they were obtained;

(xvii) on an overall examination of the financial statements of the company, we are of the opinion that, no funds raised on short-term basis have prima facie been used for long-term purposes;

(xviii) the company has, during the year, consequent upon conversion of share warrants issued in earlier year, made preferential allotment of equity shares, to a company covered in the register maintained under section 301 of the Act, as per SEBI Guidelines. Therefore, the price at which shares allotted is not prejudicial to the interest of the company;

(xix) the company has not created any security or charge in respect of any secured debentures as no secured debentures were issued. Accordingly, the provisions of clause 4 (xix) of the CARO, 2003 are not applicable to the company;

(xx) the company has not raised money through public issue during the year; and

(xxi) to the best of our knowledge and belief, no fraud on or by the company, has been noticed or reported by the company during the year.

For and on behalf of

R. S. AGRAWAL & ASSOCIATES

Chartered Accountants

(Registration No. 100156W)

R.S. Agrawal

Mumbai Partner

30th May, 2012 Membership No. 33216

 
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