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Auditor Report of Sadhana Nitro Chem Ltd.

Mar 31, 2016

AUDITOR’S REPORT

Independent Auditor’s Report

To the Members of Sadhana Nitro Chem Limited.

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Sadhana Nitro Chem Limited (“the Company”), which comprises the Balance Sheet as at 31st March 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including 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, 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. 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, 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note No. 30 in financial statements regarding going concern. 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 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in Annexure 1, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable.

2. Further to our comments in Annexure 1, 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, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in '' Annexure 2'', and

(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 explanations given to us :

i. The Company does not have any pending litigation which would impact its financial position.

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.

ANNEXURE1

TO THE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SADHANA NITRO CHEM LIMITED ON STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2016.

Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and in our opinion, we report that :

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

b. The Company has a policy of physically verifying its fixed assets in a phased manner to cover all the assets of the Company in a block of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its business.

c. The title deeds of the immovable properties are held in the name of the company.

II. a. The inventory has been physically verified by the Management at reasonable intervals during the year.

b. In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of its business. No material discrepancies were noticed on such physical verification.

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

III. The Company has not granted any loans secured or unsecured during the period to the parties covered in the Register maintained under section 189 of the Companies Act, 2013.

IV. The Company has not granted any loans, investments, or any guarantees or securities accordingly provision of Section 185 and 186 does not apply.

V. The Company has not accepted any deposits from public. Accordingly, this clause is not applicable.

VI. The Central Government has not prescribed maintenance of cost records under section 148(1) of the Act.

VII. a. The company is generally irregular in depositing 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 with the appropriate authorities during the year. According to the information and explanations given to us, no undisputed amount in respect of the aforesaid statutory dues were in arrears, as at 31st March 2016, for a period of more than six months from the date they become payable except in the following cases :-

Name of the Statute

Nature of Dues

Amount ''

Period to which it relates

Income Tax Act, 1961

Tax Deducted at Source

24,07,383

April to September 2015

Provident Fund Act, 1952

P. F. Contribution

26,61,814

April to September 2015

Service Tax

Reverse Mechanism

12,82,097

April to September 2015

Total

63,51,294

b. According to the information and explanations given to us based on the records of the company examined by us, there are no dues of Income Tax, Sales tax, Service Tax, Customs duty, Wealth Tax, Excise Duty, Excise Duty and Cess which have not been deposited on account of a dispute.

VIII. The Company has not defaulted in repayment of dues to any financial institutions or banks.

IX. The Company did not raise any money by way of initial public offer (including debts instruments) or further public offer and terms loans during the year. Accordingly, this clause is not applicable.

X No material fraud by the company or on the company by its officers or employees has been noticed or reported during the course of our audit.

XI. The company has paid / provided for managerial remuneration in accordance with the requisite approvals as mandated by the provisions of section 197 read with Schedule V of the Act.

XII. The Company is not a Nidhi Company. Accordingly, this clause is not applicable.

XIII. All Transaction with related parties are in compliance with Section 177 and section 188 of the Companies Act,2013 where applicable, and details of such transactions have been disclosed in the financial statements as required by the applicable Accounting standards.

XIV. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, this clause is not applicable.

XV The Company has not entered into any non - cash transactions with directors or persons connected with them.

XVI. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. ANNEXURE2

TO THE INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SADHANA NITRO CHEM LIMITED ON STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2016.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Sadhana Nitro Chem Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company ;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For V. Sankar Aiyar & Co.

Chartered Accountants

Firm Regn No. 109208W

Arvind Mohan

Place : Mumbai Partner

Dated : 27th May, 2016 Membership No. 124082


Mar 31, 2015

We have audited the accompanying standalone financial statements of Sadhana Nitro Chem Limited ("the Company"), which comprise the Balance Sheet as at 31 st March, 2015, the Statement of Profit and Loss, 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 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 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. I n 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. 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 aud it opi n ion 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 Ad 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.

Emphasis of Matters

We draw attention to Note 31 in the financial statements regarding going concern. 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, 2015 ('the Order"), as amended, issued by the Central Government of India intermsofsub-sedion 11 of section 143oftheAct, wegiveintheAnnexure a statement on the matters specified i n parag raphs 3 and 4 of the Order

2) As required by Section 143(3)oftheAct,wereportthat:

(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 ouropinion, 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 agreementwith 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 31 st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 st 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 does not have any pending litigations which would impact its financial position;

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 TO THE AUDITOR'S REPORT

(Referred to in paragraph (a) under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Sadhana NitroChem Ltd forthe period ended 31st March, 2015) Annexure referred in Independent Auditors Report of even date

1. a. The company has maintained records showing particulars including quantitative details and situation offixed assets on the basis of available information, b. As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner of over two years, which in ouropinion is reasonable, having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

2. a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to the information and explanation 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. No material discrepancies were noticed on such physical verification.

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

3. The company has not granted any loans, secured or unsecured during the period to parties covered in register maintained under section 189oftheAct.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that purchase of certain items of inventory and fixed assets are for the Company's specialized requirements and similarly, certain goods sold are forthe specialized requirements of the buyers and suitable alternate source are not available to obtain comparable quotations there is generally 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 the sale of goods & services. In our opinion ands according to the information and explanations given to us, we have not observed any major weakness during the course of Audit.

5. The company has not accepted any deposits during the year.

6. The Central Government has prescribed maintenance of cost records under sub section (1) of section 148 of the Companies Act 2013 in respect of one of the products, manufactured by the company. We have broadly reviewed the accounts and records of the company 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 same.

7. In respect of statutory dues:

a. There have generally been delays by the company in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, Sales Tax, Wealth tax, Customs duty, Excise duty, cess, Service tax and other statutory dues with the appropriate authorities. There are undisputed amounts payable in respect of the aforesaid dues as at 31st March, 2015 for a period of more than six months from the date of becoming payable, details are as under:

Name of Nature of dues Amount (Rs.) Period to which it relates statute

Income Tax Act, 1961 Tax Deducted 20,31,593 April to September 2014 at Source

Provident Fund Act,1952 P.F. Contribution 8,42,405 April to September 2014

Service Tax Reverse Mechanism 3,97,176 April to September 2014

Total 32,71,174

b. According to the records of the company, there are no disputed statutory dues on account of Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, and cess remaining unpaid as on 31st March, 2015.

c. Amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of Companies Act, 1956 has been transferred to such fund within time.

6. The company has accumulated losses is more than fifty percent of its net worth. The company has not incurred any cash loss during the year and in the immediately preceding financial year.

7. Based on our audit procedures and according to the information and explanation given to us, there have been no delays in repayment of dues to banks and financial institutions during the year.

8. The company has not given any guarantee for loans taken by others from Bank or Financial Institutions.

9. The company has not obtained any term loans during the year.

10. In our opinion and according to the information and explanation given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V. Sankar Alyar & Co. Chartered Accountants (Firm's Registration No. 10S208W) Arvind Mohan Place: Mumbai Partner Date: 16th April 2015 (Membership No. 124082)


Mar 31, 2014

We have audited the accompanying financial statements of Sadhana Nitro Chem Limited. ("the Company") which comprise the Balance sheet as at 31st March, 2014 and the Statement of Profit and Loss and the Cash Flow Statement for the period then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the financial statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

Emphasis of Matter

We draw your attention to Note 33 regarding going concern. 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"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

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

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 March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITOR''S REPORT

(Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Sadhana Nitro Chem Ltd for the period ended 31st March, 2014)

Annexure referred in Independent Auditors Report of even date

1. In respect of its fixed assets :

a. The company has maintained records showing particulars including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the management during the period in a phased periodical manner of over two years, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

c. During the period, the company has disposed of some of its non core business assets which does not form substantial part of fixed assets. Accordingly, going concern status of the company is not affected.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the period.

b. In our opinion and according to the information and explanation 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. No material discrepancies were noticed on such physical verification.

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

3. 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, we report that : a. The company has not granted any loans, secured or unsecured during the period.

b. During the period company had taken interest free loan from one company amounting to Rs. 22,50,000/- This along with other loans covered in register maintained under section 301 have been repaid during the period and maximum balance during the period was Rs. 20,28,242/-.

c. In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that purchase of certain items of inventory and fixed assets are for the Company''s specialized requirements and similarly, certain goods sold are for the specialized requirements of the buyers and suitable alternate source are not available to obtain comparable quotations there is generally 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 the sale of goods & services. In our opinion ands according to the information and explanations given to us, we have not observed any major weakness during the course of Audit.

5. In respect of transactions covered under section 301 of the companies act, 1956 :

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under section 301 of the companies act, 1956 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 or arrangements entered in the register maintained under Section 301 of the companies act, 1956 exceeding value of Rs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The company has repaid all existing deposits accepted from public and has not accepted new deposits. Accordingly, clause 4(xiii) of the Companies (Auditor''s Report) Order 2003 is not applicable to the company.

7. On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the internal audit functions carried out by a firm of chartered accountants appointed by the management is commensurate with the size of the company and the nature of its business.

8. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies act, 1956 in respect of one of the products, manufactured by the company. We have broadly reviewed the accounts and records of the company 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 same.

9. In respect of statutory dues :

a. There have generally been delays by the company in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, Sales Tax, Wealth tax, Customs duty, Excise duty, cess, Service tax and other statutory dues with the appropriate authorities. There are undisputed amounts payable in respect of the aforesaid dues as at 31st March, 2014 for a period of more than six months from the date of becoming payable, details are as under :

Name of statute Nature of dues Amount (Rs.) Period to which it relates

Income Tax Act, 1961 Tax Deducted at Source 14,08,125 July to September 2013

Provident Fund Act, 1952 P.F. Contribution 8,15,612 August - September 2013

Service Tax Reverse Mechanism 5,16,258 April - September 2013

Total Unpaid Statutory Dues for more than 27,39,995 six months

b. According to the records of the company, there are no disputed statutory dues on account of Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, and cess remaining unpaid as on 31st March, 2014.

10. The company has accumulated losses of Rs. 22,71,06,251/- at the end of the financial period, which is more than fifty percent of its net worth. The company has not incurred any cash loss during the period and in the immediately preceding financial period.

11. Based on our audit procedures and according to the information and explanation given to us, there have been delays in repayment of dues to banks and financial institutions during the period. There were, however, no delayed dues to banks existing at the balance sheet date.

12. In our opinion and according to the information and explanation 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.

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

14. The company has not traded in securities, debentures and other investments. All the investments are held in the name of the company. Accordingly, clause 4(xiv) of the Companies (Auditor''s Report) Order 2003 is not applicable to the company.

15. The company has not given any guarantee for loans taken by others from Bank or Financial Institutions. Accordingly, clause 4(xv) of the Companies (Auditor''s Report) Order 2003 is not applicable to the company.

16. In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company as on 31st March, 2014, in our opinion, there are no funds raised on a short term basis which have been used for long term investment

18. During the period, 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.

19. In our opinion and according to the information and explanation given to us, the company has not issued any secured debentures during the period covered by our report.

20. The Company has not raised any money by public issue during the period. Accordingly clause 4(xx) of Companies (Auditor''s Report) Order 2003 is not applicable to the company.

21. In our opinion and according to the information and explanation given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V. Sankar Aiyar & Co.

Chartered Accountants

Firm Regn. No. 109208W

Arvind Mohan

Place: Mumbai Partner

Dated: 27th May, 2014 Membership No. 124082


Jun 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Sadhana Nitro Chem Limited ("the Company"), which comprise the Balance Sheet as at June 30, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the period then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

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

Opinion

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

a) in the case of the Balance Sheet, of the state of affairs of the Company as at June 30, 2013;

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

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

Emphasis of Matter

We draw your attention to Note 33 regarding going concern and deferred tax assets. 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"),as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

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

ANNEXURE TO THE AUDITOR''S REPORT

Annexure Referred in Independent Auditors Report of even date

1. In respect of its fixed assets:

a. The company has maintained records showing particulars including quantitative details and situation of fixed assets on the basis of available information.

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

c. During the period, the company has disposed of some of its non core business assets which does not form substantial part of fixed assets. Accordingly, going concern status of the company is not affected.

2. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at regular intervals during the period.

b. In our opinion and according to the information and explanation 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. No material discrepancies were noticed on such physical verification.

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

3. 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, we report that:-

a. The company has not granted any loans, secured or unsecured during the period.

b. During the period company had taken interest free and interest bearing loan from one company amounting to Rs. 6,10,54,474/-. This loan had maximum balance ofRs. 12,12,27,610/- and has been repaid during the period.

c. In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that purchase''of certain items of inventory and fixed assets are for the Company''s specialized requirements, and similarly, certain goods sold are for the specialized requirements of the buyers and suitable alternate source are not available to obtain comparable quotations, there is generally adequate interna! control system commensurate with the size of the Company and the nature of its business for purchase of inventory and fixed assets and for the sale of goods and services. In our opinion, and according to the information and explanations given to us, we have not observed any major weakness during the course of audit.

5. In respect of transactions covered under Section 301 of the Company Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under Section 301 of the Companies Act, 1956 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 or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 exceeding value ofRs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The company has repaid all existing deposits accepted from public and has not accepted new deposits. Accordingly, clause 4(xiii) of the Companies (Auditor''s Report) Order 2003 is not applicable to the company.

7. On the basis of the internal audit reports broadly reviewed by us. we are of the opinion that, the internal audit functions carried out by a firm of chartered accountants appointed by the management is commensurate with the size of the company and the nature of its business.

8. The Central Government has prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of products, manufactured by the company. We have broadly reviewed the accounts and records of the company 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 same.

9. In respect of statutory dues:

a. There have generally been delays by the company in depositing undisputed statutory dues including provident fund, investor education and protection fund employees'' state insurance income-tax, Sales Tax, Wealth tax, Customs duty, Excise duty, cess, Service tax and other statutory dues with the appropriate authorities. There are no undisputed amounts payable in respect of the aforesaid dues as at 30th June, 2013 for a period of more than six months from the date of becoming payable;

b. According to the records of the company, there are no disputed statutory dues on account of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, and cess remaining unpaid as on 30lh June, 2013.

10. The company has accumulated losses of Rs. 22,14,88,874/- at the end of the financial period, which is more than fifty percent of its net worth. The company has not incurred any cash loss during the period and in the Immediately preceding financial period.

11. Based on our audit procedures and according to the information and explanation given to us, there have been delays in repayment of dues to banks and financial institutions. Details of default in repayment of dues to banks existing at the balance sheet date are as under;

Name of Bank Amount due Due date Date of payment

State Bank of Patiala Rs. 56,25,000 June 30, 2013 Not yet paid

(USD 1,03,500)

12. In our opinion and according to the information and explanation 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.

13. In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/ society. Accordingly, clause 4(xiii) of the Companies (Auditor''s Report) Order 2003 is not applicable to the company.

14. The Company has not traded in securities, debentures and other investments. All the investments are held in the name of the company. Accordingly, clause 4(xiv) of the Companies (Auditor''s Report) Order 2003 is not applicable to the company.

15. The company has not given any guarantee for loans taken by others from bank or financial institutions. Accordingly, clause 4(xv) of the Companies (Auditor''s Report) Order 2003 is not applicable to the company.

16. In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company as on 30th June, 2013, in our opinion, there are no funds raised on a short term basis which have been used for long term investment

18. During the period, the company has made preferential allotment of Preference Shares to its Holding Company. In our opinion and according to information and explanations given to us, the price at which these Preference Shares have been issued is not prejudicial to the interest of the company.

19. In our opinion and according to the information and explanation given to us, the company has not issued any secured debentures during the period covered by our report.

20. The Company has not raised any money by public issue during the period. Accordingly, clause 4(xx) of Companies (Auditor''s Report) Order 2003 is not applicable to the company.

21. In our opinion and according to the information and explanation given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V. SankarAiyar&Co.

Chartered Accountants

Firm Regn No. 109208W

Arvind Mohan

Place Mumbai Partner

Dated : 28th August, 2013 Membership No. 124082


Mar 31, 2012

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

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we give 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.

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 it appears from our examination of such books.

c. The Balance Sheet, Profit & Loss Account and cash flows statement referred to in this report are in agreement with the Books of Account.

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

e. Based on the representations made by the Directors and taken on record by the Board of Directors of the Company and the information and explanations given to us, none of the Directors is, as at 31E| March, 2012, prima-facie disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. Without qualifying attention is invited to note 11 of financial statements regarding non provision in respect of guarantees and diminution in value of investment provided to one of its subsidiaries.

g. Without qualifying attention is invited to note 32 of financial statements regarding accumulated losses and consequential effect on going concern.

h. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read along with notes on Accounts and the Accounting Policies give the information required by the Companies Act, 1956, in the manner so required and read in conjunction with all other notes thereon give a truo and fair view.

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

ii) in the case of the Profit & Loss Account, of the profit for the year ended on that date.

and

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

Referred to in Paragraph 3 of our report of even date.

1. In respect of its fixed assets:

a. The company has maintained records showing particulars including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. 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.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to the information and explanation 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 inventory as compared to the book records.

3. 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, we report that:-

a. The company has not granted any loans, secured or unsecured during the year.

b. During the year company had taken interest free and interest bearing loan from two companies amounting to Rs 3,62,95,000/- and interest free loan from one party amounting to Rs 35,50,000/- respectively. This along with other loans covered in register maintained under section 301 have an outstanding year end balance of Rs 6,58,06,987/- and maximum balance during the year was Rs 7,38,04,928/-.

c. In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

d. The company is regular in repaying principal and interest as stipulated.

4. 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 for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal controls.

5. In respect of transactions covered under section 301 of the Company Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956 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 or arrangements entered in the register maintained under Section 301 of the companies act, 1956 exceeding value of Rs 5,00,000/- in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58Aofthe companies act and the rules framed thereunder, and also the directives of Reserve Bank of India with regard to acceptance of deposits. The company has not accepted any deposits from small depositors as defined under section 58AA of the companies act. Since the company has not defaulted in repayments of deposits, obtaining any order from the national company law tribunal does not arise.

7. On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the internal audit functions carried out by a firm of chartered accountants appointed by the management is commensurate with the size of the company and the nature of its business.

8. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of products manufactured by the company. We have broadly reviewed the accounts and records of the company 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 same.

9. In respect of statutory dues:

a. There have generally been delays by the company in depositing undisputed statutory dues including provident fund, employees' state insurance income-tax, Sales Tax, Wealth tax, Customs duty, Excise duty, cess, Service tax and other statutory dues with the appropriate authorities. There are no undisputed amounts payable in respect of the aforesaid dues as at 31st March, 2012 for a period of more than six months from the date of becoming payable;

b. According to the records of the company, there are no disputed statutory dues on account of Sales Tax, Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, and cess remaining unpaid as on 31st March 2012.

10. The company has accumulated losses of Rs 20,35,82,519/- at the end of the financial year, which is more than fifty percent of its net worth. The company has not incurred any cash loss during the year and has incurred cash loss Rs 1,82,87,622/- during the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, there have been delays in repayment of dues to banks and financial institutions. Details of default in repayment of dues to banks existing at the balance sheet date are as under;

Name of Bank Amount due Due date Date of payment

State Bank of Patiala Rs 36,00,000 March 31, 2012 June 18, 2012 (USD 70,768) State Bank of Patiala Rs 42,00,000 March 31, 2012 Not yet paid

12. In our opinion and according to the information and explanation 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.

13. In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/ society. Therefore, clause 4
14. The company has maintained proper records of transactions and contracts in respect of trading in securities, debentures and other investments and timely entries have been made therein. All shares, debentures and other investments have been held by the company in its own name.

15. The company has given corporate guarantee against borrowings of one of its subsidiaries. According to information explanations given to us, and the representations made by the management, the terms and conditions of guarantee are not prejudicial to the interest of the company.

16. In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company as on March 31, 2012, in our opinion, there are no funds raised on a shortterm basis which have been used for long term investment

18. 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.

19. In our opinion and according to the information and explanation given to us, the company has not issued any secured debentures during the period covered by our report.

20. The Company has not raised any money by public issue during the year. Accordingly clause 4(xx) of Companies (Auditor's Report) Order 2003 is not applicable to the company.

21. In our opinion and according to the information and explanation given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V. Sankar Aiyar & Co.

Chartered Accountants

Firm Regn No. 109208W

Arvind Mohan

Place : Mumbai Partner

Dated : 18th June, 2012 Membership No. 124082


Mar 31, 2011

1. We have audited the attached Balance Sheet of Sadhana Nitro Chem Limited as at 31st March, 2011 and also the annexed Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on the 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 the audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we give 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.

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 it appears from our examination of such books.

c. The Balance Sheet, Profit & Loss Account and cash flows statement referred to in this report are in agreement with the Books of Account.

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

e. Based on the representations made by the Directors and taken on record by the Board of Directors of the Company and the information and explanations given to us, none of the Directors is, as at 31st March, 2011, prima-facie disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. Without qualifying attention is invited to note B-(3) of Schedule J regarding non provision in respect of guarantees and diminution in value of investment provided to one of its subsidiaries.

g. Without qualifying attention is invited to note B-(2) of schedule (J) regarding accumulated losses and consequential effect on going concern.

h. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read along with notes on Accounts and the Accounting Policies give the information required by the Companies Act, 1956, in the manner so required and read in conjunction with ail other notes thereon give a true and fair view.

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011.

ii) in the case of the Profit & Loss Account, of the loss for the year ended on that date.

and

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

ANNEXURE TO THE AUDITOR'S REPORT Referred to in Paragraph 3 of our report of even date.

1. In respect of its fixed assets:

a. The company has maintained records showing particulars including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. 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.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to the information and explanation 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 inventory as compared to the book records.

3. 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, we report that:-

a. The company has not granted any loans, secured or unsecured during the year.

b. During the year company had taken interest free loan from two parties amounting to Rs. 32,00,000/- and interest free and interest bearing loan from one company amounting to Rs. 4,14,60,000/- and Rs. 30,00,000/- respectively. This along with other loans covered in register maintained under section 301 have an outstanding year end balance of Rs. 2,58,07,638/- and maximum balance during the year was Rs. 6,93,37,393/-.

c. In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

d. The company is regular in repaying principal and interest as stipulated.

4. 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 for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal controls.

5. In respect of transactions covered under section 301 of the company act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under section 301 of the companies act, 1956 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 or arrangements entered in the register maintained under Section 301 of the companies act, 1956 exceeding value of Rs. 5,00,000/- in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A of the companies act and the rules framed thereunder, and also the directives of Reserve Bank of India with regard to acceptance of deposits. The company has not accepted any deposits from small depositors as defined under section 58AA of the companies act. Since the company has not defaulted in repayments of deposits, obtaining any order from the national company law tribunal does not arise.

7. On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the internal audit functions carried out by a firm of chartered accountants appointed by the management is commensurate with the size of the company and the nature of its business.

8. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies act, 1956 in respect of one of the products, manufactured by the company. We have broadly reviewed the accounts and records of the company 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 same.

9. In respect of statutory dues:

a. There has generally been delays by the company in depositing undisputed statutory dues including provident fund, employees' state insurance income-tax, Sales Tax, Wealth tax, Customs duty, Excise duty, cess, Service tax and other statutory dues with the appropriate authorities. However except as reported below there are no other undisputed amounts payable in respect of the aforesaid dues as at 31st March, 2011 for a period of more than six months from the date of becoming payable;

Nature of Nature of Total Period it statutory Dues relates to

Income Tax Tax Deducted 2,36,163 July& Act 1961 at source August 2010

Nature of Due date Date of statutory payment

Income Tax 7th August and June 14, 2011. Act 1961 7th September respectively

b. According to the records of the company, there are no disputed statutory dues on account of Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, and cess remaining unpaid as on 31st March 2011. In case of disputed dues of Income tax, details are as under;

Name of Nature of Amount Period to which statute dues (Rs.) related to

Income tax Act, Income tax 46,81,787 Assessment 1961 year 1998-99

Income tax Act, Income tax 44,83,294 Assessment 1961 year 1999-2000

Income tax Act, Income tax 36,00,028 Assessment 1961 year 2001-02

Income tax Act, Income tax 10,58,012 Assessment 1961 year 2003-04

Income tax Act, Income tax 27,80,897 Assessment 1961 year 2004-05

Income tax Act, Income tax 14,44,494 Assessment 1961 year 2007- 08

1,80,48,512

Name of Forum where it dispute statute is pending

Income tax Act, Hon'ble High Court of 1961 Bombay

Income tax Act, Hon'ble High Court of 1961 Bombay

Income tax Act, Hon'ble Supreme Court 1961 of India / CIT(A)

Income tax Act, Hon'ble Supreme Court 1961 of India

Income tax Act, Hon'ble Supreme Court 1961 of India

Income tax Act, Commissioner Of Income 1961 Tax (Appeals)

Attention is also drawn to note B(5) in Schedule J.

10. The company has accumulated losses of Rs. 21,44,26,293/- at the end of the financial year, which is more than fifty percent of its net worth. The company has incurred cash loss Rs. 1,57,87,622/- for the financial year and Rs. 5,52,55,265/- during the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the company has defaulted in repayment of dues to financial institutions and banks during the year as under. During the year banks have rescheduled its loan to the company in the form of deferring its installments.

Name of Bank & Amount due Due date Date of Facility payment

State Bank of Patiala Rs. 1000015 30th Sept. 24th (USD 22090) 2010 Dec.2010

State Bank of Patiala Rs. 4166675 31st Mar. 12th May (USD 92490) 2011 2011

12. In our opinion and according to the information and explanation 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.

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

14. The company has maintained proper records of transactions and contracts in respect of trading in securities, debentures and other investments and timely entries have been made therein. All shares, debentures and other investments have been held by the company in its own name.

15. The company has given corporate guarantee against borrowings of one of its subsidiaries. According to information explanations given to us, and the representations made by the management, the terms and conditions of guarantee are not prejudicial to the interest of the company.

16. In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company as on March 31, 2011, in our opinion, there are no funds raised on a short term basis which have been used for long term investment

18. 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.

19. In our opinion and according to the information and explanation given to us, the company has not issued any secured debentures during the period covered by our report.

20. The Company has not raised any money by public issue during the year. Accordingly clause 4(xx) of Companies (Auditor's Report) Order 2003 is not applicable to the company.

21. In our opinion and according to the information and explanation given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V. SankarAiyar & Co. Chartered Accountants Firm Regn. No. 109208W Arvind Mohan Partner Membership No. 124082

Place Mumbai Dated 17thJune, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of SADHANA NITRO CHEM LIMITED as at 31st March, 2010 and alsc the annexed Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on the date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted the audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we give 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.

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 it appears from our examination of such books.

c. The Balance Sheet, Profit & Loss Account referred to in this report are in agreement with the Books of Account.

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

e. Based on the representations; made by the Directors and taken on record by the Board of Directors of the Company and the information and explanations given to us, none of the Directors is, as at 31st March, 2010, prima-facie disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. Without qualifying we draw attention to note B(1) regarding accumulated losses and Note B(2) of Schedule (J) regarding non provision in respect of diminution in value of investment, loans and guarantee provided to one of its subsidiaries.

g. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read along with notes on Accounts and the Accounting Policies give the information required by the Companies Act, 1956, in the manner so required and read in conjunction with all other notes thereon give a true and fair view.

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010.

ii) in the case of the Profit & Loss Account, of the loss for the year ended on that date. and

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



ANNEXURE TO THE AUDITORS REPORT

Referred to in Paragraph 3 of our report of even date.

1. In respect of its fixed assets :

a. The company has maintained records showing particulars including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. 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.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management a. regular intervals during the year.

b. In our opinion and according to the information and explanation 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 inventory as compared to the book records.

3. 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, we report that :-

a. During the year company has not granted any loans to parties concerned in registered maintained u/s 301 of Companies Act, 1956. In respect of existing loans given, the maximum amount outstanding at any time during the year is Rs. 5,44,34,699/- and the year end balance is Rs. 2,26,95,476/-.

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

c. Principal on the said loan is repayable on demand. During the year Rs. 3,72,99,379/- has been received. With regard to interest the same is under negotiation with the party.

d. According to information and explanations provided to us, we are of the opinion that reasonable steps are being taken by the company in recovering the interest due for the year.

e. The company has taken loans from one Director, three companies and one party aggregating to Rs. 2,51,70,396/-. These loans have maximum balance of Rs. 2,54,51,652/- having an outstanding year end balance of Rs. 1,84,63,476/-.

f. In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable and other terms and conditions on which the loans are given are not prima- facie prejudicial to the interest of the company.

g. The company is regular in repaying the principal amount as stipulated and has been regular in the payment of interest.

4. 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 for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal controls.

5. In respect of transactions covered under Section 301 of the Company Act, 1956 :

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under Section 301 of the Companies Act, 1956 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 or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 exceeding value of Rs. 5,00,000/- in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Section 58A of the Companies Act and the rules framed thereunder, and also the directives of Reserve Bank of India with regard to acceptance of deposits. The company has not accepted any deposits from small depositors as defined under Section 58AA of the Companies Act. Since the company has not defaulted in repayments of deposits, obtaining any order from the national company law tribunal does not arise.

7. On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the internal audit functions carried out by a firm of chartered accountant appointed by the management is commensurate with the size of the company and the nature of its business.

8. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies act, 1956 in respect of one of the products, manufactured by the company. We have broadly reviewed the accounts and records of the company 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 same.

9. In respect of statutory dues :

a. According to the records, there has been no dalay in depositing dues to Investor Education and Protection Fund and Wealth Tax. There has generally been delays by the company in depositing undisputed statutory dues including provident fund, employees state insurance income-tax, Sales Tax, Customs duty, Excise duty, cess, Service tax and other statutory dues with the appropriate authorities. There are no other undisputed amounts payable in respect of the aforesaid dues as at 31st March, 2010 for a period of more than six months from the date of becoming payable.

Nature of Nature of Total(Rs.) Period it Due date Date of statutory Dues relates to payment

Income Tax Tax Deducted 9,63,216 April To 7th day of the 3rd May,

Act 1961 at source September following month 2010

2009 from the month of deduc- tion

b. According to the records of the company, there are no disputed statutory dues on account of Income Tax, Sales Tax, Service Tax, Excise Duty, and cess remaining unpaid as on 31st March, 2010.

10. The company has accumulated losses at the end of the financial year, which is more than fifty percent of its net worth. The company has incurred Rs. 5,52,55,265/- as cash loss for the financial year and Rs. 6,97,90,311/- during the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the company has defaulted in repayment of dues to financial institutions and banks during the year as under. During the year banks have rescheduled its loan to the company in the form of deferring its installments.

Name of Bank & Facility Amount due Due date Date of payment

Exim Bank Term Loan Rs. 26,12,567 15th March, 2010 27th April, 2010 (USD 61,294.66)

Axis Bank Term Loan Rs. 65,62,500 5th January, 2010 18th February, 2010

12. In our opinion and according to the information and explanation 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.

13. In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/ society. Therefore, clause 4(xiii) of the Companies (Auditors Report) Order 2003 is not applicable to the company.

14. The company has maintained proper records of transactions and contracts in respect of trading in securities, debentures and other investments and timely entries have been made therein. All shares, debentures and other investments have been held by the company in its own name.

15. The company has given corporate guarantee against borrowings of one of its subsidiaries. According to information explanations given to us, and the representations made by the management, the terms and conditions of guarantee are not prejudicial to the interest of the company.

16. In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company as on 31st March, 2010, in our opinion, there are no funds raised on a short term basis which have been used for long term investment

18. 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.

19. In our opinion and according to the information and explanation given to us, the company has not issued any secured debentures during the period covered by our report.

20. The Company has not raised any money by public issue during the year. Accordingly clause 4(xx) of Companies (Auditors Report) Order 2003 is not applicable to the company.

21. In our opinion and according to the information and explanation given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V. Sankar Aiyar & Co.

Chartered Accountants

Firm Regn. No. 109208W

Arvind Mohan

Place : Mumbai Partner

Dated : 29th July, 2010 Membership No. 124082

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