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Auditor Report of Sarla Performance Fibers Ltd.

Mar 31, 2016

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of Sarla Performance Fibers Limited (the company), which comprise the balance sheet as at 31 March 2016, the statement of profit and loss and 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules,2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities; selection and applications of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 stand alone 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 misstatements.

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 and presentation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of 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 profit and its cash flows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 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 written representations received from the directors as on 31 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 Companies Act 2013.

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 B”

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 explanation given to us:

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

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

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

The Annexure A referred to in our Independent Auditors’ Report to the members of the Company on the Standalone Financial Statements for the year ended 31st March, 2016, we report that:

i. a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. The company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

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

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

c. The company is maintaining proper records of inventory. As explained to us, there is no material discrepancy noticed on physical verification of inventory as compared to book records.

iii. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.(the Act).

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

v. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public.

vi. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148 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 not, however, made a detailed examination of the same.

vii. a. According to the information and explanation given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, service tax, wealth tax, duty of customs, value added tax, cess and other material statutory dues applicable have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees’ state insurance and duty of excise.

b. According to information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues were in arrears as at balance sheet date for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no material dues of Income tax, sales tax, service tax, wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to explanations given to us, the following dues of excise duty, custom duty and income tax have not been deposited by the Company on account of disputes.

Name of the statute

Nature of dues

Amount in Rs.

Period to which the amount relate

Forum where dispute is pending

The Central Excise Act, 1944

Excise duty

11,05,32,000/-

F.Y. 1999-2000 to 2012-2013

High Courts of Gujarat and Bombay and Supreme Court of India.

The Central Excise Act, 1944

Custom Duty

4,75,000/-

F.Y. 1999-2000, 2000-2001

CESTAT

The Income Tax Act, 1961

Income Tax

13,16,645/-

A.Y. 2003-2004

Order giving appeal effect is pending before AO

The Income Tax Act, 1961

Income Tax

51,04,560/-

A.Y. 2012-2013

Rectification application is pending before AO

d. According to the information and explanation given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 2013 and rules there under has been transferred to such fund within time.

viii. The Company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses during the financial year covered under audit or in the immediately preceding financial year.

ix. The Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders during the year.

x. In our opinion and according to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xi. Based on the information and explanation given to us by the

xii. According to information and explanations given to us, no material fraud on or by company has been noticed or reported during the course of our audit.

For SUNDARLAL, DESAI & KANODIA

Chartered Accountants

Firm Registration No. 110560W

H. P. Kanodia

Place: Mumbai Partner

Date: 30th May, 2016 Membership No. 40617


Mar 31, 2015

We have audited the accompanying standalone financial statements of Sarla Performance Fibers Limited (the company), which comprise the balance sheet as at 31 March 2015, the statement of profit and loss and 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules,2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities; selection and applications of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing 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 misstatements.

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 auditors 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 and presentation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015 and its profit and its cash flows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 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 written representations received from the directors as on 31 March 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015, from being appointed as a director in terms of section 164(2) of the Companies Act 2013.

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 explanation given to us:

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

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

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 Independent Auditors' Report

The Annexure referred to in our Independent Auditors' Report to the members of the Company on the Standalone Financial Statements for the year ended 31st March, 2015, we report that:

i. a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed , assets.

b. The company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

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

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

c. The company is maintaining proper records of inventory. As explained to us, there is no material discrepancy noticed on physical verification of inventory as compared to book records.

iii. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. (the Act).

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

v. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public.

vi. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148 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 not, however, made a detailed examination of the same.

vii. a. According to the information and explanation given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, service tax, wealth tax, duty of customs, value added tax, cess and other material statutory dues applicable have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees' state insurance and duty of excise.

b. According to information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues were in arrears as at balance sheet date for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no material dues of Income tax, sales tax, service tax, wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to explanations given to us, the following dues of excise duty, custom duty and income tax have not been deposited by the Company on account of disputes.

Name of the statute Nature of dues Amount in Rs. Period to which the amount relate



The Central Excise Act, 1944 Excise duty 18,60,62,222/- F.Y. 1999-2000 2012-2013

The Central Excise Act, 1944 Custom Duty 4,75,000/- F.Y. 1999-2000, CESTAT 2000-2001

The Income Tax Act, 1961 Income Tax 13,16,645/- A.Y. 2003-2004

The Income Tax Act, 1961 Income Tax 51,04,560/- A.Y. 2012-2013

Name of the statute Forum where dispute is pending

The Central Excise Act, 1944 High Courts of Gujarat and Bombay and Supreme Court of India.

The Central Excise Act, 1944 CESTAT 2000-2001

The Income Tax Act, 1961 Order giving appeal effect is pending before AO

The Income Tax Act, 1961 Rectification application is pending before AO

d. According to the information and explanation given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 2013 and rules there under has been transferred to such fund within time.

Of the financial year and has not incurred any cash losses during the financial year covered under audit or in the immediately preceding financial year.

ix. The Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders during the year.

x. In our opinion and according to the information and the loans were obtained. explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

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

xii. According to information and explanations given to us, no material fraud on or by company has been noticed or reported during the course of our audit.

For SUNDARLAL, DESAI & KANODIA

Chartered Accountants

Firm Registration No. 110560W

H. P. Kanodia

Place: Mumbai Partner

Date: May 29, 2015 Membership No. 40617


Mar 31, 2014

We have audited the accompanying financial statements of Sarla Performance Fibers Limited (the company), which comprise the balance sheet as at 31st March 2014, and the statement of profit and loss and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of these financial statements that 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect 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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the 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 profit for the year ended on that date, and

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

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

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

c. The balance sheet, 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 sub-section (3C) of section 211 of the Companies Act, 1956. read with General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect Section 133 of the Companies Act, 2013.

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

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date Re: Sarla Performance Fibers Limited (the company)

i. a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. All fixed assets have been physically verified by the management during the year. We are informed that the management on such verification has noticed no material discrepancies.

c. The company has not disposed of any substantial part of fixed assets during the year so as to affect its going concern.

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

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

c. The company is maintaining proper records of inventory. As explained to us, there is no material discrepancy noticed on physical verification of inventory as compared to book records.

iii. a. According to the information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the company and hence not commented upon.

b. According to information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the company and hence not commented upon.

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

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 and are exceeding the value of Rupees Five Lakhs in respect of any party during the year have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public.

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

viii. W e have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

ix. a. According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, Excise duty, service tax, cess and other material statutory dues applicable to it have generally been regularly deposited with the appropriate authorities

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

c. According to the information and explanation given to us, there are no dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute except as follows :

Name of the statute Nature of dues Amount in Rupees Period to which the amount relate

The Central Excise Act, 1944 Excise duty 19,35,62,222/- F.Y. 1999-2000 to 2012-2013

The Central Excise Act, 1944 Custom Duty 4,75,000/- F.Y. 1999-2000, 2000-2001

The Income Tax Act, 1961 Income Tax 13,16,645/- A.Y. 2003-2004

The Income Tax Act, 1961 Income Tax 3,967/- A.Y. 2011-2012

Name of the Statute Forum where dispute is pending

The Central Excise Act, 1944 High Courts of Ahmadabad and Bombay and Supreme Court of India.

The Central Excise Act, 1944 CESTAT

The Income Tax Act, 1961 Income Tax Appellate Tribunal

The Income Tax Act, 1961 Commissioner of Income Tax (Appeal)

x. The company has no accumulated losses and the company has not incurred any cash losses during the financial year covered under audit or in the immediately preceding financial year.

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

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

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

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

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

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

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

xviii. According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix. According to the information and explanations given to us, during the year covered by our audit report, the company has not issued any debentures.

xx. According to the information and explanations given to us the company has not raised any money by public issue during the period covered by our audit report.

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

For SUNDARLAL, DESAI & KANODIA Chartered Accountants Registration Number - 110560W

H. P. KANODIA Place: Mumbai. Partner Date : 29th May, 2014 Membership No. 40617


Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Sarla Performance Fibers Limited (the company), which comprise the balance sheet as at 31 March 2013, and the statement of profit and loss and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of these financial statements that give a true and fair vew 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, i m p le m e n ta ti o n and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS'' RESPONSIBILITY

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

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

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair vew 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 31 March 2013.

b. In the case of the statement of profit and loss, of the profit for the year ended on that date, and

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary 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 loss, and cash flow statement comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

Re: Sarla Performance Fibers Limited (the company)

i. a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. All fixed assets have been physically verified by the management during the year. We are informed that the management on such verification has noticed no material discrepancies.

c. The company has not disposed of any substantial part of fixed assets during the year so as to affect its going concern.

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

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

c. The company is maintaining proper records of inventory. As explained to us, there is no material discrepancy noticed on physical verification of inventory as compared to book records.

iii. a. According to the information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the company and hence not commented upon.

b. According to information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the company and hence not commented upon.

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

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 and are exceeding the value of Rupees Five Lakhs in respect of any party during the year have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public.

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

viii. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed

a. According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, Excise duty, service tax, cess and other material statutory dues applicable to it have generally been regularly deposited with the appropriate authorities

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

c. According to the information and explanation given to us, there are no dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute except as follows :

Name of the statute Nature of dues Amount in Rupees Period to which the Forum where dispute amount relate is pending

The Central Excise Act, Excise duty 17,88,70,670/- F.Y. 1999-2000 to Figh Courts of Ahmadabad 1944 2011-2012 and Bombay and Supreme Court of India.

x. The company has no accumulated losses and the company has not incurred any cash losses during the financial year covered under audit or in the immediately preceding financial year.

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

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

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

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

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

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

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

xviii. According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix. According to the information and explanations given to us, during the year covered by our audit report, the company has not issued any debentures.

xx. According to the information and explanations given to us the company has not raised any money by public issue during the period covered by our audit report.

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

For SUNDARLAL, DESAI & KANODIA

Chartered Accountants

Registration Number - 110560W

H. P. KANODIA

Place: Mumbai. Partner

Date : 29th May, 2013 Membership No. 40617


Mar 31, 2011

We have audited the attached Balance sheet of Sarla Performance Fibers Ltd. (Formerly known as Sarla Polyester Limited) as at 31st March, 2011 and also the Profit and Loss Account and the Cash Flow Statement of the Company 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.

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

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

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

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

B. In our opinion proper books of accounts as required by law have been kept by the company so far as appears from our examination of those books.

C. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

D. In our opinion the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

F. 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 subject to note no. 4 regarding non provision of interest receivable from wholly owned subsidiary company and notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

i. In the case of Balance sheet of the state of affairs of the company as at 31st March, 2011;

ii. In the case of Profit and Loss account of the profit of the company 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 AUDITORS' REPORT

As required by the “Companies (Auditors - Report) order, 2003” issued by the Department of Company affairs in terms of section 227 (4A) of the Companies Act, 1956, we report as under: -

1. a) The company has maintained proper records showing full particulars including quantitative details and situations of fixed assets. The management during the year has physically verified the fixed assets. We are informed that the management on such verification has noticed no material discrepancies.

b) As explained to us, the management during the year has physically verified all the assets. Having regard to the size of the operations and on the basis of explanations received, in our opinion, no serious discrepancies have been noticed.

c) The company has not disposed of any substantial part of its fixed assets so as to affect its going concern.

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

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

c) The company is maintaining proper records of the inventory. As explained to us, there is no material discrepancy noticed on physical verification of inventory as compared to book records.

3. a) The company had granted interest free unsecured loan to one company covered in the register maintained u/s 301 of the Companies Act, 1956. The amount involved during the year was Rs. 149.85 Lacs and closing balance Nil. The terms of repayment and interest are not stipulated hence we do not offer any comments on para 4(iii)(b) & (c) of the Companies (Auditor's Report) Order, 2003.

b) The company has not taken any loan, secured or unsecured, from companies, firms and other parties covered in the register maintained u/s 301 of Companies Act, 1956 and hence para 4(iii)(e) & (f) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

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 with regards to purchase of inventory, fixed assets and with regards to the sale of goods. During the course of our audit we have not observed any continuing failure to connect major weakness, in Internal Control System.

5. a) According to the information and explanation given to us, we are in opinion that the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained U/s 301 of the companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanation given to us, the transactions in pursuance of contracts or arrangements entered in the register maintained U/s 301 of the companies Act, 1956 and are exceeding the value of rupees Five Lakhs 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 not accepted any deposit from public.

7. In our opinion, the company has an internal audit system commensurate with its size and nature of the business.

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records u/s 209 (1) (d) of the Companies Act, 1956 and we 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. a) According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, Excise duty, service tax, cess and other material statutory dues applicable to it have generally been regularly deposited with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, custom duty, service tax, excise duty and cess were outstanding as at 31st March, 2011 for a period of more than six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of income tax, wealth tax, sales tax, custom duty, service tax, excise duty and cess which have not been deposited on account of any dispute except as stated below:

Nature of the Amount in Period to Which Forum Where the Dues Rupees Amount Relates Dispute is pending

Excise Duty 17,81,81,008 F.Y. 1999-2000 to High Courts of 2009-2010 Vapi, Ahmadabad and Bombay and Supreme Court of India.

Custom Duty 4,75,000 F.Y. 1999-2000, CESTAT 2000-2001

Income Tax 13,16,645 A.Y. 2003-2004 Income Tax Appellate Tribunal

Income Tax 9,93,080 A.Y. 2007-2008 Comm. Of Income Tax Appeals

Income Tax 30,55,951 A.Y. 2008-2009 Comm. Of Income Tax Appeals

10. The company has no accumulated losses and the company has not incurred any cash losses during the financial year covered under audit or in the immediately preceding financial year.

11. Based on our audit procedure and according to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

12. The company has not granted loans and advances 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 a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

14. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments.

15. In our opinion, the company has not given guarantees for loans taken by others from banks or financial institutions.

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

17. 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 funds raised on short-term basis have not been used for long-term investment.

18. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act 1956.

19. According to the information and explanations given to us, during the year covered by our audit report, the company has not issued any debentures.

20. According to the information and explanations given to us the company has not raised any money by public issue during the period covered by our audit report.

21. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For SUNDARLAL, DESAI & KANODIA Chartered Accountants Firm Registration Number - 110560W

M. B. DESAI Partner Membership No. 33978

Place: Mumbai. Date : 10th May, 2011


Mar 31, 2010

We have audited the attached Balance sheet of Sarla ; Performance Fibers Ltd. (Formerly known as Sarla i Polyester Limited) as at 31 st March, 2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 j includes examining, on a test basis, evidence supporting the ; amounts and disclosures in the financial statements. An i audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

B. In our opinion proper books of accounts as required by law have been kept by the company so far as appears from our examination of those books.

C. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

D. In our opinion the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

F. 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 subject to note no. 4 regarding non provision of interest receivable from wholly owned subsidiary company and notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; i. In the case of Balance sheet of the state of affairs of the company as at 31st March, 2010;

ii. In the case of Profit and Loss account of the profit of the company 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 AUDITORS REPORT

As required by the "Companies (Auditors - Report) order, 2003" ; issued by the Department of Company affairs in terms of section i 227 (4A) of the Companies Act, 1956, we report as under: -

1. a) The company has maintained proper records showing full

particulars including quantitative details and situations of fixed assets. The management during the year has physically verified the fixed assets. We are informed that ; the management on such verification has noticed no i material discrepancies.

b) As explained to us, the management during the year has physically verified all the assets. Having regard to the size i of the operations and on the basis of explanations • received, in our opinion, no serious discrepancies have been noticed.

c) The company has not disposed of any substantial part of its fixed assets so as to affect its going concern.

2. a) The inventories have been physically verified during the

year by the management. In our opinion, the frequency of i verification is reasonable.

b) The procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to size of the company and the nature of its : business.

c) The company is maintaining proper records of the ; inventory. As explained to us, there is no material discrepancy noticed on physical verification of inventory as compared to book records.

3. a) During the year the company has granted interest free I

unsecured loan to one company covered in the register ; maintained u/s 301 of the Companies Act, 1956. The ; amount involved during the year was Rs. 149.85 Lakhs. The terms of repayment and interest are not stipulated hence we do not offer any comments on para 4(iii)(b) & (c) of the Companies (Auditors Report) Order, 2003.

b) The company has not taken any loan, secured or ; unsecured, from companies, firms and other parties covered in the register maintained u/s 301 of Companies Act, 1956 and hence para 4(iii)(e) & (f) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

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 with regards to purchase of inventory, fixed assets and with regards to the sale of goods. In our opinion

and according to the information and explanation given to us, there is no continuing failure to correct major weaknesses in internal control system.

5. a) According to the information and explanation given to us,

we are in opinion that the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained U/s 301 of the companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanation given to us, the transactions in pursuance of contracts or arrangements entered in the register maintained U/s 301 of the companies Act, 1956 and are exceeding the value of rupees Five Lakhs 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 not accepted any deposit from public.

7. In our opinion, the company has an internal audit system commensurate with its size and nature of the business.

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Centra! Government for the maintenance of any cost records u/s 209 (1) (d) of the Companies Act, 1 956 and we 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. a) According to the records of the company, undisputed

statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, Excise duty, service tax, cess and other material statutory dues applicable to it have generally been regularly deposited with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, custom duty, service tax, excise duty and cess were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of income tax, wealth tax, sales tax, custom duty, service tax, excise duty and cess which have not been deposited on account of any dispute except as stated below:

Nature of the Dues Amount in Period to Which Amount Relates Forum Where the

Rupees Dispute is pending

Excise Duty 1,80,979,476 F.Y. 1999-2000 to 2008-2009 CESTAT

Custom Duty 4,75,000 F.Y. 1999-2000, 2000-2001 CESTAT

Income Tax 22,76,906 A.Y. 2003-2004 Comm. Of Income Tax Appeals Income Tax 9,93,080 A.Y. 2007-2008 Comm. Of Income Tax Appeals

10. The company has no accumulated losses and the company has not incurred any cash losses during the financial year covered under audit or in the immediately preceding financial year.

11. Based on our audit procedure and according to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

12. The company has not granted loans and advances 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 a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

14. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments.

15. In our opinion, the company has not given guarantees for loans taken by others from banks or financial institutions.

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

17. 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 funds raised on short-term basis have not been used for long-term investment.

18. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act 1 956.

19. According to the information and explanations given to us, during the year covered by our audit report, the company has not issued any debentures.

20. According to the information and explanations given to us the company has not raised any money by public issue during the period covered by our audit report.

21. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For SUNDARLAL, DESAI & KANODIA

Chartered Accountants

Registration Number - 110560W

M. B. DESAI

Place: Munbai. Partner Date: 17th May,2010 Membership No. 33978

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