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Auditor Report of Shree Ganesh Forgings Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of SHREE GANESH FORGINGS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 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 in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the general circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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.

Basis for Qualified Opinion

The company has defaulted in payment of statutory dues, such as Sales tax, Property Tax, NMMC Cess, and for P.T. the company has not filled any return during the year. The Company has also defaulted in repayment of loans and interest on loans borrowed from banks.

Despite accumulated losses and consequent total erosion of equity and inadequate liquidity, accounts have been complied as on going concern basis.

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the impact whereof is unascertainable, 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 March 31,2014;

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

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

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 and Statement of Profit and Loss and cash flow dealt with by this report are in agreement with the books of account.

(d) in our opinion, the Balance Sheet and Statement of Profit and Loss 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 31,2014, 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 AUDITORS'' REPORT

(Referred to in Paragraph 1 (Report on Other Legal and Regulatory Requirements) of our report of even date)

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

(b) The fixed assets were physically verified at the close of the year and no discrepancies were noticed.

(ii) According to the information and explanations given to us,

(a) Inventories have been physically verified by management at regular intervals. However the verification exercises have not been observed by us.

(b) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of business.

(c) In our opinion, the company has maintained adequate records of its inventories and.

(d) No material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the company has granted interest free loans to related parties of Rs. 3,70,98,457 which is a non - compliance of Section 295 of the Companies Act, 1956 as the necessary prior approval from Central Government has not been obtained. The maximum Outstanding during the year and year-end balance of such loan are as follows:

Maximum amount Year-end Name of the Party outstanding balance during the year

Namha metal Ltd. 1,41,88,311 3,51,36,543

Akshatt 2,00,02,501 1,50,189 Warehousing Corporation

Anita Sekhri 2,49,048 7,04,118

Deepak Sekhri 46,05,220 10,99,607

Namha Sekhri 8,000 8,000

(b) Since there are no stipulated terms of repayment of interest and principle, hence we are not able to comment on the regularity of receipt of the same.

(c) According to the information and explanations given to us, in case where overdue amount is more than rupees one lakh, reasonable steps have been taken by the company for the recovery of principal.

(d) The Company has taken interest free loans of Rs. 1,21,199/- secured or unsecured, from related parties. The maximum outstanding during the year and the year-end balance of such loans are as follows:q1

Name of the Party Maximum Year-end amount balance outstanding during the year

Akshatt Sekhri 34,456 16,776

Deepak Sekhri HU 1,04,423 1,04,423

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets etc. There is no sale of services during the year. During the course of our audit, we have not observed any major weaknesses in internal controls. However, in our opinion the company should strengthen its controls with regard to storage and maintenance of inventory records.

(v) Based on the audit procedure applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained u/s 301 have been so entered. In our opinion and according to the information and explanations given to us, the transactions made in the registers maintained under section 301 and exceeding the value of five lakhs rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public therefore the provisions of clause 4 (vi) of the Order are not applicable to the company.

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

(viii) The Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 having regard to the nature of the business of the company. As explained to us, the specified records have been maintained to the extent applicable, We have, however not made detailed examination of the records, with a view to determine whether they are accurate.

(ix) In respect of Statutory Dues:

(a) According to the information given to us, there were certain dues in respect of Income Tax & Cess are outstanding as at March 31st,2014 for a period of more than six months from the date they become payable due to financial constraints faced by the company. Details are as follows:

NMMC Cess 1,050,184

Sales Tax 45,15,673

Property Tax 91,45,565

P.T 57,996

CST 1,56,580

The disputed statutory dues relating to sales Tax and misc. aggregating to Rs. 270.68 lakhs that have not been deposited are as under: for which the company has made an appeal to the higher authority.

Assessment Year Amount (Rs.)

2000-01 9,450.00

2001-02 350,003.00

2002-03 3,043,843.00

2003-04 2,216,678.00

2004-05 1,331,956.00

2005-06 1,331,956.00

2006-07 21,115,850.00

(x) As on 31.03.2010 the company had accumulated losses of Rs. 357,639,510/- which completely eroded company''s net worth. The company was registered as sick company Under the provisions of Sick Industrial and Companies (special provisions) Act, 1985 with the board for Industrial and Financial Reconstruction (BIFR) on 3rd August, 2010. As on 31st March, 2014 the Company''s net worth remains eroded by its accumulated losses of Rs. 767,70,5343/-. During the financial year 2013-14 the company had incurred cash losses of Rs. 23,099,193/- and Rs.176,506,322/- for the immediately preceding previous year i.e. F.Y. 2012-13.

(xi) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, as such the provisions of clause 4(xi) of the Order are not applicable.

(xii) The company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provisions of clause 4 (xii) of the order are not applicable.

(xiii) According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments, as such the provisions of clause 4 (xiii) of the order are not applicable.

(xiv) As per the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions, as such the provisions of clause 4 (xiv) of the order are not applicable.

(xv) According to the information and explanations given to us, no term loan was taken during the year. Accordingly provisions of clause 4 (xv) of the order are not applicable.

(xvi) Based on 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. .

(xvii) According to the information and explanations given to us, during the year the company has not made any preferential allotment of shares to parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clause 4(xvii) of the Order are not applicable.

(xviii) According to the information and explanations given to us, the company has not issued debentures during the year. Therefore, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) According to the information and explanations given to us, the company has not raised money by way of public issue during the year. Therefore, the provisions of clause 4(xix) of the Order are not applicable.

For BATLIBOI & PUROHIT Chartered Accountants Firm Reg.No. 101048W

Place : Mumbai (R.D. Hangekar) Date : Partner Membership No: 30615


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of SHREE GANESH FORGINGS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013 and the Statement of Proft and Loss and Cash Flow Statement for the year then ended , and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance 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 fnancial 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 fnancial 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 fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the fnancial 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 fnancial statements.

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

Basis for Qualifed Opinion

The company accumulated losses at the end of fscal is more than 50% of its net worth. Despite accumulated losses and consequent total erosion of equity and inadequate liquidity, accounts have been complied as on going concern basis. The company has also defaulted in repayment of loans and interest borrowed from banks and fnancial institutions.

Qualifed opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualifed Opinion paragraph, the impact whereof is unascertainable, the fnancial statements

give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

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

(c) In the case of the Cash Flow Statement, of the cash fows 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 specifed 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 and Statement of Proft and Loss and cash fow dealt with by this report with by this Report are in agreement with the books of account.

(d) in our opinion, the Balance Sheet and Statement of Proft and Loss 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 thedirectors 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.

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

(b) The fxed assets were physically verifed at the close of the year and no discrepancies were noticed.

(c) A fxed assets (Motor car) theft during the year. Insurance claim received for the same.

(ii) According to the information and explanations given to us,

(a) Inventorie s have been physically verifed by management at regular intervals. However the verifcation exercises have not been observed by us.

(b) The procedure of physical verifcation of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of business.

(c) In our opinion, the company has maintained adequate records of its inventories and no material discrepancies were noticed on physical verifcation.

(iii) (a) According to the information and explanations given to us, the company has granted interest free loans to related parties of Rs. 16,483,504/- which is a non – compliance of Section 295 of the Companies Act, 1956 as the necessary prior approval from Central Government has not been obtained. The maximum Outstanding During the year and year-end balance of such loan are as follows:

Maximum amount Name of the Party outstanding during Year-end balance the year

Namha metal Ltd. 821,701.00 821,701.00

Akshat Warehousing Corporation 1,445,546.00 111,915.00

Anita Sekhri 2,000.00 2,000.00

Deepak Sekhri 1,42,14,257.00 4,714,257.00

(b) Since there are no stipulated terms of repayment of interest and principle, hence we are not able to comment on the regularity of receipt of the same.

(c) According to the information and explanations given to us, in case where overdue amount is more than rupees one lakh, reasonable steps have been taken by the company for the recovery of principal.

(d) The Company has taken interest free loans of Rs.11,246,734/- secured or unsecured, from related parties. The maximum outstanding during the year and the year-end balance of such loans are as follows:

Maximum amount Name of the Party outstanding during Year-end balance the year

Namha metal Ltd. 413,103.00 413,103.00

AkshattWarehousing

Corporation 1,333,631.00 111,915.00

Deepak Sekhri 9,500,000.00 4,714,257.00

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of fxed assets etc. There is no sale of services during the year. During the course of our audit, we have not observed any major weaknesses in internal controls. However, in our opinion the company should strengthen its controls with regard to storage and maintenance of inventory records.

(v) Based on the audit procedure applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained u/s 301 have been so entered. In our opinion and according to the information and explanations given to us, the transactions made in the registers maintained under section 301 and exceeding the value of fve lakhs rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public therefore the provisions of clause 4 (vi) of the Order are not applicable to the company.

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

(vii) The Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 having regard to the nature of the business of the company. As explained to us, the specifed records have been maintained to the extent applicable, We have, however not made detailed examination of the records, with a view to determine whether they are accurate.

(xi) In respect of Statutory Dues:

(a) According to the information given to us, there were certain dues in respect of Income Tax & Cess are outstanding as at March 31st,2013 for a period of more than six months from the date they become payable due to fnancial constraints faced by the company. Details are as follows:

T.D.S 121,829.00

NMMC Cess 1,050,184.00

Sales Tax 4,719,511.00

Property Tax 7,448,480.00

(b) The disputed statutory dues relating to excise duty and misc. aggregating to Rs. 270.68 lakhs that have not been deposited are as under :

Assessment Year Amount (Rs.)

2000-01 9,450.00

2001-02 350,003.00

2002-03 3,043,843.00

2003-04 2,216,678.00

2004-05 1,331,956.00

2005-06 1,331,956.00

2006-07 21,115,850.00

(x) As on 31.03.2010 the company had accumulated losses of Rs. 357,639,510/- which completely eroded company''s net worth. The company was registered as sick company Under the provisions of Sick Industrial and Companies (special provisions) Act, 1985 with the board for Industrial and Financial Reconstruction (BIFR) on 3rd August, 2010. As on 31st March, 2013 the Company''s net worth remains eroded by its accumulated losses of Rs. 762,784,078/-. During the fnancial year 2012-13 the company had incurred cash losses of Rs. 176,506,322/- and Rs. 84,364,167/- for the immediately preceding previous year i.e. F.Y. 2011-12.

(xi) According to the information and explanations given to us, The company banker''s have been withdrawn from CDR scheme, against which the company has preferred an appeal before the CDR Core Group.

(xii) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, as such the provisions of clause 4(xii) of the Order are not applicable.

(xiii) The company is not a chit fund or a nidhi / mutual beneft fund/society. Therefore, the provisions of clause 4 (xiii) of the order are not applicable.

(xiv) According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments, as such the provisions of clause 4 (xiv) of the order are not applicable.

(xv) As per the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or fnancial institutions, as such the provisions of clause 4 (xv) of the order are not applicable.

(xvi) According to the information and explanations given to us, no term loan was taken during the year. Accordingly provisions of clause 4 (xvi) of the order are not applicable.

(xvii) Based on 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.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year. Therefore, the provisions of clause 4(xix) of the Order are not applicable.

(xx) According to the information and explanations given to us, the company has not raised money by way of public issue during the year. Therefore, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) 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.

(xviii) According to the information and explanations given to us, during the year the company has not made any preferential allotment of shares to parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clause 4(xviii) of the Order are not applicable.

For BATLIBOI & PUROHIT

Chartered Accountants

Firm Reg.No. 101048W

Place : Mumbai (R.D. Hangekar)

Date : 31st July, 2013 Partner

Membership No: 30615


Mar 31, 2010

1. We have audited the attached Balance Sheet of SHREE GANESH FORGINGS LIMITED as at 31st March, 2010, the related Profi t & Loss Account and Cash Flow statement for the year ended on that date annexed thereto to which we have signed under reference to this report. These fi nancial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.

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

3 As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub section 227(4A) of the Companies Act, 1956, (the Act), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we set out in the Annexure a statement on the matters specifi ed 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 appears from our examination of the books;

c) The Balance Sheet and the Profi t and 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, Profi t and Loss account and the Cash Flow Statement dealt with by this report have been prepared in compliance with the applicable accounting standards referred to in Section 211 (3C) of the Act;

e) On the basis of written representation received from the directors, as on 31st March, 2010 and taken on record by the Board of Directors of Company, none of the directors is disqualifi ed 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 Balance Sheet, Profi t and Loss Account and the Cash Flow Statement read together with the Notes thereon and annexed thereto, give in the prescribed manner, the information required by the Act and also 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 the Profi t and Loss Account, of the loss of the Company for the year ended on that date; and

(iii) in the case of Cash fl ow statement, of the cash fl ow of the company for the year ended on that date.



ANNEXURE TO AUDITORS REPORT

1. (a) The Company has generally maintained proper records showing particulars, including quantitative details and situation of fi xed assets;

(b) As explained to us, fi xed assets, according to the practice of the Company are physically verifi ed by the management at reasonable intervals, in a phased verifi cation-programme, which, in our opinion, is reasonable, looking to the size of the Company and the nature of its business. To the best of our knowledge, no material discrepancies have been noticed on verifi cation;

(c) The Company has not disposed off any substantial part of its Fixed Assets so as to affect its going concern status.

2 (a) As explained to us, inventories have been physically verifi ed by the management at reasonable intervals;

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

(c) In our opinion, and according to the information and explanations given to us, the company has maintained proper records of its inventories and no material discrepancies were noticed on physical verifi cation.

3 (a) The Company has not granted any loans, secured or unsecured , to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act , 1956. Accordingly, clauses (iii)(b) to (iii)(d) of paragraph 4 of the Order, are not applicable to the Company for the current year ;

(b) The Company has not taken any loans, secured or unsecured, from companies, fi rms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses(iii)(f) and (iii)(g) of the paragraph 4 of the Order are not applicable to the Company for the current year.

4. In our opinion and according to the information and explanation given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for purchase of inventory, fi xed assets and for the

sale of goods and services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanation given to us, we have neither come across nor have we been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5 (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act, have been entered in the Register maintained under that section;

(b) According to information and explanations given to us , the transactions of purchase and sale of goods/services made in pursuance of such contracts or arrangements have been made at prices which are r e a s o n a b l e having regard to prevailing market prices at the relevant time.

6 The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8 The Central Government has prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of certain products of the company. As explained to us, the specifi ed records have been maintained to the extent applicable. We have, however, not made a detailed examination of the records, with a view to determine whether they are accurate.

9 The Corporate Debt Restructuring Cell of the RBI has approved a reworked CDR package for the company on 15.03.2010 , which is pending implementation as of date.

10. In respect of statutory dues:

(a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees State Insurance , Income Tax, Sales Tax , Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as on 31st March, 2010;

(b) The disputed statutory dues aggregating to Rs.270.68 lacs that have not been deposited on account of matters pending before the Commissioner of Income Tax (Appeals) are as under :

Assessment Year Amount ( Rs.)

2000-2001 9,450

2001-2002 3,50,003

2002-2003 30,43,843

2003-2004 22,16,678

2004-2005 13,31,956

2006-2007 2,11,15,850

Total 2,70,67,780



11. The Company has also incurred cash losses during the year under audit. The Company has accumulated losses of Rs. 357,639,510 which has completely eroded the current net worth of Rs. 280,047,652. Therefore, the Company is a sick company under the provisions of Sick Industrial Companies ( Special Provisions ) Act, 1985.The company has been advised to be referred to the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985.

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

13 The company is not a chit fund or nidhi mutual benefi t fund /society. Hence the provisions of clause 4(xiii) of Companies (Auditors Report) Order, 2003 is not applicable.

14. In our opinion and according to the information and explanations given to us, the company is not dealing in or trading in shares, securities, debentures and other investments.

15. The Company has given guarantee on behalf of its Joint Venture Company, Geldbach (UK) Ltd favouring HSBC Bank Plc for GBP 625000.

16 On an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short term basis which have been used for long term investment.

17 The company has not made any preferential allotment of shares during the year.

18 No debentures have been issued by the company during the year.

19 The Company has not raised by way of public issue any amount during the year.

20 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of major fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.



For R.K Chaudhary & Associates

Chartered Accountants

R K Chaudhary

Place: Mumbai Proprietor

Date:June18,2010 (M No. 35487)

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