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Auditor Report of Shree Karthik Papers Ltd.

Mar 31, 2016

INDEPENDENT AUDITOR’S REPORT

To the Members of M/s. SHREE KARTHIK PAPERS LIMITED Report on the Financial Statements

We have audited the accompanying financial statements of M/S. SHREE KARTHIK PAPERS LIMITED ("the company"), which comprise the Balance Sheet as at March 31, 2016, 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 Financial statements:

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. While conducting the 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 standalone 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 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 control 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 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 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:

(a) in case of the Balance sheet, of the state of affairs of the Company as at March 31st, 2016;

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

(c) 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, 2016 (the Order) issued by the Central Government of India in terms of Sub Section (11) of Section 143 of the Companies Act 2013, we give in the annexure A, a statement on the matters specified in the paragraph 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 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 the statement of Profit and loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.

d) In our opinion, the aforesaid Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014

e) On the basis of the written representations received from the directors as on March 31, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B"; and

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

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

ii. The company has made provisions as required under the applicable law or Accounting Standard, for material foreseeable losses, if any on long term contracts.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company

The Annexure "A" referred to in Independent Auditors'' report to the members of M/s. SHREE KARTHIK PAPERS LTD on the standalone financial statements for the year ended 31st March, 2016, we report that:

i) In respect of Fixed Assets :

a) In our opinion and according to the information and explanations given to us during the course of audit, the Company is maintaining proper records showing full particulars including quantitative details and situation of its fixed assets.

b) In our opinion and according to the information and explanations given to us during the course of audit, fixed assets have been physically verified by the Management at reasonable intervals, and in our opinion, physical verification of fixed Assets followed by the management are reasonable and adequate in relation to the size of the company and nature of its business. The discrepancies reported on verification were not material and have been properly dealt within the books of accounts.

c) In our opinion and according to the information and explanations given to us during the course of audit, the title deeds of immovable properties are held in the name of the company.

ii) In respect of Inventories :

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

iii) In our opinion and according to the information and explanations given to us and records examined by us during the course of audit, the Company has not granted loans, secured or unsecured, to Companies, firm, LLP''s or other parties, listed in the Register maintained Under Section 189 Of the Companies Act,2013 but the Company has not taken loans unsecured from the parties, listed in the Register maintained Under Section 189 Of the Companies Act, 2013, the terms and conditions are not prima facie pre judicial to the interests of the company and the terms of arrangement do not stipulate repayment schedule and the loans are repayable on demand. Refer Note No.2.24(b) for details.

iv) According to the information and explanations given to us, In respect of loans, investments, Guarantees and security the provisions of section 185 and 186 of the Companies Act, 2013 have been complied with.

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

vi) The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Companies Act, 2013 for the goods manufactured by the company.

vii) a) In our opinion and according to the information and explanations given to us and records examined by us during the course of audit , the undisputed statutory dues including provident fund, Income Tax (TDS) and other statutory dues, have been regularly deposited with the appropriate authorities and there have no delays and arrears outstanding for a period of more than 6 month as on the last day of the financial year ended 31st March,2016.

b) In our opinion and according to the information and explanations given to us and records examined by us during the course of audit, the following dues have not been deposited on account of disputes. The Company is confident of getting these claim quashed as the demands have been raised only on technical grounds.

Sl.

No.

Name of the Statute

Nature of Dues

Forum where dispute pending

Amount

Rs.

a.

Sales Tax 1995-1996

Penalty

Sales Tax Appellate.

Tribunal (AB) (Appeal pending)

2,21,858

b.

1999-2000

(CST)

Tax Penalty

The Appellate Asst. Commissioner(Ct.)Cbe., (Appeal pending)

15.88.951

17.99.951

c.

2000-2001

(CST)

Tax Penalty

The Appellate Asst. Commissioner(Ct.) Cbe., (Appeal pending)

27,61,182

29,43,768

d.

2003-2004

(CST)

Tax

Sales Tax Appellate Tribunal (AB) (Appeal pending)

4,44,575

e.

2004-2005

(CST)

Tax Penalty

The Appellate Asst. Commissioner(Ct.)Cbe., (Appeal pending)

15,25,088

16,02,309

f.

2004-2005

(TNGST)

Tax Penalty

The Appellate Asst. Commissioner(Ct.)Cbe., (Appeal pending)

1,17,030

58,515

g.

2006-2007 (Income Tax)

Tax

Income Tax Appellate Tribunal, Chennai

58,40,144

viii) In our Opinion and according to the information and explanations given to us and the records examined by us, the Company has not defaulted in repayment of dues to financial institutions and banks as at Balance sheet date.

ix) The company did not raise money by way of initial public offer or further public offer and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.

x) According to the information and explanations given to us, no fraud by the company or fraud on the company by its officers or employees noticed or reported during the year.

xi) According to the information and explanations given to us and the records examined by us, managerial remuneration of Rs.18 Lacs has been paid during the year by the company.

xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii) According to the information and explanations given to us and the records examined by us, all transactions with the related parties are in compliance with sec.177 and 188 of Companies Act 2013 and the details have been disclosed in the financial statements as required by the applicable accounting standards.

xiv) According to the information and explanations given to us and the records examined by us, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

xv) According to the information and explanations given to us and based on the records examined by us, the company has not entered into any non cash transactions with directors or persons connected with him during the year. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

ANNEXURE - B TO THE AUDITORS'' REPORT

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

We have audited the internal financial controls over financial reporting of M/S. SHREE KARTHIK PAPERS LIMITED as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

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

Auditors'' Responsibility

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

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

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

For Giri & Co.

Chartered Accountants

F.R. No. : 006702S

(Sd./-) R. Giri BCom fca fcma

Place : Coimbatore Senior Partner

Date : 13.08.2016 Membership Number : 025458


Jun 30, 2015

We have audited the accompanying financial statements of M/s. SHREE KARTHIK PAPERS LIMITED (“the company”), which comprise the Balance Sheet as at June 30, 2015, and the statement of Profit and Loss for the year ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the financial statements

The Company's Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made 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 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 appropriateness 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 aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the Accounting principles generally accepted in India:

(a) in the case of the Balance sheet, of the state of affairs of the Company as at June 30, 2014;

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

Report on Other Legal and Regulatory Requirements

1. As required by the companies(Auditor's Report) Order, 2015 (the Order) issued by the Central Government of India in terms of Sub Section (11) of Section.143 of the Companies Act 2013, we give in the annexure a statement on the matters specified in the paragraph 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 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 the statement of Profit and loss and the cash Flow Statement dealt with by this Report are in agreement with the books of account

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on June 30, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 2015, from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the other matters included in the Auditor's Report and to our best of our information and according to the explanations given to us :

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

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

iii. There were no amounts which required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE AUDITORS’ REPORT

The Annexure referred to in our report to the members of M/S. SHREE KARTHIK PAPERS LIMITED ('the Company”) for the year ended June 30, 2015. We report that:

i) In respect of Fixed Assets :

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

b) As per the information and explanations given to us, fixed assets have been physically verified by the Management at reasonable intervals, and No discrepancies were noticed on such Verification.

ii) In respect of Inventories :

a) As per the information and explanation given to us, the inventories have been physically verified by the management at reasonable intervals during the year.

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

c) The Company is maintaining proper records of inventories. No material discrepancies were noticed on physical verification of inventory.

iii) a) According to the information and explanations given to us, the Company has not granted loans, unsecured, from or to Companies, firm or other parties, listed in the Register maintained Under Section 189 Of the Companies Act,2013 ('the Act'),but the Company has taken loans, unsecured, from the parties, listed in the Register maintained Under Section 189 Of the Companies Act,2013 ('the Act'), the terms and Conditions are not prima facie prejudicial to the interest of the Company and the terms of arrangements do not Stipulate and repayment Schedule and the loans are repayable on demand.

During the year the company has financial transactions with the Directors as detailed below:

Name of the Directors Balance as on Balance as on 01.07.2014 30.06.2015

M.S. Velu Rs.15,93,19,850/ Rs.13,61,01,378/- Managing Director

S.S. Velu Rs.2,12,42,544/- Rs.1,77,00,623/- Director

Vignesh Velu Rs.1,67,96,408/- Rs.2,06,15,976/-

Executive Director b) There are no overdue amounts in respect of the loans granted to the bodies Corporate listed in the register maintained Under Section 189 of the Act.

iv) In our opinion and according to the information and explanations given to us, there is an internal control System Commensurate With the Size of the Company and the nature Of its business with regard to purchase of inventory & fixed assets and Sale of goods and Services.

v) The Company has not accepted and deposits from the public.

vi) We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by the Central Government for maintenance of cost records under section 148(1) of the act and are of the opinion that prima facie, the Prescribed accounts and records have been made and maintained, However, we have not made a detailed examination of the records.

vii) According to the records of the Company and the information and explanations given to us in respect of Statutory and other dues:

(a) The Company was regular in depositing Provident Fund and Employee' State Insurance dues, Excise duty, Service tax, customs duty, CESS, Investor Education & Protection Fund, Income Tax , Sales Tax and all other applicable Statutory dues with the appropriate authorities and there were no arrears outstanding for a period of more than 6 month as at 30th June,2015

(b) According to the information and explanation given to us, the following dues have not been deposited on account of disputes. The company is confident of getting these claim quashed as the demands have been raised only on technical grounds.

Sl. Name of the Nature of Dues Forum where dispute No. Statute pending

a. Sales Tax Penalty Sales Tax Appellate. 1995-1996 Tribunal (AB) (Appeal pending)

b. 1999-2000 Tax Penalty The Appellate Asst. (CST) Commissioner(Ct.)Cbe., (Appeal pending)

c. 2000-2001 Tax Penalty The Appellate Asst. (CST) Commissioner(Ct.) Cbe., (Appeal pending)

d. 2003-2004 Tax Sales Tax Appellate (CST) Tribunal (AB) (Appeal pending)

e. 2004-2005 Tax Penalty The Appellate Asst. (CST) Commissioner(Ct.)Cbe., (Appeal pending)

f. 2004-2005 Tax Penalty The Appellate Asst. (TNGST) Commissioner(Ct.)Cbe., (Appeal pending)

g. 2006-2007 Tax CIT (Appeals) Cbe.,

Sl. Name of the Amount No. Statute Rs.

a. Sales Tax 2,21,858 1995-1996

b. 1999-2000 15.88.951 (CST) 17.99.951

c. 2000-2001 27,61,182 (CST) 29,43,768

d. 2003-2004 4,44,575 (CST)

e. 2004-2005 15,25,088 (CST) 16,02,309

f. 2004-2005 1,17,030 (TNGST) 58,515

g. 2006-2007 58,40,144 (Income Tax)

(c) According to the information and explanations given to us, there were no amounts which required to be transferred to the Investor Education and Protection Fund by the Company in accordance with the relevant provisions of the Companies Act,2013 and rules there under

viii) The Company has accumulated losses at the end of the financial year and has not incurred cash loss in the financial year and in the immediately preceding financial year.

ix) According to the information and explanations given to us and the records examined by us, the Company has not defaulted in repayment of dues to financial institutions or banks.

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 of financial institutions.

xi) As informed to us, the term loans were utilized by the Company for the purpose for which they were obtained.

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

For Giri & Co. Chartered Accountants

(Sd./-) R. Giri BCOM FCA FCMA BL Place : Coimbatore Senior Partner Date : 14.08.2015 Membership Number : 25458


Jun 30, 2014

We have audited the accompanying financial statements of M/S. SHREE KARTHIK PAPERS LIMITED ("the company"), which comprise the Balance Sheet as at June 30, 2014, and the statement of Profit and Loss for the year ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the financial statements

The Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting 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 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Charted 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 appropriateness 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 June 30, 2014;

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 (the Order) issued by the Central Government of India in terms of Section 227(4A) 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 the statement of Profit and loss dealt with by this Report are in agreement with the books of account

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and other accounting principles generally accepted in India; and

e) On the basis of the written representations received from the directors as on June 30, 2014, taken on record by the Board of Directors, none of the directors is disqualified as on June 30,2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to our report of even date)

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

2. As per the information and explanations given to us, fixed assets have been physically verified by the Management at reasonable intervals, and discrepancies (if any) noticed on verification during the year have been properly adjusted in the books of accounts.

3. The company has not disposed off substantial part of fixed assets during the year under review.

4. As per the information and explanations given to us, inventories have been physically verified at reasonable interval during the year by the Management.

5. 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.

6. a) The Company has not granted any loans secured or unsecured loan to companies , Firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) The company has taken Unsecured loans from the parties covered in the register maintained u/s 301 of the Companies Act 1956.

During the year the company has financial transactions with the Directors as detailed below:

Name of the Directors Balance as on Balance as on 01.07.2013 30.06.2014

M.S. Velu Rs.11,12,63,140/- Rs.15,93,19,850/- Managing Director

S.S. Velu Rs.81,58,007/- Rs.2,12,42,544/-

Director

Vignesh Velu Rs.33,71,898/- Rs.1,67,96,408/- Executive Director

7. In our opinion the rate of interest and other terms and conditions of loans taken/ granted by the company, secured or unsecured from the parties listed in the register maintained u/s 301 of the Companies Act 1956, are prima facie not prejudicial to the interest of the company.

8. According to the information and explanations given to us, there is adequate internal control procedures commensurate with the size of the company and the nature of it''s business, for the purchase of inventories and fixed asset and with regard to sale of goods and services. In our opinion, the internal control is required to be further strengthened.

9. As per the information and explanation given to us, the transactions that need to be entered have been entered in the register maintained under Section 301 of the Companies Act, 1956. In our opinion, those transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

10. According to the information and explanations given to us the company has not accepted deposits from the public.

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

12. According to the information and explanations given to us, the company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund; employees state insurance, income tax, sales tax, wealth tax, service tax, cess and any other statutory dues with the appropriate authorities. There are no arrears of outstanding statutory dues outstanding as at 30th June, 2014 for a period of more than six months from the date they became payable.

13. According to the information and explanation given to us, the following dues have not been deposited on account of disputes. The company is confident of getting these claim quashed as the demands have been raised only on technical grounds.

Sl. Name of the Nature of Dues Forum where dispute Amount No. Statute pending Rs.

Sales Tax a. 1995-1996 Penalty Sales Tax Appellate. 2,21,858 Tribunal (AB) (Appeal pending)

b. 1999-2000 Tax Penalty The Appellate Asst. 15,88,951 (CST) Commissioner(Ct.)Cbe., 17,99,951 (Appeal pending)

c. 2000-2001 Tax Penalty The Appellate Asst. 27,61,182 (CST) Commissioner(Ct.) Cbe., 29,43,768 (Appeal pending)

d. 2003-2004 Tax Sales Tax Appellate 4,44,575 (CST) Tribunal (AB) (Appeal pending)

e. 2004-2005 Tax Penalty The Appellate Asst. 15,25,088 (CST) Commissioner(Ct.)Cbe., 16,02,309 (Appeal pending)

f. 2004-2005 Tax Penalty The Appellate Asst. 1,17,030 (TNGST) Commissioner(Ct.)Cbe., 58,515 (Appeal pending)

g. 2006-2007 Tax CIT (Appeals) Cbe., 58,40,144 (Income Tax)

15. The Company has accumulated losses. The company has not incurred cash loss in the current year covered under this report .

17. According to the information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

18. According to the information and explanation given to us, the company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.

19. The company has not given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company.

20. Fund raised on short- term basis has not been used for long-term investment.

21. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

22. The company has not created securities in respect of debentures issued.

23. The company has not raised money by public issue during the year.

24. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For Giri & Co. Chartered Accountants (Sd./-) R. Giri BCom FCA FCMA BL Senior Partner Membership Number : 25458

Place : Coimbatore Date : 21.08.2014


Jun 30, 2013

Report on the Financial Statements

We have audited the. accompanying financial statements of M/S. SHREE KARTHIK PAPERS LIMITED ("the company"), which comprise the Balance Sheet as at June 30, 2013, and the statement of Profit and Loss and cash flow statement for the year 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 and financial performance of the Company in accordance with the Accounting Standards referred to in Sub-Section (3C) of section 211 of the Companies Act, 1956 ("the act"). This responsibility includes the design, implementation and maintenance of internal control retevant 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 Charted 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 appropriateness of accounting policies used, and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion ~

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

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

(b) in the case of the Profit and loss Account, 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 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 sub-section (3C) of section 211 of the Companies Act, 1956

e) On the basis of written representations received from the directors as on June 30,~2013, and taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 2013, from being appointed as a director in terms of clause (g)'' of sub-section (1) of section 274 of the companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE AUDITORS''REPORT

(Referred to our report of even date)

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

2. As per the information and explanations given to us, fixed assets have been physically verified by the Management at reasonable intervals, and discrepancies (if any) noticed on verification during the year have been properly adjusted in the books of accounts.

3. The company has not disposed off substantial part of fixed assets during the year.

4. As per the information and explanations given to us, inventories have been physically verified at reasonable interval during the year by the Management.

5. 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.

6. The Company has taken unsecured loan from / to other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

7. In our opinion the rate of interest and other terms and conditions of loans taken/ granted by the company, secured or unsecured from the parties listed in the register maintained u/s 301 of the Companies Act 1956, are prima facie not prejudicial to the interest of the company.

8. In respect of loans and advances, the payment of principal amount and interest has been made as per the revised repayment schedule approved by the CDR.

9. According to the information and explanations given to us, there is adequate internal control procedures commensurate with the size of the company and the nature of it''s business, for the purchase of inventories and fixed asset and with regard to sale of goods and services. In our opinion, the internal control is required to be further strengthened.

10. As per the information and explanation given to us, the transactions that need to be entered have been entered in the register maintained under Section 301 of the Companies Act, 1956. In our opinion, those transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

11. According to the information and explanations given to us the company has not accepted deposits from the public.

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

13. According to the information and explanations given to us, the company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund; employees state insurance, income tax, sales tax, wealth tax, service tax, cess and any other statutory dues with the appropriate authorities. There are no arrears of outstanding statutory dues outstanding as at 31 March, 2013 for a period of more than six months from the date they became payable.

14. According to the information and explanation given to us, the following dues have not been deposited on account of disputes. The company is confident of getting these claim quashed as the demands have been raised only on technical grounds.

15. The Company has accumulated losses. The company has not incurred cash loss in the current year covered under this report and the company has noi incurred cash loss in the financial year immediately preceding the current financial year.

16 According to the information and explanation given to us, the company has not defaulted in the repayment of dues to any financial institution or bank or debenture holders in accordance with the terms and conditions of the CDR approval for debt restructuring.

1.7. According to the information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge.of shares, debentures and other securities.

18. According to the information and explanation given to us, the company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.

19. The company has not given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company.

20. Fund raised on short- term basis has not been used for long-term investment.

21. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies'' Act 1956.

22. The company has not created securities in respect of debentures issued.

23. The company has not raised money by public issue during the year.

24. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For Giri & Co.

Chartered Accountants

(Sd/-)

R. Glri

Place : Coimbatore Senior Partner

Date : 21.08.2013 Membership Number : 25458


Jun 30, 2011

We have audited the attached Balance Sheet of SHREE KARTHIK PAPERS LIMITED as at 30th June 2011, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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.

1. As required by the Companies (Auditor's Report), Order 2003, issued by the Central Government in terms of section of 227(4A) of the Companies Act, 1956, we annex hereto a statement on the matter specified in paragraph 4 & 5 of the said order.

2. 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 and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

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

e. Based on representations made by the Directors of the Company and the information and explanations given to us, we report that none of the Directors of the Company are, prima facie, as at 30th June 2011, disqualified from being appointed as Directors of the Company 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 notes thereon, give the information so 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 so far as it relates to the Balance Sheet of the State of Affairs of the Company as at 30,h June 2011.

(ii) In so far as it relates to the Profits Loss Account of the profit of the Company, for the year ended on that date.

AND

(iii) In so far as it relates to the Cash Flow Statements of the cash flow of the Company, for the year ended on that date.

In terms of the information given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

1. In respect of its fixed assets:

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

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

2. In respect of its inventories:

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

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

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

3. In respect of loans, secured or unsecured, granted or taken by the company to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a. During the year the company has financial transactions with the Directors as detailed below

Name of the Balance as on Closing Balance Directors 01.07.2010 as on 30.06.2011

M.S.Velu Rs.7,99,32,571/- Rs.8,58,23,433/- Managing Director

S.S.Velu Rs.76,62,224/- Rs.66,49,077/- Director

b. The loans are unsecured. The Company is paying interest for the same.

c. The company has not granted any loans to any party or company. As such the sub Clause (d)4(iii) is not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchases of inventory, fixed assets and also for the sale of goods and Services. During the course of our audit, we have not observed any major weaknesses in internal controls.

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

a. In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contract or arrangements, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b. The transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public.

7. The Company has the Internal Audit System and is commensurate with the size of the Company and nature of its business.

8. The Central Government has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, for the manufacturing activity of the company. We have broadly reviewed the accounts and records of the company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

9. In respect of statutory dues:

a. The company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to the company.

b. According to the information and explanations given to us, there were no undisputed amounts payable in respect of the aforesaid dues as at 30th June 2011 for a period of more than six months from the date they become payable.

c. According to the information and explanations given to us, the following dues have not been deposited on account of disputes. The Company is confident of getting these claim quashed as the demands have been raised only on technical grounds.

SI. No Name of the statute Nature of Dues Forum where dispute Pending Amount

Sales Tax a. 1995-1996 Penalty Sales Tax Appellatte. Tribunal (AB) 2,21,858 (Appeal pending)

b. 1999-2000 Tax The Appellatte Asst. 15,88,951 (CST) Penalty Commissioner(Ct.)Cbe., 17,99,951 (Appeal pending)

c. 2000-2001 Tax The Appellatte Asst. 27,61,182 (CST) Penalty Commissioner(Ct.) Cbe., 29,43,768 (Appeal pending)

d. 2003-2004 Tax Sales Tax Appellatte. 4,44,575 (CST) Tribunal (AB) (Appeal pending)

e. 2004-2005 Tax The Appellatte Asst. 15,25,088 (CST) Penalty Commissioner(Ct.)Cbe., 16,02,309 (Appeal pending)

f. 2004-2005 Tax The Appellatte Asst. 1,17,030 (TNGST) Penalty Commissioner(Ct.)Cbe., 58,515 (Appeal pending)

10. The company has not incurred cash loss during the financial year covered by our audit; and not in the immediately preceding financial year.

11. The Company has not defaulted in repayment of dues to financial institutions or Banks.

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 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, clause 4(xiii) of the Company's (Auditor's Report) Order, 2003, is not applicable to the Company.

14. The Company is not dealing or trading in shares, debentures and other investments.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. The Company has not obtained any term loans during the year.

17. The Company has not utilized any funds raised on short term basis during the year, for long term investment.

18. During the year the Company has not made any preferential allotment of shares to parties and Companies covered in the Register maintained under section 301 of the Companies Act 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money by public issue.

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.

Place : Coimbatore for GIRI & Co.,

Date : 28.11.2011 Chartered Accountants

(Sd./-) R. GIRI

Partner

Membership No.: 25458


Jun 30, 2010

We have audited the attached Balance Sheet of SHREE KARTHIK PAPERS LIMITED as at 30th June 2010, the Profit and Loss Account and also the Cash Flow Statement 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 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.

1. As required by the Companies (Auditors Report), Order 2003, issued by the Central Government in terms of section of 227(4A) of the Companies Act, 1956, we annex hereto a statement on the matter specified in paragraph 4 & 5 of the said order.

2. 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 and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

d. In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting-standards referred in sub-section 3C of Section 211 of the Companies Act, 1©56.

e. Based on representations made by the Directors of the Company and the information and explanations given to us, we report that none of the Directors of the Company are, prima facie, as at 30th June 2010, disqualified from being appointed as Directors of the Company 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 notes thereon, give the information so 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 so far as it relates to the Balance Sheet of the State of Affairs of the Company as at 30th June 2010.

(ii) In so far as it relates to the Profit & Loss Account of the profit of the Company, for the year ended on that date.

AND

(iii) In so far as it relates to the Cash FI6w Statements of the cash flow of the Company, for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS REPORT OF EVEN DATE

In terms of the information given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

1. In respect of its fixed assets:

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

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

c. The company has not disposed any of its assets during the year

2. In respect of its inventories:

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

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

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

3. In respect of loans, secured or unsecured, granted or taken by the company to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a. During the year the company has financial transactions with the Directors as detailed below

Name of the Balance as on Closing Balance Directors 01.07.2009 as on 30.06.2010

M.S.Velu Rs.3,74,00,908/- Rs.7,99,32,571/- Managing Director

S.S.Velu Rs.61,71,245/- Rs.76,62,224/- Director

b. The loans are unsecured. The Company is paying interest for the same.

c. The company has not granted any loans to any party orpompany. As such the sub Clause (d)4(iii) is not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchases of inventory, fixed assets and also for the sale of goods and Services. During the course of our audit, we have not observed any major weaknesses in internal controls.

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

a. In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contract or arrangements, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b. The transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public.

7. The Company has the Internal Audit System and is commensurate with the size of the Company and nature of its business.

8. The Central Government has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, for the manufacturing activity of the company. We have broadly reviewed the accounts and records of the company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

9. In respect of statutory dues:

a. The company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory duesapplicable to the company.

b. According to the information and explanations given to us, there were no undisputed amounts payable in respect of the aforesaid dues as at 30th June 2010 for a period of more than six months from the date they become payable.

c. According to the information and explanations given to us, the following dues have not been deposited on " account of disputes. The Company is confident of getting these claim quashed as the demands have been raised only on technical grounds.

Name of the statute No. Nature of Dues Forum where dispute Pending Amount

Sales Tax

a.1995-1996 Penalty Sales Tax Appellatte. Tribunal (AB) 2,21,858 (Appeal pending)

b.1999-2000 Tax The Appellatte Asst. 15,88,951 (CST) Penalty Commissioner(Ct.)Cbe., 17,99,951 (Appeal pending)

c.2000-2001 Tax The Appellatte Asst. 27,61,182 (CST) Penalty Commissioner(Ct.) Cbe., 29,43,768 (Appeal pending)

d. 2003-2004 Tax Sales Tax Appellatte. 4,44,575 (CST) Tribunal (AB) (Appeal pending)

e. 2004-2005 Tax The Appellatte Asst. 15,25,088 (CST) Penalty Commissioner(Ct.)Cbe., 16,02,309 (Appeal pending)

f. 2004-2005 Tax The Appellatte Asst. 1,17,030 (TNGST) Penalty Commissioner(Ct.)Cbe., 58,515 (Appeal pending)

10. The Company has not incurred cash loss during the financial year covered by our audit; and in the immediately preceding financial year, the company has incurred cash loss to the tune of Rs.30.60 lacs

11. The Company has not defaulted in repayment of dues to financial institutions or Banks.

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 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 Jund /society. Therefore, clause 4(xiii) of the Companys (Auditors Report) Order, 2003, is not applicable to the Company.

14. The Company is not dealing or trading in shares, debentures and other investments.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. The Company has not obtained any term loans during the year.

17. The Company has not utilized any funds raised on short term basis during the year, for long term investment.

18. During the year the Company has not made any preferential allotment of shares to parties and Companies covered in the Register maintained under section 301 of the Companies Act 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money by public issue.

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.

Place: Coimbatore , for GIRI & Co.,

Date : 22.11.2010 Chartered Accountants

(Sd./-) R. GIRI Partner

Membership No.: 25458

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