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Auditor Report of Shree Rama Newsprint Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls and ensuring their operating effectiveness and 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 auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company

has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

The Company had recognized deferred Tax Asset (DTA) amounting to Rs. 13207.11 lacs in the absence of virtual certainty and convincing evidence about the future taxable income against which such DTA can be realized. This constitutes a departure from Accounting Standard 22 – 'Accounting for taxes on Income.' Had the management not recognized such DTA, Reserves and Surplus and DTA would have been lower by Rs. 13207.11 lacs.

Qualified Opinion

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

Emphasis of Matter

We draw attention to the following matter in the notes to the financial statements:

i. Note No. 40 the financial statements wherein, in the opinion of the management, despite running into continuous losses, the financial statements has been prepared on a going concern basis in view of share purchase agreement entered into with acquirer in May 2015 coupled with write back of ICD liabilities and further issuance of equity shares and optionally convertible redeemable debentures, which will improve networth of Company as explained in detail in above referred note.

ii. Note No. 33 to the financial statements where in balance with excise authorities amounting to Rs. 2650.35 lacs represent Cenvat Credit Receivable as at March 31, 2015 which in the opinion of the management is realizable, subject to adequate excise duty leviable on finished goods.

iii. Note No. 38 to the financial statements wherein, the Company has accounted for sale of 170 acres of its unused land as per 'Agreement to Sell' executed by the Company. The Company has received substantial portion of the sale proceeds and also No Objection from the term lenders for the aforesaid sale. The requisite formalities/ approvals for transfer of land are in progress, which has subsequently been received.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. The matter described in Basis for Qualified Opinion paragraph and sub-paragraph ii under the Emphasis of Matter, in our opinion, may have an adverse effect on the functioning of the Company;

f. On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164 (2) of the Act;

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

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 29 on Contingent Liabilities to the financial statements;

(ii) The Company did not have any long-term contracts, including derivative contracts. Hence, the question of any material foreseeable losses does not arise;

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

ANNEXURE TO INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' in the Independent Auditor's Report of even date to the members of Shree Rama Newsprint Limited on the financial statements for the year ended March 31, 2015]

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

(b) During the year, fixed assets have been physically verified by the management as per the regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. As informed no material discrepancies were noticed on physical verification carried out during the year.

(iii) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions stated in paragraph 3 (iii)(a) and 3 (iii)(b) of the Order are not applicable.

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

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) The Company is not regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, and there have been serious delays in a large number of cases.

According to the information and explanations given to us, undisputed dues in respect of provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows:

Name of the statute Nature of the Amount Period to which the dues amount relates in lacs

Finance Act, 1994 Service Tax 35.76 June 2014 to August 2014

Gujarat Value Added Tax / VAT CST 260.96 May 2014 Central Sales Tax Act Deferment

Gujarat State Electricity Electricity Duty 1271.49 2011-12 to 2014-15 Act including interest

Gujarat Pollution Control Water Cess 205.73 2013-14 & 2014-15 Board

Name of the Statute Due Date Date of Payment

Finance Act,1994 5th /6th of next 16/4/2015 Month

Gujarat Value Added Tax/ 31/5/2014 24/4/2015 Central Sales Tax Act

Gujarat State Electricity Act 10th of next 28/4/2015 Month

Gujarat Pollution Control Board 10th of next 28/4/2015 Month

(b) According to the information and explanation given to us, the dues outstanding with respect to, income tax, sales tax, wealth tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, on account of dispute, are as follows:

Name of the statute Nature of dues Amount in lacs

Central Excise Act Excise duty, 470.72

Bombay Stamp Act Stamp Duty and registration 130.75 fee including penalty

Income Tax Act, 1961 Income Tax 319.90

Sales Tax/ VAT VAT 8.31

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

Central Excise Act Various years Deputy Commissioner Excise and Customs

Bombay Stamp Act 2000-2001 Judge (Senior Division) Surat Civil Court

Income Tax Act1961 FY 2006-07 ITAT, Mumbai

Sales Tax/VAT FY 2006-07 The Joint Commissioner of Commercial Tax, Appeal – 2, Baroda

(c) According to the information and explanations given to us, there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(viii) The accumulated losses of the Company are more than ffty percent of its net worth. Further, the Company has incurred cash losses during the financial year covered by our audit but not in the immediately preceding financial year.

(ix) According to the information and explanations given to us, the Company defaulted in repayment of its dues to Banks. The particulars of delay which related to installments (including interest ) during the year ended March 31, 2015 are as follows :

Particulars Amount Period of Delay (Including interest ) (in days ) in lacs

Bank – Term Loan 1,446.42 0 - 60

484.04 60-120

175.29 120-180

Further, the Company has not issued any debentures.

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

(xi) According to the information and explanations given to us, the term loans have been applied for the purpose for which the loans were obtained.

(xii) 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 fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such instance by the management.

For and on behalf of

Haribhakti & Co. LLP

Chartered Accountants ICAI Firm Registration No 103523W

Atul Gala Place: Mumbai Partner

Date : May 27, 2015 Membership No. 048650


Mar 31, 2014

We have audited the accompanying financial statements of Shree Rama Newsprint Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditors'' Responsibility

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

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

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

Basis for Qualifed Opinion

The Company has recognised Deferred Tax Asset (DTA) amounting to Rs. 13207.11 lacs in the absence of virtual certainty and convincing evidences about the future taxable income against which such DTA can be realised. This constitutes a departure from para 17 of Accounting Standard (AS) 22 ''Accounting for Taxes on Income''. Had the management not recognised such DTA, losses for the year would have been higher by Rs. 556.65 lacs and Reserves and Surplus and DTA would have been reduced by Rs. 13207.11 lacs.

Qualifed Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualifed Opinion paragraph, 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; and

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

Emphasis of Matter

1. We draw attention to Note No. 37 to the financial statements wherein balances with excise authorities amounting to Rs. 2640.64 lacs represent Cenvat Credit Receivable as at March 31, 2014, which in the opinion of the management, is realizable, subject to adequate excise duty leviable on fnished goods.

2. We draw attention to Note No. 44 to the financial statements wherein, in the opinion of the management, despite running into continuous losses in recent past, the financial statements have been prepared on a going concern basis in view of improved market scenario coupled with the decisions to infuse fresh funds and leveraging all the surplus assets of the Company.

3. We draw attention to Note No. 42 to the financial statements wherein, the Company having received substantial portion of the sale proceeds, has accounted for sale of 170 acres of its unused land as per the Agreement to sell executed by the Company. The requisite formalities/approvals for transfer of land are in progress.

Our opinion is not qualifed in respect of the matters stated above.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, 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 Companies Act, 1956, we report that:

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

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

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

d. except for the effects of the matter described in the Basis for Qualifed Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

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 disqualifed 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 Act.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

[Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditors'' Report of even date to the members of Shree Rama Newsprint Limited on the financial statements for the year ended March 31, 2014]

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

(b) All the fixed assets have not been physically verifed by the management during the year but there is a regular programme of verifcation which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verifcation.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the company during the year.

(ii) (a) The inventory has been physically verifed by the management during the year. In our opinion, the frequency of verifcation is reasonable.

(b) The procedures of physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifcation carried out at the end of the year.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii)(b),(c) and (d) of the order are not applicable.

(e) The Company had taken loan from eight companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 5,615 lacs and the year-end aggregate balance of loans taken from such parties was Rs. 5,330 lacs.

(f) In our opinion, the rate of interest and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the company is regular in repaying the principal amounts as stipulated. However, the Company is not regular in payment of interest, wherever applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate 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 with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

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

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs. five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is not generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income- tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it, though the delays in deposit have not been serious.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows:

Name of the Nature of Amount Period to statute dues (Rs. in lacs) which the amount relates

Gujarat State Electricity 627.61 2011-12 to Electricity Act Duty incl. 2013-14 interest

Gujarat Water Cess 5.80 2013-14 Pollution control Board (Water Act, 1974)

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of Nature of Amount Period to Forum where the statute dues (Rs. in lacs) which the dispute is amount pending relates

Excise/ Excise Duty 470.72 Various Excise Customs Years Authorities Act

Bombay Stamp 130.75 Judge (Senior Stamp Act duty and Division) Surat registration Civil Court fees including penalty

Income Tax Income Tax 5.14 2007-08 Commissioner Act,1961 of Income Tax and Appellate Authority

Sales Tax VAT 8.31 2006-07 Sales Tax Act authority



(x) In our opinion, the accumulated losses of the company are more than fifty percent of its net worth. Further, the company has not incurred cash losses during the financial year covered by our audit but has incurred cash loss in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of its dues to Banks. The particulars of delay which related to installment (including interest) during the year ended March 31, 2014 are as follows:

Particulars Amount Period of Delays (including interest) (in days) (in Rs. lacs)

Bank 1279.60 0-60

1543.24 60-120

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

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

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

(xv) In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

(xvi) In our opinion, the term loans have been applied for the purpose for which the loans were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 523.64 lacs raised on short-term basis have been used for long-term investment.

(xviii)According to the information and explanation given to us, 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.

(xix) According to the information and explanations given to us, no debentures have been issued by the company during the year.

(xx) The Company has not raised money by way of public issue during the year.

(xxi) 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 fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co. Chartered Accountants FRN 103523W

Atul Gala Place : Mumbai Partner Date : May 13, 2014 Membership No. 048650


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Shree Rama Newsprint Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a Summary of Significant Accounting Policies and Other Explanatory Information.

Management''s Responsibility for the Financial Statements

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

Auditors'' Responsibility

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

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

Basis for Qualified Opinion

The Company has recognised Deferred Tax Asset (DTA) amounting to k 13409.17 lacs in the absence of virtual certainty and convincing evidences about the future taxable income against which such DTA can be realised. This constitutes a departure from para 17 of Accounting Standard (AS) 22 ''Accounting for Taxes on Income''. Had the management not recognised such DTA, losses for the year would have been higher byt 2305.69 lacs and Reserves and Surplus and DTA would have been reduced byRs. 13409.17 lacs.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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, 2013;

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

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

Emphasis of Matter

1. We draw attention to Note No. 37 to the financial statements wherein balances with excise authorities amounting to Rs. 2623.97 lacs represent Cenvat Credit Receivable as at March 31, 2013, which in the opinion of the management. is realizable within one year, subject to adequate excise duty leviable on finished goods i.e. Newsprint and Writing & Printing paper.

2. We draw attention to Note No. 44 to the financial statements wherein, in the opinion of the management, despite running into continuous losses in recent past, the financial statements have been prepared on a going concern basis in view of improved market scenario coupled with the decisions to infuse fresh funds and leveraging all the surplus assets of the Company.

Our opinion is not qualified in respect of the matters stated above.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d. except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

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

[Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditors'' Report of even date to the members of Shree Rama Newsprint Limited on the financial statements for the year ended March 31, 2013]

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

(b) All the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out at the end of the year.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii) (b), (c) and (d) of the order are not applicable.

(e) The Company had taken unsecured loans from five companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 4089.14 lacs and the year-end balance of loan taken from such parties was Rs. 3365.00 lacs.

(f) In our opinion, the rate of interest and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated above. However, the Company is not regular in payment of interest, wherever applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate 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 with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs. five lacs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(V) In our opinion and according to the information and explanations given to us, 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.

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

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income- tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax. sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

Name of the Nature of Amount Period to which statute dues (Rs. in the amount relates lacs)

Guajarat State Electricity 656.35 2011-12 & 2012-13 Electricity Act Duty incl. interest

Gujarat Pollution Water Cess 4.38 2011-12 & 2012-13 control Board (Water Act, 1974)

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax. service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name Nature of Amount Period to Forum where of the dues (Rs. in which the dispute is pending statute lacs) amount relates

Excise/ Duty 169.18 Various Dy. Commissioner Customs demanded Years of Central Excise, Act on waste Surat

Bombay Stamp 130.75 Judge (Senior Stamp duty and Division) Surat Act registration Civil Court fees including penalty

Income Income 334.17 2007-08 & Commissioner of Tax Tax 2008-09 Income Tax and Act,1961 Appellate Authority

Sales VAT 8.31 2006-07 Sales Tax Tax Act authority

(x) The accumulated losses of the Company are more than fifty percent of its net worth. Further, the Company has incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution and bank, except for interest to ARCIL of Rs.13.34 lacs, which has been since paid.

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

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

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

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

(xvi) In our opinion, the term loans have been applied for the purpose for which the loans were raised.

(xvii)According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds amounting toRs. 3476.15 lacs raised on short-term basis have been used for long-term investment.

(xviii)According to the information and explanation given to us. 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.

(xix) According to the information and explanations given to us. no debentures have been issued by the Company during the year.

(xx) The Company has not raised money by way of public issue during the year.

(xxi) 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 fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants

Firm Registration No.103523W

Atul Gala

Place: Mumbai Partner

Date: May 29, 2013 Membership No.048650


Mar 31, 2012

1. We have audited the attached Balance Sheet of Rama Newsprint and Papers Limited ('the Company') as at March 31, 2012 and the Statement of Profit and Loss 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.

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

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

4. Further to our comments in the paragraph 3 above, we report that:

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

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

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

iv. In our opinion the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, except that the Company has recognised Deferred Tax Assets (DTA) amounting to Rs. 11,103.48 lac in the absence of convincing evidences to support virtual certainty about the future taxable income against which such DTA can be realized. The said amount includes a sum of Rs. 8,393.86 lac pertaining to the periods prior to April 1, 2011 which has been credited to accumulated deficit under the head 'Reserves and Surplus' apart from Rs. 2,709.62 lac credited to Statement of Profit and Loss for the year under audit. This has resulted into overstatement of profit for the year after extraordinary items by Rs. 2,709.62 lac and overstatement of Reserves and Surplus and Deferred Tax Assets by Rs. 11,103.48 lac.

v. On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

vi. Without qualifying our opinion, we draw attention to:

1) Write back of Contingency Reserve amounting to Rs. 11,765.48 lac, which represents the remission granted by CDR members in earlier years. The said remission amount has been credited to Statement of Profit and Loss during the year and has been disclosed as an extraordinary item, in accordance with Accounting Standard (AS) 5 'Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies' as explained in detail in Note No. 36.

2) Cenvat receivable amounting to Rs. 2,614.19 lac shown under the head Current Assets' as explained in Note No. 39.

i. Subject to our observation in paragraph 4 (iv) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

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

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

ANNEXURE:

[Referred to in paragraph 3 of the Auditors Report of even date to the members of Rama Newsprint and Papers Limited on the financial statements for the year ended March 31, 2012]

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

(b) All the fixed assets have not been physically verified by the management during the year, but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper record of inventories and no material discrepancies were noticed on physical verification carried out at the end of the year.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii) (b), (c) and (d) of the order are not applicable.

(b) The Company had taken unsecured loan from a company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1,597.59 lac and the year-end balance of loan taken from such company was Rs. 1,150.00 lac.

(c) In our opinion, the rate of interest and other terms and conditions for such loan are not, prima facie, prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated above. However, the Company is not regular in payment of interest, wherever applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate 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 with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs. five lac have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income- tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

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

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

(Rs. in lacs)

Name of the Nature of dues Amount Period to Forum where

statute which the dispute is

amount pending

relates

Excise / Duty demanded 169.20 Various Dy. Commissioner

Customs Act on waste years of Central Excise

Surat

Bombay Stamp Duty 130.75 Judge (Senior

Stamp Act and registration Division) Surat

fees including Civil Court

penalty

(x) The accumulated losses of the Company are more than fifty percent of its net worth. Further, the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted, as mentioned hereunder, in repayment of dues to a financial institution / bank:

(Rs. in lacs)

Sr. Particulars Name of Due Date Period Amount

No. the Bank

1 Principal ARCIL February November 47.61

15, 2012 to January,

2012

2 Premium/ ARCIL February November 4.76

Interest 15, 2012 to January,

2012

3 ICICI January January to 546.40

31,2012 to to March,

March 31, 2012 2012

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

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph

4 of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

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

(xvi) In our opinion, the term loans have been applied for the purpose for which the loans were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds amounting to Rs. 2,349.21 lac raised on short-term basis have been used for long- term investment.

(xviii) According to the information and explanation given to us, 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.

(xix) According to the information and explanations given to us, no debentures have been issued by the Company during the year.

(xx) The Company has not raised money by way of public issue during the year.

(xxi) 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 fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants

FRN No.: 103523W

Rakesh Rathi

Partner

Membership No.: 045228

Place : Mumbai

Date: 29th May, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of RAMA NEWSPRINT AND PAPERS LIMITED ('the Company') as at March 31, 2011 and 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.

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

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956' of India (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 give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the paragraph 3 above, we report that:

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

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

iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement Dealt with by this report are in agreement with the books of account;

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

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

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

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

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

ANNEXURE TO AUDITORS' REPORT

REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF RAMA NEWSPRINT AND PAPERS LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31. 8011.

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

(b) The fixed assets of the Company were physically verified by the management in accordance with a planned Programme of verifying them in a phased manner over a period of 3 years. In our opinion, it is reasonable having regard to the size of the Company and nature of its assets. As informed to us, no material discrepancies between the book records and the physical verification were noticed. In our opinion, the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out at the end of the year. ¦

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and consequently sub clause (b), (c), (d) of clause 4 (iii) are not applicable.

(b) The Company had taken loan from a Company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1688.31 lacs and the year-end balance of loan taken from such party was Rs 1388.31 lacs.

(c) In our opinion, the rate of interest and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated above. However the Company is not regular in the payment of interest, wherever applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate 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 with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct weaknesses in internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 30t have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) 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.

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

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we 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 these records and we have not received cost audit report by the date of signing of the financials and audit report.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income- taX sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

Further, since the Central Governent has till date not - prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty, Cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess on account of any dispute, are as follows :

Name of Nature of Dues Amount Forum where Statute (Rs. in dispute Lacs) is pending

Excise/ Duty Demanded on 4.00 Dy. Commissioner of Customs waste for the Central Excise, Act period April, Surat. September, 2000

Excise / Interest and 2.71 Commissioner of Customs Penalty on excess appeal Central Act. credit taken excise, Surat.

Bombay Stamp Duty and 130.75 Judge Stamp registration fees (Senior Division) Act including Surat Civil Court. penalty.

(x) The accumulated losses of the Company are more than fifty percent of its net worth. Further, the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to, Financial Institutions/Banks as follows:

Sr. Particulars Bank Due Date Period Amount No. (Rs. in lacs)

1. Principal Bank of 15th Feb, November to 250.00 India 2011 January, 2011

Bank of 28th Feb, December to 16.35 India 2011 February, (WCTL) 2011

LIC 15th Feb, November to 57.35 2011 January, 2011 Axis 31st March January to 250.00 Bank 2011 March, 2011

Axis 31st March January 2011 44.08 Bank 2011 March, 2011 (WCTL)

ARCIL 15th Feb, November to 52.37 2011 January. 2011 ICICI 15th March December to 208.31 Bank 2011 March 15,2011 (Lease Rent)

2. Interest Axis 31st March January to 73.55 Bank 2011 March, 2011 Bank of 28th Feb. For the Month 39.31 India and 31st February and March 2011 March, 2011

LLC. 28th Feb. & For the Month 9.68 Term 31st March February and Loan 2011 March, 2011 (CDR)

Axis 31st March For the Month 7.90 Bank 2011 of March, 2011 (WCTL)

TOTAL 1008.90

(xii) We are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

(xvi) In our opinion, the term loans had been applied for the purpose for which the loans were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds amounting to Rs 6293.15 lacs raised on short-term basis have been used for long- term investment.

(xviii)According to the information and explanations given to us, the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) During the year, the Company has not raised any money by way of public issue.

(xxi) 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 accordingto the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For HARIBHAKTI & CO. Chartered Accountants FRN N6.103523W

Rakesh Rathi Partner Membership No. 045228

Place : Mumbai Date : 25th May, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of RAMA NEWSPRINT AND PAPERS LIMITED (the Company) as at 31st March, 2010, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (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 give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Paragraph 3 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 account as required by law have been kept by the company so far as appears from our examinations 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 account.

d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement comply, in all material respect, with the accounting standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956 to the extent they are applicable to the Company.

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

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and the notes thereon give the information required by the Companies Act, 1956, in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010;

b) in the case of the profit and loss account, of the Loss for the year ended on that date; and

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

REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF RAMA NEWSPRINT AND PAPERS LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010.

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

b) Fixed assets were physically verified by the

management in accordance with a planned Programme of verifying them in a phased manner over a period of 3 years, in our opinion, it is reasonable having regard to the size of the company and nature of its assets. As informed to us, no material discrepancies were noticed on such verification.

c) Based on the information and explanation given by the

management and on the basis of audit procedures performed by us, we are of the opinion that the Company has not disposed off substantial part of its fixed assets during the year.

ii) a) As informed to us, the management has physically verified the inventories at reasonable interval. In our opinion, the frequency of verification is reasonable.

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

c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. We are informed that no material discrepancies were noticed on physical verification of inventory and same was properly dealt with in the accounts.

iii) a) As informed to us, the Company has not granted any loans secured or unsecured to companies, firms or other parties covered in the registers maintained under Section 301 of the companies act 1956 and consequently sub clause (b), (c), (d) of clause 4 (iii) are not applicable.

b) As informed to us, the Company has taken unsecured loan from three companies listed in the register maintained under Section 301 of Companies Act, 1956, the maximum amount involved during the year was Rs.6.55 crores and the year-end balance of loans were NIL.

c) According to the information and explanation given to us, the rate of interest and other terms and conditions of loans taken from above mentioned companies, are not prima facie prejudicial to the interest of the Company.

d) The loans taken are repayable on demand and company has made repayment of loan and payment of interests accordingly.

iv) In our opinion and according the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of fixed asset and inventories and sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v) a) According to the information and explanation given to us, we are of the opinion that particulars of the contract and arrangement referred to in section 301 of the companies act 1956 that need to be entered in to the register maintained under section 301 have been so entered.

b) In our opinion and according to the information and explanation given to us, the transaction made in pursuance of the such contract and arrangements exceeding the value of rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) During the year the Company has not accepted any public deposit consequently clause 4 (vi) is not applicable.

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

viii) We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the central government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956. We are of the opinion that prima facie, the prescribed accounts and records have been maintained. However, we have not made a detailed examination of these records and we have not received cost audit report by the date of signing of the financials and audit report.

ix) a) According to the records of the Company and according to the information and explanations provided to us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee state insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Cess and other material statutory dues applicable to it, with the appropriate authorities.

b) According to the information and explanations given to

us, there are no undisputed amounts payable in respect of Provident Fund, Investor Education Protection Fund, Employee state insurance, Income tax, Wealth Tax, Service Tax, Sales Tax, Cess and other material statutory dues which are outstanding as at March 31, 2010 for the period of more than six months from the date they become payable, except the Central Sales Tax payable amounting to Rs.10,631 which has been subsequently paid.

c) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Wealth tax, Service tax, cess which have not been deposited on account of any disputes except the following:

Name of Nature of Dues Amount Forum where Statute Name of the Dues (Rs. in Forum where dispute Lacs) is pending

Excise/ Duty Demanded on 4.00 Dy. Commissioner of Customs waste for the period Central Excise, Act April, 2000 to Surat. September, 2000

Excise / Interest and Penalty 2.71 Commissioner of Customs on excess credit appeal Central Act. taken excise, Surat.

Bombay Stamp Stamp Duty and 130.75 Judge Act registration fees (Senior Division) including penalty. Surat Civil Court.



x) There are no accumulated losses exceeding 50% of the net worth of the company at the end of the financial year. The Company has incurred cash losses during the current year and in the immediately preceding financial year.

xi) Based on our audit procedures and as per the information and explanation given to us we are of the opinion that company has not defaulted in the repayment of dues to a financial institution, banks, or debenture holder.

xii) According to the information and explanations given to us and baszed on the documents and records produced 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.

xiii) In our opinion, the company is not a chit fund or nidhi / mutual benefit fund/ society and hence, clause 4(xiii) is not applicable.

xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investment. Accordingly, the provisions of clause (xiv) are not applicable.

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

xvi) In our opinion the term loans were applied for the purpose for which loans were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and cash flow of the company, prima facie no fund raised on short term basis have been used for long term investment.

xviii) The company has not made any preferential allotment of shares to parties and companies covered in the registers maintain under section 301 of the Companies Act, 1956.

xix) During the year, the Company has not issued any debentures for which securities need to be created.

xx) During the year, the Company has not raised any money by way of public Issue.

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

For HARIBHAKTI & CO.

Chartered Accountants

Rakesh Rathi

Place: Mumbai Partner

Date: 29th May, 2010 Membership No. 045228

 
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