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Auditor Report of Sir Shadilal Enterprises Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statement

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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

We conducted our audit in accordance with the Standards on Auditing specifed under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

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

control relevant to the Company's preparation of the financial statements that give a true & 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 operative effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Emphasis of matter

1. Attention is invited to note no. 3.8 of Financial Statement regarding potential sickness of the Company. The Company, over the last few years, has been incurring loses, due to which its net worth has been completely eroded. Last year the Company has become Sick Industrial Company under provision of Sick Industrial Company (Special Provisions) Act, 1985, and this fact was reported to BIFR. This year further losses have been suffered.

2. In view of the aforesaid facts "deferred tax" assets Rs. 68.81 crore, the recovery of which is uncertain, in absence of future projections for profitability. In our opinion recognition in accounts of deferred tax assets is not desirable.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements subject to Note No. 3.1, in respect of bad and doubtful debts short provided by Rs.150.38 lacs 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 March 31, 2015 and its loss and its cash fows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub–section(11) of section 143 of the Companies 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 Profit and Loss Statement, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) on the basis of the written representations received from the directors as on March 31, 2015, 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.

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

1. The Company has disclosed the impact of pending litigations on its financial position in its financial statements, (Refer Note No. 2.30 of the Financial Statements);

2. The Company did not have any long– term contracts including derivative contracts for which there were any foreseeable losses; and

3. There has been no delay in transferring amounts, required to be transferred, to investor Education and Protection fund by the company.

ANNEXURE 'A' TO THE INDEPENDENT AUDITORS' REPORT

Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Sir Shadi Lal Enterprises Limited on financial statements for the year ended 31st March, 2015.

i. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b) The Company's programme of physical verification of all its fixed assets once in three years, is in our opinion, reasonable having regard to the size of the Company and the nature of its fixed assets. We are informed that in accordance with the programme, no physical verification of fixed assets was carried out during the year under report.

ii. a) During the year, the inventories have been physically verified by the management except Material sent for job work and lying with third party. In our opinion, the frequency of verification is reasonable.

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

c) On the basis of our examination of records of inventory, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material, however, the discrepancies noticed have been properly accounted for in the books of account.

iii. a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 189 of the Companies Act, 2013.

b) The Company has taken demand loans/fixed deposits, from companies, firms or other parties listed in the Register maintained under Section 189 of the Companies Act, 2013, which were taken from eight parties and the maximum amount involved during the year was Rs.17.57 crores and the year end balance was Rs.11.93 crores. As no other demand loans were taken by the company, therefore the rate of interest and other terms and conditions of such demand loans are not comparable.

c) The Company is regular in repayment of principal amount of demand loans/fixed deposits and interest thereon.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and information and as per the explanations given to us, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control system.

v. According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year, therefore, the provisions of clause (v) of paragraph 3 of the CARO 2015, are not applicable to the Company. .

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Government under Section 148 (1) (d) of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed accounts and cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. a) According to the records of the Company and information and explanations given to us, there is no undisputed amounts payable in respect of provident fund, employees' state insurance, income–tax, sales– tax, wealth–tax, service–tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end for a period of more than six months from the date of becoming payable.

b) According to the records of the Company and the information and explanations given to us, there are no amounts in respect of income–tax, sales–tax, wealth– tax, service–tax, customs duty, excise duty and cess, which have not been deposited with the appropriate authorities on account of any dispute, other than mentioned in 'Annexure– 1' to this report.

c) According to the records of the company and information and explanations given to us, there are no amounts that are due to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under.

viii. The Company has accumulated losses of Rs. 58,22,77,042/– as at the end of the financial year 31st March, 2015, after reducing there from Deferred Tax Assets of Rs. 68,81,11,332/. The Company has incurred cash losses amounting to Rs. 48,43,71,440/– during the financial year ended 31st March, 2015, the Company has also incurred cash losses amounting to Rs. 57,49,85,408/– during the immediately preceding financial year.

ix. In our opinion and according to the information and explanations furnished to us by the management of the company, the Company has defaulted in repayment of dues payable to its bankers. The loans (cash credit account) due to Zila Sahkari Bank, Gaziabad Rs. 20,33,85,431/–, was not paid on due dates during the period from November, 2014 till 30th March, 2015 and another unpaid balance due to State Bank of India since the beginning of the year Rs. 64,65,76,381/– was not paid during the year.

x. In our opinion and according to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from Banks or Financial Institutions.

xi. The Company has not raised fresh term loans during the year. The term loans outstanding at the beginning of the year have been applied for the purposes for which they were raised.

xii In our opinion and according to the information & explanations given to us, no fraud by the company and no material fraud on the company has been noticed or reported during the year.

For BASANT RAM & SONS

Chartered Accountants (Firm Regn. No. 000569N)

H. K. Chadha

Place : New Delhi Partner

Dated : 29th May, 2015 Membership No. 6470


Mar 31, 2014

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

Management''s Responsibility for the Financial Statement

The Company''s 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 notified under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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, subject to Note No. 3.1, in respect of bad and doubtful debts short provided by Rs. 150.38 Lacs 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 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 of the Company for the year ended on that date.

Emphasis of matter

Attention is invited to note No. 3.6 of Financial Statement regarding potential sickness of the Company. The accumulated losses of the Company as on 31.03.2014 have resulted in 100% erosion of the peak Net Worth during the immediately preceding four financial years. Therefore, the Company has become Sick Industrial Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 and which will be reported by the Company to the BIFR as required under the provisions of Section 15 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985.

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 the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement complied with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs) in respect of Section 133 of the Companies Act, 2013;and

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

ANNEXURE ''A'' TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 of Auditors'' Report of even date to the members of Sir Shadi Lal Enterprises Limited on the accounts for the year ended 31st March, 2014)

i. a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets except that cost and to date depreciation written off for certain assets, was available for group of assets.

b) The Company''s programme of physical verification of all its fixed assets once in three years, is in our opinion, reasonable having regard to the size of the Company and the nature of its fixed assets. Pursuant to such programme, a physical verification of fixed assets was carried out during the year and the discrepancies noticed between the book record and physical inventory have been properly accounted for in the books of account.

c) In our opinion, there was no substantial disposal of fixed assets during the year.

ii. a) During the year, the inventories have been physically

verified by the management except Material sent for job work and lying with third party. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory, followed by the management are reasonable and adequate in relation to the size of the Company.

c) On the basis of our examination of records of inventory, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material, however, the discrepancies noticed have been properly accounted for in the books of account.

iii. a) The Company has not granted any loans, secured or

unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

b) The Company has taken demand loans/fixed deposits, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

c) The demand loans/fixed deposits were taken from eight parties listed in the Register maintained under Section 301 of the Companies Act, 1956 and the maximum amount involved in the transactions during the year was Rs.20.30 Crores and the year end balance of such loans/deposits was Rs.17.57 Crores.

d) In our opinion, the rate of interest and other terms

and conditions of fixed deposits taken from Directors/ Managing Director and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. No demand loans were taken by the company except from Directors/ Managing Director. Therefore, the rate of interest and other terms and conditions of such demand loans are not comparable.

e) The Company is regular in repayment of principal amount of demand loans/fixed deposits and interest thereon.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and information and as per the explanations given to us, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control system.

v. a) In our opinion and according to the information and explanations given to us, the contracts and arrangements that need to be entered into the Register maintained under Section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts / arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of '' Rs. 5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. Last year we had reported that during the financial year 2012-13 Company has accepted/ renewed deposits in excess of limits laid down in rule 3 (2)(I) by Rs. 42.34 lacs and in rule 3(2)(II) by Rs. 190.93 lacs of section 58 A and other relevant provision of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules 1975. However, during the financial year

2013-14, Company has refunded out of the said excess amount accepted, Rs. 42.34 lacs and Rs.175.82 under rule 3 (2)(I) and rule 3 (2)(II) respectively.

As per the information and explanations given to us, no order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, relevant to Section 58A, 58AA or the other relevant provisions of the Act.

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

viii. We have broadly reviewed the Books of Account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and we are of the opinion, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. a) According to the information and explanations given

to us except service tax Rs. 601/- no undisputed amounts payable in respect of 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 were outstanding, at the year end for more than six months from the date they became payable.

b) According to the records of the Company and the information and explanations given to us, there are no amounts in respect of income-tax, sales-tax, wealth- tax, service-tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute, other than mentioned in ''Annexure-1'' to this report.

x. The Company has accumulated losses amounting to Rs.2203.69 Lacs as at the end of the Financial Year 31st March, 2014 after reducing therefrom Deferred Tax Assets of Rs.4985.56 Lacs. The Company has incurred cash losses amounting to Rs.5749.86 Lacs during the financial year ended 31st March, 2014, the Company has also incurred cash losses amounting to Rs.147.99 Lacs during the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us by the Management, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

xii. According to the information and explanations given to us by the Management, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special statute applicable to chit fund/nidhi/ mutual benefit fund/societies 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 Order 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 guarantees for loans taken by others from Banks or F inancial Institutions. Accordingly, the provisions of clause 4(xv) of the Order, are not applicable to the Company.

xvi. The Company has not raised fresh term loans during the year. The term loans outstanding at the beginning of the year have been applied for the purposes for which they were raised.

xvii. According to the information and explanations given to us and based on an overall examination of the Balance Sheet of the Company, we are of the opinion that no funds raised on short-term basis (excluding Working Capital) 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 Register maintained under Section 301 of the Companies Act, 1956, during the year. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable to the Company.

xix. According to the information and explanations given to us, the Company has not issued any debentures during the year and did not have any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable to the Company.

xx. The Company has not raised any money by public issue during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable to the Company.

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.

Following are the particulars of disputed dues (provided/considered contingent liability, as appropriate) as on 31.03.2014 on account of Income-Tax, Sales-Tax, and Excise matters that have not been deposited on account of dispute:-

Name of the Nature of the Amount Period to which Statute Dues (Rs.in lacs) the Amount relates

Sales Tax Act Entry Tax 3.02 2004-2005

3.20 2005-2006

2.54 2006-2007

11.17 2010-2011

Central Excise Modvat Credit 0.41 2003-2004 Tax

2004-2005

Central Excise Duty/Penalty 30.35 2008-2009 Act 4.01 2007-2008

10.92 2008-2009

3.94 2008-2009

0.20 2011-2012

Central Excise Penalty/Reversal 2.09 1999-2000 Act of Modvat Credit/ to Service Tax 2005-2006

U.P.Excise Act Penalty for Low 1.85 1991-1992 Recovery Duty/Penalty 55.42 1988-1989

Income Tax Act Pending Demand 11.25 2001-2002 23.59 2005-2006

Name of the Statute Forum where dispute is pending

Sales Tax Act Addl. Commissioner Appeal, M.nagar

Addl. Commissioner Appeal, M.nagar Addl. Commissioner Appeal, M.nagar

Addl. Commissioner Appeal, M.nagar

Central Excise Tax High Court at Allahabad/ Lucknow

Central Excise Act CESTAT

CESTAT

CESTAT

CESTAT

Central Excise Act Commissioner (Appeal), Meerut.Commissioner /(Asst. Commissioner)

U.P.Excise Act Excise Commissioner, Allahabad

Weight & Measurement Department Saharanpur, High Court, Allahabad

Income Tax Act High Court, Delhi ITAT, Delhi

We have been informed that apart from above, there are no dues in respect of Wealth-tax, Service-tax , Custom Duty which have not been deposited on account of any dispute.



For BASANT RAM & SONS Chartered Accountants (Firm Regn. No. 000569N)

H. K. Chadha Place : New Delhi Partner Dated : 27th May, 2014 Membership No. 6470


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statement

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial 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 fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

2. The accumulated losses of the Company as on 31.03.2012 resulted in more than 50% erosion of the peak Net Worth during the immediately preceding four fnancial years which in compliance of provisions of Section 23 (1) (a) (i) of the Sick Industrial Companies (Special Provisions) Act, 1985 was reported by the Company to BIFR on 3.10.2012. The Net Worth of the Company as on 31.3.2013 has been further reduced by Rs.9.25 Crores on account of loss during the year, however Net Worth of the Company as on 31.03.2013, is still positive.

3. 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 Proft and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

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

e) on the basis of written representations received from the directors as on March 31, 2013, taken on record by the Board of Directors, none of the directors is disqualifed 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.

i. a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fxed assets except that cost and to date depreciation written off for certain assets, was available for group of assets.

b) The Company''s programme of physical verifcation of all its fxed assets once in three years, is in our opinion, reasonable having regard to the size of the Company and the nature of its fxed assets. We are informed that in accordance with the programme, no physical verifcation of fxed assets was carried out during the year under report.

c) In our opinion, there was no substantial disposal of fxed assets during the year.

ii. a) During the year, the inventories have been physically verifed by the management except Material sent for job work and lying with third party. In our opinion, the frequency of verifcation is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verifcation of inventory, followed by the management are reasonable and adequate in relation to the size of the Company.

c) On the basis of our examination of records of inventory, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material.

iii. a) The Company has not granted any loans, secured or unsecured, to companies, frms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

b) The Company has taken demand loans/fixed deposits, from companies, frms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

c) The demand loans/fxed deposits were taken from eleven parties listed in the Register maintained under Section 301 of the Companies Act, 1956 and the maximum amount involved in the transactions during the year was Rs. 21.56 Crores and the year end balance of such loans/deposits was Rs. 20.00 Crores.

d) In our opinion, the rate of interest and other terms and conditions of fxed deposits taken from Directors/ Managing Director and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. No demand loans were taken by the company except from Directors/Managing Director, therefore the rate of interest and other terms and conditions of such demand loans are not comparable.

e) The Company is regular in repayment of principal amount of demand loans/fxed deposits and interest thereon.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fxed assets and for the sale of goods and services. Further, on the basis of our examination of the books and information and as per the explanations given to us, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control system.

v. a) In our opinion and according to the information and explanations given to us, the contracts and arrangements that need to be entered into the Register maintained under Section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts / arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public, except that the Company has not complied with the aforesaid provisions of the Act and Acceptance of Deposit Rules because the Company has accepted/renewed deposit in excess of prescribed limits amounting to Rs.42.34 Lacs of deposit under rule 3 (2) (i), and amounting to Rs.190.93 Lacs covered under rule 3 (2) (ii).

As per the information and explanations given to us, no order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, relevant to Sections 58A, 58AA or the other relevant provisions of the Act.

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

viii. We have broadly reviewed the Books of Account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and we are of the opinion, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. a) According to the information and explanations given to us and according to the books and records examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues in respect of 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 as applicable with appropriate authorities.

b) According to the records of the Company and the information and explanations given to us, there are no amounts in respect of income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute, other than mentioned in ‘Annexure-1'' to this report.

x. The Company does not have accumulated losses as at the end of the Financial Year 31st March, 2013. The Company has incurred cash losses amounting to Rs.147.99 Lacs during the financial year ended 31st March, 2013, the Company has also incurred cash losses amounting to Rs.4453.11 Lacs during the immediately preceding fnancial year.

xi. In our opinion and according to the information and explanations given to us by the Management, the Company has not defaulted in repayment of dues to any fnancial institution or bank or debenture holders.

xii. According to the information and explanations given to us by the Management, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special statute applicable to chit fund/nidhi/ mutual beneft fund/societies 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 Order 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 guarantees for loans taken by others from Banks or Financial Institutions. Accordingly, the provisions of clause 4(xv) of the Order, are not applicable to the Company.

xvi. The Company has not raised fresh term loans during the year. The term loans outstanding at the beginning of the year have been applied for the purposes for which they were raised.

xvii. According to the information and explanations given to us and based on an overall examination of the Balance Sheet of the Company, we are of the opinion that no funds raised on short-term basis (excluding Working Capital) 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 Register maintained under Section 301 of the Companies Act, 1956, during the year. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable to the Company.

xix. According to the information and explanations given to us, the Company has not issued any debentures during the year and did not have any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable to the Company.

xx. The Company has not raised any money by public issue during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable to the Company.

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 BASANT RAM & SONS

Chartered Accountants

(Firm Regn. No. 000569N)

H. K. Chadha

Place : New Delhi Partner

Dated : 30th May, 2013 Membership No. 6470


Mar 31, 2012

1. We have audited the Balance Sheet of Sir Shadi Lal Enterprises Limited as at 31st March, 2012, 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 the 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 Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of 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. In our opinion more than 50% of the peak Net Worth, during the immediately preceding four financial years of the company, has been eroded, which need to be reported by the company to the BIFR as required under the provisions of Section 23(1)(a)(i) of the Sick Industrial Companies (Special Provisions) Act, 1985.

5. Further to our comments in the Annexure referred to in 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, 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 (3 C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representations received from the directors, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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) 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 notes thereon and attached thereto, give in the prescribed manner, the information required by the Companies Act, 1956, and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012;

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.

i. a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets except that cost and to date depreciation written off for certain assets, was available for group of assets.

b) The Company's programme of physical verification of all its fixed assets once in three years, is in our opinion, reasonable having regard to the size of the Company and the nature of its fixed assets. We are informed that in accordance with the programme, no physical verification of fixed assets was carried out during the year under report.

c) In our opinion, there was no substantial disposal of fixed assets during the year.

ii. a) During the year, the inventories have been physically verified by the managment except for process stores at Shamli Sugar unit and stores and spares at Unn Sugar Unit. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory, where conducted, followed by the management are reasonable and adequate in relation to the size of the Company.

c) On the basis of our examination of records of inventory, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material.

iii. a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

b) The Company has taken demand loans/fixed deposits, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

c) The demand loans/fixed deposits were taken from seventeen parties listed in the Register maintained under Section 301 of the Companies Act, 1956 and the maximum amount involved in the transactions during the year was Rs. 30.53 Crores and the year end balance of such loans/deposits was Rs. 21.31 Crores.

d) In our opinion, the rate of interest and other terms and conditions of fixed deposits taken from Directors / Managing Director and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. No demand loans were taken by the company except from Directors/Managing Director, therefore the rate of interest and other terms and conditions of such demand loans are not comparable.

e) The Company is regular in repayment of principal amount of demand loans/fixed deposits and interest thereon.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and information and as per the explanations given to us, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control system.

v. a) In our opinion and according to the information and explanations given to us, the contracts and arrangements that need to be entered into the Register maintained under Section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanations given to us, that during the year there were no transactions exceeding value of Rupees five lacs that need to be entered into the Register in pursuance of contracts or arrangements referred to in Section 301 of the Companies Act, 1956.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. As per the information and explanations given to us, no order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, relevant to Sections 58A, 58AA or the other relevant provisions of the Act.

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

viii. We have broadly reviewed the Books of Account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and we are of the opinion, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. a) According to the information and explanations given to us and according to the books and records examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues in respect of 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 as applicable with appropriate authorities.

b) According to the records of the Company and the information and explanations given to us, there are no amounts in respect of income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute, other than mentioned in ' Annexure-1' to this report.

x. The Company does not have accumulated losses as at the end of the Financial Year 31st March, 2012. The Company has incurred cash losses amounting to Rs.4453.11 Lacs during the financial year ended 31st March, 2012, the Company has also incurred cash losses amounting to Rs.439.20 Lacs during the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us by the Management, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

xii. According to the information and explanations given to us by the Management, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special statute applicable to chit fund/nidhi/ mutual benefit fund/societies 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 Order 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 guarantees for loans taken by others from Banks or Financial Institutions. Accordingly, the provisions of clause 4(xv) of the Order, are not applicable to the Company.

xvi. According to the information and explanations given to us, in our opinion, the term loans have been applied for the purpose for which they were raised.

xvii. According to the information and explanations given to us and based on an overall examination of the Balance Sheet of the Company, we are of the opinion that no funds raised on short-term basis (excluding Working Capital) 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 Register maintained under Section 301 of the Companies Act, 1956, during the year. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable to the Company.

xix. According to the information and explanations given to us, the Company has not issued any debentures during the year and did not have any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable to the Company.

xx. The Company has not raised any money by public issue during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable to the Company.

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.

(Annexure-1 as referred to in para ix. (b) of Annexure 'A' to the Auditors' Report of even date to the members of Sir Shadi Lal Enterprises Limited on the accounts for the year ended 31st March, 2012).

Following are the particulars of disputed dues (provided/considered contingent liability, as appropriate) as on 31.03.2012 on account of Income-Tax, Sales-Tax, and Excise matters that have not been deposited on account of dispute:-

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

Sales Tax Act Entry Tax 93.83 2004-2005 High Court at Allahabad

1.71 2008-2009 Jt. Commissioner (Appeals)

19.22 2009-2010 Jt. Commissioner (Appeals)

Central Excise Tax Modvat Credit 0.41 2003-2004 High Court at Allahabad/ Lucknow

2004-2005

Central Excise Act Duty/Penalty 12.64 2007-2008 Commissioner Appeal

30.35 2008-2009 Commissioner Appeal

0.66 2007-2008 Commissioner Appeal

5.01 2007-2008 Commissioner Appeal

10.92 2008-2009 Commissioner Appeal

21.40 2008-2009 Commissioner Appeal

3.94 2008-2009 Commissioner Appeal

Central Excise Act Penalty/Reversal 2.09 1999-2000 Commissioner/ (Asstt. of Modvat to Commissioner) Credit/ Service 2005-2006 Tax

U.P. Excise Act Penalty for Low 1.85 1991-1992 Excise Commissioner, Allahabad Recovery 55.42 1988-1989 Weight & Measurement Department Duty/Penalty Saharanpur.

Income Tax Act Pending Demand 11.25 2002-2003 DCIT, CC-19, Delhi

44.40 2003-2004 DCIT, CC-19, Delhi

23.59 2005-2006 DCIT, CC-19, Delhi

We have been informed that apart from above, there are no dues in respect of Wealth-tax, Service-tax , Custom Duty which have not been deposited on account of any dispute.

For BASANT RAM & SONS

Chartered Accountants

(Firm Regn. No. 000569N)

H.K. Chadha

Place : New Delhi Partner

Dated : 14th July, 2012 Membership No. 6470

 
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