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Auditor Report of Southern Petrochemicals Industries Corporation Ltd.

Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cashflows 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 preparation 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 standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

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

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

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

Opinion

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

Emphasis of Matters

We draw attention to Note No. 27 of the financial statements regarding computation of subsidy based on the provisional Retention Price (RP) in line with the Government's policy dated 7 January 2015, as the final retention price has not been announced by the Department of Fertilizers. The necessary adjustments, if any, will be made when the final retention price is notified by the Department of Fertilizers.

Our opinion is not modified in respect of the above matter.

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 in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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 purposes 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) In our opinion, the aforesaid standalone 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 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section164 (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:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Notes 29 (a) and 29 (d) to the financial statements;

ii. The company did not have any material foreseeable losses in regard to any long-term contracts including derivative contracts, which have not been provided for;

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

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

(i) In respect of its fixed assets:

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

(b) Some of the fixed assets were physically verified during the year by the Management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

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

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

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

(iv) I n our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) The Company has not accepted any deposits during the financial year.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and The Cost Accounting Records (Fertilizer Industry) Rules, 2011 prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and 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) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(c) Details of dues of Value Added Tax, Service Tax, Excise Duty and Cess which have not been deposited as at 31 March 2015 on account of disputes are given below:

Statute Nature of the Forum where Dispute is pending Dues

The Central Excise Commissioner of Central Excise Excise Act duty (Appeals) / Customs, Excise and Service 1944 Tax Appellate Tribunal

Statute Period to which the Amount Amount involved relates (Rs. in lac)

The Central Excise 1998-99 to 2006-07 492.18 Act 1944

Statute Nature of the Forum where Dispute is pending Dues

Commissioner of The Finance Service Tax Central Excise (Appeals) / Customs, Act 1994 Excise and Appellate Tribunal/Hon'ble Madras High Court

The Sales Locals Sales Deputy Commissioner (Appeals) / Tax Act Tax Additional Commissioner (Appeals) / Under Various Sales Tax Appellate Tribunal/ Hon'ble state Andhra Pradesh and Madras High Court enactments.

he Finance Act, 1994

The Sales Tax Act under various State enactments

Statute Period to which the Amount Amount involved relates (Rs. in lac)

The Finance Act 2003-04 to 2011-12 306.39 1994

The Sales Tax 1996-97 to 2012-13 3769.73 Act Under Various Satte enactments

(d) 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 made thereunder.

(viii) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth and the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceeding financial year.

(ix) I n our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company has not taken loans from financial institutions during the current year and has not issued any debentures.

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

(xi) In our opinion and according to the information and explanations given to us, the Company does not have any term loans.

(xii) To the best of our knowledge and according to the information and 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 DELOITTE HASKINS & SELLS Chartered Accountants (Firm's Registration Number: 008072S)

Bhavani Balasubramanian Place : Chennai Partner Date : 21 May 2015 (Membership Number: 22156)


Mar 31, 2014

The accompanying abridged financial statements, which comprise the abridged Balance Sheet as at 31 March 2014, the abridged Statement of Profit and Loss and the abridged Cash Flow Statement for the year then ended and related Notes, are derived from the audited financial statements of Southern Petrochemical Industries Corporation Limited ("the Company") for the year ended 31 March 2014. We expressed an unmodifi ed opinion on those financial statements in our report dated 28 May 2014.

The abridged financial statements do not contain all the disclosures required by the Accounting Standards notifi ed 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) applied in the preparation of the audited financial statements of the Company. Reading the abridged financial statements, therefore, is not a substitute for reading the audited financial statements of the Company.

Management''s Responsibility for the Abridged Financial Statements

Management is responsible for the preparation of the abridged fi nancial statements in accordance with Rule 7A of the Companies (Central Government''s) General Rules and Forms, 1956 (as amended), based on the audited financial statements of the Company for the year ended 31 March 2014 prepared in accordance with the Accounting Standards notifi ed 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on the abridged financial statements based on our procedures conducted in accordance with Standard on Auditing (SA) 810 , "Engagements to Report on Summary Financial Statements" issued by the Institute of Chartered Accountants of India.

Opinion

In our opinion, the abridged financial statements prepared in accordance with Rule 7A of the Companies (Central Government''s) General Rules and Forms, 1956 (as amended), derived from the audited financial statements of the Company for the year ended 31 March 2014 prepared in accordance with the Accounting Standards notifi ed under 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, are a fair summary of those financial statements.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration Number:008072S)

Bhavani Balasubramanian

Place : Chennai Partner

Date : 28 May, 2014 (Membership Number 22156)


Mar 31, 2013

The accompanying abridged financial statements, which comprise the abridged Balance Sheet as at 31 March 2013, the abridged. Statement of Profit and Loss and the abridged Cash Flow Statement for the year then ended and related Notes, are derived from the audited''financial statements of Southern Petrochemicals Industries Corporation Limited ("the Company") for the year ended 31 March 2013. We expressed an unmodified opinion on those financial statements in our report dated 29 May 2013.

The abridged financial statements do not contain all the disclosures required by the Accounting Standards referred to in Section 211(3C)of the Companies Act, 1956 ("the Act") applied in the preparation of the audited financial statements of the Company. Reading the abridged financial statements, therefore, is not a substitute for reading the audited financial statements of the Company.

Management''s Responsibility for the Abridged Financial Statements

Management is responsible for the preparation of the abridged financial statements in accordance with Rule 7A of the Companies (Central Government''s) General Rules and Forms, 1956 (as amended), based on the audited financial statements of the Company for the year ended 31 March 2013 prepared in accordance with the Accounting Standards referred to in Section 211 (3C) of the Act and accounting principles generally accepted in India,

Auditor''s Responsibility

Our responsibility is to express an opinion on the abridged financial statements based on our procedures conducted in accordance with Standard on Auditing (SA)810, "Engagements to Report on Summary Financial Statements" issued by the Institute of , Chartered Accountants of India.

Opinion

In our opinion, the abridged financial statements prepared in accordance with Rule 7Aof the Companies (Central Government''s) General Rules and Forms, 1956 (as amended), derived from the audited financial statements of the Company for the year ended 31 March 2013 prepared in accordance with Accounting Standards referred to in Section 211(3C) of the Act and accounting principles generally accepted in India, are a fair summary of those financial statements.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration Number:008072S)

Bhavani Balasubramanian

Place: Chennai Partner

Date: 29 May 2013 (Membership Number 22156)


Mar 31, 2012

1. We have audited the attached Balance Sheet of SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LIMITED ("the Company") as at 31 March 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. Without qualifying our opinion, we draw attention to Note No. 30 in the financial statements which indicate that in spite of erosion of net-worth and discontinuation of certain operations the financial statements have been prepared on a going concern basis for the reasons stated in the said note.

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

5. Further to our comments in paragraph 3 above and Annexure referred to in paragraph 4 above, we report as follows:

(a) 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;

(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) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

(e) 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:

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

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

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

6. On the basis of the written representations received from the Directors as on 31 March 2012 taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 2012 from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 4 of our report of even date)

(i) Having regard to the nature of the Company's business / activities / result, clauses (xii), (xiii), (xiv), (xv) and (xix) of CARO are not applicable.

(ii) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

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

(iv) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(v) 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 with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lac in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time except in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.

(vii) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year. In respect of unclaimed deposits, the Company has complied with the provisions of Sections 58A & 58AA or any other relevant provisions of the Companies Act, 1956.

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

(ix) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed 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.

(x) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales Tax / Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March 2012 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax / Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31 March 2012 on account of disputes are given below:

Nature of the Forum where Dispute is Statute Dues pending

Central Excise Act, Excise duty Commissioner of Central Excise 1944 (Appeals) / Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994 Service Tax Commissioner of Central Excise (Appeals) /Hon'ble Madras High Court

Sales Tax Act Local Sales Tax Deputy Commissioner (Appeals) under various State / Additional Commissioner enactments (Appeals) / Sales Tax Appellate Tribunal

Central Sales Tax Act, Central Sales Deputy Commissioner (Appeals) / 1956 Tax Sales Tax Appellate Tribunal

Statute Period to which the amount Amount involved relates (Rs. in lac)

Central Excise Act,1944 1998-99 to 2006-07 346.63

(346.63)

Finance Act,1994 2003-04 to 2008-09 140.55

(124.23)

Sales Tax Act under various state 1997-98 to 2007-08 703.32 enactments (107.25) Central Sales Tax Act, 1998-99 and 1999-00 - 1956 (50.17)

(xi) The accumulated losses of the Company at the end of the financial year are more than its net worth and the Company has not incurred cash losses in the financial year and in the immediately preceding financial year.

(xii) As mentioned in Note 5 in view of the Company's inability to meet its liability under the CDR package dated 19 March 2003, ARCIL and other financial institutions have approved the rework package dated 13 March 2010, read with ARCIL term sheet dated 28 March 2010 through CDR mechanism. The Company has paid Rs.126377.17 lac as of 31 March 2012, and as per the rework package, there is no shortfall as on that date.

(xiii) In our opinion and according to the information and explanations given to us, the company has not availed any term loans during the current year.

(xiv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long- term investment.

(xv) According to the information and explanations 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.

(xvi) According to the information and explanations given to us, during the period covered by our audit report, the Company had issued 203175 debentures of Rs.100 each. The Company has created security in respect of the debentures issued.

(xvii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No.008072S)

Geetha Suryanarayanan

Partner

(Membership No.29519)

CHENNAI

30 May 2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LIMITED ("the Company") as at 31 March 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the 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 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose 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 Annexure referred to in paragraph 3 above, we report as follows:

(a) 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;

(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 Company has incurred a net loss of Rs. 12456.57 lac during the year ended 31 March 2010 and, as of that date, the Companys current liabilities exceeded its current assets by Rs.27929.29 lac and its total liabilities exceeded its total assets by Rs.113553.14 lac. The ability of the company to continue as a going concern is dependent on the successful implementation of the rework package approved by ARCIL and other financial institutions through CDR mechanism as referred to in Note B-3(b) of Schedule 16 and recommencement of operations of its nitrogenous fertilizer plants. However the financial statements have been prepared on a going concern basis based on matters as set forth in Note B-4 of Schedule 16.

(d) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(e) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) 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 give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2010;

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and

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

5) On the basis of the written representations received from the Directors as on 31 March 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

i. Having regard to the nature of the Companys business/ activities/ result, clauses (xii), (xiii), (xiv), (xv), (xix) and (xx) of CARO are not applicable.

ii. In respect of its fixed assets.

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

b. The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

c. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

iii. In respect of its inventory.

a. As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

b. In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

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

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

b. In respect of loans, secured or unsecured, taken by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

The Company has taken unsecured loans from a financial institution covered in the Register maintained under section 301 of the Companies Act, 1956 in the earlier years. At the year-end, the outstanding balance of such loans taken aggregated Rs.8005.59 lac (including interest accurued) (previous year Rs. 7542.74 lac) and the maximum amount involved during the year was Rs.8005.59 lac (previous year Rs. 7542.74 lac).

c. The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

d. As per the earlier Corporate Debt Restructuring Scheme (CDR Scheme) of 2003, the repayment terms have been redefined and the interest aggregating to Rs. 2118.88 lac (previous year Rs. 1662.78 lac) have become overdue. The said financial institution is not a party to the re work package referred in Note B-3(b) in Schedule 16.

v. 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 with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

vi. In respect of contracts or arrangements entered in the

Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

a. The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

b. Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

vii. According to the information and explanations given to

us, the Company has not accepted any deposit from the public during the year. In respect of unclaimed deposits, the Company has complied with the provisions of Sections 58A & 58AA or any other relevant provisions of the Companies Act, 1956.

viii. In our opinion, the Company has an adequate internal

audit system commensurate with the size and the nature of its business.

ix. We have broadly reviewed the books of account

maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of Fertilizers, Sulphuric Acid, Penicillin G, Bulk Drugs and Formulations and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company.

x. According to the information and explanations given to

us in respect of statutory dues.

a. The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

b. There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March 2010 for a period of more than six months from the date they became payable.

c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31 March 2010 on account of disputes are given below:

Statute Nature of Dues Forum where Dispute is pending

Income Tax Act, 1961 Income Tax Madras High Court

Commissioner of Central Excise (Appeals) Central Excise Act, 1944 Excise Duty / Customs, Excise & Service Tax Appellate Tribunal

Commissioner of Central Excise (Appeals) / Central Excise Act, 1944 Service Tax Madras High Court

Sales Tax Act under various Deputy Commissioner (Appeals) / Sales Tax Local Sales Tax State Enactments Appellate Tribunal Deputy Commissioner (Appeals) / Sales Tax Central Sales tax Act, 1956 Central Sales Tax Appellate Tribunal

Tamilnadu Electricity (Taxation Division Bench of Honorable Madras High Electricity Tax on Consumption) Act, 1962 Court

Employees State Insurance ESI Dues ESI Court / Madras High Court Act



Statute Amount Period to which the involved amount relates (Rs. in lac)

NIL Income Tax Act, 1961 1996-97 to 2000-01 (212.91)

346.63 Central Excise Act, 1944 1998-99 to 2007-08 (362.53)

Central Excise Act, 1944 124.23 2003-04 to 2007-08 (124.23)

Sales Tax Act under various State 1996-97 to 2001-02 110.79 Enactments (107.29) Central Sales tax Act, 1998-99 to 2001-02 46.67 1956 (49.92)



Tamilnadu Electricity 1985-86 to 1993-94 840.54 (Taxation on (840.54) Consumption) Act, 1962

9992.06 Employees State Insurance 1977 to 2003 Act (9460.13)

xi. The accumulated losses of the Company at the end of

the financial year are more than its net worth and the Company has incurred cash losses in the financial year and in the immediately preceding financial year

xii. As mentioned in Note 3(b) of Schedule 16 in view of the

Companys inability to meet its liability under the CDR package dated 19.3.2003, ARCIL and other financial institutions have approved the rework package dated 13.3.2010, read with ARCIL term sheet dated 28.3.2010 through CDR mechanism. As per this rework package an amount of Rs. 60000.00 lac is due for payment as on 31 March 2010. Out of this the Company has paid Rs. 38999.47 lac including the payment of Rs. 28658.00 lac made during the year pursuant to an interim arrangement with ARCIL. The balance amount of Rs. 21000.53 lac has been since paid by April 21, 2010.

xiii. In our opinion and according to the information and

explanations given to us, the company has not availed any term loans during the current year.

xiv. In our opinion and according to the information and

explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short- term basis have not been used during the year for long- term investment.

xv. According to the information and explanations given to

us, the Company has not made preferential allotment

of Equity shares (other than Conversion of Fully Compulsorily Convertible Preference Shares into equity shares) to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The issue of Fully Compulsorily Convertible Preference Shares during the year is, prima facie, not prejudicial to the interests of the Company, taking into account the consent of the shareholders obtained under Section 81 (1A) of the Companies Act, 1961 and compliance with Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (SEBI ICDR Regulations) and the other applicable provisions of the Companies Act, 1956.

xvi. To the best of our knowledge and according to the

information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year.

For FRASER & ROSS

Chartered Accountants

M K ANANTHANARAYANAN

Partner Membership No: 19521

Place : Chennai Date : 6 August 2010

 
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