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Auditor Report of Sportking India Ltd.

Mar 31, 2014

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

Management's Responsibility for the Financial Statements

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

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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements

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

Opinion

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

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2014;

b) In the case of the Statement of Profit and Loss Account, of the profit 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.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

ANNEXURE TO THE AUDITORS' REPORT

FOR THE YEAR ENDED ON 31st MARCH,

2014

[Referred in Paragraph (1) under the heading "Report on other Legal and Regulatory Requirements' of our Report of even date]

1. In respect of its fixed assets :

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

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

c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories :

a) The inventories have been physically verified during the year by the management. 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 inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

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

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

a) According to information & explanations given to us, the company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

b) According to information & explanations given to us, the company has not taken any loans, secured or unsecured during the year, from companies, firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

4. 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 purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the companies Act, 1956 :

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or 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 or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- (Rupees five lacs only) in respect of each party have been made at the prices which appear reasonable as per information available with the Company.

6. According to the information and explanations given to us, the company has not accepted any deposits from the public. Therefore, the provisions of Clause (vi) of paragraph of the Order are not applicable to the Company.

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

8. 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.

9. In respect of statutory dues:

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee's State Insurance, Income Tax, Sales Tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other statutory dues have been generally deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31,2014 for a period more than six months from the date of becoming payable.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March31,2014 for a period more than six months from the date of becoming payable.

c) The disputed statutory dues aggregating Rs. 593.08 lacs that have not been deposited on account of disputed matters pending before the appropriate authorities are as under:

Name of the Statute (Nature of Year to Amount Dues) which dues (Rs in Lacs) relate (F.Y)

Income Tax Act, 1961 Income Tax 1997-98 Nil*

Income Tax Act, 1961 Income Tax 2005-06 99.58

Income Tax Act,1961 Income Tax 2007-08 Nil*

Income Tax Act,1961 Income Tax 2008-09 Nil

Punjab Vat Act, Vat/C.S.T. 2005-06 11.19 2005

Provident Fund Provident 1993-94, 1.88 Act, 1952 Fund 1994-95 & 1997- 98

Provident Fund Provident 1995-96, 6.70** Act, 1952 Fund 1997-98 & 1998- 99

Finance Act,1994 Service Tax 2007-08 to 13.86 31.01.2012

Finance Act, 1994 Excise tax 2010-11 44.87

Electricity Act 2003 Electricity 2011-12 415.00 Charges





Name of the Statute Forum where dispute is Pending

Income Tax Act, 1961 Hon'ble supreme Court of India

Income Tax Act, 1961 Income Tax Appellate Tribunal

Income Tax Act,1961 Income Tax Appellate Tribunal

Income Tax Act,1961 Commissioner of Income Tax (Appeals)

Punjab Vat Act, Deputy Excise & 2005 Taxation Commissioner (Appeals)

Provident Fund Employees Act, 1952 Provident Fund Appellate Tribunal New Delhi

Provident Fund Employees Act, 1952 Provident Fund Appellate Tribunal New Delhi

Finance Act,1994 Commissioner Central Excise (Appeal), Chandigarh

Finance Act, 1994 Joint secretary Ministry of finance New delhi

Electricity Act 2003 High Court of Punjab, Haryana and Chandigarh

* The income tax department is in appeal.

**Net of Rs.2.23 Lacs already paid under protest pending for final verdict.

10. The company does not have accumulated losses at the end ofthe financial year. The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, and banks.

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

13. In our opinion, the company is not a Chit fund or a Nidhi/Mutual Benefit Fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor's Report) Order 2003 are not applicable to the Company.

14. The company had maintained proper records of transactions and contracts in respect dealing or trading in shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the company in its own name. However, no purchase/ sale transaction was undertaken during the year under review.

15. The Company has not given guarantees for loans taken by others from banks and financial institutions.

16. The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that there are no funds raised on short term basis that have been utilized for long term investment.

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

19. According to the information and explanation given to us, the company had not issued any debentures during the period covered by our report. Accordingly the provisions of clause (xiv) of the Companies (Auditor Report) Order 2003 are not applicable to the company.

20. The company had not raised any monies by way of Public issues during the year.

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

For Rawla & Company Chartered Accountants FRN : 001661N

CA Y. P. RAWLA Place : Ludhiana (Partner) Date : May 30, 2014 M.No.10475


Mar 31, 2013

We have audited the accompanying financaI statements of SportkLng India Limited ("the Company') which comprise the Balance Sheet as at March 31,2013, and thea Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information

Management's Responsibility for the Financial Statements

Management is responsible tor (he preparation of those financial statements that give a true- and fair view of the Financial posif'eri, financial performance and cash flews of the Company in accordance with thE Accounting principles generally accepted m India including Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1S5B fthe Act"). This responsibility includes the design, mplemenlation and niantcr.ar.ee of internal control relevant lo the preparation and presentation of the financial statements that give a true and fan view and are free from malerial 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 tnc Standards on Auditing issued by the Institute of Chattered Accountants of India. Those Standards require that we comply with ettitoal requirements and plan and perform the audit lo obtain reasonable assurance about whether the financial stole mentsnls are free from material misslatemenls.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in ttie hnanoal statements. The procedures selected depend on the auditor's judgment, includ rg the assessment of the risk3 ;f material misstatement ol line financial statemenls. whether due to fraud or error Jn making Ihose risk assessment. the auditor considers internal control relevant to the Compan/s preparation and fair presentation of the financial statements in order lo design audit procedures that are appropriate in the circumstances An audit also includes evaluating the approp lateness of eoepur t ng policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of toe financial statements.

We believe that the aud it evidence we have ofctai ned is sufficient and appropriate to provide a basis for pur audit opinion

Opinion

In our opinion and to the best of our information and according to |he explanations given to us. the aforesaid fmanc at statements give the nformalion requited by the Act in the manner so required and give a true and fair view in conformity with the accounting princ pies generally accepted in India:

a) in |he case of the Balance Sheet, of the slate ol affairs of Ihe Company as at March 31, 2013,

b) In the case of the Statement of Profit and Loss Account, of the profit for the year ended on thal date, and

c) In toe case of the Cash Flow statement, of the cash flows for the year ended an (hat date

Report on Other Legal and Regulatory Requirements

1 As nequ ired by the Compands (Auditor's Report} Order, 2003 ("the Cider*} issued by the Cenlral Gavarnmenl of India in terms of section £27(1A} nf Ihe Act, we give in the Annexure a statement on ilia maflers spec.fiec m paragraphs 4 and 5 of Itie Order

2. Aa required by section 227 (3} of iheAct, we report that.

a) we have obtained ell ihe information and explanation which tp 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, the Statement or Profit and Loss, and the Cash Flow Statement dealt with by ihis Report are in agreement wilh me books of accounts

d) in our opinion, the Balance Sheet, the Statement of Profit and Loss , and the Cash Flow Statement comply with the Accounting Standards referred to in section 211(30} of the Companies Act, 1056.

e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by (he Board of Directors, none of the dir actors Is disq ualrfied as on March 31, 2013, from being appointed as a director in terms of section 274(1 }(g) of the Companies Act, 1956

ANNEXURE TO THE AUDITORS' REPORT FOR THE YEAR ENDED ON 31" MARCH, 2013

[Referred In Paragraph (1} under the heading "Report on other Legal and Regulatory Requirements"of our Report of even date]

1 In respect of its fixed assets

a} The company has maintained proper records showing lull particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us. all (he fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of 1he Company and nature of its assets. No maiehai discrepancies were noticed on such physical verification.

c) In our opinion, the Company has not disposeo off a substantial part of its fixed assets during the year and the going concern status or the Company is not affected

2. In respect ul its inventories '

a) The inventories have been physically verified during the year by the management 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 inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

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

3. In respect of loans, Secured or unsecured, granted or taken by the Company tortrom companies, firms or other parties covered in the reg^ter maintained under Section 301 of the CompamasAcl. 1955:

a) Accord ng to information & explanations given to us. the company has not granted any loans, secured or unsecured, to companies, firms or otter parties cove rec n the Register maintained under Section 301 of the Companies Act, 1356.

b) According to information & explanations g ven fo us. the company has not taken any loans, secured or unsecured during the year, from companies, firms or other pa-ties covered m the Register maintained under section 301 of the Companies Act, 135G

4 In our opinion and according to Ihe information and explanations given Id us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory fixed assets and for the sale of goods and services During the course of our audit, we have not observed any coni numg failure to correct major weaknesses in internal control system.

5. in respect of the contracts or arrangements referred fo in Section 301 of the compares Apt, 1956

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

b) in our opirion and according to the informeton and explanations given to us, the transactions made in pursuance of oonlracfsor arrangement entered m the register maintained under Setfinn 301 of the Companies Act, 1956 end exceeding (he value of Rs 5,00,0DQT- (Rupees live lacs only) in respect of each p&rly have been made at the prices which appear reasonable a$ per ufcrmaL on available with the Company.

6. According fo the information and explanations given to us. the company has not accepted any deposits from the public Therefore, Lhe provisions of Clausa (vi) of paragraph of the Order are not applicable to the Company.

7. In our op nion, the company has an internal aud t system commensurate with the size and nature of its business

8. We have broadly reviewed foe Cost Records maintained by the Company pursuant lo foe Companies (Cost Acquiring Records ) Rules, £011 prescribed by the Central Government under Section 209(ljfd) of the Companies Act.1956 and are of the opinion that puma Tacie the prescribed cost records have been maintained We have however, not made a detailed examination of foe cost records with a view to determine whether they ere Accurate or complete.

9 In respect of statutory dues

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund. Employee's State Insurance. Income Tax, Sales Tax, Wealth fox. Service tax, Customs duty. Exes* duty. Cess a nd other statutory dues have been generally deposited with the appropriate authoril.es. According fo the information gnd explanations given to us. no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2D13 for a period more than six months from the dale or becoming payable

b) According 1o the information and explanations given to us, no undisputed amounis payable m respect ol the aforesaid dues were outstanding as al Maneh31, 3013 for a penod more then six montns from the dale of becoming payable.

c) The disputed statutory dues aggregating 119 35 lacs mat have nqf been deposited on account disputed matters pending before foe appropriate authorities are as under-

Name of statue Natue of year to Amount Dues which dues (Rs. lacs) relate?(F.Y)

Income Tax Act, Income Tax 2005-06 99.52 1961

Punjab Vat Act VAC S.T 2005-06 11.09 2005

Providend Fund Providend Fund 1995-96 1.88 Act,1952 1997-98 1998-99

Providend Fund Act,1952 1995-96 5.70 Act,1952 1997-98 1998-99

Name of statue Forum where dispute is Pending

Income Tax Act, Income Tax 1961 Appellute Tribunal

Punjab Vat Act Deputy excise and 2005 taxation commissionar (Appeals)

Providend Fund Employees Act,1952 Providend Fund Appellute Tribunal New Delhi

Providend Fund Employees Act,1952 Providend Fund Appellute Tribunal New Delhi

10. The company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during (he fUiancal year cowered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to thE information and explanations given to us, we are of the opinion that the company has nol defaulted in repayment of does lo financial insfitufrons, and banks

12. In our opinion and according lo Ihe explanations given lo us and based on the information available, no loans and advances have been granted by the Company on the hesis of security by way or pledge of shares, debentures and other securities.

13 In our op men, the company is nol a Chil fund or a NidhitMulual Benefit Fundfsociety Therefore, ihe provisions of clause {xiiij of paragraph 4 of ihe Companies (Auditors Report} Order 20D3 are not applicable lo the Company.

14. The company had maintained proper records bf transaclions and contracts in respect dealing or trading in shares, securities and other Investments and timely entries have been made therein. All shares, securities and other investments have been held by the com pany n its own name. However, no purchase/$ele transaction was undertaken during |he year under review.

15. The Company has given guarantees for loans taken by others from banks and financial institutions. According to the information and emanations given to us, we aire of ttie opinion lhal the terms and cmdilions thereof are notpnnna face prejudicial to the interest of Ihe Company

16. The Compa ny has raised new lerm loans du ring the year. The term loans outslandmg al the beginning of ihe year and those raised during the year have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and cm an overall examination ol the balance sheet of the Company, we are ol the opinion that the-re are no funds raised on short lenm basis that have been utilized for long term investment.

18. The company has rot made any preferential allotment of shares to parties and companies cowered in the Register maintained under section 301 of the Companies Act, 1956

19. According to the information and explanation given io us, Ihe company had no| issued any debentures during Ihe period covered by our report Accordingly the provisions of clause (xiv) of Ihe Companies (Auditor Report) Order 2003 are not applicable to the company

20. The company had not raised ary monies byway of Public issues during the yea.'

21. In our opinion and according lo the information and explanations given to us. no fraud on or by the Company has been noticed or reported during Ihe year.

For Rawla & Company Chartered Accountants FRN : 0-016-51M

V. P. RAWLA Place: Ludhiana (Partner} Date 1 May 30, 2613 M.No10475


Mar 31, 2012

We have audited the attached Balance Sheet of Sportking India Limited, as at 31st March, 2012 and also the statement of Profit & Loss and Cash Flow Statement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

2. Further to our comments in the Annexure referred to 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 Profit & 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 as on 31st March 2012 and taken on record by the Board of Directors, we report that 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 Significant Accounting Policies and Notes on Accounts thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012.

b) In the case of the Statement of Profit & Loss Account, of the loss for the year ended on that date and ;

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

ANNEXURE TO THE AUDITORS' REPORT FOR THE YEAR ENDED ON 31ST MARCH, 2012

[Referred in Paragraph (1) of our Report of even date]

1. a) The company has maintained records showing particulars including quantitative details and situation of fixed assets, same is yet to be updated for exisiting and operational units upto last year. Whereas for the new operational Bathinda unit records are yet to be prepared.

b) As explained to us, major fixed assets have been physically verified by the management during the year according to a regular programme, which in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies with respect to book records were noticed on such verification except our observations stated in 1 (a) above.

c) The company has not disposed off any substantial part of its fixed assets, which has affected its going concern status.

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

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

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

3. a) According to information & explanations given to us, the company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies' Act, 1956.

b) According to information & explanations given to us, the company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

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

5. a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed 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 in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregating during the year exceeding Rs. 5,00,000/-(Rupees five lacs only) in respect of any party have been made at the prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to information and explanations given us, the company has not accepted any deposits from the public under section 58-A and 58-AA of the Companies Act, 1956 and the rules made thereunder.

7. The company has internal audit system commensurate with the size and nature of its business which in our opinion is inadequate.

8. We have broadly reviewed the Cost Records 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 and in our opinion the prescribed accounts and records have prima facie been made and maintained by the company. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employee's State Insurance, Sales Tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities except in few case where the TDS was deducted and deposited late. As explained to us, the company did not have any dues on account of Investor Education and Protection Fund.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth tax, Service tax, Custom duty, Excise duty, cess and other material statutory dues except in case of Institutional Tax required to be paid to Excise & Taxation Commissioner for the year amounting to Rs 1082000/- were in arrears as at 31st March 2012 for a period of more than six months from the date they became payable.

c) Details of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and cess which have not been deposited by the Company on account of disputes:

Name of the Statute Year of which Amount Forum where (Nature of Dues) dues relate (Rs. In lacs) dispute is pending (F.Y)

Income Tax Act 1961 1997-98 4.15 Hon'ble Supreme Court of India.

Income Tax Act,1961 2005-06 99.58 Commissioner of Income Tax (Appeals)

Income Tax Ad,1961 2007-08 40.84 Commissioner of Income Tax (Appeals)

Punjab Vat Act, 2005-06 11.19 Deputy Excise & 2005 Taxation Commissioner (Appeals)

Provident Fund Act, 1998-94,1994-95 1.88 Employees 1952 & 1997-98 Provident Fund Appellate Tribunal New Delhi

Provident Fund Act, 1995-96,1997-98 6.70* Employees 1952 & 1998-99 Provident Fund Appellate Tribunal New Delhi

*Net of Rs.2.23 Lacs already paid under protest pending for final verdict.

10. The company has net accumulated profit and has not incurred cash losses during the financial year covered by our audit.

11. According to the information and explanation given to us, the company has not defaulted in repayment of dues to financial institutions, and banks as at the balance sheet date.

12. According to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not a Chit fund or a Nidhi/Mutual Benefit Fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order 2003 are not applicable to the Company.

14. The company had maintained proper records of transactions and contracts for sale of units/ securities/shares during the year under review and timely entries have been made therein. All shares/securities were held by the company in its own name. However, no purchase/sale transaction was undertaken during the year under review.

15. In our opinion and according to the information and explanation given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interests of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion no funds raised on short term basis have been utilized for long term investment except for Bathinda Project for temporary period. The Company has not made any investment in short term as well as long term investments during the year.

18. According to the information and explanation given to us, the company has made preferential allotment of 28.92 lacs 5% Redeemable non- cumulative preference shares of 10 each at a premium of Rs. 90 per share to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanation given to us, the company had not issued any debentures during the period covered by our report. Accordingly the provisions of clause (xiv) of the Companies (Auditor Report) Order 2003 are not applicable to the company.

20. During the year covered by our audit report, the company had not raised any money by way of a Public issue.

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For Rawla & Company Chartered Accountants FRN : 001661N

Y. P. RAWLA Place: Ludhiana (Partner) Date : September 1, 2012 M.No.10475



 
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