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Auditor Report of Star Paper Mills Ltd.

Mar 31, 2015

1. Report on the Financial Statements

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

2. Managements' Responsibility for the financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act 2013 (" the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act read with Rule 7 of 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.

3. 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 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 auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation 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 qualified audit opinion.

4. Basis for Qualified Opinion

Attention is drawn to the Note 23.1 regarding excess remuneration amounting to Rs. 21.57 Lakhs paid to managerial personnel for an earlier year, which is subject to approval of the Central Government.

We further report that impact with respect to the above cannot be ascertained and commented upon by us.

5. Qualified Opinion

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

6. Emphasis of Matter

We draw attention to Note No.26.1 dealing with regard to dispute for levy of Mandi Fee amounting to Rs.230 lacs in respect of goods procured in earlier years against which the company has filed a review petition before Hon'ble High Court at Allahabad. Against the said demand the company has deposited Rs. 230 lacs (included under Long Term Loans and Advances) and the accrual of liability is dependent upon the decision of the Hon'ble High Court at Allahabad. The said amount has been considered as contingent liability. Our conclusion is not qualified in respect of this matter.

7. Report on other Legal and Regulatory Requirements

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 Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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 accounts as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, 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, Statement of Profit and loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act , read with Rule 7 of the Companies (Accounts) Rules, 2013;

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:

i. The company has disclosed the effect of pending litigations on its financial positions in its financial statements as required in terms of Accounting Standards and provision of Companies Act, 2013. – Refer Note. 26 to financial statement.

ii. The Company did not have any Long term contracts including Derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to the Auditor's Report our Report of even date:

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

(b) All the assets have not been physically verified by the management during the year but there is regular programme of verification, which, in our opinion, is reasonable having regard to the size of Company and the nature of its assets. There were no material discrepancies with regard to book records in respect of the assets verified during the year.

ii. (a) The inventory has been physically verified by the management at regular intervals during the year in our opinion and according to the information and explanation given to us, the frequency of verification is reasonable.

(b) In our opinion, the procedure for the physical verification of the inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of inventory were not material.

iii. According to information and explanations given to us the company has not granted any loans, secured or unsecured, to companies, forms or other parties in the register maintained under section 189 of the Companies Act, 2013. Accordingly, clause 3(iii) of the Order is not applicable to the company.

iv. In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

v. The Company has not accepted any deposits from the public under Sections 73 to 76 or any other relevant provisions of Companies Act, 2013. and rules framed there under.

vi. 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 148 (1) of the Act in respect of the Company product and are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not carried out any detailed examination of such records with a view to determine whether they are accurate or complete.

vii. (a) According to the records of the Company, there were delays in depositing with appropriate authorities undisputed statutory dues including provident fund, Investor Education and protection Fund. Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to the information and explanation given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

(b) According to the record of the Company and according to the information and explanation given to us by the management, the details of disputed statutory dues are as below:

Name of the Status Name of Dues Forum where Dispute is pending

The Uttar Pradesh Value Added Tax Additional Commissioner VAT Act 2008 (Appeals)

The Central Sales Tax Sales Tax High Court Act, 1956

Tribunal

UP Krishi Utpadan Mandi Tax High Court Mandi Adhiniyam 1965

The Central Excise Act Excise Duty Central Excise Service Tax Applicant Tribunal, New Delhi.

Name of the Status Period to which the Amount amount relate (Rs. in Lacs)

The Uttar Pradesh VAT Act 2008 2008-09 to 2011-12 44.17 & 2012-13

The Central Sales Tax Act, 1956 1996-97 4.29

1995-96 406.00

UP Krishi Utpadam Mandi Adhiniyam 1965 1.1.1993- 361.60 31.12.2003

The Central Excise Act 2009-10 30.44 2010-11, 2011-12

c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company .

viii. The Company has accumulated losses as at the year end which has not exceeded fifty percent of its net worth. The Company has not incurred cash losses during the year covered by our audit and had incurred cash losses in the immediately preceding financial year

ix. Based on our audit procedure and on the information and explanation given by the management, we are of the opinion that during the year the company has not defaulted in repayment of dues to banks. There were no debenture holders during the year and no loan was taken from financial institutions.

x. The Company has not given guarantees for loans taken by others from bank or financial institutions.

xi. As per the information and explanation given to us, the Company has not availed term loan during the year. Accordingly , the provision of clause 3 (xi) of the order are not applicable

xii. Based upon the audit procedures performed and information and explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the course of our audit.

For Lodha & Co.

Chartered Accountants

Firm ICAI Registration No: 301051E

Place: Kolkata H K Verma

Date: 20th May, 2015 Partner

Membership No. 55104


Mar 31, 2014

1. Report on the Financial Statements

We have audited the accompanying financial statements of STAR PAPER MILLS 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.

2. Managements'' Responsibility for the financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act''). read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.The 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.

3. 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 misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error in making those risk assessments, the auditor consider 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 entity''s internal control. An audit also includes evaluating the appropriateness of according policies used and the reasonableness or the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

4. Basis for Qualified Opinion

Attention is invited to the Note 23.1 regarding excess remuneration amounting to Rs 64.51 Lakhs payable to managerial personnel for earlier years, which is subject to approval of the Central Government.

We further report that impact with respect to the Notes given as above cannot be ascertained and commented by us.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanation given to us, except for the effects of the matter described on the Basis for Qualified Opinion paragraph, the financial statements give the information required by the act in the manner so required and give a true and fair view in conformity with me 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 case of the Cash Flow Statements of the cash flows for the year ended on that date.

6. Report on other Legal and Regulatory Requirements

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

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 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 appears from our examination of those books.

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

d) In our opinion the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, read with the 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 referred to in paragraph 6 of our report of even date.

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

(b) All the assets have not been physically verified by the management during the year but there is regular programme of verification, which, in our opinion, is reasonable having regard to the size of Company and the nature of its assets. There were no material discrepancies with regard to book records in respect of the assets verified during the year.

(c) During the year, the Company has not dispose off substantial part of its fixed assets.

ii. (a) The inventory has been physically verified by the management at regular intervals during the year in our opinion and according to the information and explanation given to us, the frequency of verification is reasonable.

(b) In our opinion, the procedure for the physical verification of the inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of inventory were not material.

iii. (a) According to information and explanations given to us the company has not granted any loans, secured or unsecured, to companies, forms or other parties in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (b) and (c) of the Order are not applicable.

(b) As informed to us, the Company has taken unsecured loans from a company covered in the register maintained under section 301 of the Act. The maximum amount of such loans during the year was Rs.421.24 Lakhs and the year-end balance was Rs.421.24 Lakhs.

(c) As explained ,the loan is repayable on demand and in our opinion, the rate of interest and other terms and conditions of such loan are not prima facie prejudicial to the interest of the company.

(d) According to the information and explanations given to us, the company has been regular in repayment of the principal amount and interest thereon as applicable.

iv. In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

v. According to the information and explanations given to us, during the year there were no contracts or arrangement referred to in Section 301 of the Act which were required to be entered in the register under that section and accordingly Para v(b) of the Order is not applicable.

vi. The Company has not accepted any deposits from the public under Section 58A, 58AA or any other relevant provision of the Act and the rules framed there under.

vii. In our opinion and according to the information and explanation and explanations given to us, the Company has an internal audit system commensurate with the size of the Company and nature of its business.

viii. 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 Act in respect of the Company product and are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not carried out any detailed examination of such records with a view to determine whether they are accurate or complete.

ix. (a) According to the records of the Company, there were delays in depositing with appropriate authorities undisputed statutory dues including provident fund, Investor Education and protection Fund. Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to the information and explanation given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

(b) According to the record of the Company and according to the information and explanation given to us by the management, the details of disputed statutory dues are as below:

Name of the Status Name of Forum where Dispute is the dues pending

The Uttar Pradesh Sales Tax Additional Commissioner Trade Tax Act, 1948 (Appeals)

The Uttar Pradesh Value Added Tax Additional Commissioner VAT Act 2008 (Appeals)

The Central Sales Tax Sales Tax High Court Act, 1956 Tribunal

Additional Commissioner (Appeals)

The Uttar Pradesh Tax Entry Tax Additional Commissioner on Entry of Goods Act (Appeals)

The Uttar Pradesh Entry Tax Supreme Court Trade Tax Act, 1948

UP Krishi Utpadan Mandi Tax High Court Mandi Adhiniyam 1965



Name of the Status Period to which the Amount amount relate (Rs. in Lacs)

The Uttar Pradesh 2004-05 & 2005-06 163.11 Trade Tax Act, 1948

The Uttar Pradesh 2008-09 to 2011-12 65.72 VAT Act 2008 & 2012-13

The Central Sales Tax 1996-97 4.29 Act, 1956 1995-96 406.00

2010-11 2.55 The Uttar Pradesh Tax 2008-09 163.27 on Entry of Goods Act

The Uttar Pradesh 2008-11 38.96 Trade Tax Act, 1948

UP Krishi Utpadan 1.1.1993- 230.00 Mandi Adhiniyam 1965 31.12.2003

x. The Company has accumulated losses as at the year end which has not exceeded fifty percent of its net worth. The Company has incurred cash losses during the year covered by our audit and had incurred cash losses in the immediately preceding financial year

xi. Based on our audit procedure and on the information and explanations given by the management, we are of the opinion that during the year the Company has not defaulted in repayment of dues to banks. There were no debenture-holders there in the year and no loan was taken from financial institutions.

xii. Based on our examination of documents and records and according to information and explanations given to us, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the Order 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. The Company has not given guarantees for loans taken by others from bank or financial institutions.

xvi. As per the information and explanation given to us, the Company has not availed term loan during the year. Accordingly, the provisions of clause 4 (xv) of the Order are not applicable.

xvii. According to the information and explanations given to us and on overall examination of the Balance Sheet of the company, we report that short-term funds amounting to Rs.6,533.63 Lakhs have been used for long-term investments, i.e. for acquisition of fixed assets/funding losses to the company, etc.

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 Act.

xix. The Company has not issued any debenture during the period. Accordingly, the provisions of clause 4 (xix) of the Order are not applicable to the Company.

xx. The company has not raised money by public issues during the period.

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



For Lodha & Co. Chartered Accountants Firm ICAI Registration No: 301051E

Place: Kolkata H. K Verma Date : 19th May, 2014 Partner Membership No. 55104


Mar 31, 2013

1. Report on the Financial Statements

We have audited the accompanying financial statements of STAR PAPERS MILLS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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.

2. Management''s Responsibility for the financial Statements

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

3. Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risk 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.

4. Basis for Qualified Opinion

I. Attention is invited to the following Notes regarding:

(a) non -provision of the diminution in value of investment as stated in note 12(b) and

b) provision of managerial remuneration amounting to Rs. 64.51 lacs which is subject to approval of the Central Government.

(Note 21a)

II. We further report that impact with respect to the Notes given in paragraph I (a) above cannot be ascertained and commented by us.

5. Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the act in the manner so required and give a true and fair view in conformity with me accounting principles generally accepted in India:

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

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

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

6. Report on Other Legal and Regulatory Requirements

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

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 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 appears from our examination of those books;

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

d. In our opinion, the balance Sheet Statement of profit and loss, and cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and

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 dis-qualified 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

Annexure referred to in paragraph 6 of our report of even date.

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

(b) All the assets have not been physically verified by the management during the year but there is regular programme of verification, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. There were no material discrepancies with regard to book records in respect of the assets verified during the year.

(c) During the year, the Company has not disposed off substantial part of its fixed assets.

(ii) (a) The inventory has been physically verified by the management at regular intervals during the year. In our opinion and according to the information and explanations given to us, the frequency of verification is reasonable.

(b) In our opinion, the procedure for the physical verification of the inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of inventory were not material.

(iii) (a) According to information and explanations given to us the company has not granted any loans, secured or unsecured, to companies, firms or other parties in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (b) and (c) of the Order are not applicable.

(b) As informed to us, having regards to terms and conditions of the loan as mentioned above, there is no overdue amount outstanding in respect of such loans. However, interest has not been recovered regularly and at the year-end outstanding interest were Rs.7.38 lacs.

(c) As informed to us, the Company has taken unsecured loans from a company covered in the register maintained under section 301 of the Act. The maximum amount of such loans during the year was Rs.416.74 lacs and the year-end balance was Rs.416.74 lacs.

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

(e) According to the information and explanations given to us, the company has been regular in repayment of the principal amount and interest thereon as applicable.

(iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that transactions that need to be entered into the register maintained under section 301 of the Act, have been so entered.

(b) Based on the audit procedures applied by us and according to the information and explanations given to us, the transactions made pursuance of contracts or arrangements exceeding the value of Rs. 5 lacs in respect of a party has been made at prices which are reasonable having regard to prevailing market prices.

(vi) The Company has not accepted any deposits from the public under Section 58A, 58AA or any other relevant provision of the Act and the rules framed there under.

(vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size of the Company and nature of its business.

(viii) 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 Act in respect of the Company''s product and are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not carried out any detailed examination of such records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident Fund, Investor Education and protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding, as at 31st March 2013 for a period of more than six months from the date they became payable.

(b) According to the records of the Company and according to the information and explanation given to us by the management, the details of disputed statutory dues are as below:

Name of the Status Name of Forum where Dispute is the dues pending

The Uttar Pradesh Sales Tax Trade Tax Tribunal

Trade Tax Act 1948

The Uttar Pradesh Sales Tax Additional Commissioner

Trade Tax Act 1948 (Appeals)

The Uttar Pradesh Entry Tax Additional Commissioner

Trade Tax Act 1948 (Appeals)

The Uttar Pradesh Entry Tax Supreme Court

Trade Tax Act 1948

The Uttar Pradesh Value Added Tax Additional Commissioner

VAT Act, 2008 (Appeals)

UP Krishi Utpadan Mandi Tax High Court

Mandi Adhiniyam 1965

The Central Sales Sales Tax High Court

Tax Act, 1956

The Central Sales Sales Tax High Court

Tax Act, 1956

Name of the Status Period to which the Amount amount relate (Rs. in Lacs)

The Uttar Pradesh 2004-2007 1.32

Trade Tax Act 1948

The Uttar Pradesh 2004-05 to 2005-06 163.11

Trade Tax Act 1948

The Uttar Pradesh 2007-09 22.82

Trade Tax Act 1948

The Uttar Pradesh 2008-2011 38.93

Trade Tax Act 1948

The Uttar Pradesh 2007-11 96.86

VAT Act, 2008 2012-13 2.79

UP Krishi Utpadan 1.1.1993-31.12.2003 176.00

Mandi Adhiniyam 1965

The Centrak Sales 1986-91 69.10

Tax Act, 1956 1996-97 8.59

The Central Sales 1995-96 477.93

Tax ACT, 1956 2005-07 0.90



(x) The Company has accumulated losses as at the year-end which has not exceeded fifty percent of its'' networth. However, the effect of the unquantified qualification has not been taken into consideration for the purpose of making our comments in this clause. The Company has incurred cash losses during the year covered by our audit and had incurred cash losses in the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that during the year the Company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

(xii) Based on our examination of documents and records and according to information and explanations given to us, we are of the opinion that the Company has not granted loans and advance on the bases of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the order 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) The Company has not given guarantees for loans taken by others from bank or financial institutions.

(xvi) As per the information and explanation given to us, the Company has not availed fresh term loan during the year.

(xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet of the company, we report that short-term funds amounting to Rs. 4707.49 lacs have been used for long-term investments, i.e. for acquisition of fixed assets/funding losses to the company etc.

(xviii)The Company has not made an preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

(xix) The Company has not issued any debenture during the period. Accordingly, the provision of clause 4 (xix) of the Order are not applicable to the Company.

(xx) The Company has not raised money by public issues during the period.

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



For Lodha & Co.

Chartered Accountants

Firm ICAI Registration No: 301051E



Place: Kolkata H.S.Jha

Date: 24th May, 2013 Partner

Membership No. 55854


Mar 31, 2012

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

We conducted our audit in accordance with 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.

I. As required by the Companies (Auditor's Report) Order' 2003 as amended by the Companies (Auditor's Report) (Amendment) Order' 2004 ("the order") issued by the Central Government in exercise of the powers conferred by section 227(4A) of the Companies Act' 1956("the Act") and according to the information and explanations given to us and on the basis of such checks as we considered appropriate' we state that:

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

(b) All the assets have not been physically verified by the management during the year but there is regular programmed of verification' which' in our opinion' is reasonable having regard to the size of the Company and the nature of its assets. There were no material discrepancies with regard to book records in respect of the assets verified during the year.

(c) Duri ng the year' the Company has not disposed off substantial part of its fixed assets.

(ii) (a) The inventory has been physically verified by the management at regular intervals during the year.

In our opinion and according to the information and explanations given to us' the frequency of verification is reasonable.

(b) In our opinion' the procedure for the physical verification of the inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. As explained to us' discrepancies noticed on physical verification of inventory were not material.

(iii) (a) According to information and explanations given to us the company had given unsecured loans to

two companies listed in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs.64.96 lacs and the year-end balance of such loans was Rs. Nil

(b) In our opinion' the rate of interest and other terms and conditions on which the unsecured loans as mentioned in (a) above were prima facie not prejudicial to the interest of the Company.

(c) According to the information and explanations given to us' the principal amount and interest in respect of loan granted as mentioned above are repayable on demand. These loans have been fully repaid.

(d) As informed to us' having regards to terms and conditions of the loan as mentioned above' there is no

overdue amount outstanding in respect of such loans. However' interest has not been recovered regularly and at the yearend outstanding interest were Rs.8.20 lacs.

(e) As informed to us' the Company has taken unsecured loans from a company covered in the register maintained under section 301 of the Act. The maximum amount of such loans during the year was Rs.325 lacs and the year-end balance was Rs.321.24 lacs.

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

(g) According to the information and explanations given to us' the company has been regular in repayment of the principal amount and interest thereon as applicable.

(iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory' fixed assets and with regard to the sale of goods and services. During the course of our audit' no major weakness has been noticed in the internal controls.

(v) (a) According to the information and explanations given to us' we are of the opinion that transactions that need to be entered into the register maintained under section 301 of the Act' have been so entered.

(b) Based on the audit procedures applied by us and according to the information and explanations given to us' the transactions made pursuance of contracts or arrangements' exceeding the value of Rs.5 lacs in respect of a party has been made at prices which are reasonable having regard to prevailing market prices.

(vi) The Company has not accepted any deposits from the public under Section 58A' 58AA or any other relevant provision of the Act and the rules framed there under.

(vii) In our opinion and according to the information and explanations given to us' the Company has an internal audit system commensurate with the size of the Company and nature of its business.

(viii) 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 Act in respect of the Company's product and are of the opinion that prima facie the prescribed records have been made and maintained. However' we have not carried out any detailed examination of such records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company' the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund' Investor Education and Protection Fund' Employees' State Insurance' Income-tax' Sales-tax' Wealth-tax' Service Tax' Custom Duty' Excise Duty' Cess and other statutory dues applicable to it. According to the information and explanations given to us' no undisputed amounts payable in respect of aforesaid dues were outstanding' as at 31st March 2012 for a period of more than six months from the date they became payable.

(b) According to the records of the Company and according to the information and explanation given to us by the management' the details of disputed statutory dues are as below:

Period to which Amount Name of the Name of Forum where dispute the amount relate Rs. in Statue the Dues is pending (Financial Year) Lacs)

The Uttar Pradesh Sales Tax Additional Commissioner 2000-01 0.28 Trade Tax Act' 1948 (Appeals)

-do- 2007-08 141.24

Trade Tax Tribunal 2004-07 1.32

The Uttar Pradesh Entry Tax Additional Commissioner 2007-09 22.82 Trade Tax Act' 1948 (Appeals)

The Uttar Pradesh VAT Additional Commissioner 2007-10 47.78

VAT Act' 2008 (Appeals)

UP Krishi Utpadan Mandi Tax High Court 1.1193- 176.12 Mandi Adhiniyam 31.12.2003 1965

The Central Sales Sales Tax High Court 1986- 91 69.10 Tax Act' 1956 1996- 97 8.59

Additional Commissioner 1995 - 1996 477.93 (Appeals)

Tribunal 2005 - 07 0.90

The Income Tax Act Income Tax Commissioner (Appeals) 2008 - 09 370.99 1956

(x) The Company does not have any accumulated losses. The Company has incurred cash losses during the year covered by our audit and had incurred cash losses in the immediately preceding financial year. The effect of unquantified qualification has not been taken into consideration for the purpose of making comment in respect of this clause.

(xi) Based on our audit procedures and on the information and explanations given by the management' we are of the opinion that during the year the Company has not defaulted in repayment of dues to financial institutions' bank or debenture holders.

(xii) Based on our examination of documents and records and according to information and explanations given to us' we are of the opinion that the Company has not granted loans and advances on the basis of security byway of pledge of shares' debentures and other securities.

(xiii) In our opinion' the Company is not a chit fund oar niche mutual benefit fund / society. Accordingly' the provisions of clause 4 (xiii) of the Order 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) The Company has notgiven guarantees for loans taken by others from bankor financial institutions.

(xvi) As per the information and explanation given to us' the Company has not availed fresh term loan during the year.

(xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet of the company' we report that short-term funds amounting to Rs.2'764.73 lacs have been used for long-term investments' i.e. for acquisition of fixed assets/funding losses to the company.

(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 Act.

(xix) The Company has not issued any debenture during the period. Accordingly' the provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) The company has not raised money by public issues during the period.

(xxi) Based upon the audit procedures performed and information and explanations given by the management' we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

II. Attention is invited to the following Notes regarding:

a) non-provision of diminution in value of investment' as stated in Note 13b; and

b) payment of managerial remuneration amounting to Rs. 64.51 lacs which is subject to approval of the Central Government.(Note 22a)

III. We further report that impact with respect to the Notes given in paragraph II above cannot be ascertained and commented by us.

IV. Further 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 of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act;

(v) On the basis of information available with the company and written representations received from the directors' 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 directors in terms of section 274(1) (g) of the Act;

(vi) In our opinion and to the best of our information and according to the explanations given to us' the financial statements' subject to our remarks as given in Para II above whereby as given in Para III above' we are unable to ascertain and indicate the impact thereof on these accounts' 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.

For Lodha and Co. Chartered Accountants

Firm ICAI

Registration No: 301051 E H S Jha

Place : Kolkata Partner

Date : 28th May' 2012 Membership Number: 55854


Mar 31, 2011

We have audited the attached Balance Sheet of Star Paper Mills Limited as at 31st March 2011 and also the Profit and Loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of 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 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.

1, As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order; 200-1- ("the order") issued by the Central Covernmeiil it) exercise of the powers conferred by section 227(4 A) of the Companies Act, 1956("the Act") and according to the information and explanations given to us and on the basis of such checks as we considered appropriate, we state that

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

(b) All the assets have not been physically verified by the management during the year but there is regular programme of verification, which, in our opinion, its reasonable having regard to the size of the Company and the nature of its assets.There were no material discrepancies with regard to book records in respect of the assets verified during the year.

(c) During the year, the Company has not disposed off substantial part of its fixed assets,

(ii) (a) The inventory has been physically verified by the management at regular intervals during the year. In our opinion and according to the information and explanations given to us, the frequency of verification is reasonable.

(b) In our opinion. the procedure for the physical verification of the inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(e) The Company is maintaining proper records of inventory, As explained to us, discrepancies noticedon physical verification of inventory were not material,

(iii) (a) According to information and explanations given to us the company had given unsecured loans to three companies listed in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs. 125.96 lacs and the year-end balance of such loans was Rs.64.96lacs.

(b) In our opinion, the rate of interest and other terms and conditions on which the unsecured loans as mentioned in (a) above were prima facie not prejudicial to the interest of the Company.

(c) According to the information and explanations given to us, the principal amount and interest in respect of loan granted as mentioned above are repayable on demand, These loans have not been recalled.

(d) As informed to us.having regards to terms and conditions of the loan as mentioned above, there is no overdue amount outstanding in respect of such loans. However, interest has not been recovered regularly and at the year end outstanding interest were Rs. 79.29 lacs.

(e) An informed to us, the Company has not taken loan, secured or unsecured. from any companies, firms or other parties covered in the Register maintained under Section 301 of the Act. Accordingly, the provisions of clause (iii) (f) and (g) of the order are not applicable to the company.

(iv)In our opinion there are adequate internal control procedures commensurate with the- size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and service . During the course of our audit, no major weakness has been noticed in the internal controls.

(v) (a) According to the informations and explanations given to us, we are of the opinion that transactions that need to be entered into the register maintained under section 301 of the Act, have been so entered.

(b) Based on the audit procedures applied by us and according to the information and explanations given to us. the transactions made pursuance of contracts or arrangements exceeding the value of Rs.5 lacs in respect of a party has been made at prices which are reasonable having regard to prevailing market prices

(vi) The Company has not accepted any deposits from the public under Section 58A, 58 AA or any other relevant provision of the Act and the rules framed there under,

(vii) In our opinion and according to the information and explanations given to us, the Company has an interna] audit system commensurate with the size of the Company and nature of its business.

(viii) 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 Act in respect of the Company's product and are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not carried out any detailed examination of such records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund. Employees' State Insurance, Income-tax, Sales-tax. Wealth-tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March 2011 for a period of more than six months from the date they became payable.

(b) According to the records of the Company and according to the information and explanation given to us by the management, the details of disputed statutory dues are as below:

Name of the Statue Nature of the Dues Forum where dispute is pending

The Uttar pradesh Slaes Tax Joint Commissioner Trade Tax Act,1948 (Appeals)

Additional Commissioner (Appeals) Trade Tax Tribunal

The uttar Pradesh Entry Tax Additional Commissioner Trade Tax Act, (Appeals) 1948

The Central Sales Sales Tax High Court Tax Act,1956 Additional Commissioner (Appeals)

The Central Excise Duty Commissioner Excise Act,1944 (Appeals)

Name of the Statue Period to which Amount the amount relate (Rs.in Lacs) (Financial Year)

The Uttar pradesh 2000-01 1.97 Trade Tax Act,1948 2005-2011 144.21

2002-01 0.21

The uttar Pradesh 2007-2009 237.50 Trade Tax Act, 1948

The Central Sales 1996-97 4.29 Tax Act,1956 1995-1996 406.00 and 2005-07

The Central May 2009 7.22 Excise Act,1944 to June 2009

(x) The Company does not have any accumulated losses. The Company has incurred cash losses during the year covered by our audit but had not incurred cash losses in the immediately preceding financial year. The effect of unquatified qualification has not been taken into consideration for the purpose of making comment in respect of this clause.

(xi) Based on our audit procedures and on the information and explanations given by the management we are of the opinion that during the year the Company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

(xii) Based on our examination of documents and records and according to information and explanations given to us, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a Chit fund or a nidhi mutual benefit fund / society. Accordingly, the provisions of clause 4 (xiii) of the Order 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 clause4(xiv) of the Order are not applicable to the Company.

(xv) The Company has not given guarantees for loans taken by others from bank or financial institutions,

(xvi) As per the information and explanation given to us, the Company has not availed fresh term loan during the year.

(xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet of the company, we report that sbort-term funds amounting to Rs. 1,358.79 lacs have been used For long-term investments, i.e. for acquisition of fixed assets.

(xviii) The Company has not made any preferential alloltment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

(xix) The Company has created security in respect of debentures issued.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of ouraudit.

IT. Attention is invited to the Following Notes as given in Schedule 16 regarding:

a) non-provision and non-ascertainment of diminution in value of investment, the impact of which is presently non-ascertainable ( Note 5); and

b) payment of managerial remuneration amounting to Rs.62.34 lacs which is subject to approval of the Central Crovernment,(Note 11 (c))

III. We further report that overall impact with respect to the Notes given in paragraph 11 above cannot be ascertained and commented by us.

IV. Further 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, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account

(iv) In our opinion, the balance sheet, pmfit and loss account and cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 274 of the Act;

(v) On the basis of information available with the company and written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on31st March 2011 from being appointed as directors in terms of section 274(1) (g) of the Act;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the financial statements, subject lu our remarks as given in Para II above whereby as given in Para 111 above, we are unable to ascertain and indicate the impact thereof on these accounts, give a true and fair view in conformity with the aecounting principles generally accepted in India:

a) in the case of the balance sheet, of the state of affairs of the Company as 31st March 2011:

b) in the cose of the profit and loss account, of the loss for the year ended on that date: and

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

For Lodha and Co.,

Chartered Accountants Firm ICAI Register No: 301051E

H S jha

Partner Membership Number: 558854 Place : Kolkata Date :30th May, 2011




Mar 31, 2010

We have audited the attached Balance Sheet of Star Paper Mills Limited as at 31 st March 2010 and also the Profit and Loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

I. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 ("the Order") issued by the Central Government in exercise of the powers conferred by section 227(4A) of the Companies Act, 1956 ("the Act") and according to the information and explanations given to us and on the basis of such checks as we considered appropriate, we state that:

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

(b) All the assets have not been physically verified by the management during the year but there is regular programme of verification, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. There were no material discrepancies with regard to book records in respect of the assets verified during the year.

(c) During the year, the Company has not disposed off substantial part of its fixed assets.

(ii) (a) The inventory has been physically verified by the management at regular intervals during the year. In our opinion and according to the information and explanations given to us, the frequency of verification is reasonable.

(b) In our opinion, the procedure for the physical verification of the inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of inventory were not material.

(iii) (a) According to information and explanations given to us the company had given unsecured loans to a company listed in the register maintained under Section 301 of the Act. The maximum amount involved duringthe year was Rs. 110.46 lakhs and the year-end balance of such loans was Rs.75.96 lakhs.

(b) In respect of loans given by the company, loan of Rs. 11 lacs given to subsidiary company, which has merged with another company with effect from 1 st April 2008 as given in Note 5 of Schedule 17 is interest free and in other cases the rate of interest and other terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

(c) According to the information and explanations given to us, the principal amount and interest in respect of loan granted as mentioned above are repayable on demand. These loans have not been recalled.

(d) As informed to us, having regards to terms and conditions of the loan as mentioned above, there is no overdue amount outstanding in respect of such loans. However, interest has not been recovered regularly and at the year end outstanding interest were Rs.80.62 lakhs.

(e) As informed to us, the Company has not taken loan, secured or unsecured, from any companies, firms or other parties covered in the Register maintained under Section 301 of the Act. Accordingly, the provisions of clause (iii) (f) and (g) of the Order are not applicable to the Company.

(iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

(v) (a) According to the informations and explanations given to us, we are of the opinion that transactions that need to be entered into the register maintained under section 301 of the Act, have been so entered.

(b) Based on the audit procedures applied by us and according to the information and explanations given

to us, the transactions made pursuance of contracts or arrangements exceeding the value of Rs.5 lakhs in respect of a party has been made at prices which are reasonable and having regard to prevailing market prices.

(vi) The Company has not accepted any deposits from the public under Section 58A, 58AA or any other relevant provision of the Act and the rules framed there under.

(vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size of the Company and nature of its business.

(viii) 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 (I) (d) of the Act in respect of the Companys product and are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not carried out any detailed examination of such records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding, as at 31 st March 2010 for a period of more than six months from the date they became payable.

(b) According to the records of the Company and according to the information and explanation given to us by the management, the details of disputed statutory dues are as below:

Name of the Nature of Forum where dispute Statute The Dues is pending

The Uttar Pradesh SalesTax High Court Trade Tax Act, 1948 Joint Commissioner (Appeals) Additional Commissioner (Appeals) Trade Tax Tribunal

The Uttar Entry Tax Joint Commissioner PradeshTrade Tax (Appeals) Act, 1948 Additional Commissioner (Appeals) Trade Tax Tribunal

The Central Sales Sales Tax High Court Additional Commissioner (Appeals)

Name of the Period to which Amount Statute the amount relate (Rs. in Lakhs) (Financial Year)

The Uttar Pradesh 1979-80 0.28 Trade Tax Act, 1948 2000-01 and 2004-05 2.18 2005-2007 1.11 2002-04 and 2007-2010 168.66

The Uttar 2004-05 2.01 PradeshTrade Tax 2005-2007 11.90 Act, 1948 2007-09 94.67

The Central Sales 1996-97 8.59 Tax Act, 1956 2005-07 4.83

(x) The Company does not have any accumulated losses. The Company has not incurred any cash losses during the year covered by our audit and the immediately preceding financial period.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that during the year the Company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

(xii) Based on our examination of documents and records and according to information and explanations given to us, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 3 (xiii) of the Order 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 3 (xiv) of the Order are not applicable to the Company.

(xv) The Company has not given guarantees for loans taken by others from bank or financial institutions.

(xvi) As per the information and explanation given to us, the Company has not availed fresh term loan during the period.

(xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet of the company, we report that short-term funds amounting to Rs.592.68 lakhs have been used for long-term investments, i.e. for acquisition of fixed assets.

(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 Act.

(xix) The Company has created security in respect of debentures issued.

(xx) The company has not raised money by public issues duringthe period.

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

II Attention is invited to Note 12 (b) of Schedule 17 regarding payment of managerial remuneration amounting to Rs. 97.56 lakhs which is subject to approval of the Central Government, the impact of which cannot be ascertained on the accounts.

III Further to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryforthe purposes of our audit;

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

(iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act;

(v) On the basis of information available with the Company and written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 st March 2010 from being appointed as directors in terms of section 274( I) (g) of the Act;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the financial statements, subject to Para II above the impact of which cannot be ascertained on the accounts 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 31 st March 2010;

b) in the case of the 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.

For Lodha and Co.,

Chartered Accountants

Firm ICAI Registration No: 301051E

H. S.Jha Place: Kolkata Partner Date: 28th May 2010 Membership Number: 55854



 
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