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Auditor Report of Unimers India Ltd.

Mar 31, 2015

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

2. Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls 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 on the financial statements.

4. Basis of Qualified Opinion

(a) The accumulated losses of the Company as at the year end exceeds its entire net worth; however the Company has been advised that since certain conditions as per the Sick Industrial Companies (Special Provisions) Act, 1985 were not being met, it was not eligible to make a reference to BIFR. However, should the legal status as regards the validity of the closure of the plant change, appropriate steps will have to be taken by the Company in this regard. Moreover, the plant operations were suspended since October, 2007 and thereafter formally closed and workers retrenched effective from 26th June, 2008. These financial statements have, however, been prepared by the management on a "going concern" basis, considering the various revival/restructuring options being pursued by the management. This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can now operate as a going concern. However, as explained, should the Company be unable to continue as a going concern, there would be impact on the assets & liabilities of the Company. The extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the year end is presently not ascertainable.

(b) We are unable to express an opinion as to when and to what extent the carrying value of Building of Rs. 258.57 lacs would be realised (impairment loss) in view of the closure of all manufacturing activities since October, 2007 (subsequently formally closed and workers retrenched effective from 26th June, 2008), the impact whereof on the loss for the year, accumulated losses, assets and liabilities as at the year end is presently not ascertainable.

(c) The accounts of certain lenders aggregating to Rs. 4,945.06 lacs (Previous year Rs.4,947.38 lacs), Securities application money due for refund of Rs. 75.21 lacs (Previous Year Rs. 75.21 lacs), Advances from customers of Rs. 374.34 lacs (Previous Year Rs.374.59 lacs), Trade Payables of Rs. 712.96 lacs (Previous Year Rs. 711.26 lacs), Bank balances (Dr.) of Rs. 0.27 lacs (Previous Year Rs.0.27 lacs), Loans & Advances recoverable of Rs. 119.65 lacs (Previous Year Rs. 120.08 lacs) being subject to confirmations / reconciliations and adjustments, if any, having consequential impact on the loss for the year, assets, liabilities and accumulated losses as at the close of the year, the amount of adjustment if any, are as explained by the management presently not ascertainable and therefore, not accounted for.

(d) The Company has not yet deposited long outstanding amount of Rs.164.69 lacs (Previous year Rs. 164.69 lacs) to the Investor Education & Protection Fund (IEPF) and consequential unascertained liability of interest / other charges on the same

(e) Other than stated in para "f" below, liability as may arise towards interest/compound interest/penalty on delayed/ non-payment to certain lenders / trade payables / statutory / workers dues has not been ascertained and not provided for.

(f) The Company has not provided interest payable of Rs. 522.38 lacs (Previous Year Rs. 459.78 lacs) in respect of public debentures, Rs. 1500.86 lacs (Previous Year Rs. 1059.69 lacs) in respect of secured / unsecured loans and Rs.476.12 lacs (Previous Year Rs. 377.55 lacs) in respect of certain other liabilities. As explained, the management is in discussions with the parties concerned in respect of interest payable and is hopeful of its waiver.

We further report that without considering the matter referred in para4(a) to 4(e) above, the effect of which could not be determined, had the observation made by us in para 4(f) above been considered, the loss before tax for the year would have been Rs. 2,636.57 lacs (as against reported loss of Rs. 137.21 lacs), accumulated losses would have been Rs. 11,982.13 lacs(as against reported figure of Rs.9,482.77 lacs), other current liabilities would have been Rs 8,382.55 lacs (as against reported figure of Rs 5,883.19 lacs);Previous Year loss for the year would have Rs. 2,127.03 lacs(as against reported loss of Rs. 230.01 lacs), accumulated losses would have been Rs. 11,096.75 lacs(as against reported figure of Rs.9,199.73 lacs), other current liabilities would have been Rs 7,713.42 lacs (as against reported figure of Rs 5,816.40 lacs).

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, 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 loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

(i) As required by the Companies (Auditor's Report) Order, 2015 issued by the Central Government of India in terms of Section 143 (11) of the Companies Act, 2013, we enclose in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the said Order.

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

(a) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph 4(c) above, 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) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph 4(b),(d),(e) and

(f) above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

(d) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph 4(b) above, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

(f) The matters described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 17 (e) to the financial statements.

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

(iii) There were no amounts which were required to be transferred to the investor Education and Protection Fund by the Company, except as disclosed in note 4(d) of basis of Qualified Opinion paragraph above.

Annexure referred to in paragraph "Report on Other Legal and Regulatory Requirements" of our report of even date on the Financial Statements as at and for the year ended March 31, 2015 of Unimers India Limited:

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

(b) All the fixed assets have been physically verified by the management once during the year which is reasonable considering the size and nature of its business. No material discrepancies were noticed on such verification.

(ii) (a) The inventory has been physically verified by the management at the year end which is considered reasonable having regard to the size of the Company and nature of its business.

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

(c) The Company is maintaining proper records of inventory. No discrepancies were noticed on physical verification of inventories as compared to book records.

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

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items of fixed assets are of special nature and suitable alternative source may not always exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) No deposits within the meaning of directives issued by the Reserve Bank of India and Sections 73 to 76 or any other provisions of the Companies Act, 2013 and rules framed thereunder have been accepted by the Company.

(vi) Since plant operations have been discontinued from October 2007, no cost records and accounts as prescribed by the Central government under section 209 (1) (d) of the act have been maintained.

(vii) (a) The Company is generally regular in depositing undisputed statutory dues, including Provident Fund, employee's state insurance, income tax, wealth tax, sales tax, service tax, duty of customs, value added tax and other material statutory dues applicable to the Company with the appropriate authorities during the year. There were no undisputed amount payable on account of the above dues outstanding as on March 31, 2015 for a period of more than six months from the date they became payable except as mentioned below:

Name of Statute Nature of Dues Amount (Rs. in Lacs) *

The Companies Act Investor Education 164.69 & Protection Fund

BPMC Act Property Tax 342.58

Name of Statute Period to which Due Date it relates

The Companies Act 1991-2003 1998-2011

BPMC Act October 2006 From October to March 2015 2006 onwards

* Excluded interest and other charges/penalties as may be leviable owing to delayed payment of the aforesaid amount.

(b) According to information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, service tax, custom duty and value added tax during the year which have not been deposited on account of any disputes except the following:

Financial Year Nature of Dues Amount Forum where dispute (Rs. in Lacs) is pending

1999- 2000 Sales Tax 13.49 Deputy Commissioner

2000- 2001 Sales Tax 1.91 Appellate Tribunal

2006- 2007 Excise Duty 62.26 CESTAT

2007- 2008 Cess Liability 1.18 NMMC

(c) The Company is required to transfer Rs. 164.69 lacs to the Investor Education and Protection Fund in accordance with the relevant provisions of the Act, and rules made thereunder.

(viii) The accumulated losses of the Company at the end of the financial year exceed 50% of its net-worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

(ix) According to the information and explanations given to us and considering that certain loans from financial institutions and Banks have already been assigned to bodies corporate, the Company has defaulted in repayment of dues of Rs. 1,478.73 lacs (last installment due since March 31, 2012) to debenture holders.[Also refer para 4(e) of the Basis of Qualified opinion paragraph in main report]

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

(xi) According to the information and explanations given to us, the Company has not raised any term loan during the year and in recent past.

(xii) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing standards in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For LODHA & COMPANY Chartered Accountants Firm Registration No. - 301051E

R. P. BARADIYA Partner Membership No. 44101

Place : Mumbai Date : May 23, 2015




Mar 31, 2014

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

2. Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. 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. Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the 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 accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

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

4. Basis of Qualified Opinion

(a) The accumulated losses of the Company as at theyear end exceeds its entire net worth, however the Company has been advised that since certain conditions as per the Sick Industrial Companies (Special Provisions) Act, 1985 were not being met, it was not eligible to make a reference to BIFR. However, should the legal status as regards the validity of the closure of the plant change, appropriate steps will have to be taken by the Company in this regard. Moreover, the plant operations were suspended since October, 2007 and thereafter formally closed and workers retrenched effective from 26th June, 2008. These financial statements have, however, been prepared by the management on a "going concern" basis, considering the various revival/restructuring options being pursued by the management. This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can now operate as a going concern. However, as explained, should the Company be unable to continue as a going concern, there would be impact on the assets & liabilities of the Company. The extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the period end is presently not ascertainable.

(b) The Company has not carried out impairment test as required by Accounting Standard (AS) 28

"Impairment of Assets", in respect of Building, Plant & Machinery and Furniture & Fixtures. We are unable to express an opinion as to when and to what extent the carrying value of Building, Plant & Machinery and Furniture & Fixtures would be recovered in view of the closure of all manufacturing activities since October, 2007 (subsequently formally closed and workers retrenched effective from 26th June, 2008), the impact whereof on the loss for the year, accumulated losses, assets and liabilities as at the year end is presently not ascertainable.

(c) The Company has not yet deposited long outstanding amount of Rs.164.69 lacs (Previous year Rs. 164.69 lacs) to the Investor Education & Protection Fund (IEPF) and consequential unascertained liability of interest / other charges on the same.

(d) The accounts of certain lenders aggregating to Rs. 4,947.38 lacs (Previous year Rs.4,947.38 lacs), Securities application money due for refund of Rs. 75.21 lacs (Previous Year Rs. 75.21 lacs),Advances from customers of Rs. 374.59 lacs (Previous Year Rs.373.58 lacs), Trade Payables of Rs.223.97 lacs (Previous Year Rs. 328.13 lacs), Bank balances (Dr.) of Rs. 0.27 lacs (Previous Year Rs.0.33 lacs), Loans & Advances recoverable of Rs. 31.68 lacs (Previous Year Rs. 32.18 lacs) being subject to confirmations / reconciliations and adjustments, if any, having consequential impact on the loss for the year, assets, liabilities and accumulated losses as at the close of the year, the amount of adjustment if any, are as explained by the management presently not ascertainable and therefore, not accounted for.

(e) Other than stated in para "f" below, liability as may arise towards interest/compound interest/penalty on delayed/non-payment to certain lenders / trade payables / statutory / workers dues has not been ascertained and not provided for.

(f) The Company has not provided interest payable of Rs. 459.78 lacs (Previous Year Rs. 383.15 lacs) in respect of public debentures, Rs. 1059.69 lacs (Previous Year Rs. 705.46 lacs) in respect of secured / unsecured loans and Rs.377.55 lacs (Previous Year Rs. 341.48 lacs) in respect of certain other liabilities. As explained, the management is in discussions with the parties concerned in respect of interest payable and is hopeful of its waiver.

We further report that without considering the matter referred in para4(a) to 4(e) above, the effect of which could not be determined, had the observation made by us in para 4(f) above been considered, the loss before tax for the year would have beenRs. 2,127.03 lacs (as against reported loss of Rs. 230.01 lacs), accumulated losses would have been Rs. 11,096.75 lacs (as against reported figure of Rs. 9,199.73 lacs), other current liabilities would have been Rs 7,713.42 lacs (as against reported figure of Rs 5,816.40 lacs); Previous Year loss for the year would have been Rs. 1824.63 lacs (as against reported loss of Rs. 394.54 lacs), accumulated losses would have been Rs. 10,399.78 lacs (as against reported loss of Rs. 8,969.69 lacs) other current liabilities would have been Rs 7098.74 lacs (as against reported figure of Rs 5,668.65 lacs)

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 matters described in the Basis of Qualified Opinion paragraph,the financial statements

give the information required by the Act in the manner so required and give a true and fair view in conformity

with the accounting principles generally accepted in India:

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

(b) in the case of the Statement of Profit and Loss, of the loss of the Company 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.

6. Report on Other Legal and Regulatory Requirements

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

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

(a) Subject to what is stated in para 4(d) above,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) Subject to what is stated in para 4 (b), (d), (e) & (f) above,in our opinion, proper books of account as required by law have been kept by the Company so far asappears from our examination of those books;

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

(d) subject to what is stated in para 4(b) above,in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

(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 clause (g) of sub-section (1) of section 274 of the Companies'' Act, 1956.

Annexure referred to in paragraph 6 (1)of our report of even date on the Financial Statements as at and for the year ended March 31, 2014

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

(b) All the fixed assets have been physically verified by the management at the year end which is considered reasonable and no material discrepancies were noticed on such verification.

(c) No substantial/major part of fixed assets has been disposed off by the Company during the year.

ii. (a) The inventory has been physically verified by the management at the year end which is considered reasonable having regard to the size of the Company and nature of its business.

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

(c) The Company is maintaining proper records of inventory. No discrepancies were noticed on physical verification of inventories as compared to book records.

iii. Read with what is stated in point (v) below, during the year the Company has not taken/granted any loans, secured or unsecured, from/to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

iv. In our opinion and according to the information and explanations given to us and read with para (vii) below, having regard to the explanation that some of the items of fixed assets are of special nature and suitable alternative source may not always exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of fixed assets and for the sale of goods and services.During the course of our audit, we have not observed any major weakness or continuing failure to correct in the internal control system of the

Company in respect of these areas.

v. We are informed by the management that as per the legal opinion obtained by them, the transactions with other companies in which Directors of the Company are also holding the positions as directors in the other companies (not holding shares exceeding 2% of paid up capital) are not required to be entered in the register maintained under sub-section (1) of Section 301 of the Act. In view of above no entries were required to be recorded in the register maintained under section 301 of the Act.

vi. No deposits within the meaning of directives issued by the Reserve Bank of India and Sections 58A and 58AA or any other relevant provisions of the Act and Rules framed thereunder have been accepted by the Company.

vii. The Company does not have an internal audit system.

viii. As explained, since plant operations were discontinued from October 2007, no cost records and accounts as prescribed by the Central Government under Section 209 (1) (d) of the Act have been maintained.

ix. (a) According to the information and explanations given to us and according to the books and records as produced to and examined by us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with appropriate authorities and there were no undisputed amounts outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable except as mentioned below

Name of Statute Nature of Dues Amount Period to which (Rs.in Lacs) it relates

The Companies Investor Education 164.69 1991-2003 Act, 1956 and Protection Fund

BPMC Act Property Tax 273.68 October 2006 to March 2014 Nmae of Statue Due Date The Companies 1998-2011 Act, 1956

BPMC Act From October 2006 onwards

* not including interest and other charges as may be leviable owing to non-payment of the aforesaid amount.

b) There were no dues during the year in respect of Income tax, Sales tax, State value added tax, Custom duty, Excise duty and Cess which have not been deposited on account of any dispute except as mentioned below:

Nature of Dues Year to which Forum where dispute Amount it relates is pending (Rs.in Lacs)

Sales Tax 1999-2000 Deputy Commissioner 13.49

Sales Tax 2000-2001 Appellate Tribunal 1.91

Excise Duty Oct''2006 CESTAT 62.26

Cess Liability Oct''2007 NMMC 1.18

x . The accumulated losses of the Company at the end of the financial year exceed 50% of its net worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

xi. According to the information and explanations given to us and considering that certain loans from Financial institutions and Banks have already been assigned to bodies corporate, the Company has defaulted in repayment of dues of Rs. 1,478.73 lacs (last installment due since March 31, 2012) to debenture holders. (Also Refer Para 4(f) of the main report).

xii. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year. Therefore, the provisions of paragraph 4 (xii) of the Order are not applicable to the Company.

xiii. As the Company is not a nidhi/ mutual benefit fund/ society, the provisions of clause 4(xiii) of the Order is not applicable to the company.

xiv. As the Company is not dealing or trading in shares, securities, debentures and other investments the provisions of clause 4(xiv) of the Order is not applicable to the company.

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

xvi. According to the information and explanations given to us, the Company has not raised any term loan during the year and in recent past.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statements of the Company, in our opinion, the funds raised on short-term basis by the Company have not been used for long-term investment.

xviii. The Company has not during the year and in the recent past made any preferential allotment of shares to parties covered in the Register maintained under Section 301 of the Act.

xix. The Company has not during the year or in the recent past raised any money by way of issue of Debentures.

xx. The Company has not raised any money by way of public issues during the year or in recent past.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing standards in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For LODHA & COMPANY Chartered Accountants ICAI Firm Registration No: 301051E

A. M. Hariharan Partner Membership No. 38323

Place : Mumbai Date : May 29, 2014


Mar 31, 2013

1. Report on the Financial Statements

We have audited the accompanying financial statements of Unimers India Limited("the Company"), which comprise the Balance Sheet as atMarch 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year then ended, and a summary of the significant accounting policies and other explanatory information.

2. Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the. preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards 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. Auditors'' Responsibility

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

An auditinvolves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the 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 the Management, as well as evaluating the overall presentation of the financial statements.

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

4. Basis of Qualified Opinion

(a) The accumulated losses of the Company as at theyearend exceeds its entire net worth, however tbeCompany has been advised that since certain conditions as per the Sick Industrial Companies (Special Provisions) Act, 1985 were not being met, it was not eligible to make a reference to BIFR. However, should the legal status as regards the validity of the closure of the plant change, appropriate steps will have to be taken by the Company in this regard. Moreover, the plant operations were suspended since October, 2007 and thereafter formally closed and workers retrenctied effective from 26th June, 2008. These financial statements have, however, been prepared by the management on a "going concern" basis, considering the various revival/restructuring options being pursued by the management. This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can now operate as a going concern. However, as explained, should the Company be unable to continue as a going concern, the extent ol the effect of the resultant adjustments to tlie accumulated tosses, assets and liabilities as at the year end and loss for the year is presently not ascertainable.

(b) The Company has not carried out impairment test as required by Accounting Standard (AS) 28 "Impairment of Assets", in respect of Building, Plant & Machinery and Furniture & Fixtures. We are unable to express an opinion as to when and to what extent the carrying value of Building, Plant & Machinery and Furniture & Fixtures would be recovered in view of the suspension of all manufacturing activities since October, 2007 (subsequently formally closed and workers retrenched effe''ctive from 26* June, 2008), the impact whereof on the loss for the year, accumulated losses, assets and liabilities as at the year end is presently not ascertainable.

(c) Further, we are unable to express an opinion as to when and to what extent, the carrying value of Stores of Rs.50.29 lacs (Previous year Rs. 67.05 lacs) would be recovered in view of closure as mentioned above.

(d) The Company has not yet deposited long outstanding amount of Rs. 164.69 lacs (Previous year Rs. 164.69 Lacs) to the Investor Education S Protection Fund (IEPF) and consequential unascertained liability of interest / other charges on the same.

(e) The accounts of certain lenders aggregating to Rs. 4,947.38 lacs (Previous year Rs.4,997.38 lacs), Securities application money due tor refund of Rs. 75.21 lacs (Previous Year Rs. 75.21 lacs), Advances from customers of Rs. 373.58 lacs (Previous Year Rs.423.59 lacs), Trade Payables of Rs 328.13 lacs (Previous Year Rs, 361.85 Lacs), Bank balances (Dr.) of Rs 0.33 lacs (Previous Year Rs. 17.82 Lacs), Loans & Advances recoverable of Rs. 32.18 lacsjPrevious Year Rs. 31.68 Lacs) being subject to confirmations I reconciliations and adjustments, if any, having consequential impact on the loss for the year, assets, liabilities and accumulated losses as at the close of the year, the amount of adjustment if any, are as explained by the management presently not ascertainable and therefore, not accounted for.

(f) Other than stated''in para "g" below, liability as may arise towards interest/compound interest/ penalty on delayed/non-payment to certain lenders I trade payables I statutory I workers dues has- not been ascertained and not provided for.

(g) The Company has not provided interest payable of Rs 383.15 lacs (Previous Year Rs: 306.52 lacs) in respect of public debentures, Rs 705.46 lacs (Previous Year Rs. 383.96 lacs) in respect of secured I unsecured loans and Rs.341.48 lacs (Previous Year Rs. 15946 lacs) in respect of certain other liabilities. As explained, the management is in discussions with the parties concerned in respect of interest payable and is hopeful of its'' waiver.

We further report that without considering the matter referred in para 4(a) to 4(f) above, the bffect of which -- could not be determined, had the observation made by us in para 4(g) above been considered, the loss before tax for the year would have been Rs 1,824.63 lacsjas against reported loss of Rs. 394.55 lacs), accumulated losses would have been Rs. 10,399.78 lacs (as against reported figure of Rs.8,969.70 lacs); Previous Year loss for the year would have been Rs. 4.139.72 lacs (as against reported loss of Rs. 3,289.79 Lacs), accumulated losses would have been Rs.9,425.09 lacs (as against reported loss of Rs. 8,575.15 lacs)

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to is,except for the possible effects of matters described in the Basis of Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair vievy 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 atMarch 31,2013;

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

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

6. Report on Other Legal and Regulatory Requirements

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

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

(a) Subject to what is stated in para 4(e) abov&.w 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) Subject to what is stated in para 4 (b), (e), (f) & (g) abovejn our opinion, proper books of account as required by law have been kept by the Company so far asappears from our examination of those books; .

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

(d) subject to what is stated in para 4(b) above, in our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (X) of section 211 of''the Act.

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

Annexure referred to In paragraph 6 (1) of our report of even date on the Financial Statements as at and for the year ended March 31, 2013-

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

(b) All the fixed assets have been physically verified by the management at the year end which is considered reasonable and- no material discrepancies were noticed on such verification.

(c) No substantial/major part of fixed assets has been disposed off by the Company during the year.

ii. (a) The inventory has been physically verified by the management at the year end which is considered reasonable having regard to the size of the Company and nature of its business.

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

(c) The Company is maintaining proper records of inventory. No discrepancies were noticed on physical verification of inventories as compared to book records.

iii. Read with what is stated in point (v) below, during the year the Company has not taken/granted any loans, secured or unsecured, from/to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

iv. In our opinion and according to the information and explanations given to us and read with para (vii) below, having regard to the explanation that some of the items of fixed assets are. of special nature and suitable alternative source may not always exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct in the internal, control system of the Company in respect of these areas.

v. We are informed by the management that as per the legal opinion obtained by them, the transactions with

- other companies in which Directors of the Company are also holding the positions as directors in the other companies {not holding shares exceeding 2%. of paid up capital) are nor required to be entered in the register maintained under sub-section (1) of Section 301 of the Act In view of above no entries were required to be recorded in the register maintained under section 301 of the Act.

vi. No deposits within the meaning of directives issued by the Reserve Bank of India and Sections 58A and 58AA or any other relevant provision!: of the *ct and Rules framed thereunder have, been accepted by the Company.

vii. The Company does hot have an internal audit system.

viii. As explained, since plant operations were discontinued from October 2007, no cost records and accounts as prescribed by the Central Government under Section 209 (1) (d) of the Act have been maintained.

ix. (a) According to the information and explanations given to us and according to the books and records as produced to and examined by us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with appropriate" authorities and there were no undisputed amounts outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable except as mentioned below:

Name of Statute Nature of Dues Amount Period to which it Due Date (Rs. in Lacs) relates

The Companies Investor Education 164.69 1991-2003 1998-2011 Act, 1956 and Protection Fund

* not including interest and other charges as may be leviable owing to non-payment of the aforesaid amount.

b) There were no dues during the year in respect of Income tax, Sales tax.State value added tax, Custom duty, Excise duty and Cess which have riot been deposited on account of any dispute except as mentioned below:

Nature of Dues Year to which Forum where dispute Amount it relates Is pending (Rs. In Lacs)

Sales Tax 1999-2000 Deputy Commissioner 13.49

Sales Tax 2000-2001 Appellate Tribunal 1.91

Excise Duty Oct 2006 CESTAT 62.26

Cess Liability Oct 2007 NMMC 1.18

x. The accumulated losses of the Company at the end of the financial year exceed 50% of its net worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

xi. According to the information and explanations given to us and considering that certain loans from Financial institutions and Banks have already been assigned to bodies corporate, the Company has defaulted in repayment of dues of Rs. 1,478.73 lacs (last instalment due since March 31,2012) to debenture holders. (Also Refer Para 4(g) of the main report).

xii. According to the information and explanations given to. us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year. Therefore, the provisions of paragraph 4 (xii) of the Order are not applicable to the Company.

xiii. As the Company is not a nidhi/ mutual benefit fund/ society,.the provisions of clause 4(xn) of the Order is not applicable to the company. -

xiv. As the Company is not dealing or trading in shares, securities, debentures and other investments the provisions of clause 4{xiv) of the Order is not applicable to the company.

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

xvi. According to the information and explanations given to. us, the Company has not raised any term loan during the year and in racent past.

xvii. According to the information and explanations given io us and on an overall examination of the balance, sheet and cash flow statements of the Company, in our opinion, the funds raised on short-term basis by the Company have not been used for long-term investment.

xviii.The Company has not during the year and in the recent past made any preferential allotment of shares to parties covered in the Register maintained under Section 301 of the Act.

xix. The Company has not during the year or in the recent past raised any money by way of issue of Debentures.

xx. The Company has not raised any money by way of public issues during the year or in recent past.

xx i. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing standards in India and according to the information and explanations given''to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.



For LODHA & COMPANY

Chartered Accountants

ICAI Firm Registration No: 301051E





A. M. Hariharan

Partner

Membership No. 38323

Place : Mumbai

Date : May 28, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Unimers India Limited as at 31st March, 2012 and also the statement of Profit & Loss and the 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.

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

3. We draw attention to:

a) Note no. (a) and (c) of Note 21 of Notes on Financial Statements - the Company has incurred loss in the current year as well as in the preceding year and the accumulated losses as at the year end have exceeded its entire net worth. The management had received advice to the effect that certain conditions as per the Sick Industrial Companies (Special Provisions) Act, 1985 were not being met and hence the Company was not eligible to make reference to BIFR. However, should the legal status as regards the validity of the closure of the plant change, appropriate steps will have to be taken by the Company in this regard. The plant operations were suspended since October, 2007 and thereafter closed and workers retrenched effective from 26th June, 2008. These financial statements have, however, been prepared by the management on a "going concern" basis, considering the various revival/restructuring options being pursued by the management. This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can operate as a going concern. However, as explained, should the Company be unable to continue as a going concern, the extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the year end and loss for the year is presently not ascertainable.

b) The Company has not carried out impairment test as required by Accounting Standard (AS) 28 'Impairment of Assets', particularly in respect of Building and Plant & Machinery as explained in note (e) of Note 20 of Significant Accounting Policies. We are unable to express an opinion as to when and to what extent the carrying value of Building and Plant & Machinery would be recovered in view of the suspension of plant operations, the impact whereof on the loss for the year, accumulated losses, assets and liabilities as at the year end is presently, not ascertainable.

c) Note no. f(ii)) of Note 21 of the financial statements regarding the accounts of certain Trade Payables of Rs. 361.85 Lacs, Bank Balances (Dr) of Rs. 17.82 Lacs and Other Non Current Assets of Rs. 48.38 Lacs being subject to confirmations, reconciliations, and adjustments, if any, having consequential impact on the loss for the year, assets, liabilities and accumulated losses as at the close of the year, the amounts of adjustment if any, are presently not ascertainable and therefore not provided for.

d) Note no.(l) of Note 21 of the financial statements regarding the Company not having deposited the overdue amount of Rs. 164.69 Lacs to the Investor Education & Protection Fund and consequential liability of interest / other charges on the same.

e) Further, we are unable to express an opinion as to when and to what extent the carrying value of Stores and Spares of Rs.67.05 Lacs would be recovered in view of the suspension of plant operations since October, 2007 and deterioration of quality, if any.

f) Note no. c(vi)) of Note 21 of the financial statements regarding non-provision of interest liability aggregating to Rs. 849.93 Lacs on assigned loans, certain advances and debentures on the basis that as per management, revised terms are in the process of being negotiated with the lenders.

g) Without considering the matter referred in para 3(a) to 3(e), the effect of which could not be determined, had the observations made by us in para 3(f) above been considered, the loss before tax for the current year would have been Rs 4,139.72 Lacs (as against reported loss "of Rs 3,289.79 Lacs).

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

5. Further to our comments in the Annexure referred to in paragraph (4) above, we report that:

a) Subject to what is stated in para 3 (c ) and (f) above ,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) Subject to what is stated in para 3(b), ( c ) and (f) above In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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

d) In our opinion, the Balance Sheet, the statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Act, to the extent applicable except as stated in Para 3(b) above.

e) 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 Section 274 (1)(g) of the Act;

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements subject to what is stated in para 3 above, and read together with Note no 21 (i) regarding pending approval of Central Government in respect of managerial remuneration, Note no 21 (j) regarding interest liability in respect of dues to micro, small and medium enterprises, Note no 21 (k) regarding appointment of Company Secretary and other notes appearing in the accompanying 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:

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

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

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

Annexure referred to in paragraph 4 of our report of even date to the Members of UNIMERS INDIA LIMITED on the financial statements for the year ended 31st March 2012.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

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

(b) All fixed assets have been physically verified by the management at the year end which is considered reasonable and no discrepancies were noticed on such verification.

(c) No substantial part of fixed assets has been disposed of during the year.

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

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

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification of inventories as compared to book records.

3. Read with what is stated in point 5 below, during the year, the Company has not taken/granted any loans, secured or unsecured, from/to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us having regard to the explanations that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is adequate internal control system commensurate with the size of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system.

5. We are informed by the management that as per the legal opinion obtained by them, the transactions with other companies in which Directors of the Company and who are also holding the positions as directors in the other companies (not holding shares exceeding 2% of paid up capital) are not required to be entered in the register maintained under sub-section (1) of Section 301 of the Act. In view of above, there are no entries recorded in the Register maintained under Section 301 of the Act.

6. The Company has not accepted any deposits within the meaning of Section 58A, 58AA or any other relevant provisions of the Act and Rules framed thereunder.

7. During the year, no internal audit has been carried out.

8. On the basis of records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Central Government under Section 209 (1) (d) of the Act, as applicable have been maintained. However, we are not required to and thus have not carried out any detailed examination of such accounts and records, with a view to ascertain whether these are accurate and complete.

9. (a) According to the information and explanations given to us and according to the books and records as produced to and examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with appropriate authorities and there were no undisputed amounts outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable except as mentioned below:

Name of the statute Nature of dues Amount Period to which the Due date

(Rs. in lacs)* amount relates

The Companies Act, 1956 Investor Education and 164.69 1991-2003 1998-2011

Protection Fund

* not including interest and other charges as may be leviable owing to non payment of the aforesaid amount.

^b) According to the records of the Company and information and explanations given to us by the management, the details of disputed Excise Duty, Custpm Duty, Service Tax, Income Tax, Wealth Tax and Cess which have not been deposited are as under:

10. 10. The Company's accumulated losses as at 31st March, 2012 are more than fifty percent of its net worth. The Company has incurred cash losses during the current financial year and in the immediately preceding financial year.

11. During the year, the Company has defaulted in repayment of dues to financial institutions and debentures holders as per details below:

Nature of Dues Amount (Rs. in lacs) Paid On

Financial Institutions including assigned loans (*) -

Principal 1801.15 Still Pending

Interest 1198.33

Debenture Holders -

Principal 928.85 Still Pending

Interest 549.88 (upto March, 2008)

(*) - Also refer para 3 (f) of the main report.

12. During the year, the Company has not granted any loans and advances 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 fund or a benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. As the Company is not dealing or trading in shares, securities, debentures and other investments the provisions of clause 4(xiv) of the Order is not applicable to the Company.

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

16. According to the information and explanations given to us, the term loans were applied for the purpose for which the loans were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statements of the Company, in our opinion, the funds raised on short-term basis by the Company have not been used for long-term investment.

18. During the year, the Company has not made any preferential allotment of shares to parties and companies covered and recorded in the Register maintained under section 301 of the Act.

19. The Company has not issued any debentures during the year or in the recent past.

20. The Company has not raised any money by public issues during the year or in the recent past.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

For LODHA & COMPANY Chartered Accountants A. M. Hariharan Partner

Place: Mumbai Membership No.: 38323

Date: 23-05-2012 Firm Registration No.:301051E


Mar 31, 2010

1. We have audited the attached Balance Sheet of Unimers India Limited as at 31st March, 2010 and the annexed Profit & Loss Account and also Cash Flow Statement of the Company 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.

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

3. We draw attention to:

(a) Note no. B1 and 04 of Schedule 15 of Significant Accounting Policies and Notes on Financial Statements. The Company has incurred loss in the current period as well as in the preceding period and the accumulated losses as at the period end have exceeded its entire net worth and reference has to be made to the Board for Industrial and Financial Reconstruction. However, as per expert opinion obtained the company is not required to make a reference to BIFR. Besides, plant operations were suspended since October, 2007 and thereafter formally closed and workers retrenched effective from 26th June, 2008. These financial statements have, however, been prepared by the management on a "going concern* basis, considering the various revival/restructuring options being actively pursued by the management. This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can now operate as a going concern. However, as explained, should the Company be unable to continue as a going concern, the extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the year end and loss for the year is presently not ascertainable.

(b) Note no. B9 (a) of Schedule 15 of the said Schedule regarding recognition of deferred tax asset of Rs. 266,117,387 on the basis that there would be sufficient future income. We are however unable to express an opinion as to when and to what extent such deferred tax asset would get reversed (i.e. get utilized). -

(c) Note no. B 8(b) of Schedule 15 of the financial statements regarding the accounts of certain Creditors of Rs. 34,236,933, Bank balances (Dr) of Rs. 167,192 and Loans and advances recoverable of Rs. 5,762,782 being subject to confirmations, reconciliations, and adjustments, if any, having consequential impact on the loss for the year, assets, liabilities and accumulated losses as at the close of the year, the amounts of adjustment if any, are presently not. ascertainable and therefore not provided for.

(d) Note no. B 15 of Schedule 15 regarding Company having not deposited long outstanding amount of Rs.7,520,885 to the Investor Education & Protection Fund and consequential liability of interest / other charges on the same.

(e) Further, we are unable to express an opinion as to when and what extent the carrying value of Raw Material of Rs 15,07,089 Stores and Spares of Rs 154,26,907 would be recover in view of the suspension of production in October, 2007 and deterioration of quality, if any.

(f) Note no. B 4(b) of Schedule 15 of the financial statements regarding non-provision of interest liability aggregating to Rs. 21,006,646 on assigned loans and debentures on the basis that the management is expecting waiver thereof.

4. We further report that, without considering matters mentioned in para 3(a) to (e) above, the effect of which could not be determined, had the observation made by us in para 3(f) above been considered the loss for the year, would have been Rs.131,197,143 (as against the reported figure of Rs 110,190,499), accumulated losses would have been Rs 381,413,328 (as against the reported figure of Rs 360,406,682) and secured loans would have been Rs 573,519,103(as against the reported figure of Rs.552,512,457).

5. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (hereinafter referred to as the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable,

Further to our comments in the Annexure referred to in paragraph (5) above, we report that:

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

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

c) The Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Act, to the extent applicable.

e) On the basis of written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as a Director in terms of Section 274 (1)(g) of the Act;

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements subject to what is stated in paragraphs 3 and 4 above, and read together with Note no. B 12(a) of Schedule 15 regarding pending approval of Central Government in respect of managerial remuneration, Note no. B 13 regarding interest liability in respect of dues to micro, small and medium enterprises, Note no. B 14 of Schedule 15 regarding appointment of Company Secretary and other notes in the said Schedule and those appearing elsewhere in the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Annexure referred to in paragraph 4 of our report of even date to the Members of UNIMERS INDIA LIMITED on the financial statements for the year ended 31st March 2010.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

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

(b) All fixed assets have been physically verified by the management at the year end which is considered reasonable no discrepancies were noticed on such verification.

(c) No substantial part of fixed assets has been disposed of during the year.

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

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

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification of inventories as compared to book records.

3. Read, with what is stated in point 5 below, during the year, the Company has not taken/granted any loans, secured or unsecured, from/to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us having regard to the explanations that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is adequate internal control system commensurate with the size of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system. ^

5. We are informed by the management that as per the legal opinion obtained by them, the transactions with other companies in which Directors of the Company and who are also holding the positions as directors in the other companies (not holding shares exceeding 2% of paid up capital) are not required to be entered in the register maintained under sub-section (1) of Section 301 of the Act. In view of above, there are no entries recorded in the Register maintained under Section 301 of the Act. ¦

6. The Company has not accepted any deposits within the meaning of Section 58A, 58AA or any other relevant provisions of the Act and Rules framed thereunder.

7. During the year Company has not carried out internal audit in view of closure of the operations.

8. We have broadly reviewed the books of account maintained by the Company in respect of products where pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause

(d) of sub - section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and according to the books and records as produced to

and examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Value Added tax, Wealth Tax, Service Tax, Custom Duty; Excise Duty, Cess and other material statutory dues applicable to it with appropriate authorities and there were no undisputed amounts outstanding as at 31" March, 2010 for a period of more than six months from the date they became payable except as mentioned below:

Name of the statute Nature of dues Amount Period to which the Due date (Rs. In lacs)* amount relates

The Companies Investor Education 75.21 1991 1998

Act, 1956 and Protection Fund

* it does not include interest and other charges as may be leviable owing to npn payment of the aforesaid amount.

(b) According to the records of the Company and information and explanations given to us by the management, the details of disputed Excise Duty, Custom Duty, Service Tax, Income Tax, Wealth Tax and Cess which have not been deposited are as under:

Nature of Dues Year Forum where dispute is Pending Amount

(Rs)

Sales tax 1998-1999 App. Tribunal 183,795

Sales Tax 1999-2000 Dy. Cpmm 1,349,213

Sales Tax 2000-2001 App. Tribunal 191,264

Sales Tax 2002-2003 Dy. Comm 1,363,375

Excise Duty Oct2006 CESTAT 6,226,499

Cess Liability Oct2007 NMMC 117,785

10. The Companys accumulated losses as at 31" March, 2010 are more than fifty percent of its net worth. The Company has incurred cash losses during the current financial year and in the immediately preceding financial year.

11. During the year, the Company has defaulted in repayment of dues to financial institutions and debentures holders as per details below:

Nature of Dues Amount (Rs. in lacs) Paid On

Financial Institutions -

Principal 949.03 Still Pending

Interest 817.03

Debenture Holders -

Principal 557.31 Still Pending

Interest 549.88 (upto March, 2008)

(*)- Also refer para 3 (c) of the main report.

12. During the year, the Company has not granted any loans and advances 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 fund benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. As the Company is hot dealing or trading in shares, securities, debentures and other investments the provisions of clause 4(xiv) of the Order is not applicable to the Company.

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

16. According to the information and explanations given to us, the term loans were applied for the purpose for which the loans were obtained.

17. The Company hasnt raised any short term funds during the year.

18. During the year, the Company has not made any preferential allotment of shares to parties and companies covered and recorded in the Register maintained under section 301 of the Act.

19. The Company has not issued any debentures during the year or in the recent past.

20. The, Company has not raised any money by public issues during the year or in the recent past.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

For LODHA & COMPANY

Chartered Accountants

R. P. BARADIYA

Partner

Membership No. 44101

Firm Registration No.:301051E

Place : Mumbai

Date : August 18, 2010

 
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