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Auditor Report of Vapi Enterprise Ltd.

Mar 31, 2014

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

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 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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.

Basis for Qualified Opinion

i. In our opinion, the following accounting standards are not complied by the company:

1. Accounting Standard (AS-15) on "Employee Benefits"; regarding non provisioning of employee benefits

2. Accounting Standard (AS-24) on "Discontinuing Operations"

3. Accounting Standard (AS-28) on "Impairment of Assets".

4. Accounting Standard (AS-22) on "Deferred tax".

The effect of the above on assets and liabilities, as well as loss and reserves is not ascertainable.

ii. We are unable to form an opinion about the realisability of:

a. Balance of Rs.31,09,647/- of long term trade payables is subject to confirmation and adjustment, if any, required upon such confirmations are not determinable.

b. Balance of Rs.54,75,000/- of Long term borrowings from others is subject to confirmation and adjustment, if any, required upon such confirmations are not determinable.

The effects of the matters referred to para above on assets and liabilities, as well as profit and reserves could not be ascertainable.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, (subject to the possible 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 the accounting principles generally accepted in India:

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

2) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

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

Emphasis of Matter:

We draw attention that the Company''s accumulated losses as on March 31, 2014 were Rs.15,90,82,708/- as against paid up capital and reserves of Rs.9,02,08,547/-. Hence, Company''s net worth is negative. However, the accounts are prepared on the basis that Company is a going concern. In our opinion, the ability of the Company to continue as a going concern is dependent upon the surplus that may be generated out of present activity as well as promoters bringing in funds to finance losses. Our opinion on this matter is not qualified.

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 under provisions of section 227(3) of the Companies Act, 1956, we report that:

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

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

c) The Balance Sheet, Statement of Profit and Loss and 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 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 subject to those mentioned under "basis for qualified opinion".

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 Section 274(1)(g) of the Act.

ANNEXURE TO AUDITORS'' REPORT

[Referred to in paragraph 1 of our report on Other Legal and Regulatory Requirements]

(i) In respect of fixed assets:

a. The Company has not maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b. The fixed assets have not been physically verified by the management. In the absence of physical verification, we are not in a position to comment on the discrepancies, if any, between physical and book balances and the impact thereof.

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

(ii) In respect of Inventories:

a. Since the company is not having inventory, the para 4(ii)(a) of the order is not applicable.

b. Since the company is not having inventory, the para 4(ii)(b) of the order is not applicable.

c. Since the company is not having inventory, the para 4(ii)(c) of the order is not applicable.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act,1956

a. The company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and therefore, reporting requirement:

1. Under clause 4(iii)(a) of the order is not applicable to the company.

2. Under clause 4(iii)(b) of the order is not applicable to the company.

3. Under clause 4(iii)(c) of the order is not applicable to the company.

4. Under clause 4(iii)(d) of the order is not applicable to the company.

b. The company has taken loan from two companies and two individuals listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 8,33,52,967/- and the year- end balance of loans taken from such parties was Rs. 8,17,24,555/- c. In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company. d. In respect of loans taken by the company the principal amount is repayable on demand. As per information and explanation given to us, no demand of the interest/principal amount has been made during the financial year.

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

(v) In respect of the contracts or arrangements referred to in section 301 of the Companies Act, 1956:

a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000/- in respect of any party during the year have been made at prices which are reasonable having regard to market prices prevailing at the relevant time or compared to prices at which purchases were made from other parties.

(vi) According to information and explanations given to us, the company has not accepted any deposits from public during the concerned financial year. However, in respect of unsecured loans from parties obtained in earlier years and outstanding as on March 31, 2014, the Company has not complied with the provisions of sections 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 (hereinafter referred to as Rules), as mentioned hereunder:

a. The Company has not maintained liquid assets as required by Rule 3A of the Rules.

b. The Company has not filed statement in lieu of advertisements with the Registrar of Companies under Rule 4A (1) of the Rules, and

c. The Company has not filed returns of deposits with the Registrar of Companies, under Rule 10 of the Rules.

Further, we are informed that no Order has been passed by the Company Law Board (''the CLB'') or National Company Law Tribunal (''the NCLT'') or Reserve Bank of India (''the RBI'') or any Court or any other Tribunal.

(vii) The Company does not have formal internal audit system.

(viii) As per the information and explanation given to us, the company is not required to maintain cost records pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956.

(ix) In respect of statutory dues:

a. In our opinion and according to the information and explanation given to us, the company has been generally regular in depositing undisputed statutory dues including Provident Fund, Sales Tax, Income Tax, Wealth Tax, Investor Education and Protection Fund, Custom duty, Excise duty, and other statutory dues as may be applicable to the company except in case of Professional tax . Income Tax deducted at Source and Service Tax dues there were paid late. The companies contribution towards profession tax is not provided for and the staff profession tax of Rs.80,715/- is outstanding for a period more than six months from the date they become payable. b. According to the information and explanation given to us, there are no dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

(x) In our opinion, the company has been registered for a period more than five years, the accumulated losses of the company are more than fifty percent of its net worth and it has not incurred cash loss in the current year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not raised loans from financial institution or bank neither issued debentures therefore the reporting requirement of clause 4(xi) of the Order is not applicable.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the reporting requirement under clause 4(xii) the Order is not applicable to the company.

(xiii) In our opinion, the company is not a chit fund or a nidhi mutual benefit fund / society. Therefore the reporting requirement under clause 4(xiii) the Order is 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 reporting requirement under clause 4(xiv) the Order is not applicable to the company.

(xv) We are informed that, the company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, the reporting requirement under clause 4(xiv) the Order is not applicable to the company.

(xvi) According to the information and explanations given to us, the company has not availed any term loans during the year. Accordingly, the reporting requirement under clause 4(xvi) of the order is not applicable to the company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

(xviii)According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

For Chirag N Shah & Associates Chartered Accountants FRN.118215W

Sd/- Hetal C. Shah Partner Membership No: 111610 Place: Mumbai Date : 31st May, 2014, 2014


Mar 31, 2012

1. We have audited the attached Balance Sheet of VAPI PAPER MILLS LIMITED as at 31st March 2012, and also Statement of Profit and Loss for the year ended on that date annexed thereto and the cash flow statements for the year ended on that date. 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 auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. The Company's accumulated losses as on March 31, 2012 were Rs 146,240 thousands as against paid up capital and reserves of Rs 90,209 thousands. Hence Company's net worth is negative. However the accounts are prepared on the basis that Company is a going concern. In our opinion the ability of the Company to continue as a going concern is dependent upon the surplus that may be generated out of present activity as well as promoters bringing in funds to finance losses as mentioned in note no. 23.

5. Subject to the foregoing and further to our comments in the Annexure referred to above, we report that:

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

(ii) In our opinion, proper books of accounts as required by law, have been kept by the Company so far as appears from our examination of those books. The Company has no branches.

(iii)The Balance Sheet, Profit & Loss Account and Cash flow statement dealt with by this report are in agreement with books of account

(iv) in our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comp with the accounting standards referred to in sub-section (3C) of section 212 of the Companies Act 1956 except: section 211I

a) Accounting Standard (AS-15) on "Employee Benefits"; regarding non provisioning of employee benefits (Refer Note 26).

b) Accounting Standard (AS-17) on "Accounting for Segment Reporting."

C) Accounting Standard (AS-24) on "Discounting Operations" (Refer Note 35).

d) Accounting Standard (AS-28J on "Impairment of Assets".

The effect of the above on assets and liabilities, as well as loss and reserves is not ascertainable. well loss and

(v) On the basis of written representations received from the directors as on 31st March 2012 and taken on record by the Board of Directors, we report that none of Directors is disqualified as on 31st March 2012 from being appointed as a director in terms of Clause (g) of sub Section (1) of Section 274 of the Companies Act 1956.

(vi) a) We are unable to form an opinion about the realisability or otherwise of long term loans and advances of Rs. 9,251 thousands as no payment is received since long time and the confirmation of balances have not been obtained from the parties.

b) We are unable to form an opinion about the realisability or otherwise of trade receivables of Rs. 6,053 thousands as no payment is received since long time and the confirmation of balances have not been obtained from the parties.

c) We are unable to form an opinion about the realisability or otherwise long term trade advances to other suppliers of Rs. 4,750 thousands as no services are rendered or payment is received since long time and the confirmation of balances have not been obtained from the parties.

d) Balance of Rs. 1,000 thousands of Share Application Money is sublet confirmation and adjustment, if any required upon such confirmations are not determinable.

e) Balance of Rs. 4,964 thousands of long term trade payables is subject confirmation and adjustment, if any required upon such confirmations are not determinable.

f) Balance of Rs. 1190 thousands of Trade Deposits is subject confirmation and adjustment if any required upon such confirmations are not determinable.

(vii) The effect of the matters referred to para (vi) above on assets and liabilities, as well as loss and reserves could not be quantified.

(viii) Subject to our remarks in Para 4, 5 (iv), (vi) and (vii) above, in our opinion and to the best of our information and according to the explanations given to us, the Said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

b) in the case of statement of Profit & Loss of the Profit for the year ended on that date; and

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

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

(i) (a) The Company has not maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The fixed assets have not been physically verified by the management. In the absence of physical verification, we are not in a position to comment on the discrepancies, if any, between physical and book balances and the impact thereof.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets during the year.

(ii) (a) The inventory has been physically verified at regular intervals during the year by the management, In our opinion this frequency of verification is reasonable.

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

(c) The company is maintaining proper records of inventory. As informed to us, the discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) The company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and therefore, reporting requirement under clause 4(iii} (a) to (d) of the Order are not applicable to the company.

(b) The company had taken loan from two companies and four individuals listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 84,254 thousands and the year-end balance of loans taken from such parties was Rs. 82,932 thousands.

(c) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(d) In respect of loans taken by the company the principal amount is repayable on demand.

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

(v) (a) According to the information and explanations given to us we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs 5,00,000/- in respect of any party during the year have been made at prices which are reasonable having regard to market prices prevailing at the relevant time or compared to prices at which purchases were made from other parties.

(vi) During the year the Company has not accepted deposits from public However in respect of unsecured loans from parties obtained in earlier years and outstanding as on March 31, 2012, the Company has not complied with the provisions of sections 58 A of the Companies Act 1956 and the Companies (Acceptance of Deposit) Rules, 1975 (hereinafter referred to as Rules), as mentioned hereunder:

a) The Company has not maintained liquid assets as required by Rule 3A of the Rules.

b) The Company has not filed statement in lieu of advertisements with the Registrar of Companies under Rule 4A (1) of the Rules, and

c) The Company has not filed returns of deposits with the Registrar of Companies, under Rule 10 of the Rules.

Further, we are informed that no Order has been passed by the Company Law Board ('the CLB') or National Company Law Tribunal ('the NCLT') or Reserve Bank of India ('the RBI') or any Court or any other Tribunal.

(vii) The Company does not have formal internal audit system.

(viii) The company has not maintained cost records pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209 (1) (d) of the Companies Act,

(ix) (a) In our opinion and according to the information and explanation given to us, the company has been generally regular in undisputed statutory dues including Provident Fund, Sales Tax, Income Tax Wealth Tax, Investor Education and Protection Fund, Custom duty Excise duty, Professional tax and other statutory dues as may be applicable to the company except in case of Income Tax deducted at Source and Service Tax dues where there was delay.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax and custom duty were in arrears as at March 31, 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us there are no dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute. y

(x) In our opinion, the accumulated losses of the company are m ore than fifty percent of its net worth and it has incurred cash loss both in the current year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not raised loans from financial institution or bank neither issued debentures therefore the reporting requirement of clause 4(xi) of the Order is not applicable.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities Therefore, the reporting requirement under clause 4 (xii) the Order is not applicable to the company.

(xiii) In our opinion, the company is not a chit fund or a nidhi mutual benefit fund / society. Therefore the reporting requirement under clause 4(xiii) the Order is 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 reporting requirement under clause 4(xiv) the Order is not applicable to the company.

(xv) We are informed that, the company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, the reporting requirement under clause 4(xiv) the Order is not applicable to the company.

(xvi) According to the information and explanations given to us, the company has not availed any term loans during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.



For Manubhai & Co. Chartered Accountants Firm Reg. No. : 106041W

(K. M. Patel) Partner Membership No. 45740

Place: Ahmedabad Date :29th June, 2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of VAPI PAPER MILLS LIMITED, as at 31st March 2010, and also Profit and Loss Account for the year ended on that date annexed thereto and the cash flow statements for the year ended on that date. 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 auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Audi tor s K.S port) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

(i) We have obtained all the information and explanations which to the best of our knowledge and behef were necessary for the purposes of our audit;

(ii) 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. The Company has no branches.

(iii) The Balance Sheet, Profit & Loss Account and Cash flow statement dealt with by this report are in agreement with 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 Companies Act, 1956 except Accounting Standard (AS-15) on "Employee Benefits"; Accounting Standard (AS-17) on "Accounting for Segment Reporting"; AS -11 on "Effects of changes in foreign exchange rates — revised 2003" and Accounting Standard (AS-24) on "Discontinuing Operations" notified under company Accounting SfrmdaM Rules, 2006 the effect of the same on loss, assets and liabili ascertainable

(v) On the basis of written representations received from the directors, as on 31 st March 2010 and taken on record by the Board of Directors, we report that none of directors is disqualified as on 31st March 2010 from being appointed as a director in terms of Clause (g) of sub Section (1) of Section 274 of the Companies Act, 1956.

(vi) We are unable to form an opinion about readability or otherwise of loans and advances ofRs. 9,250 thousand as no payment was received since long time and the confirmation of balances have not been obtained from the said party. The effect of the same on loss, reserves and assets could not be quantified.

(vii) Subject to our comments in Para (vi) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

b) in the case of Profit & Loss Account of the Loss for the year ended on that date; and

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



ANNEXURE TO AUDITORSREPORT [Referred to in paragraph (3) of our report of even date]

(i) (a) The Company has not maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) We are informed by the management that all fixed assets were physically verified during the year. As informed to us, no material discrepancies have been noticed on such verification as compared to records maintained by the company.

(c) During the year, the Company has disposed off substantial part of its assets. However this has not affected going concern.

(ii) (a) The inventory has been physically verified at regular intervals during the year by the management. In our opinion this frequency of verification is reasonable.

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

(c) The company is maintaining proper records of inventory. As informed to us, the discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) The company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and therefore, the provisions of clause 4(iii) (a) to (c) of the Companies (Auditors Report) Order,2003 are not applicable to the company.

(b) The company had taken loan from two companies and four individuals listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 284.47 lacs and the year-end balance of loans taken from such parties was Rs. 870.56 lacs.

(c) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(d) In respect of loans taken by the company the principal amount is repayable on demand.

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

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, there were no transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year.

(vi) During the year the Company has not accepted deposits from public. However in respect of unsecured loans from parties obtained in earlier years and outstanding as on March 31, 2010, the Company has not complied with the provisions of sections 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 (hereinafter referred to as Rules), as mentioned hereunder:

a) The Company has not maintained liquid assets as required by Rule 3A of the Rules.

b) The Company has not filed statement in lieu of advertisements with the Registrar of Companies under Rule 4 A (1) of the Rules, and

c) The Company has not filed returns of deposits with the Registrar of Companies, under Rule 10 of the Rules.

Further, we are informed that no Order has been passed by the Company Law Board (the CLB) or National Company Law Tribunal (the NCLT) or Reserve Bank of India (the RBI) or any Court or any other Tribunal.

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

(viii) The company is required to maintain cost records under section 209(1 )(d) of the Companies Act, 1956 in respect of paper manufactured by it. As informed to us, the necessary records as required by the rules are under preparation.

(ix) (a) The company is not regular in depositing statutory dues with appropriate authorities viz. Sales Tax, Excise Duty, Service Tax, Family Pension Fund, Provident Fund and Employees state insurance. However, no undisputed amounts payable in respect of such dues were in arrears, as at 31st March, 2010 for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us, there are no dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

(x) In our opinion, the accumulated losses of the company are not more than fifty percent of its net worth. The company has incurred cash losses during the financial year; however the Company has incurred cash losses in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a bank.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xiii) In our opinion, the company is not a chit fund or a nidhy mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 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 Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xv) We are informed that, the company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that short term funds of Rs. 74,286 thousands have been used for long term purpose.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares --to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

For Manubhai & Co.

Chartered Accountants

Firm Reg. No.: 106041W

(K. M. Patel)

Partner

Membership No. 45740

Place : Ahmedabad

Dated : September 2, 2010

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