Auditor Report of Cosboard Industries Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

2. The management and Board of Directors of the Company are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ('the act') with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with rule 7 of Companies (Accounts) Rules, 2014. This responsibility 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; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 accounting policies used and the reasonableness of the accounting estimates made by the Company's management and Board of Directors, as well as evaluating the overall presentation of the financial statements

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

Opinion

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

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015; and

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

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

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section143 of the Act, we give in the Annexure a statement on the matters Specified in paragraphs 3 and 4 of the Order.

8. As requires section 143(3) of the Act, we further report that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 aforesaid financial statements comply with the applicable Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014

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

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

i) The Company does not have any pending litigations which would impact its financial position except as mentioned in CARO.

ii) The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise

iii) There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise

Annexure referred to in paragraph 7 Our Report of even date to the members of COSBOARD INDUSTRIES LIMITED on the accounts of the company for the year ended 31st March, 2015 On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

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

(b). We have been informed that all the assets have not been physically verified by the Management during the year but there is a regular programme of verification, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets.

ii. (a) Physical verification of inventory has been conducted at reasonable intervals by the management

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

(c) The company is maintaining proper record s of inventory and the discrepancies between the physical stocks and the book stocks noticed on physical verification are not material.

iii. (a) 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.

(b) The question of, whether reasonable steps have been taken by the company for recovery of the principal and interest does not arise.

iv. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business and company needs to establish some additional controls procedures with regard to the purchases of inventories, fixed assets and with regard to sales of goods. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, no major weakness has not been noticed or reported.

v. The Company has not accepted any deposits from the public covered under Section 73 to 76 of the Companies Act, 2013

vi. As informed to us, the Central Government has prescribed maintenance of cost records under sub- section (1) of Section 148 of the Act ( Cost Audit not yet completed by till date)

vii. (a) According to the information and explanations given to us and based on the records of the company examined by us, the company is regular in depositing the undisputed statutory dues, including Provident Fund, , Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues, as applicable, with the appropriate authorities in India ;

(b) According to the information and explanations given to us and based on the records of the company examined by us, there are no dues of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty and Excise Duty which have not been deposited on account of any disputes other than those mentioned below:

Name of statute Nature of dues Amount Forum where dispute is (in lacs) pending

Central Excise Excise Duty 38.93 High Court, Odisha, Cuttack

CESCO Electricity demand 190.37 High Court, Odisha, Cuttack

CESCO Electricity demand 22.70 High Court, Odisha, Cuttack

CESCO Electricity Duty 105.62 High Court, Odisha, Cuttack

(c) There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of reporting delay in transferring such sums does not arise

viii. The Company has accumulated losses at the end of the current financial year and are less than fifty per cent of its net worth and Company has not incurred cash losses in Current financial year and also in the immediately preceding financial year.

ix. According to the records of the company examined by us and as per the information and explanations given to us, the company has availed loans from banks and has not issued debentures

x. In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from a bank or financial institution during the year

xi. In our opinion, and according to the information and explanations given to us, the company has raised term loan from bank during the year.

xii. During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in India, we have neither come across any instance of fraud on or by the Company noticed or reported during the course of our audit nor have we been informed of any such instance by the Management

For B R R & Associates

Chartered Accountants

FRN 013012S

B. Ravinder Rao

Partner



Place: Hyderabad

Date: 30-05-2015

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Mar 31, 2014

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

Management''s responsibility for the Financial Statements.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act,2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give us 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; and

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 and as amended by the Companies (Auditor''s Report) (Amendment) Order 2004, 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:

in our opinion, the provision for retirement benefits has not been made by the Company in Conformity with AS-15 (Revised) and in the absence of detailed information, the impact of the same on the Statement of Profit and Loss and Balance Sheet cannot be ascertained (Refer to Note No.29)

3. Subject to 2 above in our opinion and to the best of our information and according to explanation given to us.

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 these books;

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

d) In our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act,1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

e) On the basis of written representations received from the Directors as on March 31, 2014 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 THE PARAGRAPH 3 OF THE AUDITOR''S REPORT OF EVEN DATE TO THE MEMBERS OF COSBOARD INDUSTRIES LIMITED, ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2014.

1. (a) The Company has maintained proper records to show full particulars, including quantitative details and situation, of its fixed assets. We have been informed that all the assets have not been physically verified by the Management during the year but there is a regular programme of verification, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets.

(b) Fixed assets not disposed off during the year and therefore do not affect the going concern assumption.

2. (a) The inventory of the Company has been physically verified by the Management during the year.

(b) In our opinion, the procedures of physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The company has maintained proper records of inventory and the discrepancies between the physical stocks and the book stocks noticed on physical verification are not material.

3. The Company during the year has not given loan to parties, covered in the register maintained under Sec. 301 of the Companies Act, 1956.

4. Even though there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, company needs establish some additional controls procedur4es with regard to the purchases of inventories, fixed assets and sales of goods.

5. (a). According to the information and explanations given to us, we are of the opinion that transactions that need to be entered into a register in pursuance of Section 301 of the Companies Act, 1956 have not been entered.

(b). In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted any deposits under the provisions of Section 58Aand 58AA of the Act and the rules framed hereunder.

7. In our opinion, the present internal audit system of the Company is not commensurate with its size and nature of its business and the same needs to be strengthened.

8. As per information given to us, the Central Government has prescribed maintenance of cost Record U/s 209(1) (d) of the Companies Act. 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained. However we have not made a detailed examination of such records.

9. (a) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it, were in arrears as at 31st March 2014, for a period of more than six months from the date they become payable, except the following:

Nature of dues Amount (Rs. In lakhs)

Employees provident Fund 33.82

(b) As per the information given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise duty and Cess on account of any dispute other than those mentioned below:

Name of statute Nature of dues Amount Forum where dispute (in lacs) is pending Central Excise Excise Duty 38.93 High Court, Odisha Act

Electricity 190.37 National Consumer CESCO demand Forum, New Delhi.

CESCO Electricity demand 22.70 High Court, Odisha, Cuttack

CESCO Electricity Duty 78.74 High Court, Odisha, Cuttack

10. The Company has accumulated losses at the end of the financial year and are more than 50% of its net worth. However, the Company has not incurred cash loss during the financial year.

11. The Company has not defaulted in repayment of dues to the Banks.

12. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. Considering the nature of activities carried out by the company during the year, the provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to it.

14. The Company has not dealt or traded in shares, securities, debentures or other investments during the year.

15. In our opinion and according to the information and explanations given to us, the company has not obtained any term loan during the year and applied for the purpose for which borrowed.

16. 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.

17. According to the information and explanation given to us, the Company has not made any preferential allotment of shares during the year.

18. According to the information and explanation given to us, the Company has not issued debentures during the year.

19. The Company has not raised any money by public issue during the year.

20. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the Company was noticed or reported during the year.

For B R R & ASSOCIATES Chartered Accountants FRN: 013012S

R. Ravinder Rao Partner M No.221298

Place: Hyderabad Date: 30th May, 2014

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Mar 31, 2012

1. We have audited the attached Balance Sheet of COSBOARD INDUSTRIES LIMITED, as at 31st March. 2012 and the Statement of Profit & Loss and the Cash Row statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 mis-statement. 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 (Auditors' Report) 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 explanation, which to the best of our knowledge and belief were necessary for the purpose of our audit.

ii. In our opinion, proper books of account as required by law have been kept by the company, so far as appears from our examination of those books.

iii. The Balance sheet and Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

iv. In our opinion, as per the information and according to the explanations given to us, no Director is disqualified from being appointed as Director U/s 274 (i) (g) of the Companies Act, 1956.

5. We report that: I

in our opinion, the provision for retirement benefits made by the Company is not in conformity with AS-15 (Revised). Further, in the absence of detailed information, the impact on the Profit & Loss account & Balance Sheet cannot be ascertained (Refer to Note No. 31).

6. Subject to 5 above in our opinion and to the best of our information and according to the explanation given to us.

a) The Balance Sheet, profit & Loss Statement and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable.

b) The said accounts together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the Accounting Principles generally accepted in India:

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 & Loss, of the Profit for the year ended on that date, and

iii. In the case of Cash Flow statement, of the Cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN THE PARAGRAPH 3 OF THE AUDITOR'S

REPORT OF EVEN DATE TO THE MEMBERS OF COSBOARD INDUSTRIES

LIMITED, ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2012.

1. (a) The Company has maintained proper records to show full particulars, including quantitative details and situation, of its fixed assets. We have been informed that all the assets have not been physically verified by the Management during the year but there is a regular programme of verification, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets.

(b) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2. (a) The inventory of the Company has been physically verified by the

Management during the year.

(b) In our opinion, the procedures of physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The company has maintained proper records of inventory and the discrepancies between the physical stocks and the book stocks noticed on physical verification are not material.

3. The Company during the year has given loan of Rs, 1,75,000 .00 io i*»r. /-.. ' Kumar Gilra, Director of the company, covered in the register maintained under Sec. 301 of the Companies Act, 1956, the terms of which are not prejudicial to the interest of the Company.

4. There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchases of inventories, fixed assets and sales of goods.

5. (a). According to the information and explanations given to us , we are of

the opinion that transactions that need to be entered into a register in pursuance of Section 301 of the Companies Act, 1956 have not been entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted any deposits under the provisions of Section 58A and 58AA of the Act and the rules framed there under.

7. In our opinion, the present internal audit system of the Company is not commensurate with its size and nature of its business and the same needs to be strengthened.

8. As per information given to us, the Central Government has prescribed maintenance of cost Record U/s 209(1) (d) of the Companies Act. 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained. However we have not made a detailed examination of such records. .

9. (a) According to the information and explanations given to us, no

undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it, were in arrears as at 31st March 2012, for a period of more than six months from the date they become payable, except the following:

Nature of dues Amount (Rs. In lakhs)

Basic Excise Duty 5.50

Service Tax 4.18

ployees State Insurance Corporation 5.17

"TEmployees provident Fund 33.35

(b) As per the information given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise duty and .Cess on account of any dispute other than those mentioned as follows:

10. The Company has accumulated losses at the end of the financial year amounting to Rs. 414.44 lakhs and are more than 50% of its net worth. It has earned a cash profit of Rs.69.80 lakhs during the year.

11. The Company has not defaulted in repayment of dues to the financial institutions/Bank, except loan from IPICOL of Rs.240.50 lakhs *

- It has been explained to us that the company is not in default as per BIFR sanction order as the Company is awaiting sanction letter from IPICOL for One Time Settlement.

12. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. Considering the nature of activities carried out by the company during the year, the-provisions of any special statute applicable to chit-fund/nidhi/ mutual benefit fund/societies are not applicable to it.

14. The Company has not dealt or traded in shares, securities, debentures or other investments during the year.

15. In our opinion and according to the information and explanations given to us, the company has not obtained any term loan during the year and hence the question of commenting on application thereof does not arise.

16. 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.

17. According to the information and explanation given to us, the Company has not made any preferential allotment of shares during the year.

18. According to the information and explanation given to us, the Company has not issued debentures during the year.

19. The Company has not raised any money by public issue during the year.

20. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the Company was noticed or reported during the year.

For L. N. MORE a CO., Chartered Accountants F.R.N. 307042E

(L.N. MORE)

PLACE: CUTTACK PARTNER

DATE : 30th August, 2012 MEMBERSHIP No. 011485

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Mar 31, 2010

1. We have audited the attached Balance Sheet of COSBOARD INDUSTRIES LIMITED, as at 31st March. 2010 and the Annexed Profit & Loss account of the company for the year ended on that date annexed thereto and the Cash Flow statement as on that date, which we have signed under reference to this report 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 have 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 mis-statement. An audit includes examining on a test basis, evidences 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 (Auditors Report) order 2CC3 issued by the Central Government of India in terms of sub-section (4A) of S.-, ;,! Ill of the Companies Act, 1956, we enclose in the Annexure, a statement tiie matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to .how... we state that:

i. We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the puipose of our audit.

ii. In our opinion, proper books of account as required by law have been kept by the company, .so far as appears from our examination of such books

iii. The Balance sheet and Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

iv. In our opinion, as per the information and according to the explanations given to us, no Director is disqualified from being appointed as Director U/s 274 (i) (g) of the Companies Act, 1956.

5. We report that:

a) in our opinion, the provision for retirement benefits made by the Company is not in conformity with AS-15 (Revised). Further, in the absence of detailed information, the impact on the Profit & Loss account & Balance Sheet can not be ascertained (Refer to Note No. 9 of Schedule Q).

b) in our opinion, other liabilities and Accumulated losses have been overstated to the extent of Rs. 14.93 Crores due to non writing back of the waiver amount by State Bank of India on One Time Settlement of their dues (Refer Note No. 13 of Schedule Q).

6. Subject to 5 above in our opinion and to the best of our information and according to the explanation given to us.

a) The Balance Sheet, profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable.

b) The said accounts read with schedules and Notes on Accounts thereon give information as required by the Companies Act, 1956, in the manner so required and give a true and fair view:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010 and

ii. In the case of Profit & Loss Account, of the Loss for the year ended on that date.

iii. In the case of Cash Flow statement, of the Cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN THE PARAGRAPH 3 OF THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF COSBOARD INDUSTRIES LIMITED, ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2D10.

1. (a) The Company has maintained proper records to show full particulars,

including quantitative details and situation, of its fixed assets. We have been" informed that all the assets have not been physically verified by the Management during the year but there is a regular programme of verification, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets.

(b) During the year none of the fixed assets have not been disposed off by the Company.

2. (a) The inventory of the Company has been physically verified by the Management during the year.

(b) In our opinion, the procedures of physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The company has maintained proper records of inventory and the discrepancies between the physical stocks and the book stocks noticed on physical verification are not material.

3. The Company has taken loan of Rs.5.00 lakhs from Sri. Anil Kumar Gilra, Director of the company covered in the register maintained under Sec. 301 of the Companies Act, 1956. the terms of which are not prejudicial to the interest of the company.

4. There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchases of inventories, fixed assets and sales of goods.

5. (a) According to the information and explanations given to us, we are of the opinion.that there are no transaction during the year, that need to be entered into the Register maintained under Section 301 of the Companies Act, 1956

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of the contracts or arrangements have not been 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 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted any deposits under the provisions of Section 58A and 58AA of the Act and the rules framed there under.

7. In our opinion, the present internal audit system of the Company is not commensurate with its size and nature of its business and the same needs to be strengthened..

8. As per information given to us, the Central Government has not prescribed maintenance of cost Record U/s 209(i) (d) of the Companies Act. 1956, for this Company.

9. (a) According to the information and explanations given to us, no undisputed

amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it, were in arrears as at 31st March 2010, for a period of more than six months from the date they become payable, except the following:

NATURE OF DUE MOUNT- (Rs. In lakhs)

Basic Excise Duty 7.83

Service Tax 4.33

Employees State Insurance Corporation 7.81

Employees provident Fund 36.10

(Including employees contribution)

(b) As per the information given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise duty and Cess on account of any dispute • other than those mentioned as follows:



Name of statute Nature of dues Amount Forum where dispute is (in lacs) pending

Central Excise Act Excise Duty 38.93 High Court, Orissa..

Central Excise Act Excise Duty 10.18 CESTAT, Kolkata

Central Excise Act Excise Duty 11.62 CESTAT, Kolkata

E.S.I. Outstanding dues 11.22 Regional Director, ESIC, Bhubaneswar

CESCO Electricity demand 190.37 National Consumer Forum, New Delhi.

CESCO Electricity demand 22.70 High Court, Orissa, Cuttack

10. The Company has accumulated losses at the end of the financial year amount to Rs.2436.52 lakhs and are more than 50% of its net worth. It has incurred a cash loss of Rs.64.79 lakhs in the financial year under review and Rs.209.52 lakhs in the financial year immediately preceding such financial year also.

11. The Company has defaulted in repayment of dues to the following financial institutions/Bank:



Name of financial Institution/Bank Amount of default principal Intt. Default since (Rs. In lakhs)

i.industrial Promotion & Investment 225.00 288.52 2003-2004 Corporation of Orissa Ltd.

ii.Orissa State Financial Corporation 31.83 33.92 2003-2004

iii. State Bank of India 157.16 37 86 March 2009 (OTS completed with State Bank of India- before signing of the Auditors Report).



12. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. Considering the nature of activities carried out by the company during the year, the provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to it.

14. The Company has not dealt or traded in shares, securities, debentures or other investments during the year.

15. As per information given to us, the Company has not given any guarantees for loan taken by others from banks or financial institutions.

16. No term loans have been raised by the Company during the year.

17. No short term funds have been raised by the company during the year.

18. According to the information and explanation given to us, the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued debentures during the year.

20. The Company has not raised any money by public issue during the year.

21. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the Company was noticed or reported during the year.

For L. N. MORE & CO., CHARTERED ACCOUNTANTS

(L.N. MORE) PARTNER MEMBERSHIP No. 011485

PLACE : CUTTACK DATE : 31s,July,2010