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Auditor Report of Dwarikesh Sugar Industries Ltd.

Mar 31, 2017

Report on the Financial Statements

We have audited the accompanying financial statements of Dwarikesh Sugar Industries Limited (“the Company”), which comprise the balance sheet as at 31st March, 2017, the statement of profit and loss, the cash flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

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 and the Companies (Accounting Standards) Amendment Rules, 2016 as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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.

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 the 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. 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 audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2017, and its profit and its 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, 2016 (“the Order”) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 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) 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 and the Companies (Accounting Standards) Amendment Rules, 2016 as amended;

e) On the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in terms of section 164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B” to this report.

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 28 B to the financial statements;

ii. Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses; and

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

iv. The Company has provided requisite disclosures in Note no. 12 of 28 B to these financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.

Annexure A to the Independent Auditor-s Report to the members of Dwarikesh Sugar Industries Limited dated May 18, 2017.

Report on the matters specified in paragraph 3 of the Companies (Auditor-s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of section 143(11) of the Companies Act, 2013 (“the Act”) as referred to in paragraph 1 of -Report on Other Legal and Regulatory Requirements- section

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

(b) The fixed assets are physically verified by the management according to a phased program designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, the fixed assets has been physically verified by the management during the year and no material discrepancies were noticed on such verification, discrepancies has duly been adjusted in the financials.

(c) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the title deed of immovable properties are held in the name of the company.

(ii) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnership or other parties covered in the registered maintained under section 189 of the Act. Accordingly, clauses 3 (iii) (a) to (c) of the Order are not applicable.

(iv) As per the information and explanation given to us and on the basis of our examination of the records, the company has complied with provision of section 185 and 186 of the Act , with respect to the loans and investment made .

(v) In our opinion and according to explanation given to us, As the company has not accepted deposits as per directives issued by the Reserve Bank of India and provisions of sections 73 to 76 or any other provisions of the companies Act and rules framed there under.

(vi) We have broadly reviewed the books of account relating to materials, labor and other items of cost maintained by the Company as specified by the Central Government of India under section 148(1) 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 and complete.

(vii) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund, employees- state insurance, income tax, sales tax, service tax, customs duty, excise duty, Value added tax , cess and other material statutory dues as applicable with the appropriate authorities. Further, there were no undisputed amounts outstanding at the year-end for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the books and records examined by us, there are no dues of Custom Duty and Cess which have not been deposited on account of any dispute, except the following in respect of disputed Income Tax, Excise Duty, Service Tax and Sales Tax along with the forum where dispute is pending:

Name of the statue

Nature of dues

Amount (in Rs.)

Period to which the amount pertains

Forum where dispute is pending

Central Excise Act, 1944

Excise duty and penalty

1,88,31,735

Jan-05 to Dec-05, Apr-06 to Dec-06, Apr-06 to Dec-07, Jan-07 to Feb-07, Mar-07, Jun-07 to Nov-07, Jun-07 to Aug-08, Nov-07 to Aug-08, Jan-08 to Dec-08, Jan-07 to Oct-07, Oct-10 to Mar-11, Apr-10 to Sep-10, June-07 to Nov -07

CESTAT, Mumbai

Central Excise Act, 1944

Excise duty

1,21,211

Jun-05 to Mar-06

CESTAT, Delhi

Central Excise Act, 1944

Excise duty

2,23,982

Apr-14 to Mar-15

Commissioner (Appeals), Meerut

Finance Act, 1994

Service Tax duty and penalty

1,61,49,123

Jun-07 to Jan-09

CESTAT, Delhi

Finance Act, 1994

Service tax

28,66,157

Jan-14 to Aug-14, Apr-09 to Dec-13

CESTAT, Allahabad

Finance Act, 1994

Service Tax

8,21,071

Sep-12 to Dec-13, Sep-14 to Jun-15

Commissioner (Appeals), Meerut

Uttar Pradesh Tax On Entry of Goods into Local Areas Act, 2007

Entry tax on Iron Steel Purchases

85,000

2013-14

Additional Commissioner (Appeal), Bijnor (U.P)

(viii) According to the information and explanations given to us and as per the books and records examined by us, the Company has not defaulted in repayments of its dues to Governments, banks and financial institution. The Company does not have any debenture.

(ix) According to the information and explanations given by the management, the Company has not raised any monies by way of initial public offer or further public offer during the financial year, and the terms loans raised by the Company have been applied for the purpose for which they are were obtained. Where such end use has been stipulated by the lender(s).

(x) In our opinion and on the basis of information and explanations given to us, no cases of fraud by the Company or fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us, the managerial remuneration has been paid and provided in accordance with the requisite approvals as mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) As the Company is not a Nidhi Company, hence clause (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Act, as applicable and the details have been disclosed in these financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanation given to us and as per our verification of records of the company, the company has issued the shares to qualified institutional buyers on private placement basis on September 28, 2016 and the requirement of section 42 of the Act have been complied with. The company has raised the funds for the purpose of repayment/ prepayment in full/ part of existing loans and for general corporate purpose and utilize for the same.

(xv) In our opinion and on the basis of information and explanations given to us, the Company has not entered into non-cash transactions with directors and persons connected with him. Hence, the provisions of section 192 of Act are not applicable.

(xvi) In our opinion and on the basis of information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For S. S. Kothari Mehta & Co

Chartered Accountants

Firm-s Registration No. 000756N

Kamal Kishore

Place: New Delhi Partner

Date: May 18, 2017 Membership No: 078017


Mar 31, 2015

We have audited the accompanying Financial Statements of Dwarikesh Sugar Industries Limited ("the Company") which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the eighteen months then ended, and a summary of Significant Accounting Policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") which, as per a clarification issued by the Ministry of Corporate Affairs, continue to apply under section 133 of the Companies Act , 2013 (which has superseded section 211(3C) of the Companies Act 1956 w.e.f 12th September 2013). This responsibility includes the design, implementation and maintenance of internal controls 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.

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 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 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 management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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 Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

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

Emphasis of Matter

We draw attention to note no. 12 of the financial statements wherein the company has recognised deferred tax assets on unabsorbed depreciation and business losses. Continuing losses in the last few years indicate the condition of an uncertainty as regards realisation of such deferred tax assets. In view of the reasons explained in the said note, such deferred tax assets continue to be treated as realisable.

Our opinion is not qualified in respect of this matter.

Other Matters

The Ministry of Corporate Affairs had on 1st April, 2014, vide its General Circular No. 07/2014, Dissemination of Information with Regards to the Provision of the Companies Act, 2013 as Notified Till date vis a vis Corresponding Provisions of the Companies Act 1956, identified such sections of the Companies Act, 1956 that would cease /continue to have effect from 1st April 2014.

Accordingly, in terms of the aforesaid Circular, our reporting in respect of section 227(3)(f) of the Companies Act, 1956, and clauses (iii), (v)(a) and (b), (vi), (viii), (xiv),(xviii) of the Companies (Auditor's Report) Order, 2003, (dealing with section 49, 58A, 58AA, 209(1)(d) and 301 of the Companies Act , 1956) is only for the period beginning from October 1, 2013, till March 31, 2014 since as per the aforementioned MCA Circular these sections have ceased to have effect from 1st April, 2014."

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order, 2003 (as amended) ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (Superseded by section 143(11) of the Companies Act, 2013), we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

1. As required by section 227(3) of the Act (Superseded by section 143(3) of the Companies Act, 2013), we report that:

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

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

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

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act, which, as per a clarification issued by the Ministry of Corporate Affairs, continue to apply under section 133 of the Companies Act 2013 (which has superseded section 211(3C) of the Companies Act 1956 w.e.f 12th September 2013); and

(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 clause (g) of sub-section (1) of section 274 of the Act (Superseded by section 164(2) of the Companies Act, 2013).

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT OF DWARIKESH SUGAR INDUSTRIES LIMITED (Referred to in paragraph 1 under the heading "Report on the Legal and Regulatory requirements "of our report of even date.)

i) a) The Company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets.

b) Physical verification of fixed assets is being conducted by the management based on a programme designed to cover all assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the company and nature of its business. Discrepancies noticed on such verification as compared to book records were not material and have been properly adjusted in the books of account.

c) During the eighteen months period, the Company has not disposed off substantial part of the fixed assets.

ii) a) The inventories have been physically verified by the management during the eighteen months period at all its locations.

In our opinion, the frequency of such 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. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of account.

iii) a) The Company has taken unsecured loans from a company and Managing Director covered in the register maintained under section 301 of the Act(Superseded by Section 189 of the Companies Act, 2013), maximum balance outstanding against these loans is Rs.8,74,736 and eighteen months period end balance is Rs. 8,52,044.

b) In our opinion, the rate of interest and other terms & conditions on which these loans have been taken are not, prima facie, prejudicial to the interest of the Company.

c) These loans are repayable on demand; therefore, there are no overdue amounts at the period end.

d) The company has not granted any loan, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Act (Superseded by Section 189 of the Companies Act, 2013).

e) Since there are no such loans, comments regarding terms & conditions, repayment of the principal amount & interest due thereon and overdue amounts are not required.

iv) According to the information and explanations given to us, there seems to be adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory & fixed assets and with regard to sale of goods & services. Further, on the basis of our examination of the books & records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any instances of major weaknesses in the aforesaid internal control systems.

v) a) To the best of our knowledge and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Act (Superseded by Section 189 of the Companies Act, 2013), have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act (Superseded by Section 189 of the Companies Act, 2013), and exceeding the value of rupees five lacs in respect of each party during the eighteen months period have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

vi) The company has not accepted any deposits from the public within the meaning of provisions of Section 58A, 58AA of the Act (Superseded by Section 73 to 76 of the Companies Act, 2013) & any other relevant provisions of the Act, including the Companies (Acceptance of Deposits) Rules, 1975.

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

viii) We have broadly reviewed the cost accounting records maintained by the Company as prescribed by the Government of India under Section 209 (1) (d) of the Act (Superseded by Section 148(1) of the Companies Act, 2013). We are of the opinion that, prima facie, the prescribed records have been made and maintained by the company. However, we are not required to make a detailed examination of such records.

ix) a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor Education and Protection fund, Employees state insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it. There are no arrears of such dues outstanding as at the period end for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and as per the books & records examined by us, there are no dues of Income tax, Wealth tax, Trade tax, Service tax, Custom duty and Cess which have not been deposited on account of any dispute except the following in respect of Excise duty along with the forum where the dispute is pending:

Name of the statue Nature of dues Amount (in Rs.)

Central Excise Act, 1944 Excise duty and penalty 6,10,905

Central Excise Act, 1944 Excise duty and penalty 1,52,136

Central Excise Act, 1944 Excise duty and penalty 86,749

Central Excise Act, 1944 Excise duty and penalty 73,500

Central Excise Act, 1944 Excise duty and penalty 1,23,473

Central Excise Act, 1944 Excise duty and penalty 13,47,590

Central Excise Act, 1944 Excise duty 1,21,211

Finance Act, 1994 Service Tax and Penalty 26,57,124

Central Excise Act, 1944 Excise duty and penalty 9,29,966

Central Excise Act, 1944 Excise duty and penalty 17,14,285

Central Excise Act, 1944 Excise duty and penalty 4,06,466

Central Excise Act, 1944 Excise duty and penalty 1,52,728

Central Excise Act, 1944 Excise duty 1,28,37,340

Central Excise Act, 1944 Excise duty and penalty 12,15,845

Finance Act, 1994 Service Tax duty and penalty 1,61,49,123

Central Excise Act, 1944 Excise duty and penalty 2,02,460

Central Excise Act, 1944 Excise duty and penalty 6,455

Central Excise Act, 1944 Excise duty and penalty 89,957

Finance Act, 1994 Service Tax 1,09,430



Name of the statue Period to which the Forum where amount pertains dispute is pending

Central Excise Act, 1944 Oct-95 CESTAT, Delhi

Central Excise Act, 1944 Dec-95 CESTAT, Delhi

Central Excise Act, 1944 Jan-96 to Apr-96 CESTAT, Delhi

Central Excise Act, 1944 Jul-97 CESTAT, Delhi

Central Excise Act, 1944 Aug-97 to Oct-97 CESTAT, Delhi

Central Excise Act, 1944 Jan-05 to Dec-05 CESTAT, Mumbai

Central Excise Act, 1944 Jun-05 to Mar-06 CESTAT, Delhi

Finance Act, 1994 Jul-05 to Jan-08 CESTAT, Mumbai

Central Excise Act, 1944 Apr-06 to Dec-06 CESTAT, Mumbai

Central Excise Act, 1944 Apr-06 to Dec-07 CESTAT, Mumbai

Central Excise Act, 1944 Jan-07 to Feb-07 CESTAT, Mumbai

Central Excise Act, 1944 Mar-07 CESTAT, Mumbai

Central Excise Act, 1944 Jun-07 to Nov-07 CESTAT, Mumbai

Central Excise Act, 1944 Jun-07 to Aug-08 CESTAT, Mumbai

Finance Act, 1994 Jun-07 to Jan-09 CESTAT, Delhi

Central Excise Act, 1944 Jul-07 to Oct-07 CESTAT, Mumbai

Central Excise Act, 1944 Nov-07 to Aug-08 CESTAT, Mumbai

Central Excise Act, 1944 Jan-08 to Dec-08 CESTAT, Mumbai

Central Excise Act, 1944 2010-11 to 2011-12 Commissioner (Appeals), Meerut

x) The accumulated losses as at the end of the financial eighteen months period are less than fifty percent of the net worth. Further, the Company has not incurred cash losses in the current eighteen months period and in the immediately preceding financial year.

xi) According to the information and explanations given to us and as per the books and records examined by us, the company has not defaulted in repayment of dues to any financial institution or banks.

xii) According to the information & 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.

xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/ society. Therefore the relevant reporting requirements of the Order are not applicable.

xiv) According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments and hence the related reporting requirements of the Order are not applicable.

xv) The company has not given any guarantees for loans taken by others from banks or financial institutions.

xvi) Based on the information and explanations given to us by the management, term loans were generally applied for the purpose for which the loans were obtained where such end use has been stipulated by the lenders.

xvii) According to the information and explanations given to us and on the basis of an overall examination of the balance sheet of the Company, the funds raised by the Company on short-term basis have been applied for long-term investment to the extent of Rs. 25,50,72,543/-.

xviii) During the period, the company has not made any preferential allotment of shares to companies and parties covered in the register maintained under section 301 of the Act (Superseded by Section 189 of the Companies Act, 2013).

xix) During the financial period, the Company has not issued any debentures nor has any outstanding debentures.

xx) The company has not raised any monies by way of public issues during the eighteen months period.

xxi) During the course of our examination of the books & records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the eighteen months period, nor have we been informed of such case by the management.

For S. S. KOTHARI MEHTA & CO. Chartered Accountants Firm Regn. No. 000756N

ARUN K. TULSIAN

Place: New Delhi Partner

Date : May 29, 2015 Membership No.89907


Sep 30, 2013

Report on the financial Statements

We have audited the accompanying Financial Statements of Dwarikesh Sugar Industries Limited ("the Company") which comprise the Balance Sheet as at September 30, 2013, the Statement of Proft and Loss and the Cash Flow Statement for the year then ended, and a summary of Signifcant Accounting Policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") which, as per a clarifcation issued by the Ministry of Corporate Affairs, continue to apply under section 133 of the Companies Act , 2013 (which has superseded section 211(3C) of the Companies Act 1956 w.e.f 12 September 2013). This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the Company''s preparation and fair presentation of the fnancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fnancial statements. We believe that the audit evidence we have obtained is suffcient 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 fnancial 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 Balance Sheet, of the state of affairs of the Company as at September 30, 2013;

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

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

report on other legal and regulatory requirements

1. As required by the Companies (Auditors'' Report) Order, 2003 (as amended) ("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 specifed in paragraphs 4 and 5 of the Order.

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

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

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

(c) The Balance Sheet, Statement of Proft 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 Proft and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act, which, as per a clarifcation issued by the Ministry of Corporate Affairs, continue to apply under section 133 of the Companies Act 2013 (which has superseded section 211(3C) of the Companies Act 1956 w.e.f 12 September 2013); and

(e) On the basis of written representations received from the directors as on September 30, 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on September 30, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ix) a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor Education and Protection fund, Employees state insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it. There are no arrears of such dues outstanding as at the year end for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and as per the books & records examined by us, there are no dues of Income tax, Wealth tax, Trade tax, Service tax, Custom duty and Cess which have not been deposited on account of any dispute except the following in respect of Excise duty along with the forum where the dispute is pending:

S. n. name of statue nature of dues Disputed amt. (net of forum where dispute is payments made) pending

1 The Central Excise Act, 1944 Excise Duty Rs.3,07,87,721 Excise Appellate Authorities

x) The accumulated losses as at the end of the fnancial year are less than ffty percent of the net worth. Further, the Company has not incurred cash losses in the current fnancial year and in the immediately preceding fnancial year.

xi) According to the information and explanations given to us and as per the books and records examined by us, the company has not defaulted in repayment of dues to any fnancial institution or banks.

xii) According to the information & 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.

xiii) In our opinion, the Company is not a chit fund or nidhi/mutual beneft fund/ society. Therefore the relevant reporting requirements of the Order are not applicable.

xiv) According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments and hence the related reporting requirements of the Order are not applicable.

xv) The company has not given any guarantees for loans taken by others from banks or fnancial institutions.

xvi) In our opinion and according to the information and explanations given to us, the Company has not raised any term loans during the year.

xvii) According to the information and explanations given to us and on the basis of an overall examination of the balance sheet of the Company, the funds raised by the Company on short-term basis have been applied for long-term investment to the extent of Rs. 83,01,18,093/-.

xviii)During the year, the company has not made any preferential allotment of shares to companies and parties covered in the register maintained under section 301 of the Act.

xix) During the fnancial year, the Company has not issued any debentures nor has any outstanding debentures.

xx) The company has not raised any monies by way of public issues during the year.

xxi) During the course of our examination of the books & records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

for S. S. kotharI mehta & Co.

Chartered Accountants

Firm Regn. No. 000756N

arun k. tulSIan

Place: New Delhi Partner

Date: 27th November, 2013 Membership No. 89907


Sep 30, 2012

We have audited the attached Balance Sheet of Dwarikesh Sugar Industries Limited as at September 30, 2012, the Statement of Profit & Loss and also 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.

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

1. As required by the Companies (Auditors'' Report) Order, 2003 as amended by the Companies (Auditors'' report) (Amendment) Order, 2004 (collectively the Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information & explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph (1) 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 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 & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the said Balance Sheet, Statement of Profit & Loss and Cash flow Statement have been prepared in accordance with the accounting standards as prescribed under the provisions of Section 211 (3C) of the Companies Act, 1956;

e. On the basis of written representations received from the directors, as on September 30, 2012 and taken on record by the Board of directors, we report that none of the directors is disqualified as on September 30, 2012 from being appointed as a director of the Company in terms of Section 274 (1) (g) of the Companies Act, 1956;

f. Without qualifying our opinion :

i) We draw attention to sub note 14 of main note 28 (B) of the financial statements relating to Society commission on purchase of sugarcane of Rs. 4,82,12,723 in view of representation for relief/waiver made by UPSMA; the liability will be provided in future depending on decision of the State Government. We have relied on the management assessment in this regard;

ii) We draw attention to sub note 4 of main note 28 (B) of the financial statements relating to non accounting for adjustment on account of conversion of non-levy sugar into levy sugar. Based on SLP filed and the stay granted by the Hon''ble Supreme Court of India and legal opinion taken by the company, against the order of Hon''ble Allahabad High Court which had upheld the order of Directorate of Sugar for converting the unlifted non-levy quantity of 1,77,403 quintals into levy sugar, the matter being subjudice, the adjustment in accounts cannot be made at this stage. We have relied on the management assessment in this regard.

g. In our opinion, and to the best of our information and according to the explanations given to us, the said Accounts read together with the Significant Accounting policies and other Notes to the financial statements 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 case of Balance Sheet, of the state the Company''s affairs as at September 30, 2012;

(ii) In case of Statement of Profit & Loss, of the loss for the year ended on that date; and"

(iii) In case of Cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS'' REPORT

Annexure referred to in paragraph 1 of our report to the members of Dwarikesh Sugar Industries Limited on the accounts for the year ended September 30, 2012

i) (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets.

(b) Physical verification of fixed assets is being conducted by the management based on a programme designed to cover all assets over a period of three years, which , in our opinion, is reasonable having regard to the size of the company and nature of its business. Discrepancies noticed on such verification as compared to book records were not material and have been properly adjusted in the books of account.

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

ii) (a) The inventories have been physically verified by the management during the year at all its locations. In our opinion, the frequency of such 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. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of account.

iii) (a) The Company has taken unsecured loans from three companies and Managing Director covered in the register maintained under section 301 of the Companies Act, 1956, maximum balance outstanding against these loans is Rs 36,33,327 and year end balance is Rs 10,58,226.

(b) In our opinion, the rate of interest and other terms & conditions on which these loans have been taken are not, prima facie, prejudicial to the interest of the Company.

(c) These loans are repayable on demand; therefore, there are no overdue amounts at the year end.

(d) The company has not granted any loan, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(e) Since there are no such loans, comments regarding terms & conditions, repayment of the principal amount & interest due thereon and overdue amounts are not required.

iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory & fixed assets and with regard to sale of goods & services. Further, on the basis of our examination of the books & records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any instances of major weaknesses in the aforesaid internal control systems.

v) (a) To the best of our knowledge and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

vi) The company has not accepted any deposits from the public within the meaning of provisions of Section 58A, 58AA & any other relevant provisions of the Companies Act, 1956, including the Companies (Acceptance of Deposits) Rules, 1975.

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

viii) We have broadly reviewed the cost accounting records maintained by the Company as prescribed by the Government of India under Section 209 (1) (d) of the Companies Act, 1956. We are of the opinion that, prima facie, the prescribed records have been made and maintained by the company. However, we are not required to make a detailed examination of such records.

ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor Education and Protection fund, Employees state insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it. There are no arrears of such dues outstanding as at the year end for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the books & records examined by us, there are no dues of Income tax, Wealth tax, Service tax, Custom duty and Cess which have not been deposited on account of any dispute except the following in respect of Trade tax and Excise duty along with the forum where the dispute is pending:

S.N. Name of statute Nature of Disputed Amt. Forum where dispute is dues (net of payments pending made) (Rs.)

1 Uttar Pradesh Trade Entry Tax 8,19,966 Additional Commissioner Tax Act (demand of 8,00,000 (Appeal) Trade Tax subsequently decided Authorities, Bijnore, Uttar in favour of the Pradesh. company)

2 The Central Excise Excise Duty 3,19,35,311 Excise Appellate Authorities Act, 1944 demands

x) The accumulated losses as at the end of the financial year are less than fifty percent of the net worth. Further, the Company has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi) According to the information and explanations given to us and as per the books and records examined by us, we report as follows:

Amounts due in respect of Term Loans (TL)/Interest on term loan (ITL) FROM Banks aggregating Rs. 46,31,03,178 (as per detail noted here under) were delayed but the same have fully been paid during the year. As explained by the management, the delays are attributable due to accumulating losses on account of low realization of sugar sale prices.

Note: - 1. The details are as under:

- Punjab National Bank TL, 6 instances aggregating to Rs. 24,17,93,311 with delay ranging from 1 to 89 days.

- IDBI Bank Limited TL, 4 instances aggregating to Rs. 660,00,000 with delay ranging from 1 to 89 days.

- Punjab National Bank ITL in Foreign Currency - I, 4 instances aggregating to Rs. 4,25,73,276 with delay ranging from 1 to 90 days.

- Punjab National Bank ITL in Foreign Currency - II, 5 instances aggregating to Rs. 3,47,42,593 with delay ranging from 1 to 90 days.

- Punjab National Bank ITL, 5 instances aggregating to Rs. 6,11,57,360 with delay ranging from 1 to 90 days.

- IDBI Bank Limited ITL, 5 instances aggregating to Rs. 1,68,36,638 with delay ranging from 1 to 90 days.

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.

xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/society. Therefore the relevant reporting requirements of the Order are not applicable.

xiv) According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments and hence the related reporting requirements of the Order are not applicable.

xv) The company has not given any guarantees for loans taken by others from banks or financial institutions.

xvi) In our opinion and according to the information and explanations given to us, the Company has not raised any term loans during the year.

xvii) According to the information and explanations given to us and on the basis of an overall examination of the balance sheet of the Company, the funds raised by the company on short-term basis have been applied for long-term investment to the extent ofRs. 6,31,39,152/-.

xviii) During the year, the company has not made any preferential allotment of shares to companies and parties covered in the register maintained under section 301 of the Companies Act, 1956.

xix) During the financial year, the Company has not issued any debentures nor has any outstanding debentures.

xx) The company has not raised any monies by way of public issues during the year.

xxi) During the course of our examination of the books & records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

For S. S. KOTHARI MEHTA & CO.

Chartered Accountants

Firm Regn. No. 000756N

ARUN K. TULSIAN

Place: New Delhi Partner

Date: October 25, 2012 Membership No.89907


Sep 30, 2010

We have audited the attached Balance sheet of Dwarikesh sugar Industries limited as at 30th September, 2010, the Profit & Loss Account and also the 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.

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

1. As required by the Companies (Auditors Report) order, 2003 as amended by the Companies (Auditors report) (Amendment) order, 2004 (collectively the order) issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information & explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph (1) 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 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, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the said Balance Sheet, Profit & Loss Account and Cash flow Statement have been prepared in accordance with the accounting standards as prescribed under the provisions of section 211 (3C) of the Companies Act, 1956 to the extent applicable;

e. On the basis of written representations received from the directors, as on 30th september,2010 and taken on record by the Board of directors, we report that none of the directors is disqualified as on 30th September, 2010 from being appointed as a director of the Company in terms of section 274 (1) (g) of the Companies Act, 1956;

f. Without qualifying our opinion :

i) We draw attention to note 12 of schedule B relating to accounting for cane purchase liability for the sugar season 2007-08 at Rs 110 per quintal based on earlier interim order of Honble Allahabad High Court (subsequently upheld by Honble Supreme Court pending final decision) instead of State Advised price of Rs125 per quintal fixed by the Uttar Pradesh Government. Pending completion of legal proceedings in the matter, the effect thereof on these accounts cannot be determined at this stage.

ii) We draw attention to note 13 of schedule B relating to non accounting for adjustment on account of conversion of non-levy sugar into levy sugar. Based on SLP fled and the stay granted by the Honble supreme Court of India and legal opinion taken by the company, against the order of Honble Allahabad High Court which had upheld the order of Directorate of sugar for converting the unlifted non-levy quantity of 177,403 qtls. into levy sugar, the matter being subjudice, the adjustment in accounts cannot be made at this stage.

g. In our opinion, and to the best of our information and according to the explanations given to us, the said Accounts read together with the Signifcant Accounting policies in Schedule A & Notes to Accounts in schedule B 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 Balance sheet, of the state of the Companys affairs as at 30th September, 2010; (ii) In the case of Profit & Loss Account, of the loss of the Company for the year on that date; and (iii) In the case of Cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT Annexure referred to in paragraph 1 of our report to the members of Dwarikesh Sugar Industries limited on the accounts for the year ended 30.09.2010

i (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, the assets have been physically verified by the management in accordance with a phased programme of verification, which in our opinion, is reasonable considering the size and nature of its business. No material discrepancies have been noticed on such physical verification as compared to book records.

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

ii. (a) As explained to us, inventory has been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are, in our opinion, 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. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of account.

iii. (a) The Company has taken unsecured loans from four companies and Managing Director covered in the register maintained under section 301 of the Companies Act, 1956, maximum balance outstanding against these loans is Rs 3,02,38,948 and year end balance is Rs 1,17,20,805.

(b) In our opinion, the rate of interest and other terms & conditions on which these loans have been taken are not, prima facie, prejudicial to the interest of the Company.

(c) These loans are repayable on demand; therefore, there are no overdue amounts at the year end.

(d) The company has not granted any loan, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(e) Since there are no such loans, comments regarding terms & conditions, repayment of the principal amount & interest due thereon and overdue amounts are not required.

iv. In our opinion, and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory & fixed assets and with regard to sale of goods & services. Further, on the basis of our examination of the books & records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any instances of major weaknesses in the aforesaid internal control systems.

v. (a) To the best of our knowledge & belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

vi. The company has not accepted any deposits from the public within the meaning of provisions of section 58A, 58AA & any other relevant provisions of the Companies Act, 1956, including the Companies (Acceptance of Deposits) Rules, 1975.

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

viii. In our opinion and according to the information and explanations given to us, the Company is maintaining accounts and records in accordance with the Rules prescribed by the Central Government under section 209(1) (d) of the Companies Act, 1956, for maintenance of Cost Accounting records. However, we are not required to make a detailed examination of such books & records.

ix. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, Investor education and protection fund, employees state insurance, Income tax, sales tax, Wealth tax, service tax, Custom duty, excise duty, Cess and any other statutory dues applicable to it. there are no arrears of such dues outstanding as at the year end for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the books & records examined by us, there are no dues of Income tax, Wealth tax, service tax, Custom duty and Cess which have not been deposited on account of any dispute except the following in respect of trade tax and excise duty along with the forum where the dispute is pending:

Sr. Name of statue Nature of Disputed Amt. (net of Forum where dispute is No. dues payments made) pending (Rs In lacs)

1 Uttar Pradesh Trade tax Trade Tax 27.03 Honble Allaha bad High Court Act dues and other trad e tax Authorit ies

2 The Central Excise Act, Excise Duty 320.76 Excise Appellate Authorities 1944 demands

x. The accumulated losses as at the end of the financial year are less than 50%of the net worth. Further, the Company has not incurred cash losses in the current financial 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 defaulted in repayment of dues to any financial institution and bank.

xii. According to the information & 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.

xiii. In our opinion, the Company is not a chit fund or nidhi/ mutual benefit fund/ society. Therefore the relevant reporting requirements of the order are not applicable.

xiv. According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments and hence the related reporting requirements of the order are not applicable.

xv. The company has not given any guarantees for loans taken by others from banks or financial institutions.

xvi. In our opinion and according to the information and explanations given to us, the term loans raised during the year have been applied for the purpose for which they were raised where such end use has been specified by the lender.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, long term assets of Rs 5,309.73 lacs have been financed through short term loan from a bank.

xviii. During the year, the company has not made any preferential allotment of shares to companies and parties covered under section 301 of the Companies Act,1956.

xix. During the financial year, the Company has not issued any debentures nor has any outstanding debentures.

xx. The company has not raised any monies by way of public issues during the year.

xxi. During the course of our examination of the books & records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

For S. S. KOTHARI MEHTA & Co.

Chartered Accountants

Firm Regn. No. 000756N

ARUN K. TUlSIAN

place: New Delhi Partner

Date: November 29, 2010 Membership no.89907


Sep 30, 2009

We have audited the attached Balance Sheet of Dwarikesh Sugar Industries Limited as at 30th September, 2009, the Profit & Loss Account and also the 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.

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

1. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (collectively the Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to. the information & explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph (1) 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 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, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accouni.

d. In our opinion, the said Balance Sheet, Profit & Loss Account and Cash flow Statement have been prepared in accordance with the accounting standards as prescribed under the provisions of Section 211 (3C) of the Companies Act, 1956, to the extent applicable.

e. On the basis of written representations received from the directors, as on 30th September, 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th

September, 2009 from being appointed as a director of the Company in terms of Section 274 (1) (g) of the Companies Act, 1956;

f. Without qualifying our opinion :

(i) We draw attention to note 13 of Schedule B relating to accounting for cane purchase liability for the sugar season 2007-08 at Rs. 110 per quintal based on earlier interim Order of Honble Allahabad High Court (subsequently upheld by Honble Supreme Court pending final decision) instead of state advised price of Rs. 125 per quintal fixed by the Uttar Pradesh Government. Pending completion of legal proceedings in the matter, the effect thereof on these accounts cannot be determined at this stage.

(ii) We draw attention to note 14 of Schedule B relating to not accounting for adjustment on account of conversion of non-levy sugar into levy sugar. Based on SLP filed and the stay granted by the Honble Supreme Court of India and legal opinion taken by company, against the order of Honble Allahabad High Court which had upheld the order of Directorate of sugar for converting the unlifted non-levy quantity of 1 77403 qtls. Into levy sugar, the matter being subjudice, the adjustment in accounts cannot be made at this stage.

g. In our opinion, and to the best of our information and according to the explanations given to us, the said Accounts read together with the Significant Accounting policies in Schedule A & notes to accounts in Schedule B 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 Balance Sheet, of the state of the Companys affairs as at 30th September, 2009;

(ii) In the case of Profit & Loss Account, of the profit of the Company for the year 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 paragraph 1 of our report to the members of Dwarikesh Sugar Industries Limited on the accounts for the year ended 30.09.2009

i (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, the assets have been physically verified by the management in accordance with a phased programme of verification, which in our opinion is reasonable, considering the size and nature of its business. No material discrepancies have been noticed on such physical verification as compared to book records.

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

ii. (a) As explained to us, inventory has been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are in our opinion, 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. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of account.

iii. (a) The Company has taken unsecured loans from three companies and Managing Director covered in the register maintained under Section 301 of the Companies Act, 1956, maximum balance outstanding against these loans is Rs. 64,07,084 and year end balance is Rs. 44,25,466.

(b) In our opinion, the rate of interest and other terms & conditions on which these loans have been taken are not, prima facie, prejudicial to the interest of the Company.

(c) These loans are repayable on demand; therefore, there are no overdue amounts at the year end.

(d) The company has not granted any loan, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1 956.

(e) Since there are no such loans, comments regarding terms & conditions, repayment of the principal amount & interest due thereon and overdue amounts are not required.

iv. In our opinion, and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory & fixed assets and with regard to sale of goods & services. Further, on the basis of our examination of the books & records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any instances of major weaknesses in the aforesaid internal control systems.

v. (a) To the best of our knowledge & belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1 956, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi. The company has not accepted any deposits from the public within the meaning of provisions of Section 58A, 58AA & any other relevant provisions of the Companies Act, 1956, including the Companies (Acceptance of Deposits) Rules, 1975.

vii. In our opinion, the Company has an in-house internal audit system commensurate with its size and nature of its business.

viii. In our opinion and according to the information and explanations given to us, the Company is maintaining accounts and records in accordance with the Rules prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1 956, for maintenance of Cost Accounting records. However, we are not required to make a detailed examination of such books & records.

ix. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom Duty, Excise Duty, Cess and any other statutory dues applicable to it. There are no arrears of such dues outstanding as at the year end for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the books & records examined by us, there are no dues of Income Tax, Wealth Tax, Service Tax, Custom Duty and Cess which have not been deposited on account of any dispute except the following in respect of Trade Tax and Excise Duty along with the forum where the dispute is pending:

Sr. Name of statute Nature of dues Disputed Amt. (net of payments Forum where dispute is pending No. made) (Rs. In Lacs)

1 Uttar Pradesh Trade Tax Act Trade Tax dues 55.45 Honble Allahabad High Court and Other Trade Tax Authorities

2 The Central Excise Act, 1944 Excise Duty 182.88 Excise Appellate Authorities demands

x. The Company has accumulated losses as at the end of the financial year. Further, it has not incurred cash losses in the current financial 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 defaulted in repayment of dues to any financial institution and bank.

xii. According to the information & 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.

xiii. In our opinion, the Company is not a chit fund or nidhi/ mutual benefit fund/society. Therefore, the relevant reporting requirements of the order are not applicable to the Company.

xiv. According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures, and other investments and hence the related reporting requirements of the order are not applicable.

xv. The company has not given any guarantees for loans taken by others from banks or financial institutions.

xvi. In our opinion and according to the information and explanations given to us, the term loans raised during the year have been applied for the purpose for which they were raised where such end use has been specified by the lender.

xvii According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, long term assets of Rs. 10.01 crores have been financed through short term loan from a bank. We understand from the management that long term debt in lieu of the same has already been tied up.

xviii During the year, the company has not made any preferential allotment of shares to companies and parties covered in the register maintained u/s 301 of the Companies Act 1956.

xix. During the financial year, the Company did not issue any debentures nor has any outstanding debentures.

xx. The Company has not raised any monies by way of public issues during the year.

xxi During the course of our examination of the books & records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

For S.S. KOTHARI MEHTA & CO. Chartered Accountants ARUN K. TULSIAN

Place: New Delhi Partner

Date : 30th November, 2009 Membership No.89907

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