Auditor Report of IOL Chemicals and Pharmaceuticals Ltd.

Mar 31, 2018

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of IOL Chemicals and Pharmaceuticals Limited (‘the Company’), which comprise the balance sheet as at 31 March 2018, the statement of profit and loss (including other comprehensive income), the statement of changes in equity and the statement of cash flows for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 Ind AS 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 Ind AS 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 Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Ind AS 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 Board of Directors, as well as evaluating the overall presentation of the Ind AS financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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 31 March 2018, and its profit, total comprehensive income, the changes in equity and 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, 2016 (“the order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the “Annexure A”, which forms a part of this report, a statement on the matters specified in the paragraph 3 and 4 of the order.

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

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

(b) In our opinion, proper books of 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 (including other comprehensive income), the statement of cash flows and statement of changes in equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with relevant rules issued thereunder;

(e) On the basis of the written representations received from the directors of the Company as on 31st March 2018 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March 2018 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”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the company’s internal financial controls over financial reporting and;

(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, as amended 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 Ind AS financial statements. Refer Note 31 to the Ind AS financial statements.

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

iii. There were no amounts which were to be transferred, to the Investor Education and Protection Fund by the Company.

Other Matter

The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 01, 2016 included in these standalone Ind AS financial statements, are based on previously issued statutory financial statements prepared in accordance with the Companies (Accounts) Rules, 2014 (as amended) whose report for the year ended March 31,2017 and March 31, 2016 dated 27 May, 2017 and 2nd May, 2016 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.

ANNEXURE - A TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report to the Members of IOL Chemicals and Pharmaceuticals Limited of even date)

i) In respect of the Company’s fixed assets:-

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

b) According to information and explanations given to us, the fixed assets of the Company have been physically verified by the management during the year. No material discrepancies were noticed on such physical verification. In our opinion the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its assets.

c) According to information and explanations given to us and on the basis of our examination of records of the company the title deeds of immovable properties are held in the name of the company.

(ii) According to the information and explanations given to us, the inventories have been physically verified by the management at the reasonable intervals during the year. In our opinion the frequency of verification is reasonable.

According to the information and explanations given to us, no discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us we report that the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnership or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Therefore the provisions of paragraph 3(iii) (a), (b) and (c) of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us, the Company has not granted loans to directors or any other person in whom director is interested and also has not made loans, guarantees or provided security in connection with loan to any person or other body corporates and has not acquired securities of any other body corporate. Therefore, the provisions of section 185 and section 186 of the Companies Act, 2013 are not applicable to the company. Thus paragraph 3(iv) of the Order is not applicable to the company.

(v) According to the information and explanations given to us, the Company has not accepted deposits cover under the provisions of sections 73 to 76, other relevant provisions of the Companies Act, 2013 and the rules framed thereunder. According to the information and explanations given to us, no order under the aforesaid sections has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.

(vi) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination of such records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of the records of the Company examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess, goods and service tax and other statutory dues with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts in respect of statutory dues payable were outstanding as on the last day of the financial year concerned for a period of more than six months from the date they became payable as at 31st March, 2018.

(b) According to the information and explanations there are no dues of income tax, service tax, duty of custom, duty of excise which have not been deposited with the appropriate authorities on account of any dispute.

(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution bank or government. The Company has not issued any debentures during the year or in the preceding year.

(ix) In our opinion and according to the information and explanations given to us, the term loans taken during the year by the Company have been applied for the purpose for which they were raised. The company has not raised money by way of initial public offer or further public offer (including debt instruments) during the year.

(x) According to the information and explanations given to us, no fraud on or by the company or on the company by its officers or employees has been noticed or reported during the course of our audit.

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

(xii) According to the information and explanations given to us, the company is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the order are not applicable.

(xiii) According to the information and explanations given to us, and based on our examinations of the records of the company, transactions with the related parties are in compliance with section 177 and section 188 of the Act, where applicable and the details of the transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us, the company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the financial year under audit. Thus the provisions of paragraph 3 (xiv) of the Order are not applicable.

(xv) According to information and explanations given to us, and based on our examination of the records of the company, the company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, provisions of paragraph 3 (xv) of the Order are not applicable.

(xvi) According to the 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.

ANNEXURE-B TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 2(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report to the members of IOL Chemicals and Pharmaceuticals Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

Report on Internal Financial Controls

We have audited the internal financial control over financial reporting of IOL Chemicals and Pharmaceuticals Limited (“the Company”) as of 31st March 2018 in conjunction with our audit of Ind AS financial statements of company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing, prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanation given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For SCV & Co. LLP

Chartered Accountants

Reg. No.000235N/N500089

Sd/-

(Sanjiv Mohan)

Place: Ludhiana Partner

Date: 16th May, 2018 M. No. 086066

---

Mar 31, 2016

To the Members of IOL Chemicals and Pharmaceuticals Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of IOL Chemicals and Pharmaceuticals Limited (‘the Company’) which comprise the Balance Sheet as at 31^st March 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. 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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. 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.

5. 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. 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.

7. 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

8. 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 31^s1 March, 2016 and its losses and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

9. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of subsection (11) of Section 143 of the Act, we give in the Annexure- A, which forms part of this report, a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

b. in our opinion, proper books of 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;

e. on the basis of written representations received from the directors as on 31^st March 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2016 from being appointed as a director in terms of sub-section (2) of Section 164 of the Act; and

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”; and

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 explanations given to us;

i. the company has disclosed the impact of pending litigations on its financial position in its financial statements. Refer Note No.29.I.(i) to the financial statements;

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

iii. there are no amounts required to be transferred to the Investor Education and Protection Fund by the company.

Annexure - A to the Auditors’ Report

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the financial statements for the year ended 31^st March 2016, we report that:

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

b) According to the information and explanations given to us, the fixed assets of the Company have been physically verified by the management during the year. No material discrepancies were noticed on such physical verification. In our opinion the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its assets.

c) According to information and explanations given to us and on the basis of our examination of records of the company the title deeds of immovable properties are held in the name of the company.

(ii) a) According to the information and explanations given to us, the inventories have been physically verified by the management at the end of the year. In our opinion the frequency of verification is reasonable.

b) According to the information and explanations given to us, discrepancies noticed on physical verification of inventory as compared to the book records were not material and have been dealt with in the books of accounts.

(iii) According to the information and explanations given to us we report that the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnership or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Therefore the provisions of paragraph (iii) (a), (b) and (c) of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us, the Company has not granted loans to directors or any other person in whom director is interested and also has not made loans, guarantees or provided security in connection with loan to any person or other body corporate and has not acquired securities of any other body corporate. Therefore, the provisions of Section 185 and Section 186 of the Companies Act, 2013 are not applicable to the company. Thus paragraph 3(iv) of the Order is not applicable to the company.

(v) According to the information and explanations given to us, the Company has not accepted deposits cover under the provisions of Sections 73 to 76, other relevant provisions of the Companies Act, 2013 and the rules framed there under. According to the information and explanations given to us, no order under the aforesaid Sections has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.

(vi) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination of such records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on

the basis of the records of the Company examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts in respect of statutory dues payable were outstanding as on the last day of the financial year concerned for a period of more than six months from the date they became payable.

(b) According to the information and explanations there are no dues of income tax, service tax, duty of custom, duty of excise which have not been deposited with the appropriate authorities on account of any dispute. However according to information and explanations given to us, the following dues of Value Added Tax has not deposited by the company on account of dispute:

(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution bank or government. The Company has not issued any debentures during the year or in the preceding year.

(ix) In our opinion and according to the information and explanations given to us, the term loans taken during the year by the Company have been applied for the purpose for which they were raised. The company has not raised money by way of initial public offer of further public offer (including debt instruments) during the year.

(x) According to the information and explanations given to us, no fraud on or by the company or on the company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and based on the records of the company, the company has paid / provided for the managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us, the company is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the order are not applicable.

(xiii) According to the information and explanations given to us, and based on our examinations of the records of the company, transactions with the related parties are in compliance with Section 177 and Section 188 of the Act, where applicable and the details of the transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us, the company has made preferential allotment of equity shares during the financial year under audit. The company has compiled with the requirements of Section 42 of the Companies Act, 2013. The said amount had been used for the purpose for which these funds were raised.

(xv) According to information and explanations given to us, and based on our examination of the records of the company, the company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, provisions of paragraph 3 (xv) of the Order are not applicable.

(xvi) According to the 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.

Annexure - B to the Auditors’ Report

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

Report on Internal Financial Controls

1. We have audited the internal financial controls over financial reporting of IOL Chemicals and Pharmaceuticals Limited (“the Company”) as of 31st March 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

2. The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that;

1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial

Reporting

7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For S.C. Vasudeva & Co,

Chartered Accountants

Firm Reg. No.000235N

Sd/-

(Sanjiv Mohan)

Ludhiana Partner

02 May 2016 M. No. 086066

---

Mar 31, 2015

1. We have audited the accompanying financial statements of IOL Chemicals and Pharmaceuticals 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 year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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:

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of Sub- Section (11) of Section 143 of the Act, we give in the Annexure, which forms part of this report, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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 purposes of our audit;

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

c. The Balance Sheet, the 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;

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

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

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

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

(iii) There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditor's Report (Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' Section of even date )

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

(b) According to the information and explanations given to us, the fixed assets of the Company have been physically verified by the management during the year. No material discrepancies were noticed on such physical verification. In our opinion the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its business.

(ii) (a) According to the information and explanations given to us, the inventories have been physically verified by the management at the end of the year. In our opinion the frequency of verification is reasonable.

(b) Based on information and explanations given to us and the records produced to us, in our view, the procedures of physical verification of inventories followed by the management during the year 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 inventories. As explained to us, no discrepancies were noticed on physical verification of inventory as compared to the book records.

(iii) According to the information and explanations given to us and based on such tests which we considered necessary, we report that the Company has not granted any loans, secured or unsecured to firms, companies, or other parties covered in the register maintained under Section 189 of the Companies Act. Therefore the provisions of paragraph (iii) (a) and (b) of the above order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system, considered adequate, commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

(v) According to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76, other relevant provisions of the Companies Act and the rules framed there under. According to the information and explanations given to us, no order under the aforesaid Sections has been passed by the Company Law Board or the Reserve Bank of India or any Court or any other Tribunal on the Company.

(vi) We have broadly reviewed the cost records maintained by company pursuant to the sub- Section (1) of Section 148 of the Company Act, specified by the Central Government and are of opinion that prima facie, such account and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a)According to the information and explanations given to us and on the basis of the records of the Company examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts in respect of statutory dues payable were outstanding as at the last day of the financial year concerned for a period of more than six months from the date they became payable.

(b)According to the records of the Company, the disputed statutory dues that have not been deposited on account of matters pending before the appellate authorities in respect of value added tax are given below:

Sr. Name of Nature Period to Disputed No. the Statute of Dues which the Amount amount (Rs) relates

1. Punjab Vat Value 2006-2007 17,21,622 Act, 2005 Added Tax

2. Punjab Vat Value 2009-2010 11,56,914 Act, 2005 Added Tax

Name of the Statute Forum where the dispute is pending

Punjab Vat Act, 2005 Assistant Excise and Taxation Commissioner, Ludhiana

Punjab Vat Act, 2005 Deputy Excise and Taxation Commissioner, Ludhiana

(c)According to the information and explanations given to us, there was no amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

(viii) In our opinion and according to the information and explanations given to us, the Company does not have accumulated losses. The company has incurred Rs. 46.53 Crore cash losses during the financial year covered by our audit and has not incurred any cash losses in the immediately preceding financial year.

(ix) 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 or bank. The Company has not issued any debentures.

(x) In accordance with the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) In our opinion and according to the information and explanations given to us, the term loans taken during the year by the Company have been applied for the purpose for which they were raised.

(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

FOR S. C. VASUDEVA & CO. Chartered Accountants Firm Reg. No.000235N

Sd/-

Place: Ludhiana (SANJIV MOHAN)

Dated: 29th May 2015 Partner

M. No. 086066

---

Mar 31, 2014

1. We have audited the accompanying financial statements of IOL Chemicals and Pharmaceuticals Limited ("the Company"), which comprise the Balance sheet as at 31 March 2014, and the Statement of profi t and loss and Cash fl ow statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. The Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial 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 fi nancial 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 fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor consider internal control relevant to the Company''s preparation and fair presentation of the fi nancial 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 fi nancial statements.

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

Opinion

4. In our opinion and to the best of our information and according to the explanations given to us, the fi nancial statements read together with signifi cant accounting policies and notes thereon give the information required by the Companies Act, 1956 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31 March 2014;

ii) In the case of the Statement of Profi t and Loss, of the profi t for the year ended on that date; and

iii) In the case of Cash Flow Statement, of the cash fl ows for the year ended on that date.

Report on other Legal and Regulatory Requirements

5. As required by the Companies (Auditor''s 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 Companies Act, 1956, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order.

6. As required by Section 227(3) of the Companies Act, 1956, we report that:

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

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

c. The Balance sheet, Statement of profi t and loss, and Cash fl ow statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-Section (3C) of Section 211 of the Companies Act, 1956.

e. On the basis of written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualifi ed as on 31 March 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 TO INDEPENDENT AUDITORS'' REPORT

Referred to in paragraph 5 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

(1) a) The Company has maintained proper records showing full

particulars including quantitative details and situation of fi xed assets.

b) According to the information and explanations given to us, the fi xed assets have been physically verifi ed by the management during the year. No discrepancies were noticed on such physical verifi cation. Further in our opinion the frequency of physical verifi cation of fi xed assets is reasonable having regard to the size of the Company and nature of its business.

c) In our opinion, and according to the information and explanations given to us, the Company has not disposed off substantial part of its fi xed assets during the year.

(2) a) According to the information and explanations given to us, the

inventories have been physically verifi ed by the management at the close of the year. In our opinion the frequency of verifi cation is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verifi cation of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the Company and nature of its business.

c) On the basis of our examination of records of inventories, we are of our opinion that the Company is maintaining proper records of inventories. As explained to us, no discrepancies were noticed on physical verifi cation of inventory as compared to the book records.

(3) a) The Company has not granted secured or unsecured loans to companies, fi rm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore the provisions of clause 4 (iii) (b) (c) and (d) of the above said order are not applicable to the Company.

b) The Company has taken interest free unsecured loans from three companies and two parties covered in the register maintained under Section 301 of the Companies Act, 1956. The amount involved in the transaction is Rs. 3531.27 lacs. The amount payable as at the close of the year is Rs. 1002.77 lacs.

c) According to the information and explanations given to us and in our opinion, terms and conditions in respect of unsecured loans taken by the Company are not prima-facie prejudicial to the interest of the Company.

d) According to the information and explanations given to us, these unsecured loans are not repayable during the currency of the credit facilities availed by the Company from various banks.

(4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fi xed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(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 Rupees fi ve lacs or more in respect of party during the year, have been made at prices at the relevant time.

(6) According to the information and explanations given to us, the Company has not accepted any deposits from public. Therefore, the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(8) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(9) (a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the Company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31 March 2014, for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, there are no disputed statutory dues in respect of income tax, sales tax, service tax, custom duty, wealth tax, excise duty and cess.

(10) The Company does not have accumulated losses as at 31 March 2014. The latter part of the question relating to net worth is thus not applicable to the Company. Further, the Company has not incurred cash losses during the fi nancial year covered under audit and in the immediately preceding fi nancial year.

(11) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank or fi nancial institutions.

(12) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the above said order are not applicable to the Company.

(13) The Company is not a chit fund, or a nidhi/mutual benefi t fund/ society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the Company.

(14) According to the information and explanations given to us, the Company is not dealt or traded in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the Company.

(15) The Company has not given guarantee for loans taken by others from banks and fi nancial institutions. Therefore, the provisions of clause 4(xv) of the above said order are not applicable to the Company.

(16) In our opinion according to the information and explanations given to us, the term loans taken during the year have been applied for the purpose for which they were obtained.

(17) According to information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have not been used for long term investment.

(18) According to the information and explanation given to us, the Company has made preferential allotment of equity shares and preference shares to the companies covered in the register maintained under Section 301 of the Companies Act, 1956. The equity shares and preference shares have been issued in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Preference Share are issued at par. In our opinion the price at which such shares have been issued is not prejudicial to the interest of the Company.

(19) According to the information and explanations given to us, the Company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the above said order are not applicable to the Company.

(20) According to the information and explanations given to us, the Company has not raised money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the Company.

(21) According to the information and explanations given to us, by the management and based upon the audit procedures performed we report that no fraud on or by the Company has been noticed or reported during the year.

FOR S. C. VASUDEVA & CO. Chartered Accountants Firm Reg. No.000235N

Sd/- Place : Ludhiana (SANJIV MOHAN) Dated : 30 May 2014 Partner M. No. 86066

---

Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying fnancial statements of IOL Chemicals and Pharmaceuticals Limited (the "Company"), which comprise the balance sheet as at 31 March 2013, the Statement of proft and loss and cash fow statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. The 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 the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

3. 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 misstatements.

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 consider internal control 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

4. In our opinion and to the best of our information and according to the explanations given to us, the said fnancial statements read together with signifcant accounting policies and 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 balance sheet, of the state of affairs of the Company as at 31 March 2013; ii) In the case of statement of proft and loss, of the proft for the year ended on that date; and iii) In the case of cash fow statement, of the cash fows for the year ended on that date.

Emphasis of Matter

5. We draw intention to note no. 36 to the fnancial statements, relating to remuneration paid/provided in respect of Managing Director and Whole Time Director of the Company, in excess of the limits prescribed under section 198 read with Schedule XIII to the Companies Act, 1956, which is subject to the approval of Central Government and in case of

whole time director approval from shareholders is also pending. We are informed that as required by the relevant provision of the Companies Act, 1956, the Company is taking necessary steps to seek approval from Central Government. Our opinion is not qualifed in respect of this matter.

Report on Other Legal and Regulatory Requirements

6. As required by the Companies (Auditor''s Report) Order, 2003 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.

7. As required by section 227(3) of the Companies Act, 1956, we report that:

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

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

c. The balance sheet, statement of proft and loss, and cash fow 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 fow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e. On the basis of written representations received from the directors as on 31 March 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on 31 March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

Referred to in paragraph 6 under the heading on "Report on Other Legal and Regulatory Requirements" of our report of even date.

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

b) According to the information and explanations given to us, the fxed assets have been physically verifed by the management during the year. No discrepancies were noticed on such physical verifcation. Further in our opinion the frequency of physical verifcation of fxed assets is reasonable having regard to the size of the Company and nature of its business.

c) In our opinion, and according to the information and explanations given to us, the Company has not disposed off substantial part of its fxed assets during the year.

(2) a) According to the information and explanations given to us, the inventories have been physically verifed by the management at the close of the year. In our opinion the frequency of verifcation is reasonable. b) In our opinion and according to the information and explanations given to us, the procedures of physical verifcation of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the Company and nature of its business. c) On the basis of our examination of records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As explained to us, no discrepancies were noticed on physical verifcation of inventory as compared to the book records.

(3) a) The Company has not granted secured or unsecured loans to

companies, frm or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (b) (c) and (d) of the above said order are not applicable to the Company.

b) The Company has taken interest free unsecured loans from three companies and two parties covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved in the transaction is Rs. 3531.27 lacs. The amount payable as at the close of the year is Rs. 3530.67 lacs.

c) According to the information and explanations given to us and in our opinion, terms and conditions in respect of unsecured loans taken by the Company are not prima-facie prejudicial to the interest of the Company.

d) According to the information and explanations given to us, these unsecured loans are not repayable during the currency of the credit facilities availed by the Company from various banks.

(4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fxed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register maintained under that section. (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 Rs. 5 lacs or more in respect of each party during the year, have been made at prices at the relevant time.

(6) According to the information and explanations given to us, the Company has not accepted any deposits from public. Therefore, the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(8) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(9) (a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the Company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31 March 2013, for a period of more than six months from the date they became payable. (b) According to information and explanations given to us, there are no disputed statutory dues in respect of income tax, sales tax, service tax, custom duty, wealth tax, excise duty and cess.

(10) The Company does not have accumulated losses as at 31 March 2013. The latter part of the question relating to net worth is thus not applicable to the Company. Further, the Company has not incurred cash losses during the fnancial year covered under audit and in the immediately preceding fnancial year.

(11) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank or fnancial institutions.

(12) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the above said order are not applicable to the Company.

(13) The Company is not a chit fund, or a nidhi/mutual beneft fund/ society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the Company.

(14) According to the information and explanations given to us, the Company is not dealt or traded in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the Company.

(15) The Company has not given guarantee for loans taken by others from banks and fnancial institutions. Therefore, the provisions of clause 4(xv) of the above said order are not applicable to the Company.

(16) In our opinion according to information and explanation given to us, the term loans taken during the year have been applied for the purpose for which they were obtained.

(17) According to information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have not been used for long term investment.

(18) According to the information and explanation given to us, the Company has not made preferential allotment to companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(xviii) of the above said order are not applicable to the Company.

(19) According to the information and explanations given to us, the Company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the above said order are not applicable to the Company.

(20) According to the information and explanation given to us, the Company has not raised money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the Company.

(21) According to information and explanations given to us by the management and based upon the audit procedures performed we report that no fraud on or by the Company has been noticed or reported during the year.

For S. C. VASUDEVA & CO.

Chartered Accountants

Firm Reg. No.000235N

Sd/-

Place : Ludhiana (Sanjiv Mohan)

Dated : 27 May 2013 Partner

M. No. 86066

---

Mar 31, 2012

1. We have audited the attached Balance sheet of M/s IOL Chemicals and Pharmaceuticals Ltd. as at 31 March 2012 and also the statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 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 paragraph 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that :

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

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

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

d) In our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the directors as on 31 March 2012 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31 March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) 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 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 balance sheet, of the state of affairs of the Company as at 31st March, 2012;

ii) in the case of statement of profit and 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 TO THE AUDITORS' REPORT

(Referred to in paragraph 3)

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

b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its business.

c) According to information and explanations given to us, the Company has not disposed off substantial part of its fixed assets during the year.

(2) a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of the year. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion, the Company is maintaining proper records of inventory. As explained to us, no discrepancies were noticed on physical verification of inventory as compared to the book records.

(3) a) According to the information and explanations given to us, the

Company has not granted loans secured or unsecured to companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly the provisions of Clause 4 (iii) (b) (c) and (d) of the above said order are not applicable to the Company.

b) According to the information and explanations given to us, the Company has taken interest free unsecured loans from four companies and one party covered in the register maintained under Section 301 of the Companies Act, 1956. The amount involved in the transaction and payable as at the close of the year is Rs. 3581.82 lacs.

c) According to the information and explanations given to us and in our opinion, terms and conditions in respect of unsecured loans taken by the Company are not prima-facie prejudicial to the interest of the Company.

d) According to the information and explanations given to us, these unsecured loans are not repayable during the currency of the credit facilities availed by the Company from various banks.

(4) According to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) (a) According to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(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 Rs. 5 lacs or more in respect of each party during the year, have been made at prices at the relevant time.

(6) According to the information and explanations given to us, the

Company has not accepted any deposits from public. Therefore, the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(8) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(9) (a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues applicable to the Company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31 March 2012, for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, there are no disputed statutory dues in respect of income tax, sales tax, service tax, custom duty, wealth tax, excise duty and cess.

(10) The Company does not have accumulated losses as at 31 March 2012. The latter part of the question regarding net worth is not applicable. Further, the Company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

(11) According to the information and explanations given to us, the Company has defaulted in repayment of dues to bank. The details of the defaults are as under:

Sr. Particulars Amount Nature Period of default of No. (in Lacs) of Dues repayment

1. Punjab National 314.42* Principal repayment Jan 2012 - March 2012 Bank 163.02** Interest Feb 2012

* Out of which Rs. 50 lacs is pending.

** Since cleared.

(12) In our opinion and according to the information and explanations given to us, the Company has not granted any

loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of Clause 4(xii) of the above said order are not applicable to the Company.

(13) According to the information and explanations given to us, the Company is not a chit fund, or a nidhi/mutual benefit fund/ society. Accordingly, the provisions of Clause 4 (xiii) of the above said order are not applicable to the Company.

(14) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4(xiv) of the above said order are not applicable to the Company.

(15) According to the information and explanations given to us, the Company has not given guarantee for loans taken by others from banks and financial institutions. Therefore, the provisions of Clause 4(xv) of the above said order are not applicable to the Company.

(16) According to the information and explanations given to us, the Company has applied the term loans for the purpose for which the loans were taken.

(17) In our opinion and according to information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that short term funds of Rs. 5.41 Crores have temporarily been utilised for long term purpose.

(18) According to the information and explanation given to us, the Company has not made preferential allotment to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of Clause 4(xviii) of the above said order are not applicable to the Company.

(19) According to the information and explanations given to us, the Company has not issued debentures during the year. Accordingly, the provisions of Clause 4(xix) of the above said order are not applicable to the Company.

(20) According to the information and explanations given to us, the Company has not raised money by way of public issue during the year. Accordingly, the provisions of Clause 4(xx) of the above said order are not applicable to the Company.

(21) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period covered by our audit.

for S. C. VASUDEVA & CO.

Chartered Accountants Firm Reg. No.00235N

Sd/-

(Sanjiv Mohan)

Place : Ludhiana Partner

Dated : 30 May 2012 M. No. 86066

---

Mar 31, 2011

1. We have audited the attached Balance sheet of M/s IOL Chemicals and Pharmaceuticals Ltd. as at 31 March 2011 and also the Profit and Loss account and the Cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 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 paragraph 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that :

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

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

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

d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the directors as on 31 March, 2011 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) 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 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 balance sheet, of the state of affairs of the company as at 31 March, 2011;

ii) in the case of profit and loss account, 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 TO THE AUDITORS' REPORT (Referred to in paragraph 3)

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

b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion the frequency of physical verification of fixed assets is reasonable having regard to the size of the company and nature of its business.

c) According to information and explanations given to us, the company has not disposed off substantial part of its fixed assets during the year.

(2) a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of the year. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion, the company is maintaining proper records of inventory. As explained to us, no discrepancies were noticed on physical verification of inventory as compared to the book records.

(3) a) According to the information and explanations given to us, the company has not granted loans secured or unsecured to companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (b) (c) and (d) of the above said order are not applicable to the company.

b) According to the information and explanations given to us, the company has taken interest free unsecured loans from four companies and one party covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved in the transaction is Rs. 1497.77 lac. There is Rs. 1497.77 lac payable as at the close of the year.

c) According to the information and explanations given to us and in our opinion, terms and conditions in respect of unsecured loans taken by the company are not prima- facie prejudicial to the interest of the company.

d) In our opinion and according to the information and explanations given to us, the schedule for payment of principal amount is not yet decided.

(4) According to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) (a) According to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(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 rupees five lac or more in respect of each party during the year, have been made at prices at the relevant time.

(6) According to the information and explanations given to us, the company has not accepted any deposits from public. Therefore, the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the company. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(8) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(9) (a) According to the information and explanations given to us and on an examination of the records of the company, we are of the opinion that the company has been regular in depositing statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other applicable statutory dues with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2011, for a period of more than six months from the date of they becoming payable. (b) According to the information and explanations given to us, there is no disputed statutory dues in respect of income tax, sale tax, service tax, custom duty, wealth tax, excise duty and cess.

(10) The company does not have accumulated losses as at 31 March 2011. The latter part of the question regarding net worth is not applicable. Further, the company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

(11) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to banks or financial institutions.

(12) In our opinion and according to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the above said order are not applicable to the company.

(13) According to the information and explanations given to us, the company is not a chit fund, or a nidhi/mutual benefit fund/ society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the company.

(14) According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the company.

(15) According to the information and explanations given to us, the company has not given guarantee for loans taken by others from banks and financial institutions. Therefore, the provisions of clause 4(xv) of the above said order are not applicable to the company.

(16) According to the information and explanations given to us, the company has applied the term loans for the purpose for which the loans were taken.

(17) In our opinion and according to information and explanations given to us and on an overall examination of the balance sheet of the company, we report that funds raised on short term basis have not been used for long term investment.

(18) According to the information and explanation given to us, the company has made preferential allotment to the companies covered in the register maintained under section 301 of the Companies Act, 1956. The preferential allotments of shares were in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulation 2009. The price at which preferential allotments of shares has been made by company is not prejudicial to the interest of the company.

(19) According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the above said order are not applicable to the company.

(20) According to the information and explanations given to us, the company has not raised money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the company.

(21) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the period covered by our audit.

for S. C. VASUDEVA & CO. Chartered Accountants Firm Reg. No.00235N Sd/- (Sanjiv Mohan) Partner M. No. 86066

Place : New Delhi Dated : 21 May 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s IOL Chemicals and Pharmaceuticals Limited as at 31 March 2010 and also the Profit and Loss Account and the Cash Fow Statement for the year ended on that date annexed thereto. These financial statements are responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted ou r audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the financial statements. An audit also includes assessing accounting principles used and significant estimates made by management, as well as evaluating 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 paragraph 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:

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

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

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

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the directors as on 31 March 2010 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31 March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) 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 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 Balance Sheet, of the state of affairs of the company as at 31 March 2010;

ii) in the case of Profit and Loss Account, 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 TO THE AUDITORS REPORT (Referred to in paragraph 3)

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

b) According to information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its business.

c) According to information and explanations given to us, Company has not disposed off substantial part of its fixed assets during the year.

(2) a) According to information and explanations given to us,

inventories have been physically verified by the management at the close of the year. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to information and explanations given to us, the procedures of physical verification of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the Company and nature of its business.

c) In our opinion, Company is maintaining proper records of inventory. As explained to us, no discrepancies were noticed on physical verification of inventory as compared to the book records.

(3) a) According to information and explanations given to

us, the Company has not granted loans secured or unsecured to companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (b) (c) and (d) of the above said order are not applicable to the Company.

b) According to information and explanations given to us, the Company has taken interest free unsecured loans from three companies and one party covered in the register maintained under Section 301 of the Companies Act, 1956. The amount involved in the transaction is Rs 1,081.27 lacs. There is Rs 774.77 lacs payable as at the close of the year.

c) According to information and explanations given to us and in our opinion, terms and conditions in respect of unsecured loans taken by the company are not prima- facie prejudicial to the interest of the Company.

d) In our opinion and according to information and explanations given to us, the schedule for payment of principal amount is not yet decided.

(4) According to information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) a) According to information and explanations given to us,

particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register maintained under that section. b) In our opinion and according to 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 Rupees Five Lacs or more in respect of each party during the year, have been made at prices at the relevant time.

(6) According to information and explanations given to us, the Company has not accepted any deposits from public. Therefore, the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

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

(8) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(9) a) According to information and explanations given to us

and on an examination of the records of the Company, we are of the opinion that the Company has been regular in depositing statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other applicable statutory dues with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31 March 2010, for a period of more than six months from the date of they becoming payable. b) According to information and explanations given to us, there is no disputed statutory dues in respect of income tax, sale tax, service tax, custom duty, wealth tax, excise duty and cess.

(10) The Company does not have accumulated losses as at 31 March 2010. The latter part of the question regarding net worth is not applicable. Further, the Company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

(11) In our opinion and according to information and explanations given to us, the Company has not defaulted

in repayment of dues to banks or financial institutions.

(12) In our opinion and according to information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the above said order are not applicable to the Company.

(13) According to information and explanations given to us, the Company is not a chit fund, or a nidhi/mutual benefit fund/ society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the Company.

(14) According to information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the Company.

(15) According to information and explanations given to us, the Company has not given guarantee for loans taken by others from banks and financial institutions. Therefore, the provisions of clause 4(xv) of the above said order are not applicable to the Company.

(16) According to information and explanations given to us, the Company has applied the term loans for the purpose for which the loans were taken.

(17) In our opinion and according to information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that short term funds of Rs 1,047 lac has temporarily been used for purchase of fixed assets.

(18) According to information and explanation given to us, the Company has made preferential allotment to the companies covered in the register maintained under Section 301 of the Companies Act, 1956. The preferential allotments of shares were in accordance with SEBI (Disclosures and Investor Protection) Guidelines, 2000/ SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. The price at which preferential allotments of shares has been made by Company is not prejudicial to the interest of the Company.

(19) According to information and explanations given to us, the Company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the above said order are not applicable to the Company.

(20) According to information and explanations given to us, the Company has not raised money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the Company.

(21) According to information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period covered by our audit.

for S. C. VASUDEVA & CO. Chartered Accountants Firm Reg. No. 00235N Sd/- Place: Ludhiana (Sanjiv Mohan) Dated: 29 May 2010 Partner M. No. 86066