Auditor Report of Jayshree Chemicals Ltd.

Mar 31, 2016

Independent auditors'' report

To

the Members of

Jayshree Chemicals Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of JAYSHREE CHEMICALS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone 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 standalone 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

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.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, and its Profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of Sub-section (11) of Section 143 of the Act, we give in the Annexure - A 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 standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 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".

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

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

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses.

iii. As we are informed there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

AS STATED IN PARAGRAPH 6(1) OF OUR REPORT OF EVEN DATE ON OTHER LEGAL AND REGULATORY REQUIREMENTS

(i) a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) These fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verification.

c) The only immovable property of the Company is its Wind Mill. Title Deeds of the Wind Mill are in the Company''s Name. All other immovable properties of the Company have since been sold to M/s. Aditya Birla Chemicals (India) Limited.

(ii) Physical verification of inventory has been conducted at reasonable intervals by the management and no material discrepancies were noticed.

(iii) The company has granted any loans, secured or unsecured to companies or other parties covered in the register maintained under section 189 of the Companies Act, 2013 and;

a) The terms and conditions of the grant of such loans are not prejudicial to the company''s interest;

b) The schedule of repayment of principal and payment of interest has been stipulated and the repayments or receipts are regular;

c) No amount is overdue.

(iv) In respect of loans, investments, guarantees, and security provisions of section 185 and 186 of the Companies Act, 2013 have been complied with.

(v) The company has not accepted any such deposits mentioned in the Clause.

(vi) Maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 and such accounts and records have been so made and maintained.

(vii) a) The company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities.

b) The following have not been deposited on account of any disputes :

Name of the Statute	Nature of the dues	Amount of Demand (?)	Amount Deposited (?)	Period to which amount relates	Forum where dispute is pending
Central Sales Tax Act	Sales Tax	4,02,979	80,000	2007-08 to 2010-11	ACCT Berhampur
Odisha Entry Tax Act	Odisha Entry Tax	14,04,592	2,00,000	2005-06 to 2010-11	ACCT Appeal Berhampur
Odisha Entry Tax Act	Odisha Entry Tax	55,77,540	6,00,000	2005-06 to 2010-11	ACCT Appeal Berhampur

(viii) The company has defaulted in repayment of principal and interest to banks. However, the company has since repaid in full the entire outstanding loans and interest thereon to all the banks.

(ix) No moneys were raised by way of initial public offer.

(x) No fraud by the company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) Managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act. However, approval for the remuneration paid to Sri P. N. Ojha, Executive Director for the period 17.08.2015 to 31.03.2016 is awaited.

(xii) The Company is not a Nidhi Company and hence this clause is not applicable.

(xiii) All transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

(xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) The company has not entered into any non-cash transactions with directors or persons connected with it.

(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

AS STATED IN PARAGRAPH 2 (f) OF OUR REPORT OF EVEN DATE ON REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

We have audited the internal financial controls over financial reporting of Jayshree Chemicals Limited ("the Company") as of March, 31, 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

Management of the Company 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 component so 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 Act.

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 and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by ICAI. 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.

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.

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

The 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 of the 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 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, 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 March31,2016, 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.

For K. N. Gutgutia & Co.

Chartered Accountants

Firm Registration No.304153E

CA. Subhasish Pore

Date : 30th May, 2016 Partner

Place : Kolkata Membership No. 055862

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Mar 31, 2015

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

Management's Responsibility for the Standalone 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 standalone 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 provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 standalone 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 standalone 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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the standalone 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 standalone 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 accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the standalone 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: of the state of affairs of the Company as at 31st March, 2015 and its loss and its cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

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 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 Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone 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 March, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015, from being appointed as a director in terms of Section 164(2) of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 2.24 (a) (i) to the financial statements.

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

iii. There was no amount, which required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to the Independent auditors' report

Annexure to the Independent Auditors' Report to the Members of JAYSHREE CHEMICALS LIMITED as referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements in our Report of even date

i) a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b. All the fixed assets have been physically verified by the Management at reasonable intervals. No material discrepancies were noticed on such verification.

ii) a. The inventory has been physically verified at reasonable intervals by the Management.

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

c. The Company is maintaining proper records of inventory. In our opinion, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013 and as such the provisions of Clause 3(iii) (a) & (b) are not applicable.

iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) The Company has not accepted any public deposits during the year..

vi) 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 maintenance of cost records under Section 148(1) of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

vii) a. According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Cess were in arrears as at 31st March, 2015 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following:

Name of the Statute Nature of the dues Amount of Amount Demand(Rs.) Deposited (Rs.)

Odisha Entry Tax Act Odisha Entry Tax 12,54,480 5,00,000

Odisha Entry Tax Act Odisha Entry Tax 9,21,181 4,00,000

Odisha Entry Tax Act Odisha Entry Tax 5,04,343 33,650

Central Sales Tax Act Sales Tax 4,02,979 80,000

Odisha Entry Tax Act Odisha Entry Tax 14,04,592 2,00,000

Odisha Value Added Odisha Value Added 55,77,540 6,00,000 Tax Act Tax

Odisha Irrigation Water Tax 1,27,903 25,000 Act, 1959 and Odisha Irrigation Amendment Rules, 1999

Odisha Irrigation Water Tax 5,74,07,828 - Act, 1959 and Odisha Irrigation Amendment Rules, 1999

Odisha Municipal Tax Lighting Tax 12,38,581 1,78,068 1951

Service Tax Service Tax 6,15,000 - for Services rendered by Goods transporters

West Bengal VAT ACT W B VAT 6,17,976 2,11,932

Name of the Statute Period to which Forum where dispute is amount relates pending



Odisha Entry Tax Act 2001-02 High Court of Odisha

Odisha Entry Tax Act 2002-03 Sales Tax Tribunal Cuttack

Odisha Entry Tax Act 2005-06 ACCT Appeal Berhampur 2006-07

Central Sales Tax Act 2007-08 to ACCT Berhampur 2010-11

Odisha Entry Tax Act 2005-06 to ACCT Appeal Berhampur 2010-11

Odisha Value Added 2005-06 to ACCT Appeal Berhampur Tax Act 2010-11

Odisha Irrigation August, 1967 to High Court of Odisha Act, 1959 and February, 1993 Odisha Irrigation Amendment Rules, 1999

Odisha Irrigation October, 1994 to High Court of Odisha Act, 1959 and March, 2015 Odisha Irrigation Amendment Rules, 1999

Odisha Municipal Tax Upto 2013-15 Court of ADM,Chatrapur 1951

Service Tax November, 1997 High Court of Odisha to June, 1998

West Bengal VAT ACT 2005-06 JCCT, Kolkata(Appeal)

d. According to the information and explanations given to us there is 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 thereunder.

viii) The Company has accumulated losses at the end of the financial year which is more than fifty percent of its net worth and it has incurred cash losses in the financial year and in the immediately preceding financial year.

ix) Based on our audit procedures and according to the information and explanations given to us, we observed that the Company has defaulted in repayment of Rs13,95,48,856/- dues to banks during the current financial year. There are no outstanding dues to a financial institution or debenture holders.

x) According to 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) According to the information and explanations given to us, the Company has applied the term loans for the purpose for which such loans were obtained.

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 K. N. Gutgutia & Co.

Chartered Accountants Firm Registration No.304153E B. K. Bhutia Date : 14th May, 2015 Partner Place : Kolkata Membership No. 059363

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Mar 31, 2014

We have audited the accompanying financial statement of JAYSHREE CHEMICALS LIMITED ("the Company"), which comprises the Balance Sheet as at March 31, 2014 and the Statement of Profit & Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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

AUDITOR''S RESPONSIBILITY

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

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

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

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

a) 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 & 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 & 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 the written representations received from the Directors as on 31st March, 2014 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st 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 the Independent Auditors'' Report

Annexure to the Independent Auditors'' Report to the Members of Jayshree Chemicals Limited referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements in our Report of even date.

i) a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b. All the fixed assets have been physically verified by the Management during the year. No material discrepancies were noticed on such verification.

c. During the year, the Company has not disposed off any substantial/major part of fixed assets, so as to affect the going concern status of the Company.

ii) a. The inventory has been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

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

c. The Company is maintaining proper records of inventory. In our opinion, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii) a. The Company has not given any loan, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and as such the provisions of Clause 4(iii) (b), (c) & (d) are not applicable.

b. The Company has taken unsecured loan from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Only Seven parties are involved with transactions value of Rs. 1,597.00 Lacs. The rate of interest and other terms and conditions of unsecured loans taken by the Company, are prima facie not prejudicial to the interest of the Company. The payment of the principal amount and interest are regular.

iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) Based on the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that transactions need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

vi) The Company has not accepted any public deposits during the year.

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

viii) 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 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.

ix) a. According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following :

Name of the Statute Nature of the Amount of Amount dues Demand (Rs.) Deposited (Rs.)

Central Sales Tax Act Sales Tax 5,57,921 5,07,344

Central Sales Tax Act Sales Tax 2,17,994 1,10,000

Central Sales Tax Act Sales Tax 1,78,082 1,22,500

Odisha Sales Tax Act Sales Tax 1,39,584 1,12,926



Name of the Statute Period to which Forum where dispute is amount relates pending

Central Sales Tax Act 1985- 86 High Court of Odisha

Central Sales Tax Act 1991- 92 ACCT Berhampur

Central Sales Tax Act 1992- 93 ACCT Berhampur

Odisha Sales Tax Act 1986- 87 High Court of Odisha

Name of the Statute Nature of the Amount of Amount dues Demand (Rs.) Deposited (Rs.)

Odisha Entry Tax Act Odisha Entry 12,54,480 5,00,000 Tax

Odisha Entry Tax Act Odisha Entry 9,21,181 4,00,000 Tax

Odisha Entry Tax Act Odisha Entry 5,04,343 33,650 Tax

Odisha VAT Act Odisha VAT 26,55,676 4,50,000

Odisha Irrigation Act, Water Tax 1,27,903 25,000 1959 and Odisha Irrigation Amendment Rules, 1999

Odisha Irrigation Act, Water Tax 6,48,97,072 1,63,82,280 1959 and Odisha Irrigation Amendment Rules, 1999

Odisha Municipal Tax, Lighting Tax 10,60,501 1,78,068 1951

Service Tax Service Tax 6,15,000 - for Services rendered by Goods transporters

Income Tax Assessment 6,73,629 4,50,000 Demand

West Bengal VAT ACT W B VAT 6,17,976 2,11,932



Name of the Statute Period to which Forum where dispute is amount relates pending

Odisha Entry Tax Act 2001- 02 High Court of Odisha

Odisha Entry Tax Act 2002- 03 Sales Tax Tribunal Cuttack

Odisha Entry Tax Act 2005- 06 Addl. CCT Appeal, 2006- 07 Berhampur

Odisha VAT Act 2005- 06 Addl JCCT Appeal, 2006- 07 Berhampur

Odisha Irrigation Act, 1959 and Odisha Irrigation Amendment Rules, 1999 August, 1967 to High Court of Odisha February, 1993

Odisha Irrigation Act, 1959 and Odisha Irrigation Amendment Rules, 1999 October, 1994 High Court of Odisha to March, 2014

Odisha Municipal Tax, 1951 Upto 2013-14 Court of ADM, Chatrapur

Service Tax November, High Court of Odisha 1997 to June, 1998

Income Tax 2007-08 DCIT, Kolkata

West Bengal VAT ACT 2005-06 JCCT, Kolkata(Appeal)

x) The Company has accumulated losses at the end of the financial year which is less than fifty percent of its net worth. The Company has incurred cash loss during the financial year covered by our audit but has no cash loss during immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to banks. There are no outstanding dues to a financial institution or debenture holders.

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

xiii) The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditors'' Report) Order, 2003 (as amended) are not applicable to the Company.

xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003 (as amended) are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi) According to the information and explanations given to us, the Company has taken term loans during the financial year and applied the same for the purpose for which such loans were obtained.

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

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year covered by our Report, the Company has not issued secured debentures and no secured debentures are outstanding.

xx) The Company has not raised any money by public issue during the year covered by our Report.

xxi) 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 K.N. Gutgutia & Co.

Chartered Accountants Firm Registration No.304153E

6C, Middleton Street, B. K. Bhutia

Kolkata - 700 071 Partner

Date : 14th May, 2014 Membership No.059363

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statement of JAYSHREE CHEMICALS LIMITED ("the Company"), which comprises the Balance Sheet as at March 31, 2013 and the Statement of Profit & Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2013;

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

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

Report on Other Legal and Regulatory Requirements

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

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

a) 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 & 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 & 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 the written representations received from the Directors as on 31st March, 2013 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st 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.

i) a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b. All the fixed assets have been physically verified by the Management during the year. No material discrepancies were noticed on such verification.

c. During the year, the Company has not disposed off any substantial/major part of fixed assets, so as to affect the going concern status of the Company.

ii) a. The inventory has been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

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

c. The Company is maintaining proper records of inventory. In our opinion, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii) a. The Company has not given any loan, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and as such the provisions of Clause 4(iii)(b),(c)&(d) are not applicable.

b. The Company has taken unsecured loan from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Only two parties are involved with transactions value of ? 200.00 Lacs. The rate of interest and other terms and conditions of unsecured loans taken by the Company, are prima-facie not prejudicial to the interest of the Company. The payment of the principal amount and interest are regular.

iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) Based on the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that transactions need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

vi) The Company has not accepted any public deposits during the year.

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

viii) 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 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.

ix) a. According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears as at 31st March, 2013 for a period of more than six months from the date they became payable.

x) The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by our audit and during immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to banks. There are no outstanding dues to any financial institution or debenture holders.

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

xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditors'' Report) Order, 2003 (as amended) are not applicable to the Company.

xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003 (as amended) are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi) According to the information and explanations given to us, the Company has taken term loans during the financial year and applied the same for the purpose for which such loans were obtained.

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

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year covered by our Report, the Company has not issued secured debentures and no secured debentures are outstanding.

xx) The Company has not raised any money by public issue during the year covered by our Report.

xxi) 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 K.N.GUTGUTIA & CO.

Chartered Accountants

Firm Registration No. 304153E

6C,Middleton Street B. K. Bhutia

Kolkata-700 071 Partner

Date : 10th May, 2013 Membership No. 059363

---

Mar 31, 2012

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

3. As required by the Companies (Auditors' Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a Statement on the matters specified in Paragraphs 4 and 5 of the said Order to the extent they are applicable to the Company.

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 and Statement of Profit & Loss and Cash Flow Statement dealt with by the Report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit & 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 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a Director in terms of 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 together with accounting policies and the Notes thereon, annexed thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

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

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

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

Annexure to the Auditors' Report to the Members of Jayshree Chemicals Limited referred to in paragraph 3 of our Report of even date.

i) a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b. All the fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.

c. During the year, the Company has not disposed off any substantial/major part of fixed assets so as to affect the going concern status of the Company.

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

b. In our opinion the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory. In our opinion, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii) a. The Company has not given any loan, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and as such the provisions of Clause 4(iii) (b), (c) & (d) are not applicable.

b. The Company has taken unsecured loans from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Only one party is involved with transaction value ofRs 100.00 Lacs. The rate of interest and other terms and conditions of unsecured loans taken by the Company, are prima facie not prejudicial to the interest of the Company. The payment of the principal amount and interest are regular.

iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) Based on the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that transactions need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

vi) The Company has not accepted any public deposits during the year.

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

viii) 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 maintenance of cost records under Section 209 (l)(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.

ix) a. According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears as at 31st March, 2012 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following :

Name of the Nature of Amount of Amount Period to which Forum where Statute the dues Demand Deposited amount relates dispute is pending (Rs) (Rs)

Central Sales Tax Act Sales Tax 5,57,921 5,07,344 1985-86 High Court of Odisha

Central Sales Tax Act Sales Tax 2,17,994 1,10,000 1991-92 ACCT, Berhampur

Central Sales Tax Act Sales Tax 1,78,082 1,22,500 1992-93 ACCT, Berhampur

Odisha Sales Tax Act Sales Tax 1,39,584 1,12,926 1986-87 High Court of Odisha

Odisha Entry Tax Act Odisha Entry Tax 12,54,480 5,00,000 2001-02 High Court of Odisha

Odisha Entry Tax Act Odisha Entry Tax 9,21,181 4,00,000 2002-03 Sales Tax Tribunal, Cuttack

Odisha Entry Tax Act Odisha Entry Tax 5,04,343 33,650 2005-06 Addl. CCT Appeal, Berhampur

2006-07

Odisha VAT Act Odisha VAT 26,55,676 4,50,000 2005-06 Addl. JCCT Appeal, 2006-07 Berhampur

Odisha Irrigation Act, Water Tax 1,27,903 25,000 August, 1967 High Court of Odisha 1959 and Odisha to February, 1993 Irrigation Amendment Rules, 1999 & 2000

Odisha Irrigation Act, Water Tax 3,49,12,028 56,53,450 October, 1994 to High Court of Odisha 1959 and Odisha March, 2012 Irrigation Amendment Rules, 1999 & 2000

Odisha Municipal Lighting Tax 7,93,389 1,78,068 Upto 2011-12 Court of ADM, Tax, 1951 Chatrapur

Service Tax Service Tax for 6,15,000 - November, 1997 High Court of Odisha Services rendered by to June, 1998 Goods trans porters

Income Tax Assessment 6,73,629 4,50,000 2007-08 DCIT, Kolkata Demand

West Bengal VAT ACT W B VAT 6,17,967 2,11,932 2005-06 JCCT, Kolkata (Appeal)

x) The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and during immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to banks. There are no outstanding dues to any financial institution or debenture holders.

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

xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditors' Report) Order, 2003 (as amended) are not applicable to the Company.

xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditors' Report) Order, 2003 (as amended) are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi) According to the information and explanations given to us, the Company has taken term loans during the financial year and applied the same for the purpose for which such loans were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that sum of about Rs 625.00 Lacs funds raised on short-term basis have been used for long-term investment in purchase of fixed assets.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year covered by our Report, the Company has not issued secured debentures and no secured debentures are outstanding.

xx) The Company has not raised any money by public issue during the year covered by our Report.

xxi) 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 K. N. GUTGUTIA & CO.

Chartered Accountants

Firm Registration No. 304153E

6C, Middleton Street B. K. Bhutia

Kolkata - 700 071 Partner

Date : 16th May, 2012 Membership No. 059363

---

Mar 31, 2011

1.We have audited the attached Balance Sheet of JAYSHREE CHEMICALS LIMITED as at 31st March, 2011, the Profit & Loss Account and also 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3.As required by the Companies (Auditors' Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a Statement on the matters specified in Paragraphs 4 and 5 of the said Order to the extent they are applicable to the Company.

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 and Profit & Loss Account and Cash Flow Statement dealt with by the Report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit & 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 and taken on record by the Board of Directors, we report that none of the Directors is 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 together with accounting policies and the Notes thereon and Schedules annexed thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :-

i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2011; ii) in the case of Profit & 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

Annexure to the Auditors' Report to the Members of Jayshree Chemicals Limited referred to in paragraph 3 of our Report of even date.

i) a.The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b.All the fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.

c. During the year, the Company has discarded and disposed off substantial/major part of fixed assets of the old Plant. However, the same would not affect the going concern status of the Company.

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

b.In our opinion the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c.The Company is maintaining proper records of inventory. In our opinion, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii) a.The Company has not given any loan, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and as such the provisions of Clause 4(iii) (b), (c) & (d) are not applicable.

b. The Company has taken unsecured loan from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Only one party is involved with transactions value of Rs 75.00 Lacs. The rate of interest and other terms and conditions of unsecured loans taken by the Company, are prima facie not prejudicial to the interest of the Company. The payment of the principal amount and interest are regular.

iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) Based on the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that transactions need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

vi) The Company has not accepted any public deposits during the year. According to the information and explanations given to us, no order has been passed by the Company Law Board in respect of the aforesaid deposits.

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

viii) 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 maintenance of cost records under Section 209 (l)(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.

ix) a. According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears as at 31st March, 2011 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following :

Name of the Nature of Amount Amount Period to Forum where Statue the dues Demand Deposi amount dispute is Rs ted Pending Rs Central Sales Tax 5,57,921 5,07,344 1985-86 High Court Sales Tax Of Orissa Act

Central Sales Tax 5,68,547 4,00,000 1988-89 ACCT, Sales Tax Berhampur Act

Central Sales Tax 2,17,994 1,10,000 1991-92 ACCT, Sales Tax Berhampur Act

Central Sales Tax 1,78,082 1,22,500 1992-93 ACCT, Sales Tax Berhampur Act Central Sales Tax 63,219 35,000 1997-98 ACCT, Sales Tax Berhampur Act

Central Sales Tax 1,39,584 1,12,926 1986-87 High Court Sales Tax Of Orissa Act

Orissa Sales Sales Tax 1,42,839 1,42,839 1988-89 ACCT, Tax Act Berhampur

Orissa Entry Orissa 12,54,480 5,00,000 2001-02 Sales Tax Tax Act Entry Tax Tribunal, Cuttak

Orissa Entry Orissa 9,21,181 4,00,000 2002-03 Sales Tax Tax Act Entry Tax Tribunal, Cuttack

Orissa Entry Orissa 5,04,343 33,650 2005-06 Addl.CCT Tax Act Entry Tax 2006-07 Appeal, Berhampur

Orissa Water Tax 1,27,903 25,000 August High Court Irrigation 1967to Of Orissa Act 1950 February and Orissa 1993 Irrigation Amendment Rules,1999

Orissa Water Tax ,28,38,425 10,88,58 October High Court Irrigation 1994to Of Orissa Act 1950 March, and Orissa 2011 Irrigation Amendment Rules,1999

2011 Orissa Lighting 5,26,281 Upto Court Of Municipal Tax 2010-11 ADM Tax,1951 Chatrapur

Service Service 6,15,000 November High Court TaxTax For 1997 to Of Orissa Services June 1998 rendered by Goods transpor ters

Income Assessment 49,44,730 15,00,000 2007-08 Add.CIT Tax Demand KolKata

West W B VAT 6,17,967 2,11,932 2005-06 JCCT Bengal Kolkata VAT ACT (Appeal)

x) The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and during immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to banks. There are no outstanding dues to a financial institution or debenture holders.

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

xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4

(xiii) of the Companies (Auditors' Report) Order, 2003 (as amended) are not applicable to the Company.

xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of ClauseVv) of the Companies (Auditors' Report) Order, 2003 (as amended) are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi) According to the information and explanations given to us, the Company has taken term loans during the financial year and applied the same for the purpose for which such loans were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company we report that Rs 675 Lacs funds raised on short-term basis have been used for long-term investment in purchase of fixed assets.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year covered by our Report, the Company has not issued secured debentures and no secured debentures are outstanding

xx) The Company has not raised any money by public issue during the year covered by our Report.

xxi) 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 K.N.GUTGUTIA&CO. Chartered Accountants Firm Registration No. 304153E B. K. Bhutia Partner Membership No. 059363

6C,Middleton Street Kolkata-700 071 Date : 30th May,2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of JAYSHREE CHEMICALS LIMITED as at 31 March, 2010, the Profit & Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a Statement on the matters specified in Paragraphs 4 and 5 of the said Order to the extent they are applicable to the Company.

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 and Profit & Loss Account and Cash Flow Statement dealt with by the Report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit & 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 and taken on record by the Board of Directors, we report that none of the Directors is 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 together with accounting policies and the Notes thereon and Schedules annexed thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :-

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

ii) in the case of Profit & 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 to the Members of Jayshree Chemicals Limited referred to in paragraph 3 of our Report of even date.

i) a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b. All the fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.

c. During the year, the Company has not disposed off any substantial/major part of fixed assets so as to affect the going concern status of the Company.

ii) a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. In respect of stock lying with third party, related confirmations have been obtained by the Company.

b. In our opinion the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory. In our opinion, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii) a. The Company has not given any loan, secured or unsecured to companies, firms on other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and as such the provisions of Clause 4(iii) (b), (c) & (d) are not applicable.

b. The Company has not taken any loan, secured or unsecured, from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and as such the provisions of Clause 4(iii) (f) & (g) are not applicable.

iv) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) Based on the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that transactions need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

vi) The Company has not accepted any public deposits during the year.

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

viii) 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.

ix) a. According to the information and explanations given to us and records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, EmployeesState Insurance, IncomeTax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears as at 31 March, 2010 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following :

Name of the Nature of Amount of Amount Statute the dues Demand Deposited (Rs.) (Rs.)

Central Sales Tax Act Sales Tax 5,57,921 5,07,344

" 14,230 14,230

" 5,68,547 4,00,000

" 2,17,994 1,10,000

" 1,78,082 1,22,500

" 63,219 35,000

Orissa Sales Tax Act " 1,39,584 1,12,926



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

Central Sales Tax Act 1985-86 High Court of Orissa

" 1986-87 CTO Berhampur

" 1988-89 High Court of Orissa

" 1991-92 CTO Berhampur

" 1992-93 SalesTax Tribunal, Cuttack. (Orissa)

" 1997-98 CTO Berhampur

Orissa Sales Tax Act 1986-87 High Court of Orissa

Name of the Nature of Amount of Amount Statute the dues Demand Deposited (Rs.) (Rs.)

Orissa Sales Tax Act Sales Tax 1,42,839 1,42,839

" " 2,33,233 70,000

Orissa Entry Tax Act Orissa Entry Tax 12,54,480 5,00,000

" " 9,21,181 4,00,000

" " 2,54,248 76,000

Orissa Vat Act Orissa VAT 8,85,225 4,50,000

Orissa Irrigation Water Tax 1,27,903 25,000 Act, 1959 and Orissa Irrigation Amendment Rules, 1999

" " 5,05,800 2,52,900

" " 11,24,000 --

Service Tax Service Tax for 5,39,949 -- Services rendered by Goods transporters





Name of the Period to which Forum where Statue amount relates dispute is pending

Orissa Sales Tax Act 1988-89 CTOBerhampur

" 2004-05 ACCTBerhampur

Orissa Entry Tax Act 2001-02 High Court of Orissa

" 2002-03 CTO Berhampur

" 2004-05 ACCT Berhampur

Orissa Vat Act 2005-06,2006-07 CCTO,Cuttack

Orissa Irrigation Act, 1959 and Orissa Irrigation Amendment Rules, 1999 August, 1967 to High Court of Orissa February, 1993

" October, 1994 High Court of Orissa to March, 1999

" April, 1999 Executive Engineer to March, 2007 Berhampur, (Orissa)

Service Tax November, 1997 High Court of Orissa to June, 1998

x) The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and during immediately preceding financial year.

xi) Based on our audit procedures and according to the informationand explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to banks.There are no outstanding dues to a financial institution or debenture holders.

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

xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi) According to the information and explanations given to us, the Company has taken term loans during the financial year and applied for the purpose for which loans are obtained.

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

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year covered by our Report, the Company has not issued secured debentures and no secured debentures are outstanding.

xx) The Company has not raised any money by public issue during the year covered by our Report.

xxi) 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.

ForK.N.GUTGUTIA&CO. Chartered Accountants

Firm Registration No. 304153E

6C, Middleton Street B. K. Bhutia

Kolkata-700 071 Partner

Date: 29th May, 2010 Membership No. 59363