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Auditor Report of Khaitan Chemicals & Fertilizers Ltd.

Mar 31, 2017

Report on the Financial Statements

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

Management’s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5)of the Companies Act, 2013 (“the Act” )with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safe guarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made 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 appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report)Order, 2016(“the Order”) issued by the Central Government of India in terms of 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.

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

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

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

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

d) in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

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

f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”, 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 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 32 to the financial statements;

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts- Refer note to the financial statements;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, during the year ended March 31, 2017;

iv. the Company has provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from November 8, 2016to December30,2016and these are in accordance with the books of accounts maintained by the Company-Refer note 33 to the financial statements.

The Annexure as referred to in Independent Auditor’s report to the members of the Company on the financial statements for the year ended March 31, 2017, we report that:

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

(b) The fixed assets have been physically verified by the management according to the programme of periodical verification in phased manner which, in our opinion, is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies, if any, noticed on such physical verification have been properly dealt with in the books of accounts.

(c)According to the information and explanation given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties as disclosed in the note 10 on fixed assets to the financial statements, are held in the name of the company excepting the following cases where title deeds/lease agreement are not held in the name of the Company;(Refer Note 10(b)& (c)

Nature of immovable properties

No. of properties

Gross Carrying Value (Rs. in lacs)

Net Carrying Value (Rs. in lacs)

Freehold Land

2

57.47

57.47

Leasehold Land

1

24.86

16.49

Total

3

82.33

73.96

ii The inventory of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). In our opinion, the frequency of verification is reasonable, the discrepancies noticed on physical verification of the inventory as compared to book records were not material.

iii. The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the register maintained under section 189 of the Act. Thus, the paragraph 3(iii)(a)to(c) of the Order is not applicable to the Company.

iv. The Company has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under sections 185 and 186oftheAct. Thus, the paragraph 3(iv) of the Order is not applicable to the Company.

v. The Company has not accepted any deposits from the public.

vi. We have broadly reviewed the books of accounts maintained in pursuance to sub section (1) of Section 148 of the Act in respect of single super phosphate fertilizers, sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. (a)According to information and explanations given to us and on the basis of our examination of the books of account, and records, the Company has been generally regular in depositing undisputed statutory dues including Income-Tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities.

According to the information and explanation given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duties of customs, service tax, cess and other material statutory dues were in arrear as March 31, 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of customs and service tax which have not been deposited with appropriate authorities on account of any dispute. However, according to the information and explanations given to us the following dues of income tax, sales tax, excise duty, value added taxes, purchase tax, entry tax and Royalty/cess, have not been deposited by the Company on account of disputes: -

Sr.

No.

Name of the Statute

Nature of dues

Amount (Rs. in Lacs)

Period to which the amount relates

Forum where the dispute is pending

1

Mines and Minerals (Development and Regulation)Act,1957

Royalty on rock phosphate

118.77*

2004-05

High Court, Rajasthan

2

Commercial Tax Act, 1994

Purchase Tax

42.85*

2004-05

High Court of Madhya Pradesh, Jabalpur

3

UP Trade Tax, 1948

Trade Tax

1.00*

2006-07

The Deputy Commission Commercial Tax-Jhansi

4

M.P. Entry Tax Act, 1976

Entry Tax

22.14*

2007-08

MP Commercial Tax Appellate Board, Bhopal

5

Central Excise Act, 1994

Excise Duty & Penalty

16.85

2007-09

Commissioner (Appeal)-I, Delhi

6

Custom Act, 1962

Custom Duty

171.56*

2004-05 to 2008-09

Commissioner (Appeal), Mumbai

7

Income Tax Act, 1962

Income Tax

3.53

2013-14

CIT (Appeal)- New Delhi

8''

Income Tax Act, 1962

Income Tax

7.06

2014-15

CIT (Appeal)- New Delhi

9

UP Sales Tax

Sales Tax

2.66

2011-12

Dy. Commissioner, Jhansi

10

U.P Sales Tax

Sales Tax

2.57

2012-13

Dy. Commissioner, Jhansi

11

U.P Central Sales Tax, 1956

Sales Tax

0.69

2013-14

Dy. Commissioner, Jhans

12

U.P. Entry Tax, 2007

Entry Tax

0.11

2013-14

Dy. Commissioner, Jhansi

13

Minimum Wages Act, 1948

Labour Case

0.30*

2013-14

High Court, Allahabad

* Net of amounts paid under protest

viii. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions, The Company has not taken any loan from the government and has not issued any debentures.

ix. According to the information and explanations given to us, the Company did not raise any money byway of initial public offer or further public offer (including debt instruments). The term loans have been applied for the purpose for which they were raised.

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

xii. In our opinion and according to the information and explanations given to us the Company is not a Nidhi Company. Accordingly, paragraph 3 (xii) of the Order is not applicable to the Company.

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

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv. According to the 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 him. Accordingly, paragraph3(xv) of the Order is not applicable to the Company

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

for S S KOTHARI MEHTA & CO.

Chartered Accountants

Firm’s Registration Number: 000756N

Harish Gupta

Place: Gurugram Partner

Date: May 29, 2017 Membership Number: 098336


Mar 31, 2016

To

The Members,

Khaitan Chemicals & Fertilizers Limited

Gurugram

1. We have audited the accompanying financial statements of Khaitan Chemicals & Fertilizers Limited (“the Company”) which comprise the Balance Sheet as at March 31,2016, 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.

2. Management’s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”)with respect to the preparation of these financial statements that give a true and Fairview 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 133of the Act, read with Rule7of 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.

3. Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit .We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the cat and the Rules made hereunder.

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 appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

4. Opinion

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

5. Report on Other Legal and Regulatory Requirements

(a) As required by the Companies (Auditor''s Report) Order, 2016 (“the Order”), as amended, 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.

(b) As required by section 143 (3)of the Act, we report that:

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

ii. 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.

iii. 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.

iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule7 of the Companies (Accounts) Rules, 2014.

v. On the basis overwritten representations received from the directors as on March 31, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016from being appointed as a director in terms of Section 164 (2)of the Act.

vi. 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”.

vii. 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 knowledge and belief and according to the information and explanations given to us:

a) The company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 29 to the financial statements.

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

c) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March31,2016.

(As referred to in paragraph 5(a) of our report to the members of Khaitan Chemicals & Fertilizers Limited financial statements of the Company for the year ended March 31,2016, we report that:

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

(b) The Fixed Assets have been physically verified by the management

in a phased manner, designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the company and nature of its business. Pursuant to the program, a portion of the fixed asset has been physically verified by the management during the year and no material discrepancies between the books records and the physical fixed assets have been noticed on such verification.

(c) The title deeds of immovable properties as disclosed in the note 10 on fixed assets to the financial statements, are held in the name of the company except in the following cases where title deeds/lease agreement are not held in the name of the Company;(Refer Note 10

(b) & (c) of the Financial Statement.

Nature of immovable properties

No. of properties

Gross Block (Rs)

Net Block (Rs)

Freehold Land

2

57.47 lacs

57.47 lacs

Leasehold Land

1

24.86 lacs

16,77 lacs

Total

3

82.33 lacs

74.24 lacs

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

management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). In our opinion, the frequency of verification is reasonable

(b) The discrepancies noticed on physical verification of the inventory as compared to books records were not material.

iii. The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Act. Therefore, the provisions of clause 3 (iii) (a) to (c) of the Order are not applicable to the Company.

iv. The Company has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under section 185 and 186. Therefore, the provisions of the clause 3(iv) of the said Order are not applicable to the Company.

v. As per the information and explanations provided to us, the Company has not accepted any deposits and therefore provisions of Sections 73to 76 or any other relevant provisions of the Companies Act and rules there underage not applicable to the Company.

vi. We have broadly reviewed the books of accounts maintained in pursuance to subsection (1)of section 148of the Act in respect of single super phosphate fertilizers, sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have-not carried out a detailed examination of such records to verify its authenticity and accuracy.

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

basis of our examination of the books of account, and records, the Company has been generally regular in depositing undisputed statutory dues of including, Income-Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and any other statutory dues with the appropriate authorities Further, there are no undisputed amounts payable in respect of the above were in arrears as at March 31, 2016 for a period of more than six months from the date on when they become payable.

(b) According to the information and explanationsgivento us, there are no material dues of custom duty and service tax which have not been deposited with appropriate authorities on account of dispute. However, according to the information and explanations given to us the following dues of income tax, sales tax, excise duty, value added taxes, purchase tax, entry tax and Royalty/cess, have not been deposited by the Company on account of any disputes: -

Sr.

No.

Name of the Statute

Nature of dues

Amount (Rs.)

Period to which the amount relates

Forum where the dispute is pending

1.

M.P. Commercial Tax Act, 1974

Sales Tax/Trade Tax

0.48 Lacs

2001-02

Tribunal Commercial Tax, Bhopal

2.

Mines and Minerals (Development and Regulation) Act,1957

Royalty on rock phosphate

118.77 Lacs

2004-05

High Court, Rajasthan

3.

Purchase Tax Act

Purchase Tax

63.38 Lacs

2004-05

High Court of Madhya Pradesh, Jabalpur

4.

Central Excise Act

Penalty

17.78 Lacs

2007-08

Custom Excise and Service Tax Appellate Tribunal, Delhi

5.

UP Trade Tax 1948

Sales Tax

1.00 Lacs

2006-07

The Deputy Commission Commercial Tax-Jhansi

6.

M.P. Entry TaxAct 1976

Entry Tax

28.27 Lacs

2007-08

MP Commercial Tax Appellate Board, Bhopal

7.

Central Excise Act

Excise Duty& Penalty

16.85 Lacs

2007-09

Commissioner (Appeal)-I, Bhopal

8.

Custom Act 1962

Custom Duty

171.56 Lacs

2004-05 to 2008-09

Commissioner (Appeal), Mumbai

viii In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions.

However, the Company has not taken any loan from the government and has not issued any debentures.

ix. Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys byway of initial public offer or further public offer (including debt instruments)and term Loans. Accordingly, the provisionsofclause3(ix) of the Order are not applicable to the Company.

x. Based upon the audit procedures performed and the information and explanations given by the management, we report that no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi. Based upon the audit procedures performed and the information and explanations given by the management, the 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.

xii. In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

xiii. In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements 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. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company.

xv. The company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company.

xvi. In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisionsofclause3(xvi)of the Order are not applicable to the Company.

(Referred to in paragraph 5 (b) (vi) of our report to the members of Khaitan Chemicals & Fertilizers Limited for the year ended March31,2016)

1. Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Khaitan Chemicals & Fertilizers 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.

2. Management’s Responsibility for Internal Financial Controls

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 issued by the Institute of Chartered Accountants of India. 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.

3. 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 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.

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.

4. 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 Tehran sections 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.

5. 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.

6. 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 March 31, 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.S. KOTHARI MEHTA & CO.

Chartered Accountants

Firm Regn.No. 000756N

HARISH GUPTA

Place:Gurugram Partner

Date: 27th May,2016 (Membership N°. °98336)


Mar 31, 2015

1. We have audited the accompanying financial statements of Khaitan Chemicals & Fertilizers Limited ('the Company') which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flaw Statement far the period then ended, and the Nates ta Financial Statements comprising af a summary of significant accounting policies and other explanatory information.

2. Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view af the financial position, financial performance and cash flows af 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 af the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance af adequate accounting records in accordance with the provisions af the Act far safeguarding the assets af the Company and for preventing and detecting frauds and other irregularities; selection and application af 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 far ensuring the accuracy and completeness af the accounting records, relevant ta the preparation and presentation af the financial statements that give a true and fair view and are free from material misstatement, whether due ta fraud or error.

3. Auditors'Responsibility

Our responsibility is to express an opinion on these financial statements based on aur audit. We have taken into account the provisions af the Act, the accounting and auditing standards and matters which are required ta be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted aur audit in accordance with the Standards on Auditing specified under Section 143(10) af the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit ta 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 auditors' judgment, including the assessment af the risks of the material misstatement af the financial statements, whether due to error orfraud. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation af the financial statements that give a true and fair view in order ta design audit procedures that are appropriate in the circumstances, but not far the purpose af expressing an opinion an whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness af such controls. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness af the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation af the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate ta provide a basis far aur audit opinion an the financial statements.

4. Opinion

In our opinion and ta the best af our information and according ta the explanations given ta 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 af affairs of the Company as at 31 March 2015, and its profit and its cash flows far the period ended an that date.

5. Report on Other Legal and Regulatory Requirements

(a) As required by the Companies (Auditors' Report) Order, 2015 ('the Order') issued by the Central Government af India in terms af sub Section 11 of Section 143aftheAct,wegiveinthe Annexure a statement on the matters specified in paragraphs 3 and 4 af the Order.

(b) As required under provisions af Section 143(3) of the Act, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryforthe purpose of auraudit;

ii. In aur opinion, proper baaks af accounts as required by law have been kept by the Company so far as appears from aur examination af those books;

iii. The Balance Sheet, Statement of Profit and Lass and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts;

iv. In ourapinion, the Balance Sheet, Statement of Profit and Lass and Cash Flaw Statement comply with the Accounting Standards referred ta in Section 133 af the Act read with Rule 7 of the Company (Accounts) Rules, 2014.

v. On the basis af written representations received from the Directors, as on 31" March, 2015 and taken an record by the Board of Directors, none af the Directors is disqualified as on 31" March, 2015, from being appointed as a Director in terms of Section 164 (2) af the Act.

(As referred to in paragraph 5(a) of aur report ta the members af Khaitan Chemicals & Fertilizers Limited an the accounts as at and for the period ended 31 " March, 2015)

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

(b) The fixed assets are physically verified by the management according ta a phased programme designed ta caver all the items aver a period af three years, which in aur opinion, is reasonable having regard ta the size af the Company and the nature af its assets. Pursuant ta the programme, a portion af the fixed assets has been physically verified by the management during the year and no material discrepancies were noticed an such verification.

(ii) (a) The inventory af the Company has been physically verified by the management during the year (except far stack af Rack Phosphate, Sulphur end Single Super phosphate far which stackis taken an estimetian besisendfarthe stackin transit end stack lying with outside parties). In aur opinion, the frequency af verification is reasonable.

(b) In aur opinion, the procedures af physical verification af inventory fallowed by the management are reasonable and adequate in relation to the size af the Company and the nature af its business.

(c) In aur opinion and according ta the information and explanations given ta us, the Company is maintaining proper records af inventory. The discrepancies noticed an verification between the physical stocks and the book records were not material and have been properly dealt with in the books af accounts.

(iii) As per the information given to us, the Company has not granted any loan, secured or unsecured, ta Companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 ("The Act"). Accordingly, clauses 3 (iii) (a)and (b) af the Order are not applicable.

(iv) In aur opinion and according ta the information and explanations given to us, there are adequate internal control systems commensurate with the size af the Company and the nature af its business with regard ta purchase af inventory, fixed assets and with regard ta the sale af goads and services.

Further, an the basis af aur examination af the books and records af the Company carried out in accordance with the generally accepted auditing practices in India and according ta the information and explanations given ta us, we have neither came across nor have been informed af any continuing failure ta correct major weaknesses in the aforesaid internal control system.

(v) As per the information and explanations provided ta us, the Company has not accepted any deposits and therefore provisions af Sections 73 ta 76 ar any other relevant provisions af the Companies Act and rules there under are not applicable to the Company.

(vi) We have broadly reviewed the books af accounts maintained in pursuance ta sub Section (1) af Section 148 af the Act in respect af single super phosphate, sulphuric acid and refined vegetable ail manufactured by the Company and are af the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination af such records to verify its authenticity and accuracy.

(vii) (a) According ta the information and explanations given ta us, and the records af the Company examined by us, in aur opinion, the Company is generally regular in depositing undisputed statutory dues in respect af provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According ta the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues were outstanding, as at 31" March, 2015 far a period af mare than six months from the date they became payable.

(c) According ta the information and explanations given ta us, there are no material dues af wealth tax, custom duty, and service tax which have not been deposited with appropriate authorities on account af dispute. However, according ta the information and explanations given ta us the fallowing dues af income tax, sales tax, excise duty, value added taxes,

S. Name of Nature Amount No the Statute of dues (Rs.)

1. M.P. Commercial Tax Act, 1974 Sales Tax/Trade Tax 0.48 Lacs

2. UP Trade Tax 1948 Sales Tax/Trade Tax 3.28 Lacs (Principal)

15.94 Lacs (Interest)

3. M.P. Commercial TaxAct, 1974 Entry tax 0.11 Lacs

4. Mines and Minerals (Development Royalty on rock 118.77 Lacs and Regulation) Act, 1957 Phosphate

5. Purchase TaxAct Purchase Tax 63.38 Lacs

6. Central ExciseAct Penalty 17.78 Lacs

7. UP Trade Tax 1948 Sales Tax 1.00 Lacs

8. M.P. Entry Tax Act 1976 Entry Tax 28.27 lacs

9. Central Excise Act Excise Duty & Penalty 16.85 lacs



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

M.P. Commercial TaxAct, 1974 2001-02 Tribunal Commercial Tax, Bhopal

UP Trade Tax 1948 Before 1996 Joint Commissioner of Trade Tax, Lucknow

M.P. Commercial TaxAct, 197 1991-92 Tribunal Commercial Tax, Bhopal

Mines and Minerals (Development2004-05 High Court, Rajasthan and Regulation) Act, 1957

Purchase TaxAct 2004-05 High Court of Madhya Pradesh, Jabalpur

Central Excise Act 2007-08 Custom Excise and Service Tax Appellate Tribunal

UP Trade Tax 1948 2006- 07 The Deputy Commission Commercial Tax, Jhansi

M.P. Entry Tax Act 1976 2007- 08 MP Commercial Tax Appellate Board, Bhopal

Central Excise Act 2007-09 Commissioner (Appeal)-I, Bhopal

purchase tax, entry tax and Royalty/cess, have not been deposited by the Company on account of any disputes: -

(d) According to the information and explanations given to us, the amounts which were 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 has been transferred to such fund within time.

(viii) The Company does not have any accumulated losses as at 31" March, 2015 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(ix) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(x) As per the information given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xii) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended 31st March, 2015.

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

HARISH GUPTA Place : Gurgaan Partner Date : 16th May, 2015 Membership No. 098336


Mar 31, 2014

1. We have audited the accompanying financial statements of Khaitan Chemicals & Fertilizers Limited (the ''Company'') which comprise the Balance Sheet as at 31" March, 2014, and the statement of Profit and Loss and cash flow statement for the year then ended, and the Notes to Financial Statements comprising of a summary of significant accounting policies and other explanatory information.

2. 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'') read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

3. 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 the material misstatement of the financial statements, whether due to error of fraud. 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 reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

4. Opinion

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

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31" March 2014;

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.

5. Emphasis of Matter

We draw attention to Note No 36 of the notes to the financial statements for the year ended on 31" March 2014 regarding the fact that the Company has decided not to provide for mopping up of subsidy on raw material of fertilizer as on 31-3-2011 in term of Office Memorandum NO.2311/1/2010-MPR dated 11-07-2011 issued by Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR (pt) dated 22.08.2012 and decided not to effect recovery till a policy in this regard is formulated. The impact on Revenue from operations and Profit after tax is unascertainable at this stage.

6. Report on Other Legal and Regulatory Requirements

(a) As required by the Companies (Auditor''s Report) Order, 2003 (''the Order'') issued by the Central Government of India in terms 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.

(b) As required under provisions of section 227(3) of the Act, we report that:

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

ii. In our opinion, proper books of accounts as required bylaw have been kept by the Company so far as appears from our examination of those books;

iii. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

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

v. 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 disqualified 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;

(As referred to in paragraph 6(a) of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended31"March2014)

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

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

(C) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year. (ii) (a) The inventory of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). 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 inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(C) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts. (iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 659.32 lacs and Rs. 96.86 lacs respectively.

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the yearin respect of above loans/advances.

(e) The Company has taken loan from three Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 720 lacs and Rs.621.33 lacs respectively.

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

(v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1) (d) of Companies Act, 1956 in respect of single super phosphate, Sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

(ix) (a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) Further, According to information & explanations given to us, there were no undisputed amounts outstanding at the year- end for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, custom duty wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows: -

Sr. Name of Nature Amount Period to which Forum where the

N0 the Statute of dues (Rs) the amount relates dispute is pending

1. M.P. Commer cial Tax Act, 1974 Sales Tax/ Trade Tax 0.48 Lacs 2001-02 Tribunal Commercial Tax, Bhopal

2. UPTrade Tax1948 Sales Tax/ Trade Tax 3.28 Lacs (Princi pal) Before 1996 Joint Commissioner of Trade Tax,

15.94 Lacs (Inter est) Lucknow

3. M.P. Commer cial Tax Act, 1974 Entrytax 0.11 Lacs 1991-92 Tribunal Commercial Tax, Bhopal

4. Mines and Minerals (Develop ment Royalty on rock 11.8 77 Lacs 2004-05 High Court, Rajasthan and Regu lation) Act, 1957 Phosphate

5. Purchase TaxAct Purchase Tax 63.38 Lacs 2004-05 High Court of Madhya Pradesh, Jabalpur

6. Central Excise Act Penalty 17.78 Lacs 2007-08 Custom Excise and Service Tax Appellate

Tribunal

7. UPTrade Tax1948 Sales Tax 1.00 Lacs. 2006-07 The Deputy Commission Commercial Tax,

Jhansi

8. M.P. Entry TaxAct 1976 EntryTax 28.27 lacs 2007-08 MP Commercial Tax Appellate Board, Bhopal

9. UPTrade Tax1948 Sales Tax/ Trade Tax 11.73 lacs 2009-10 The Deputy Commission Commercial Tax,

Jhansi

10. Income TaxAct 1961 Income Tax 21.70 lacs AY 2010 -11 CIT(Appeal), New Delhi

11. Income TaxAct 1961 Income Tax 109.39 lacs AY 2011 -12 CIT(Appeal), New Delhi

(x) The company does not have any accumulated losses as at 31" March 2014 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of 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 to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31,2014.

For S.S. KOTHARI MEHTA & CO

Chartered Accountants Firm Regn.No. 000756N

HARISH GUPTA

Partner Place:New Delhi (Membership No. 98336)

Date : 20th May2014


Mar 31, 2013

1. We have audited the accompanying financial statements of Khaitan Chemicals & Fertilizers Limited (the Company''] which comprise the Balance Sheet as at 31" March, 2013, and the statement of Profit and Loss and cash flow statement for the year then ended, and the Notes to Financial Statements comprising of a summary of significant accounting policies and other explanatory information.

2. 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, 19S6 (''the Act'']. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

3. 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 the material misstatement of the financial statements, whether due to error of fraud. 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 reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

4. Opinion

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

a] In the case of the Balance Sheet, of the state of affairs of the Company as at Sl''March, 2013;

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

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

5. Emphasis of Matter

We draw attention to Note No 36 of the notes to the financial statements for the year ended on 31st March 2013 regarding the fact that the Company has decided not to provide for mopping up of subsidy on raw material of fertilizer as on 31-3-2011 in term of Office Memorandum No.2311/1/2010- MPR dated 11-07-2011 issued by Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR (pt] dated 22.08.2012 and decidednotto effect recovery till apolicy in this regardis formulated. The impacton RevenuefromOperationsand Profit after tax is unascertainobleatthisstoge.

6. Report on Other Legal and Regulatory Requirements

[a] As required by the Companies (Auditor''s Report] Order, 2003 (''the Order''] issued by the Central Government of India in terms of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and S of the Order.

[b] As requiredunder provisions of section 227(3] of the Act, we reportthat:

i. 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; ii. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; iii. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account; iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C] of section 211 of the Companies Act, 19S6; v. On the basis of 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 beine appointed as a director in terms of Clause (el of sub-section (11 of Section 274 ofthe Companies Act, 19S6

[As referred to in paragraph 6(a) of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended 31st March 2013)

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

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

[c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii)(a) The inventory of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur ond Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). 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 inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

[c) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts.

[hi) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 19S6. The maximum amount involved during the year and the year-end balance of such loans was Rs. 1120 lacs and Rs. 317.68 lacs respectively.

[b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

[c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

[d) There is no overdue amount outstanding at the end of the year in respect of above loans /advances.

[e) The Company has taken loan from two Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 19S6. The maximum amountinvolvedduringthe year and the year-end balance of such loans was Rs. S1S.12 lacs and Rs.110 lacs respectively.

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

[v) [a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered. [b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

[vi) The company has not accepted any deposits from the public within the meaning of Section S8A and S8AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

[viii) We have broadly reviewed the books of account maintained in pursuance to section 209 [1) (d) of Companies Act, 19S6 in respect of single super phosphate, Sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

[ix) [a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

[b) Further, According to information & explanations given to us, there were no undisputed amounts outstanding at the year-end for a period of more than six months from the date they became payable.

(x) The company does not have any accumulated losses as at 31st March, 2013 and it has not incurred any cash losses during the financial year ended on that date or in the immediately precedingfinancial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank duringtheyear.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of 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 to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31,2013.

For S.S. KOTHARIMEHTA & CO

Chartered Accountants Firm Regn.No. 000756N

Palce : Dahej HARISH GUPTA

Partner

Date : 14.05.2013 (Membership No. 98336]


Mar 31, 2012

1. We have audited the attached balance sheet of Khaitan Chemicals & Fertilizers Limited as at 31st March, 2012, the statement of profit and loss and also the cash flow statement for the year ended as 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 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 {as amended by the Companies (Auditor's Report) (Amendment) Order, 2004}issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we consider appropriate and according to the information and explanation given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. We draw our attention to Note No 18 of the financial statement for the year ended on 31st March 2012 regarding recognition of subsidy income, on SSP manufactured from the carried over quantity of raw materials for fertilizers as on 31-3-2011, which is not in line with Office Memorandum No. 23011/1/2010-MPR dated 11-07-2011 issued by the Ministry of Chemicals & Fertilizers, Govt, of India and also constitutes a departure from the Accounting Standards -12 referred to in sub-section (3C) of section 211 of the Companies Act, 1956. The impact on Revenue from Operations and Profit after-tax is unascertainable.

5. Further to our comments in the Annexure referred to in Para 3 above and subject to Para 4 above, we report that:

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

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

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

iv. In our opinion, 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, except Accounting Standards -12

v. On the basis of written representations received from the directors, as on 31!t March, 2012 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;

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

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

b) in the case of statement of profit and 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.

ANNEXURE TO THE AUDITORS' REPORT

(As referred to in paragraph '3' of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for The year ended 31stMarch 2012)

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

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

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). 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 inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 3006.75 lacs and Rs. Nil lacs respectively.

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the year in respect of above loans/advances.

(e) The Company has taken loan from two Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 600 lacs and Rs.500 lacs respectively.

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

(v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1) (d) of Companies Act, 1956 in respect of single super phosphate. Sulphuric acid and refined vegetable oil etc. manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

(ix) (a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities though there has been slight delay in few cases.

(b) Further, According to information & explanations given to us, there were no undisputed amounts outstanding at the yearend for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, custom duty, wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows: -

S. Name of the Statute Nature of dues Amount Period to No. (Rs.) which the amount relates

1. M.P. Commercial Tax Act, 1974 Sales Tax/Trade Tax 0.48 2001-02 Lacs

2. UP Trade Tax 1948 Sales Tax/Trade Tax 3.28 Lacs (Principal) Before

15.94 1996 Lacs (Interest)

3. M.P. Commercial TaxAct, 1974 Entry tax 0.11 1991-92 Lacs

4. Mines and Minerals (Development Royalty on rock phosphate 118.77 2004-05 Lacs and Regulation) Act,1957

5. Purchase Tax Act Purchase Tax 63.38 2004-05 Lacs

6. Central Excise Act Penalty 17.78 2007-08 Lacs

7. UP Trade Tax 1948 Sales Tax 1.00 2006-07 Lacs 8. M.P.Entry Tax Entry Tax Act 1976 28.27 2007-08 lacs

9. Income Tax Act 1961 Income Tax 8.37 2008-09 Lacs

Name of the Statute Forum where the dispute is pending

M.P. Commercial Tax Act,1974 Tribunal Commercial Tax, Bhopal

UP Trade Tax 1948 Joint Commissioner of Trade Tax, Lucknow

M.P. Commercial Tax Act,1974 Tribunal Commercial Tax, Bhopal

Mines and minerals (Development High Court, Rajasthan and Regulation) Act,1957

Purchese Tax Act High Court of Madhya Pradesh, Jabalpur

Central Excise Act Custom Excise and Service Tax Appellate Tribunal

UP Trade Tax Act 1976 The Deputy Commission Commercial Tax-Jhansi

M.P.Entry Tax Act 1976 MP Commercial Tax Appellate Board, Bhopal ' 2008-09 Income Tax Act 1961 CIT(Appeal), New Delhi

(x) The company does not have any accumulated losses as at 31st March 2012 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund ora society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of 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 to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2012.

For S.S.KOTHARI MEHTA & CO.

Chartered Accountants

Firm Regn.No. 000756N

NAVEEN AGGARWAL

Place: New Delhi Partner

Date: 29th May, 2012 Membership No. 94380


Mar 31, 2011

1. We have audited the attached balance sheet of Khaitan Chemicals & Fertilizers Limited as at 31st March, 2011, the profit and loss account and also the cash flow statement for the year ended as 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 by the Companies (Auditors Report) (Amendment) Order, 2004} 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 of the books and records of the Company as we consider appropriate and according to the information and explanation given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

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

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

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

iv. 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,;

v. On the basis of written representations received from the directors, as on 31st March, 2011 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:

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

a) in the case of balance sheet, of the state of affairs of the Company as at 31st March, 2011;

b) in the case of profit and loss account, 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.

ANNEXURE TO THE AUDITORS REPORT

(As referred to in paragraph 3 of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended 31st March 2011)

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

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

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate, Sulphur and Single Super phosphate for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). 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 inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory, in our opinion, the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts.

(iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans/advances to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 2286.09 lacs and Rs. 621.82 lacs respectively.

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company.

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the year in respect of above loans/advances.

(e) The Company has taken loan from two Companies during the year covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans was Rs. 500 lacs and Rs.500 lacs respectively.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control procedures. (v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1) (d) of Companies Act, 1956 in respect of single super phosphate, Sulphuric acid and refined vegetable oil manufactured by the Company and are of the opinion that, prima facie, the prescribedrecords and accounts have been made and maintained. However, we have not carried out a detailed examination of such records to verify its authenticity and accuracy.

(ix) (a) According to the information and explanations given to us and the records of the company examined by us,in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities though there has been slight delay in few cases.

(b) Further, According to information & explanations given to us, undisputed amount of Sa/es Tax and Advance Income Tax of Rs. 1.55 lacs and Rs 181.90 lacs respectively were outstanding as at the Balance Sheet Date for more than six months from the date they become payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, custom duty, wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows: -

S. Name of the Statute Nature of Amount Period to Forum where the dispute is pending No. dues (Rs.) which the

amount relates

I. MP.Commerc- ial Tax Sales Tax 0.48 Lacs 2001-02 Tribunal Commercial Tax, Bhopal Act,1974 Trade Tax 3.98 lacs

2 UP Trade Tax 1948 Sales Tax (princi- pal) Before 1996 Joint Commissio- ner of Trade Tax, Lucknow Trade Tax

15.94 Lacs

(Inter- est)

3. MP. Comme- rcial Tax Entry tax 0.11 Lacs 1991-92 Tribunal Commer- cial Tax, Bhopal 1974

4. Mines and Minerals Royalty on 118.77 2004-05 High Court, Rajasthan (Develop- ment and rock Lacs Regulation) Act, 1957 phosphate

5. Purchase Tax Act Purchase Tax 63.38 Lacs 2004-05 High Court of MadhyaPradesh, Jabalpur

6. Income Tax Act 1961 Income Tax 36.87 Lacs 2007-08 CIT(Appeal),New Delhi

7. Central Excise Act Penalty 17.78 Lacs 2007-08 Custom Excise and Service Tax Appellate Tribunal

8. UP Trade Tax 1948 Sales Tax 0.49 Lacs 2007-08 The Deputy Commission Commercial Tax-Jhansi

9. UP Trade Tax 1948 Sales Tax 0.93 Lacs 2005-06 The Deputy Commission Commercial Tax-Jhansi

10. UPTrade Tax1948 Sales Tax 1.00 Lacs. 2006-07 The Deputy Commission Commercial Tax-Jhansi

II. MP. Entry TaxAct 1976 EntryTax 35.37 lacs 2007-08 MP Commercial TaxAppellate Board,Bhopal

x) The company does not have any accumulated losses as at 31st March 2011 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society. (xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein. All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of 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 to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

(xx) The Company has no raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2011.

For: S.S.KOTHARI MEHTA & CO.

Chartered Accountants Firm Regn.No. 000756N

NAVEEN AGGARWAL

Partner Membership No. 94380

Place : New Delhi Date : 18th May 2011


Mar 31, 2010

1. We have audited the attached balance sheet of Khaitan Chemicals & Fertilisers Limited as at 31st March, 2010, the profit and loss account and also the cash flow statement for the year ended as 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 by the Companies (Auditors Report) (Amendment) Order. 2004} 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 of the books and records of the Company as we consider appropriate and according to the information and explanation given to us. we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

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

ii. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books except in case of leave encashment as mentioned in (vi) below;

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

iv. 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, except as stated in (vi) below regarding pending compliance of Accounting Standard-15 (Employee Benefits) issued by the Institute of Chartered Accountants of India;

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

vi. The gratuity and leave encashment are accounted for and disclosed as stated in the Note No. 6-9 of Schedule 19 of the Financial Statement. The unprovided liability for gratuity and leave encashment is unascertained. The aforesaid provision and disclosure is not in accordance with the requirements of AS-15 (Employee Benefits) issued by the Institute of Chartered Accountants of India Impact of the same on the current years Profit & Loss A/c is unascertained.

vii. Without qualifying our opinion, attention is drawn to Note no. B-13 of Schedule 19, wherein the remuneration to Managing Director is subject to the approval of shareholders in the ensuing General Meeting.

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

a) in the case of balance sheet, of the state of affairs of the Company as at 31st March, 2010;

b) in the case of profit and loss account, 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.

Annexure to Auditors Report" (As referred to in paragraph 3 of our report to the members of Khaitan Chemicals & Fertilizers Limited on the accounts as at & for the year ended 31st March 2010)

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

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

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory of the Company has been physically verified by the management during the year (except for stock of Rock Phosphate and Sulphur for which stock is taken on estimation basis and for the stock in transit and stock lying with outside parties). 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 inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory in our opinion the Company has maintained proper records of inventory and as explained to us, discrepancies noticed on physical verification of inventory as compared to the books records were not material and have been properly dealt with in the books of accounts

(iii) (a) According to the information and explanations given to us, the Company has granted inter-corporate loans advances to two companies covered in the register maintained under Section 301 of the Companies Act 1956 The maximum amount involved during the year and the year-end balance of such loans was Rs 2060 61 lacs and Rs 552.73 lacs respectively

(b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions are prima facie not prejudicial to the interest of the Company

(c) The Companies to whom loans have been granted have been regular in the payment of principal and interest wherever stipulated.

(d) There is no overdue amount outstanding at the end of the year in respect of above loans advances

(el The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act 1956 Consequently the requirements of Clauses (iii)(f) and (iii)(g) of paragraph of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us there are adequate interna! control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods Further, on the basis of out examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have been informed of any instance of continuing failure to correct major -weaknesses in the aforesaid internal control procedures

(v) (a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to pre,ailing market prices at the relevant time

(vi) The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act 1956 and the rules framed there under

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

(viii) We have broadly reviewed the books of account maintained in pursuance to section 209 (1 ) (d) ol Companies Act 1 956 in respect of single super phosphate, Sulphuric acid and refined vegetaoie oil manufactured by the Company and are of the opinion that, prima facie, the prescribed records and accounts have been made and maintained However we have not carried out a detailed examination of such records to verify its authenticity and accuracy

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

(b) According to the information and explanations given to us and the records of the Company examined by us the particulars of dues of income tax. sales tax, custom duty, wealth tax, excise duty, service tax and cess, which have not been deposited on account of any dispute, are as follows. -

S. Name of Nature of Amount

No. the Statute dues (Rs.)

1. M.P. Commercial Tax Sales Tax/ 0.48 Lacs

Act. 1974 Trade Tax

2. UP Trade Tax 1948 Sales Tax/ 3.28 Lacs

Trade Tax (Principal)

15.94 Lacs (Interest)

3. MP Commercial Tax Entry tax 0.11 Lacs

Act. 1974

4 Mines and Minerals Royalty on 118.77 Lacs (Development and rock Regulation) Act,1957 phosphate

5 Purchase Tax Act Purchase Tax 192 84 Lacs

6 Income Tax Act 1961 Income Tax 65.20 Lacs

7. Central Excise Act Penalty 17.78 Lacs

8. Central Sales Tax Act Sales Tax 1.87 Lacs

9 UP Trade Tax 1948 Sales Tax 0.49 Lacs

10 UP Trade Tax 1948 Sales Tax 0.93 Lacs

11 UP Trade Tax 1948 Sales Tax 1.53 Lacs

S Period to which the Forum where the NO. amount relates dispute is pending

1. 2001-02 Tribunal Commercial Tax, Bhopal

2. Before Joint Commissioner of Trade Tax.

1996 Lucknow

3. 1991-92 Tribunal Commercial Tax, Bhopal

4. 2004-05 High Court, Rajasthan

5. 2004-05 & High Court of Madhya Pradesh, Jabalpur 2005-06

6. 2006-07 CIT(Appeal), New Delhi

7. 2007-08 Custom Excise and Service Tax Appellate Tribunal

8. 2005-06 Additional Commissioner of Commercial Tax-lndore

9. 2007-08 The Deputy Commission Commercial Tax-Jhansi

10. 2005-06 The Deputy Commission Commercial Tax-Jhansi

11. 2006-07 The Deputy Commission Commercial Tax-Jhansi

(x) The company does not have any accumulated losses as at 31st March 2010 and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year

(xi) Based on our audit procedure and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank during the year

(xii) Based on our examination of cuments and records, we are of the opinion that the company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares debentures and other securities. (xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a society.

(xiv) The company has maintained proper records of transactions & contracts for purchase & sale of securities during the year under review & timely entries were made therein All the shares, securities and other investments have been held by the Company in its own name.

(xv) As per the information and explanations given to us and on our examination of records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the records of the Company examined by us and the information and explanations given to us. in our opinion, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of 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 to parties and companies covered in the register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debenture during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31.2010,

for S.S. KOTHARI MEHTA & CO.

Chartered Accountants Firm Reg, No, 00756N (CA ATUL SEKSARIA)

Place : New Delhi Partner

Date : 14.05.2010 Membership No. 86370

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