Auditor Report of Nilachal Refractories Ltd.

Mar 31, 2018

INDEPENDENT AUDITORS'' REPORT TO THE MEMBERS OF NILACHAL REFRACTORIES LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of NILACHAL REFRACTORIES LIMITED (the Company), which comprise the Balance Sheet as at 31st March 2018, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s responsibility for the Standalone Financial Statements.

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

Auditor''s Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the order under section 143(11) of the Act.

We conducted our audit in accordance with the standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the institute of Chartered Accountants of India. Those Standards and pronouncements 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

i. The company has made provision for gratuity and leave liability as per the provisions of the

relevant act and not as per actuarial valuation which constitutes a departure from the Accounting standards referred to in Section 133 of the Act. However, in absence of necessary information being made available to us, impact of the same on the loss for the year of the company and corresponding effect on liability cannot be ascertained and quantified.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2018

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (the Order) issued by the Central Government of India in terms of section (11) of section 143 of the Act 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 explanations given tous, we give in the Annexure "A", a statement on the matters specified in the paragraph 3 and 4 of the order.

2. As required by Section 143(3) of the Act, 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, statement of Profit & Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with the accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 as applicable except for the effects of the matters described in the basis for qualified opinion paragraph.

(e) On the basis of the written representations received from the Directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal Financial Controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in the Annexure "B"

(g) With respect to the other matters to the 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 litigation on its financial position in its financial statements. Refer Note 5 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which they were any material foreseeable losses and

iii. There is no amount which was required to be transferred, to the investor Education and Protection Funds by the Company.

	For T. MORE a CO.
	Chartered Accountants
	Firm Regn. No. 327844E
Place : KOLKATA	TANISHA MORE
	Proprietor
	C.A. Membership No. 301569
Dated, the 30th day of May, 2018

ANNEXURE "A" TO THE INDEPENDENT AUDITORS'' REPORT OF NILACHAL REFRACTORIES LIMITED

The Annexure referred to in paragraph 1 under ''Report on other legal and regulatory requirements'' section of our report of even date to in our independent Auditors'' Report to the members of the Company on the standalone financial statements for the year ended 31st March, 2018, 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 during the year by the management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals, According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us we report that the title deed, comprising all the immovable properties of land and building which are freehold, were mortgaged with the lenders and confirmation was obtained from them during the audit of the preceding year and from the documents verified by us, it was held in the erstwhile name of the company as at the preceding Balance Sheet date in respect of immovable properties of self-constructed buildings on leasehold land which are disclosed as fixed assets in the financial statements, were mortgaged with the tenders and confirmation is obtained from them during the audit of the preceding year and from the documents verified by us, the land lease agreement was in the erstwhile name of Company, where the company is the lessee in the agreement as at the preceding Balance Sheet date.

However at the time of audit during the year under consideration, we are informed that the loans have been repaid in full and the tenders are in the process of releasing the title documents for which the documents could not be physically verified by us.

(ii) As explained to us, the inventories were physically verified during the year by the management at reasonable intervals and no material discrepancies were noticed on physical verification

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnership or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) The Company has not granted any loans, made investments or provided guarantee and hence reporting under clause (iv) of the CARO 2016 is not applicable.

(v) According to the information and explanation given to us, the Company has not accepted any deposits in terms of directives issued by the reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Act and the rules framed there under.

(vi) We are informed that the central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the products dealt in by the Company

(vii) According to the information and explanations given to us in respect of statutory dues:

(a) The company has been regular in depositing undisputed statutory dues, including provident fund, employee state insurance, income-tax, sales tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it to the appropriate authorities. There have been few instances of delayed deposit

(b) There were no undisputed amount payable in respect of provident fund, employee state insurance, wealth tax, customs duty, excise duty, cess and other material statutory dues in arrears as on 31st March, 2018 for period of more than six months from the date they became payable. The particulars of dues of sales tax and Entry tax as at March 31, 2018 which have not been deposited on account of a dispute are as follows:

Nature of Statutes (nature of dues)	Fourm where dispute is pending	Period to which the amount relates	Amount involved Rs. In Lakhs	Amount Unpaid Rs. In Lakhs
Sales Tax	Additional Commissioner of Sales Tax, Central Zone, Cuttack, Orrisa (Sales Tax)	1999-2000 to 2001-02	72.18	72.18
Entry Tax	Additional Commissioner of Commercial Taxes, Range -II, Cuttack, Orissa (Entry Tax)	2001-02	3.38	3.38
Entry Tax	Joint Cimmissioner of Commercial Tax, Angul Range, Angul, Orrisa (Entry Tax)	2002-03	0.79	0.79
Sales Tax	Joint Cimmissioner of Commercial Tax, Angul Range, Angul, Orrisa (Entry Tax)	2002-03	24.10	24.10

(vii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to financial institutions, bank and Government.

(viii) The company has not raised money by way of initial public offer or further public offer of equity shares convertible securities and debt securities hence reporting under clause (ix) of the CARO 2016 order is not applicable.

(ix) To the best of our knowledge and according to the information and explanations given to us, no fraud by the company or any fraud on the company by its officers or employees has been noticed or reported during the year.

(x) In our opinion and according to the information and the explanations given to us, the company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013

(xi) The company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 is not applicable

(xii) In our opinion and according to the information and the explanations given to us, the company is in compliance with section 188 and 177 of the Companies Act, 2013 where applicable for all transaction with the related parties and the details of related party transaction have been disclosed in the notes to the financial statements as required by the applicable accounting standards.

(xiii) In our opinion and according to the information and the explanations given to us, during the year the company has not entered into any non cash transactions with its directors or persons connected with him and hence provisions section 192 of the Companies Act, 2013 are not applicable.

(xiv) The company is not required to be registered under section 45-1 of the Reserve Bank of India Act, 1934.

	For T. MORE a CO.
	Chartered Accountants
	Firm Regn. No. 327844E
Place : KOLKATA	TANISHA MORE
	Proprietor
	C.A. Membership No. 301569
Dated, the 30th day of May, 2018

ANNEXURE "B" TO THE INDEPENDENT AUDITORS'' REPORT OF NILACHAL REFRACTORIES LIMITED

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

We have audited the internal financial controls over financial reporting of NILACHAL REFRACTORIES LIMITED (The Company) as of 31st March, 2018 in conjunction with our audit of the standalone financial statements of the company for the year ended on that date.

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 the internal control stated in the Guidance Note on Audit or 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 Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion of the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of internal Financial Controls. Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under section 143(10) of the Companies Act, 2013 to the extent applicable to an audit of internal Financial Control. 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 judgement, including the assessment of the risks of material misstatement of the financial statement whether due to fraud or error.

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

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes these policies and procedures that (1) pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

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

	For T. MORE & CO.
	Chartered Accountants
	Firm Regn. No. 327844E
Place : KOLKATA	TANISHA MORE
	Proprietor C.A. Membership No. 301569
Dated, the 30th day of May, 2018

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Mar 31, 2015

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

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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

AUDITOR'S RESPONSIBILITY

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 here under.

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

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

BASIS FOR QUALIFIED OPINION

The Company has not provided for depreciation as required under sub section (2) of section 123 which constitutes a departure from the Accounting Standards referred to in Section 133 of the Act. However, in absence of necessary information being made available to us, impact of the same on the loss for the year of the company and corresponding effect on Fixed assets cannot be ascertained and quantified.

The company has made provision for gratuity and leave encashment liability as per the provisions of the relevant act and not as per actuarial valuation which constitutes a departure from the Accounting Standards referred to in Section 133 of the Act. However, in absence of necessary information being made available to us, impact of the same on the loss for the year of the company and corresponding effect on liability cannot be ascertained and quantified.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and feir view in conformity with the accounting principles generally accepted in India:

- In the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2015

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order.

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

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

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

(c) The Balance Sheet, 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 except for the effects of the matters described in the Basis for Qualified Opinion paragraph.

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

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

i. The Company has filed a writ petition in Honorable High Court of Kolkata against SEBI Circular no. CIR/MRD/DSA/3I/2013 dated September 30,2013 pursuance to arbitrary actions taken for reasons beyond the control of Company.

ii. The Company has made no provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts as there are no such contracts prevailing ; and

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

The Annexure referred to in our Independent Auditors' Report to the members of the Company on the financial statements for the year ended 31 March 2015, we report that:

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

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

(ii) (a) The inventories have been physically verified at reasonable intervals by the management.

(b) In our opinion and according to the information and explanations given to us the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of its inventories and no material discrepancies have been noticed on physical verification of stocks as compared to book records.

(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the sub-clauses (a) and (b) are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal I control system 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 and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

(v) According to the information and explanation given to us, the Company has not accepted any deposits in terms of directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Act and the rules framed there under.

(vi) We are informed that the Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the products dealt in by the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities but there have been few instances of delayed deposit but we are informed that there are no arrears of outstanding statutory dues as at the last day of the financial year under audit 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 material dues of wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute, However, according to information and explanations given to us, the. following dues of income tax, sales tax, service tax and value added tax have-not been deposited by the Company on account of disputes:

Financial Year to which Forum where matter is pending Amount in the matter pertains Lacs

1999-00 to 2001-02 Additional Commissioner of Sales Tax, Central Zone, 72.18 Orissa, Cuttack (Sales Tax)

2001-02 Additional Commissioner of Commercial Taxes 3.38 Range-II, Orissa, Cuttack (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, Angul 0.79 Range, Angul,Orissa, (Entry Tax)

2002-03 Joint Commissioner of Commercial Taxes, Angul 24.10 Range, Angul, Orissa, (sales Tax)

(c) According to the information and explanations given to us there were no amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

(viii) The Company have accumulated losses at the end of the financial year but which are less than fifty percent of its net-worth and has incurred cash losses in the financial year under review and also in the immediately preceding financial year.

(ix) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks.

(x) In our opinion and according to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xi) According to the information and explanations given to us, the term loans obtained in earlier years have been applied for the purpose for which the loan were obtained.

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

For P Mukhopadhyay & Co.

Chartered Accountants

Firm's registration number 302085E

Subhas Mukhopadhyay

Place: Kolkata Partner

Date: 31st May 2015 Membership number: 050384

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Mar 31, 2014

1. We have audited the accompanying financial statements of Nilachal Refractories Limited, (the "Company"), which comprise the Balance Sheet as at 31st March, 2014, the statement of Profit & Loss and the cash flow statement for the year ended and the summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. The company's 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 standard notified under the Companies Act, 1956 (the Act) which continue to be applicable in respect of the section 133 of the Companies Act,2013 in terms of General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of Internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

3. 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 the ethical requirement and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosure in the financial statements. The procedure selected depends on the Auditors' judgement, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessment the auditor considers the internal control relevant to the company's preparation and fair presentation of the financial statements in order to design audit procedure that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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

Basis for Qualified Opinion

5. The liability for Gratuity and leave encashment has been determined on basis other than actuarial valuation and which is not in conformity with AS-15 viz., "Employee Benefits" issued by the Institute of Chartered Accountants of India and the Liability remains unfunded.

Qualified Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis Qualified Opinion paragraph, 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 :-

1. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st. March, 2014 and;

2. In the case of Profit and Loss Account, of the Loss for the year ended on that date.

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

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 27.12.7 to the financial statements regarding lock out of the factory of the Company for the period from 24th March 2014 to 19th December 2014.

Report on Other Legal and regulatory Requirements

7. As required by the Companies (Auditors' 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 Act (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the mattes specified in paragraphs 4 and 5 of the Order.

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

1. 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.

2. 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.

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

4. In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the Balance Sheet and Statement of Profit and Loss and the cash flow statement comply with the accounting standards notified under the Act read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013 comply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956.

5. On the basis of written representations received from the directors as on 31st March, 2014 and taken on record by the Board of Directors, that none of the directors is disqualified as on 31st March, 2014 from being appointed as a director of in terms of section 274(1) (g) of the Companies act, 1956

ANNEXURE II TO INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED 31st MARCH. 2014 OF NILACHAL REFRACTORIES LIMITED. (Referred to in paragraph 6 of our report of even date)

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

(b) As explained to us the assets have been physically verified by the management during the year where no material discrepancies were noticed.

(c) During the year under review no asset has been disposed off.

ii) (a) The inventory has been physically verified during the year by the management and no material discrepancies were noticed.

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

(c) The company is maintaining proper record of inventory.

iii) (a) It is reported to us that the company has not granted any loan, secured or unsecured to companies, firms or other parties covered under section 301 of the Companies Act, 1956.

(b) In view of our comment in paragraph iii(a) above, clause 3(b), 3(c) and 3(d) of paragraph iii of the aforesaid order are not applicable to the company.

(c) The company has taken unsecured loans from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. The company, in order meet its financial commitment, has brought in further unsecured loan from the promoters/share holders amounting in total to Rs.813,76 lakh involving 11 parties, transferred Rs. 932.19 lakhs to 0% Preference Shares, against which 932191 preference shares have been issued at par involving 6 parties, repaid a sum amounting to Rs.1028.77 lakh involving 11 parties, retaining a balance of Rs. 552.57 lakh at the year end.

(d) Interest has been charged on such loans during the year and other terms and conditions of the loans taken by the company, secured or unsecured are, prima facie, not prejudicial to the interest of the company.

(e) The unsecured loan repayment is done on demand and during the year under review, the principal has been partly repaid to the tune of Rs. 1028.77 lakhs involving 11 parties and the company is regular in payment of principal and interest.

iv) In our opinion and according to the information and explanations given to us and considering the status of the company mentioned elsewhere in this report, there are adequate internal control system commensurate with the size of the company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) (a) According to the information and explanations given to us, the particulars of contracts and arrangements referred in section 301 of the companies Act, 1956 other than as mentioned in clause (iii) above has been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

vi) We are informed that, the unsecured loan brought in by the promoters/shareholders are not covered under Public Deposit pursuant to clause 2(b)(xi) of the Companies (Acceptance of deposits) Rules 1975.

vii) The company had an internal audit system by external agency, commensurate with its size and nature of its business during the First quarter of the year under review.

viii) Maintenance of cost records is being done as prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 in respect of the company.

ix) a) The Company have paid undisputed statutory dues of Provident Fund, Employees State Insurance and Service Tax but there have been few instances for delayed payments in respect of the same, as regards to other statutory dues like Income Tax, Sales Tax, Wealth Tax, Custom Duty Excise Duty, Cess and Investor Education and Protection Fund, no irregularities in deposit of the same were noticed.

b) According to the information and explanations given to us, the disputed tax liability of sales tax and entry tax assessment which have not been deposited is listed below:

Financial Forum where matter is pending Amount year Rs. In Lakhs 1999-00 to Additional Commissioner of Sales Tax, 2001-02 Central Zone, Orissa, Cuttack(Sales Tax) 72.18

2001- 02 Assistant Commissioner of Commercial Tax, 3.38 Range-II Orissa, Cuttack (Entry Tax)

2002- 03 Joint Commissioner of Commercial Tax, 0.79 Angul Range, Angul, Orissa, (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, Angul 24.10 Range, Angul, Orissa, (Sales Tax)

x) The accumulated losses of the company at the year end is less than fifty percent of its net worth at the year end. The company has incurred cash loss during the year covered under this audit and had not incurred cash loss in the immediately preceding year.

xi) As per the records and documents produced before us, we are of opinion that the company is regular in payment of dues to the Bank against Term Loan in the year under review.

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

xiii) The provisions of any special statute applicable to chit fund or a nidhi/mutual benefit fund/society are not applicable to the company.

xiv) The company is not dealing in or trading in shares, securities, debentures and other investments

xv) As reported to us the company has not given any guarantee for loans taken by others.

xvi) No Term Loan was taken during the year under Audit.

xvii) According to the information and explanations given to us the fund brought in is being utilized for revival of the company and on an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

xviii) The Company has made preferential allotment of shares during the year to parties and companies covered under section 301 of the Act and we believe that the price at which the shares have been issued is not apparently prejudicial to the interest of the company.

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

xx) The company has not raised money by public issue during the year.

xxi) In our opinion and according to the information and explanations given to us during the course of our audit, no fraud on or by the company has been noticed or reported during the year.

For P Mukhopadhyay & Co. Chartered Accountants Registration No.- 302085E

Subhas Mukhopadhyay Partner Membership No.- 050384

PLACE : Kolkata DATE : 25 March, 2015

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Mar 31, 2013

Report on the Financial Statement

1. We have audited the accompanying financial statements of Nilachal Refractories Limited, (the "Company"), which comprise the Balance Sheet as at 31st March, 2013, the statement of Profit & Loss and the cash flow statement for the year ended and the summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. The company''s 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 standard referred to in sub-section 3C of section 211 of the Companies Act, 1956 (the Act) and in accordance with the accounting principle generally accepted in India.. This responsibility includes the design, implementation and maintenance of Internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. 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 the ethical requirement and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosure in the financial statements. The procedure selected depends on the Auditors'' judgement, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessment the auditor considers the internal control relevant to the company''s preparation and fair presentation of the financial statements in order to design audit procedure that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

5. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements, subject to the note in clause 5(d) of this report, 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, 2013;

b) In the case of the statement of profit and loss, of the profit of the company for the year ended as on that date; and

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

Report on Other Legal and regulatory Requirements

6. As required by the companies (Auditor''s Report) Order, 2003 (the "Order") issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the order.

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

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

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

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

d) In our opinion, the balance sheet, the statement of profit and loss, and the cash flow statement comply with the accounting standards referred to in sub-section (3C) of section 211of the companies act, 1956.

e) The liability for Gratuity and leave encashment has been determined on basis other than actuarial valuation and which is not in conformity with AS-15 and remains unfunded.

f) On the basis of written representations received from the directors as on 31 st March, 2013 and taken on record by the Board of Directors, that none of the directors is disqualified as on 31st March, 2013 from being appointed as a director of in terms of section 274(1) (g) of the Companies act, 1956

ANNEXURE TO INDEPENDENT AUDITOR''S REPORT FOR THE YEAR ENDED 31st MARCH, 2013 OF NILACHAL REFRACTORIES LIMITED.

(Referred to in paragraph 6 of our report of even date)

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

(b) As explained to us the assets have been physically verified by the management during the year where no material discrepancies were noticed.

(c) The asset disposed off during the year is not significant and therefore do not affect the going concern assumption.

(ii) (a) The inventory has been physically verified during the year by the management where no material discrepancies were noticed.

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

(c) The company is maintaining proper record of inventory.

iii) (a) It is reported to us that the company has not granted any loan, secured or unsecured to companies, firms or other parties covered under section 301 of the Companies Act, 1956.

(b) In view of our comment in paragraph iii(a) above, clause 3(b), 3(c) and 3(d) of paragraph iii of the aforesaid order are not applicable to the company.

(c) The company has taken unsecured loans from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. The company, in order meet its financial commitment, has brought in further unsecured loan from the promoters/share holders amounting in total to Rs. 1539.94 lakh involving 28 parties, transferred Rs. 2700 lakhs to share application money, against which 13500000 equity shares have been issued at a premium of Rs.10/- each share involving 27 parties, repaid a sum amounting to Rs.1499.74 lakh involving 21 parties, retaining a balance of Rs. 1202.56 lakh at the year end.

(d) Interest has been charged on such loans during the year and other terms and conditions of the loans taken by the company, secured or unsecured are, prima facie, not prejudicial to the interest of the company.

(e) The unsecured loan repayment is done on demand and during the year under review, the principal has been partly repaid to the tune of Rs.1499.74 lakhs involving 21 parties and the company is regular in payment of principal and interest.

(iv) In our opinion and according to the information and explanations given to us and considering the status of the company mentioned elsewhere in this report, there are adequate internal control system commensurate with the size of the company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information and explanations given to us, the particulars of contracts and arrangements referred in section 301 of the companies Act, 1956 other than as mentioned in clause (iii) above has been entered in the register maintained under that section,

b) In our opinion and according to the information and explanations given to us, where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) We inform that, the unsecured loan brought in by the promoters/shareholders are covered under Public Deposit pursuant to caluse 2(b)(xi) of the Companies (Acceptance of deposits) Rules 1975.

(vii) The company has an internal audit system by external agency, commensurate with its size and nature of its business.

viii) Maintenance of cost records is being done as prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 in respect of the company.

(ix) a) The Company have paid undisputed statutory dues of Provident Fund, Employees State Insurance and Service Tax but there have been few instances for delayed payments in respect of the same, as regards to other statutory dues like Income Tax, Sales Tax, Wealth Tax, Custom Duty Excise Duty, Cess and Investor Education and Protection Fund, no irregularities in deposit of undisputed dues were noticed.

(b) According to the information and explanations given to us, the disputed tax liability of sales tax and entry tax assessment which have not been deposited is listed below:

Financial year to which the Forum where matter is pending Amount matter pertains Rs. In Lakhs

1999-00 to 2001-02 Additional Commissioner of Sales Tax, Central Zone, 72.18 Orissa, Cuttack (Sales Tax)

2001-02 Assistant Commissioner of Commercial Tax, Range-II, 3.38 Orissa, Cuttack (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, Angul Range, 0.79 Angul, Orissa, (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, Angul Range, 24.10 Angul, Orissa, (Sales Tax)

(x) The accumulated losses of the company at the year end is less than fifty percent of its net worth at the year end. The company has incurred cash loss during the year covered under this audit and had not incurred cash loss in the immediately preceding year.

(xi) As per the records and documents produced before us, we are of opinion that the company is regular in payment of dues to the Bank against Term Loan in the year under review.

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

(xiii) The provisions of any special statute applicable to chit fund or a nidhi/mutual benefit fund/society are not applicable to the company.

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) As reported to us the company has not given any guarantee for loans taken by others.

(xvi) No Term Loan was taken during the year under Audit.

(xvii) According to the information and explanations given to us the fund brought in is being utilized for revival of the company and on an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

(xviii)The Company has made preferential allotment of shares during the year to parties and companies covered under section 301 of the Act at a price as per valuation made by independent valuer and we believe that the price at which the shares have been issued is not apparently prejudicial to the interest of the company.

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

(xx) The company has not raised money by public issue during the year.

(xxi) In our opinion and according to the information and explanations given to us during the course of our audit, no fraud on or by the company has been noticed or reported during the year.

For P Mukhopadhyay & Co.

Chartered Accountants

(Registration no. 302085E)

Subhas Mukhopadhyay

Place: Kolkata Partner

Dated: June 30,2013 Membership Number : 050384

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Mar 31, 2012

1. We have audited the attached balance sheet of Nilachal Refractories Limited, as at 31 st March, 2012, the Profit & Loss account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 of our opinion.

3. As required by the companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. The liability for Gratuity and leave salary payable to the staffs has been made as per actual liability as on 31s' March' 2012 and not as per actuarial valuation and the liability remains non funded.

5. Further to our comments in the Annexure referred to above and subject to note 4 above and read together with other notes in the schedule annexed to the financial statements for the year, we report that:

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

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

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

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

e. On the basis of written representations received from the directors and taken on record by the Board of Directors we report that none of the directors is disqualified as on 3 lsl March, 2012 from being appointed as a director of the company in terms of section 274( 1) (g) of the companies act, 1956

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

L In the case of balance sheet, of the state of affairs of the company as at 3 lsl March, 2012;

ii. In the case of profit and loss account, of the profit for the year ended on that date; and

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





ANNEXURE TO AUDITOR'S REPORT FOR THE YEAR ENDED 31st MARCH, 2012 OF

NILACHAL REFRACTORIES LIMITED.

(Referred to in paragraph 3 of our report of even date)

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

(b) The assets have been physically verified by the management during the year where no material discrepancies were noticed.

(c) No fixed assets has been disposed off during the year.

(ii) (a) The inventory has been physically verified during the year by the management where no material discrepancies were noticed.

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

(c) The company is maintaining proper record of inventory.

iii) (a) It is reported to us that the company have not granted any loan, secured or unsecured to companies, firms or other parties covered under section 301 of the Companies Act, 1956.

(b) In view of our comment in paragraph 3(a) above , clause 3(b), 3(c) and 3(d) of the paragraph 3 of the aforesaid order are not applicable to the Company.

(c) The company has taken loans, secured or unsecured from the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. In order to meet its financial commitment, unsecured loan from the promoters/share holders amounting to Rs.2222 lakh involving 15 parties has brought in further and have balance of Rs. 3747 lakh at the year end (31s1 March 2012),

(d) Interest has been charged on such loans during the year and other terms and conditions of the loans taken by the Company, secured or un-secured are, prima facie, not prejudicial to the interest of the company.

(e) The Term Loan repayment is done on demand and during the year under review, the principal has been partly repaid to the tune of Rs 1005 lakh involving 9 parties and hence principal and interest are regular in payment.

(iv) In our opinion and according to the information and explanations given to us and considering the status of the company mentioned elsewhere in this report, there are adequate internal control system commensurate with the size of the company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information and explanation given to us, the particulars of contracts and arrangements referred in section 301 of the companies Act, 1956 other than as mentioned in clause (iii) above has been entered in the register maintained under that section.

b) In our opinion and according to the information and explanations given to us, where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) We informed that, the unsecured loan brought in by the Promoters/shareholders are not covered under Public Deposit pursuant to clause 2(b) (xi) of the Companies (Acceptance of Deposits) Rules, 1975

(vii) The company has an internal audit system by external agency, commensurate with its size and nature of its business.

viii) Maintenance of cost records is being done as prescribed by the Central Government under section 209( 1) (d) of the Companies Act, 1956 in respect of the company.

(ix) a) The Company have paid undisputed statutory dues of Provident Fund, Employees' State Insurance and Service Tax but there have been few instances for delayed payments in respect of the same, as regards to other statutory dues like Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and Investor Education and Protection Fund, no irregularities in deposit of undisputed dues were noticed.

(b) According to the information and explanations given to us, the disputed tax liability of sales tax and entry tax assessment which have not been deposited is listed below:



Financial year to which the Forum where matter is pending Amount matter pertains Rs. In Lakhs

1999-00 to 2001-02 Additional Commissioner of Sales Tax, 72.18 Central Zone, Orissa, Cuttack (Sales Tax)

2001-02 Assistant Commissioner of 3.38 Commercial Tax, Range-II, Orissa, Cuttack (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, 0.79 Angul Range, Angul, Orissa, (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, 24.10 Angul Range, Angul, Orissa, (Sales Tax)





(x) The accumulated losses of the company are more than fifty percent of its net worth at the year end. The company has not incurred cash loss during the year covered under thi s audit and had not incurred cash loss in the immediately preceding year.

(xi) As per the records and documents produced before us, we are of opinion that the company is regular in payment of dues to the Bank against Term Loan in the year under review.

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

(xiii) The provisions of any special statute applicable to chit fund or a nidhi/mutual benefit fund/ society are not applicable to the company

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments

(xv) As reported to us the company has not given any guarantee for loans taken by others.

(xvi) No Term Loan was taken during the year under Audit.

(xvii) According to the information and explanations given to us the fund brought in is being utilized for revival of the company and on an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

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

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

(xx) The company has not raised money by public issue during the year.

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



For P. Mukhopadhyay & Co.

Chartered Accountants

(Registration no. 302085E)

(Subhas Mukhopadhyay)

Place : Kolkata Partner

Dated : September 4,2012 Membership Number: 050384

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Mar 31, 2011

1. We have audited the attached balance sheet of Nilachal Refractories Limited, as at 31st March, 2011, the Profit & Loss account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 of our opinion.

3. As required by the companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4.1 The Hon'ble Board of Industrial and Financial Reconstruction had declared the Company to be a sick Company and vide its Order dated 06/12/2005 and had approved the rehabilitation scheme and accordingly a change of Management had taken place with effect from 19/12/2005. The Hon'ble Board of Industrial and Financial Reconstruction vide order dated 11.11.2010 had reviewed the position of the Company and decided that the Company has ceased to be a sick Company within the meaning of section 3(1)(o) of the SICA and have discharged the Company from the purview of SICA/BIFR.

4.2 The liability for Gratuity and leave salary payable to the staffs has been made as per actual liability as on 31st March' 2011 and not as per actuarial valuation and the liability has not been deposited in separate fund.

5. Further to our comments in the Annexure referred to above and subject to note 4.2 above and read together with other notes in the schedule annexed to the financial statements for the year, we report that:

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

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

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

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

e. On the basis of written representations received from the directors and taken on record by the Board of Directors we report that none of the directors is disqualified as on 31st March, 2011 from being appointed as a director of the Company in terms of section 274(1) (g) of the companies act, 1956

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

i. In the case of balance sheet, of the state of affairs of the Company as at 31st March, 2011;

ii. In the case of profit and loss account, of the profit for the year ended on that date; and

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

ANNEXURE TO AUDITOR'S REPORT FOR THE YEAR ENDED 31st MARCH, 2011 OF NILACHAL REFRACTORIES LIMITED.

(Referred to in paragraph 3 of our report of even date)

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

(b) The assets have been physically verified by the management during the year where no mate- rial discrepancies were noticed.

(c) No fixed assets has been disposed off during the year.

(ii) (a) The inventory has been physically verified during the year by the management where no material discrepancies were noticed.

(b) The procedure of physical verification of inventory followed by the management is reason- able and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper record of inventory.

(d) Accounting Standard -2 in respect of non provision of excise duty on closing stock of fin- ished goods, consequently the value of closing stocks is understated by Rs. 5842273/-. However it has no impact on the working result of the year and revenue is neutral

(iii) (a) It is reported to us that the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered under section 301 of the Companies Act, 1956. The Company pursuant to meet its financial commitment, has brought in further unsecured loan from the promoters/share holders amounting in total to Rs.2655 lakh involving 15 par- ties and has repaid a sum amounting to Rs.435 lakh involving 8 parties retaining a balance of Rs. 2220 lakh at the year end.

(b) Interest @12.50% has been charged on such loans during the year and other terms and conditions of the loans brought in are, prima facie, not prejudicial to the interest of the Company.

(c) The principal has been partly repaid during the year under consideration as per mutual un- derstanding and since the promoters are trying to expand the operation of the Company no amount is considered to be overdue.

(iv) In our opinion and according to the information and explanations given to us and considering the status of the Company mentioned elsewhere in this report, there are adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During course of our audit, we have not observed any continuing failure to correct major weak- nesses in internal control system.

v) a) According to the information and explanation given to us, the particulars of contracts and arrangements referred in section 301 of the companies Act, 1956 other than as mentioned in clause (iii) above has been entered in the register maintained under that section.

b) In our opinion and according to the information and explanations given to us, where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) As regards to the unsecured loan brought in by the promoters are not covered under u/s 58Aand 58AA .We state that, the unsecured loan brought in by the Promoters/shareholders are not covered under Public Deposit pursuant to clause 2(b) (xi) of the Companies (Ac- ceptance of Deposits) Rules, 1975

(vii) The Company has an internal audit system by external agency, commensurate with its size and nature of its business.

(viii) Maintenance of cost records has not been prescribed by the Central Government under section 209(1) (d) of the Companies Act, 1956 in respect of the Company.

(ix) a) As regards to statutory dues like Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and Investor Education and Protection Fund, no irregularities in deposit of undisputed dues were noticed. However, there were some delays on certain occasion with regard to deposit of undisputed statutory dues like Provident Fund, Employ- ees State Insurance and Service Tax. The arrear of statutory dues on the last day of financial year concern for a period of more than six months from the date they became payable is Rs. NIL

(b) According to the information and explanations given to us, there are no disputed dues of income tax, wealth tax, service tax, customs duty, excise duty, and cess except demands raised on sales tax and entry tax assessment which have been disputed and have not been deposited as below:

Financial year to which the Forum where matter is pending Amount matter pertains Rs. In Lakhs

1999-00 to 2001-02 Additional Commissioner of Sales Tax, 72.18 Central Zone, Orissa, Cuttack (Sales Tax)

2001-02 Assistant Commissioner of 3.38 Commercial Tax, Range-II, Orissa, Cuttack (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, 0.79 Angul Range, Angul, Orissa, (Entry Tax)

2002-03 Joint Commissioner of Commercial Tax, 24.10 Angul Range, Angul, Orissa, (Sales Tax)

(x) The accumulated losses of the Company are more than fifty percent of its net worth at the year end. The Company has not incurred cash loss during the year covered under this audit and had not incurred cash loss in the immediately preceding year.

(xi) As per the records and documents produced before us, we are of the opinion that the Company is regular in payment of dues to the Bank against Term Loan in the year under review.

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

(xiii) The provisions of any special statute applicable to chit fund or a nidhi/mutual benefit fund/ society are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other invest- ments

(xv) As reported to us the Company has not given any guarantee for loans taken by others.

(xvi) No Term Loan was taken during the year under Audit.

(xvii) According to the information and explanations given to us the fund brought in is being utilized for expansion of the manufacturing facilities of the Company and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis have been used for long term investment.

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

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

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

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

For P. Mukhopadhyay & Co. Chartered Accountants (Registration no. 302085E)

(Subhas Mukhopadhyay) Partner Membership Number: 050384

Kolkata Dated :27th June 2011

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Mar 31, 2010

1. We have audited the attached balance sheet of Nilachal Refractories Limited, as at 31 st March, 2010, the Profit & Loss account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 of our opinion.

3. As required by the companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4.1 The Board of Industrial and Financial Reconstruction had declared the Company to be a sick Company and vide its Order dated 06/12/2005 and has approved the rehabilitation scheme and accordingly a change ofManagement had taken place with effect from 19/12/2005. The manufacturing process was started from April 2006.The sanctioned rehabilitation scheme has been implemented by the new Management. The financial statements have been drawn on assumption of "Going Concern" concept.

4.2 The liability for Gratuity and leave salary payable to the staffs has been made as per actual liability as on 31s March 2010 and not as per actuarial valuation and the liability has not been deposited in separate fund.

5. Further to our comments in the Annexure referred to above and subj ect to note 4.2 above and read together with other notes in the schedule annexed to the financial statements for the year, we report that:

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

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

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

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

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

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

i. In the case of balance sheet, of the state of affairs of the company as at 31st March, 2010;

ii. In the case of profit and loss account, of the profit for the year ended on that date; and

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

ANNEXURE TO AUDITORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2010 OF NILACHAL REFRACTORIES LIMITED.

(Referred to in paragraph 3 of our report of even date)

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

(b) The assets have been physically verified by the management during the year where no material discrepancies were noticed.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the company and such disposal, in our opinion, has not affected the going concern status of the Company.

(ii) (a) The inventory has been physically verified during the year by the management where no material discrepancies were noticed.

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

(c) The company is maintaining proper record of inventory.

m) (a) It is reported to us that the company has not granted any loan, secured or unsecured to companies, firms or other parties covered under section 301 of the Companies Act, 1956. The company pursuant to order of the honble BIFR has brought in further unsecured loan from the promoters amounting in total to Rs.920.65 lakh involving 13 parties and has repaid a sum amounting to Rs.581.00 lakh involving 5 parties and has converted Rs.990.00 lakh into 0% redeemable preference shares involving 10 parties retaining a balance of Rs. 310.00 lakh at the year end.

(b) No interest has been charged on such loans and other terms and conditions of the loans brought in are, prima facie, not prejudicial to the interest of the company.

(c) The principal has been partly repaid during the year under consideration as per mutual understanding and since the promoters are trying to revive the unit of the company no amount is considered to be overdue.

(iv) In our opinion and according to the information and explanations given to us and considering the status of the company mentioned elsewhere in this report, there are adequate internal control system commensurate with the size of the company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information and explanation given to us, the particulars of contracts and arrangements referred in section 3 01 of the companies Act, 1956 other than as mentioned in clause (iii) above has been entered in the register maintained under that section.

b) In our opinion and according to the information and explanations given to us, where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) Persuant to the order of the Honble BIFR the new promoters have brought in unsecured loans. In the opinion of the Directors, since the said amount brought in by the Promoters in compliance with the order of the Honble BIFR, the same is not covered under Public Deposit pursuant to clause 2(b) (xi) of the Companies (Acceptance of Deposits) Rules, 1975.

(vii) The company has an internal audit system by external agency, commensurate with its size and nature of its business.

viii) Maintenance of cost records has not been prescribed by the Central Government under section 209( 1) (d) of the Companies Act, 1956 in respect of the company.

(ix) a) The Company is not regular in deposit of undisputed statutory dues of Provident Fund, Employees State Insurance and Service Tax and as regards to other statutory dues like Income Tax, Sales Tax, Wealth Tax,Costum Duty, Excise Duty, Cess and Investor Education and Protection Fund, no irregularities in deposit of undisputed dues were noticed. The arrear of statutory dues on the last day of financial year concern for a period of more than six months from the date they became payable is Rs. NIL

(b) According to the information and explanations given to us, there are no disputed dues of income tax, wealth tax, service tax, customs duty, excise duty, and cess except demands raised on sales tax and entry tax assessment which have been disputed and have not been deposited as below:



Financial year to which Forum where matter is pending Amount Rs. In Lakhs the matter pertains

1999-00 to 2001 -02 Additional Commissioner of Sales Tax, Central Zone, Orissa, Cuttack (Sales Tax) 72.18

2001-02 Assistant Commissioner of Commercial Tax, Range-II, Orissa, Cuttack (Entry Tax) 3.38

2002-03 Joint Commissioner of Commercial Tax, Angul Range-, Angul, Orissa (Entry Tax) 0.79

2002-03 Joint Commissioner of Commercial Tax, Angul Range-, Angul, Orissa (Sales Tax) 24.10



(x) The accumulated losses of the company are more than fifty percent of its net worth at the year end. The company has not incurred cash loss during the year covered under this audit and had not incurred cash loss in the immediately preceding year.

(xi) As per the records and documents produced before us, we are of opinion that the company has not defaulted in repayment of dues to the Bank against term loan.

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

(xiii) The provisions of any special statute applicable to chit fund or a nidhi/mutual benefit fund/society are not applicable to the company.

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments

(xv) As reported to us the company has not given any guarantee for loans taken by others.

(xvi) No Term Loan was taken during the year under Audit.

(xvii) According to the information and explanations given to us the fund brought in is being utilized for revival of the company as per sanctioned rehabilitation scheme of Honble BIFR and on an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) During the year the Company has converted part of unsecured loan into 9,90,000 Nos. zero % Redeemable Preference Shares of Rs.100/- each, at par, on preferential basis, to parties and companies covered in the Register maintained under section 301 of he Companies Act 1956 and in our opinion, the price at which the shares have been issued is not prejudicial to the interest of the Company.

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

(xx) The company has not raised money by public issue during the year.

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



For P. Mukhopadhyay & Co.

Chartered Accountants

(Registration no. 302085E)

(Sankar Prasad Mukhopadhyay)

Kolkata Partner

Dated : 12/08/2010 Membership Number: 050779