Auditor Report of Orient Paper & Industries Ltd.

Mar 31, 2019

Independent Auditors'' Report

To the Members of Orient Paper & Industries Limited Report on the audit of the Standalone financial statements

Opinion

1. We have audited the accompanying standalone financial statements of Orient Paper & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2019, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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, 2019, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.

Key audit matter

How our audit addressed the key audit matter

Management''s assessment relating to litigation in respect of levy of excess usage of water and impact on the financial statements (Refer Note 51(c) to the financial statements) Amount of H 98248.03 lacs (including interest and penalty of H 96835.10 lacs) has been disclosed as ''contingent liability'' in the financial statements which represents excess water consumption charges levied by Madhya Pradesh State Government (period up to April 2009) against the Company. The Company is contesting the said demand and had filed writ petition in the High Court of Madhya Pradesh and obtained interim stay in year 2015. The Company has obtained external legal opinion to support their assessment around the outcome of the litigation that has led to the management''s conclusion that no provision is required to be made against the demand. We considered this to be a key audit matter as the final outcome of the litigation, in case same is decided against the Company, is likely to have significant financial impact.

We performed the following procedures in this regard: - Understood and evaluated the design and tested the operating effectiveness of controls around the assessment of the matter. - Discussed the status and likelihood of the outcome of the litigation with the external legal counsel engaged by the management. - We also evaluated the independence and competency of the management''s legal expert. - Obtained and tested evidence to support the management assessment with regard to no provisioning against the demand. - Assessed the appropriateness of disclosures made under the head ''contingent liabilities'' in the financial statements. Based on the above procedures, management''s assessment with regard to litigation in respect of levy of excess usage of water under contingent liabilities is considered reasonable.

Basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors'' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters are addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Other Information

5. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Director''s report, but does not include the financial statements and our auditors'' report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

6. The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

7. In preparing the financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditors'' responsibilities for the audit of the financial statements

8. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

9. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

10. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

11. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

12. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

13. As required by the Companies (Auditors'' 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 B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

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

(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 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 A.

(g) With respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11 of

the Companies (Audit and Auditors) Rules, 2014, in our opinion and to 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 51 to the financial statements.

ii. The Company has long-term contracts as at March 31, 2019 for which there were no material foreseeable losses. The Company did not have any derivative contracts as at March 31, 2019.

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

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable to the Company for the year ended March 31, 2019.

Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Act

1. We have audited the internal financial controls with reference to financial statements of Orient Paper & Industries Limited ("the Company") as of March 31, 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

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

Auditors'' Responsibility

3. Our responsibility is to express an opinion on the Company''s internal financial controls with reference to financial statements 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") and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

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

Meaning of Internal Financial Controls with reference to financial statements

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

Inherent Limitations of Internal Financial Controls with

reference to financial statements

7. Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial control controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, an adequate internal financial controls

system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2019, 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.

i. (a) The Company is maintaining 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 have been noticed on such verification.

(c) The title deeds of immovable properties, as disclosed in Note 3 on property, plant and equipment, Note 4 on investment properties and Note 18 on assets classified as held for sale to the Ind AS financial statements, are held in the name of the Company, except for the cases below:

Asset category	Gross Block as at March 31, 2019 (H in lacs)	Net Block as at March 31, 2019 (H in lacs)	Remarks
Freehold Land Leasehold Land	243.33 2.17	243.33 2.17	Correction in land records in Company’s name is pending.
Buildings	47.10	38.38	Held in joint ownership, registration in the name of the Company is pending
Investment Properties	432.94	432.94	Registration in the name of the Company is pending

ii. The physical verification of inventory have been conducted at reasonable intervals by the Management during the year. The discrepancies noticed on physical verification of 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. Therefore, the provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.

iv. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.

vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations

given to us and the records of the Company examined by us, in our opinion, except for dues in respect of Industrial License Fees under Orissa Municipal Act, the Company is generally regular in depositing undisputed statutory dues in respect of income tax, professional tax and goods and service tax, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including provident fund, employees'' state insurance, value added tax, sales tax, service tax, duty of customs, duty of excise, cess and other material statutory dues, as applicable, with the appropriate authorities. The extent of the arrears of statutory dues outstanding as at March 31, 2019, for a period of more than six months from the date they became payable are as follows:

Also refer note 47(iv) to the financial statements regarding management''s assessment on certain matters relating to provident fund.

Name of the statute	Nature of dues	Amount (I in lacs)	Period to which the amount relates	Due date	Date of Payment
Orissa Municipal Act	Industrial License Fees	32.39	1996-97 to 2018-19	Beginning of the respective years	Not yet paid

(b) According to the information and explanations given to us and the records of the Company examined by

Name of the statute	Nature of dues	Amount (I in lacs)	Period to which the amount relates	Forum where the dispute is pending
Central Sales Tax	Sales Tax	0.50	1986-87	High Court
Act, 1956		6.27	1995-96	Sales Tax Tribunal
		83.27	2001-02, 2007-08 and 2010-11 to 2012-13	Appellate and Revision Board
		0.12	1979-80 to 1982-83	Sales Tax Commissioner
		98.13	2015-16	Additional Commissioner
		12.22	1985-86 and 1999-2000	Assistant Commissioner
West Bengal Value Added Tax Act, 2003	Value Added Tax	40.82	2007-08	West Bengal Commercial Taxes Appellate and Revision Board
Bihar Finance Act,	Sales Tax	39.74	1994-95 to 1996-97	Commissioner of Commercial Tax
1981		7.90	1994-95 to 1997-98	Joint Commissioner of Commercial Taxes
Orissa Sales Tax Act,	Sales Tax	2.06	1985-86 and 1986-87	High Court
1947		0.02	1983-84	Assistant Commissioner
Madhya Pradesh	Value Added Tax	14.63	2006-07 to 2009-10	High Court
VAT Act, 2002		11.11	2008-09	Commercial Tax Appellate Board
M.P Commercial Tax Act, 1994	Sales Tax	7.00	2001-02	High Court
M.P Sales Tax Act,	Sales Tax	14.65	1998-99	High Court
1961		1.07	1986-87	Commercial Tax Appellate Board
Central Excise Act, 1944	Excise Duty	879.07	1975-76, 1976-77, 1982-83, 1989-90, 1994-95, 1995-96, 2005-06 to 2008-09, 2010-11 and 2011-12	Customs, Excise & Service Tax Appellate Tribunal
		23.86	2006-07 to 2008-09, 2011-12, 2012-13 and 2014-15	Commissioner (Appeals)
		0.96	2012-13 and 2013-14	Deputy Commissioner
		46.21	1975-76 to 1978-79 and 1986-87 to 1997-98	Assistant Commissioner
Madhya Pradesh Upkar (Sanshodan) Adhiniyam 2004	Energy Development Cess including Surcharge	8,242.77	2001-02 to 2017-18	Supreme Court

us, there are no dues of income-tax, service-tax, duty of customs and goods and service tax which have not been deposited on account of any dispute. The particulars of dues of sales tax, duty of excise and value added tax as at March 31, 2019 which have not been deposited on account of a dispute, are as follows:

viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the balance sheet date.

ix. In our opinion, and according to the information and explanations given to us, the moneys raised by way of term loans have been applied, on an overall basis, for the purposes for which they were obtained. The Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments).

x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. 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 to the Act.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of

Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act.

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 its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are 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. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For Price Waterhouse & Co Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009

Chartered Accountants

Avijit Mukerji

New Delhi Partner

May 2, 2019 Membership Number 056155

---

Mar 31, 2017

To the Members of

Orient Paper & Industries Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Orient Paper & Industries Limited ("the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and 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 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 accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Rct, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Rct for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control 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 Rct, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Rct and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of 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 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, its profit, and its cash flows for the year ended on that date.

Emphasis of Matter

(a) We draw attention to note 38 to the accompanying Financial Statements regarding remuneration paid to Managing Director during the years ended March 31, 2015 and March 31, 2016 which has exceeded the limit prescribed under Section 197 read with Schedule V to the Companies Act, 2013, by C178.19 lacs and C177.70 lacs respectively. As informed to us, the Company has filed application / made further representation to the Central Government for the waiver of above excess remuneration and pending receipt of the approval, no adjustments to financial statements have been made.

(b) We draw attention to note 28 to the financial statements in respect of scheme of arrangement to demerge the consumer electric business undertaking of the Company by transferring the same on a going concern basis to a newly formed wholly owned subsidiary namely "Orient Electric Ltd.” with effect from 1st March, 2017 subject to necessary approvals, more fully described therein. Pending such approvals, no adjustment has been made in these accounts.

Our opinion is not qualified in respect of the above matters.

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

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016;

(e) On the basis of written representations received from the directors as on March 31, 2017, and taken 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 2” to this report;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer note 37 to the financial statements;

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

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

iv. The Company has provided requisite disclosures in note 18 to these financial statements as to the holding of Specified Bank notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank notes during the period from November 8, 2016 to December 30, 2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of C463.88 lacs at Brajrajnagar unit,

due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non-verification of fixed assets for the reasons mentioned above.

(c) According to information and explanations given by the management, the title deeds of immovable properties, included in Fixed Assets and Investment Property are held in the name of the Company except in respect of land valuing C432.94 lacs, held in joint ownership and flats valuing C86.91 lacs whose registration in the name of the Company is still pending. Further, in respect of land aggregating to C150.11 lacs as at March 31, 2017 pertaining to the Company''s Electric unit at Faridabad for which original title deeds were not available with the Company and hence we are unable to comment on the same, although the photocopies of the title deeds were made available to us.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of C32.90 lacs at Brajrajnagar unit, due to suspension

of production activities and no material discrepancies were noticed on such physical verification.

(iii) According to the information and explanations given to us, 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 Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

name of	nature of the	Amount	Period to which the	Due Date	Date of
the statute	dues	(C in lacs) amount relates			Payment
Orissa Municipal Act	Industrial Licence Fees	28.13	1996-97 to 2015-16	Beginning of the respective years	not yet Paid

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of section 185 and 186 of the Companies Act 2013 are applicable and hence not commented upon.

(v) The Company has not accepted any deposits within the meaning of section 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund,

employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues outstanding, at the year end, for a period of more than six months from the date they became payable are as follows :

(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to a financial institution or banks. The Company did not have any outstanding dues in respect of Government or debenture holders during the year.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, duty on custom, duty of excise and value added tax on account of any dispute, are as follows:

name of the statute	nature of the dues	Period to which the amount relates	Amount (C in lacs)	Forum where dispute is pending
Central Excise and Customs Act, 1944	Disallowance of Cenvat credit on inputs and capital goods	1979-83, 1986-96, 2000-2015	453.53	Deputy/Assistant Commissioner / Commissioner/ High Court/ CESTAT
	Inclusion of interest in Assessable value	1994-96	10.99	CESTAT
	Disallowance of refund on post manufacturing expenses of paper	1976-77 to 1983-84	149.06	Deputy Commissioner
	Differential duty on manufacture of paper/ duty on various inputs due to difference in classification/ Duty on shortage /excess etc.	1975 to 1977, 1978 to 1985, 1993-97, 2000-01, 2002-03 & 2005-07	62.24	Asst Commissioner/ Commissioner Appeals/ Appelleate Tribunal/ CESTAT
MP Sales Tax Act,1961/Central Sales Tax Act 1956	Demand with respect to disallowance of cash discount, levy of higher rate of purchase tax, difference in classification of goods etc.	1998-99 to 2001-02	54.23	Asst Commissioner / Appellate Board/High Court
Other State/ Central Sales Tax Acts	Sales tax on stock transfer/export sales, non-submission of forms, penalty etc.	Various	605.36	Asst. Commissioner/ Deputy Commissioner/ Sales Tax officer / Sales Tax Appellate Tribunal/ High court
M.P Upkar Adhinium, 2004	Energy development cess on consumption of Captive power including surcharge	2001-2002 to 2016-17	6,461.13	Supreme Court

(ix) In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of right issue of equity shares and term loans for the purpose for which they were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or on the Company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, the Company has paid managerial remuneration for the years 2014-15 and 2015-16 in excess of the limit prescribed under the applicable Companies Act by C178.19 lacs and C177.70 lacs respectively. The Company has filed application / made further representation to the Central Government for the waiver of above excess remuneration and pending receipt of the approval, no steps have been taken for the recovery of excess amount so paid. Also refer EOM para (a) in the main audit report.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(xv) According to the information and explanations given by the management, the Company has not entered into any noncash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

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

We have audited the internal financial controls over financial reporting of Orient Paper & Industries Limited ("the Company”) as of March 31, 2017 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 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 the 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance note on Audit of Internal Financial Controls Over Financial

Reporting (the "Guidance note”) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent 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 judgement, 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 internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our opinion, 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, 2017, 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.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Sanjay Kumar Rgarwal

Place: new Delhi Partner

Date: May 16, 2017 Membership number: 060352

---

Mar 31, 2016

To the Members of

Orient Paper & Industries Limited

Report on the Financial Statements

We have audited the accompanying Financial statements of Orient Paper & Industries Limited ("the Company”), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and 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 matters stated in Section 134(5) of the Companies Ret, 2013 ("the Ret") with respect to the preparation of these Financial statements that give a true and fair view of the Financial position, Financial performance and cash hows of the Company in accordance with accounting principles generally accepted in India, including the Recounting Standards specified under section 133 of the Ret, read with Rule 7 of the Companies (Recounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Ret for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control 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 Ret, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Ret and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of 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 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, its profit, and its cash flows for the year ended on that date.

Emphasis of Matter

(a) We draw attention to Dote 35 to the financial statements regarding non provision of water tax demand amounting to Rs,47,434.91 lackhs (including interest and penalty of Rs,46,021.91 lackhs) against which the Company has filed writ petition with the Hon''ble High Court and obtained an interim stay on the recovery, as more fully described therein. Pending final decision in the matter, no adjustments are considered necessary at this stage.

(b) We draw attention to Dote 36 to the financial statements regarding remuneration paid to/provided for the Managing

Director of the Company during the years ended March 31, 2015 and March 31, 2016 which is in excess of the limit prescribed under Section 197 of the Act read with Schedule V to the Act, by C178.19 lackhs and C177.70 lackhs respectively. As informed to us, waiver application has since been filed by the Company for the year ended March 31, 2015 and the Company is in the process of Filing waiver application for the year ended March 31, 2016 with the Central Government for the above excess remuneration. Pending the Fling of waiver application and receipt of the approval, no adjustments to financial statements have been made.

Our Opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. Rs 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 Ret, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. Rs required by section 143 (3) of the Ret, 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 and Loss, and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the aforesaid financial statements comply with the Recounting Standards specified under section 133 of the Ret, read with Rule 7 of the Companies (Recounts) Rules, 2014;

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

(f) The matter (a) described under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company, in case of an unfavorable decision;

(g) 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 2" to this report;

(h) 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 34 and 35 to the financial statements;

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

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

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of C544.68 lackhs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Rs informed no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non-verification of fixed assets for the reasons mentioned above.

(c) Recording to information and explanations given by the management, the title deeds of immovable properties, included in Fixed Assets and Investment Property are held in the name of the Company except in respect of land valuing C432.94 lackhs, held in joint ownership and fiats valuing C79.87 lackhs whose registration in the name of the Company is still pending. Further, in respect of land aggregating to C150.ll lackhs as at March 31, 2016 pertaining to the Company''s Electric unit at Faridabad for which original title deeds were not available with the Company and hence we are unable to comment on the same, although the photocopies of the title deeds were made available to us.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of C32.90 lackhs at Brajrajnagar unit, due to suspension of production activities and no material discrepancies were noticed on such physical verification.

(iii) Recording to the information and explanations given to us, 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 Companies Ret, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of section 185 and 186 of the Companies Ret 2013 are applicable and hence not commented upon.

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

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Ret, 2013 and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cases and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.

(b) Recording to the information and explanations given to us, undisputed dues in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cases and other material statutory dues outstanding, at the year end, for a period of more than six months from the date they became payable are as follows

Name of	Nature of the	Amount	Period to which the	Due Date	Date of
the statute	dues	(Rs, in lackhs) amount relates			Payment
Orissa Municipal Ret	Industrial License Fees	26.73	1996-97 to 2014-15	Beginning of the respective years	Not yet Paid

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, duty on custom, duty of excise and value added tax on account of any dispute, are as follows:

Name of the statute	nature of the dues	Period to which the amount relates	Amount (C in lackhs)	Forum where dispute is pending
Central Excise and Customs Act, 1944	Disallowance of Cenvat credit on inputs and capital goods	1979-83,1986-98, 2000-2015	546.22	Deputy/Assistant Commissioner / Commissioner/ High Court/ CESTAT
	Inclusion of interest in Assessable value	1994-96	10.99	CESTAT
	Disallowance of refund on post manufacturing expenses of paper	1976-77 to 1983-84	149.06	Deputy Commissioner
	Differential duty on manufacture of paper/ duty on various inputs due to difference in classification/ Duty on shortage /excess etc.	1975 to 1977,1978 to 1985,1993-97, 2000-01, 2002-03 & 2005-07	81.74	Asst Commissioner/ Commissioner Appeals/ Appellate Tribunal/ CESTAT
Income Tax Act,1961	Tax deducted at source (short deduction)	2005-06 to 2012-13	2.16	Commissioner of Income Tax (Appeals)
MP Sales Tax Act,1961/Central Sales Tax Act 1956	Demand with respect to disallowance of cash discount, levy of higher rate of purchase tax, difference in classification of goods etc.	1998-99, 2000-02 & 2005-06	54.23	Asst Commissioner / Appellate Board/High Court
Other State/ Central Sales Tax Acts	Sales tax on stock transfer/export sales, non-submission of forms, penalty etc.	Various	353.94	Asst. Commissioner/ Deputy Commissioner/ Sales Tax officer / Sales Tax Appellate Tribunal/ High court
M.P. Upkar Adhinium, 2004	Energy development cases on consumption of Captive power including surcharge	2001-2002 to 2011-12	5.415.55	Supreme Court

(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to a financial institution or banks. The Company did not have any outstanding dues in respect of Government or debenture holders during the year.

(ix) In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of term loans for the purpose for which the loans were obtained. The Company has not raised any money by way of initial public offer / further public offer / debt instruments during the year.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or on the Company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, during the year the remuneration paid to/ provided for the Managing Director of the Company is in excess of the limit prescribed under section 197 read with Schedule V to the Companies Act, 2013 by C177.70 lackhs.

Further, the Company has also paid managerial remuneration tor the years 2013-14 and 2014-15 in excess to the limit prescribed under the applicable Companies Ret by C127.42 lackhs and CI78.19 lackhs respectively. The Company''s application to the Central Government to such excess remuneration paid in 2014-15 is pending approval by the concerned authority and pending disposal to the same, no steps have been taken to recovery to the excess amount so paid. Also, the Company has shown the amount of C127.42 lackhs as recoverable from the Managing Director in respect to excess remuneration paid for the year 2013-14 due to non-approval to the same by the Central Government and steps are being taken to recover the said amount. Also rater EOM para (b) in the main audit report.

(xii) In our opinion, the Company is note Nidhi Company. Therefore, the provisions to clause 3(xii) to the order are not applicable to the Company and hence not commented upon.

(xiii) Recording to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Ret, 2013 where applicable and the details have been disclosed in the notes to the Financial statements, as required by the applicable accounting standards.

(xiv) Recording to the information and explanations given to us and on an overall examination of the balance sheet, the Company has nomad any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(xv) Recording to the information and explanations given by the management, the Company has not entered into any noncash transactions with directors or persons connected with him as referred to in section 192 of Companies Ret, 2013.

(xvi) Recording to the information and explanations given to us, the provisions of section 45-IR of the Reserve Bank of India Ret, 1934 are not applicable to the Company.

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

We have audited the internal Financial controls over Financial reporting of Orient Paper & Industries Limited ("the Company") as of March 31, 2016 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 internal control stated in the Guidance note on Auditor 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 the 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.

Auditor''s 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 Auditor Internal Financial Controls Over Financial Reporting (the "Guidance note") and the Standards on Auditing as specified 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 internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised 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 note detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting mere 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.R. Batliboi & Co. LLP

Chartered Accountants ICAI Firm Registration Flumber: 301003E/E300005

Per Sanjay Kumar Agarwal

Place: Flew Delhi Partner

Date: May 06, 2016 Membership Flumber: 060352

---

Mar 31, 2015

We have audited the accompanying financial statements of Orient Paper & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and 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 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 accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 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 effectiveness of such controls. An audit also includes evaluating the appropriateness of 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 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, 2015, of its loss, and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to note 35 regarding non provision of water tax demand amounting to Rs.37248.55 lacs (including interest and penalty of Rs. 35835.62 lacs) against which the Company has filed writ petition with the Hon''ble High Court and obtained an interim stay on the recovery, as more fully described therein. Pending final decision in the matter, its impact on the financial statements is presently not ascertainable and accordingly no adjustments are considered necessary at this stage.

Our opinion is not qualified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account ;

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

(f) The matter described under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company, in case of an unfavourable decision;

(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 34, 35 and 37 to the financial statements;

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

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

Annexure to the Independent Auditors'' Report

(Referred to in our report of even date to the members of Orient Paper & Industries Limited as at and for the year ended 31st March, 2015)

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of Rs.735.46 lacs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. FIs informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non-verification of fixed assets for the reasons mentioned above.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of Rs.32.90 lacs at Brajrajnagar unit, due to suspension of production activities.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in (a) above.

(iii) According to the information and explanations given to us, 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 provisions of clause 3(iii) (a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us and having regard to the explanation that purchases of some of the items of inventories and certain fixed assets are of a proprietary nature for which alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) The Company has not accepted any deposit from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriate

authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales- tax, wealth-tax, service tax, custom duty, excise duty, value added tax, cess and other material statutory dues applicable to it though there have been slight delays in few cases and also certain payments are not yet made as indicated in (b) below:

(b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, wealth- tax, service tax, sales-tax, customs duty, excise duty, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable are as follows:

name of the nature of Amount Period to Due Date Date of statute the Dues (Rs. in which the Payment lacs) amount relates

Orissa Industrial 25.32 1996-97 Beginning Not yet Municipal Licence to of the Paid Act Fees 2013-14 respective years

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty, value added tax & cess on account of any dispute, are as follows :-

Central Disallowance of 1979-83, 435.42 Deputy/Assistant Excise and Cenvat credit 1986-98, Commissioner/ Customs on inputs and 2000-2014 Commissioner/ Act, 1944 capital goods High Court/ CESTAT

Inclusion of 1994-96 10.99 Dy. Commissioner/ interest in Commissioner Assessable value

Disallowance 1976-77 149.06 Deputy Commissioner of refund on to post manu 1983-84 -facturing expenses of paper

Differential 1975 to 81.74 Asst Commissioner/ duty on manu 1977, 1978 Deputy -facture of to 1985, Commissioner/ paper/ duty on 1993-97, Commissioner various inputs 2000-01, Appeals/Fddl. due to 2002-03 Commissioner/ difference in & 2005-07 Jt. Commissioner classification/ Duty on shortage /excess etc.

MP Sales Demand with 1998-99, 54.23 Deputy Commissioner Tax Fct, respect to 2000-02 & Fppeals/Fppellate 1961/ disallowance of 2005-06 Board/ Central cash discount, High Court Sales Tax levy of higher Act 1956 rate of purchase tax, difference in classification of goods etc.

Other Sales tax on Various 262.41 Asst. Commissioner/ State/ stock transfer/ Deputy Central export sales, non Commissioner/ Sales Sales Tax submission of Tax officer / Sales Acts forms, penalty Tax Appellate etc. Tribunal/ High court/ Supreme Court

Income Disallowance of 2005-06 to 163.54 Commissioner Tax Act, certain 2012-13 (Appeals) 1961 Expenditure, Tax deducted at source & Interest thereon

M.P Upkar Energy develop 2001-2002 4,925.53 Supreme Court Adhinium, -ment cess on to 2004 consumption of 2011-12 Captive power including surcharge

(d) According to the information and explanations given to us, the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

(viii) The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash loss in the current year and in the immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

(x) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions

(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no material fraud on or by the Company has been noticed or reported during the year.

For S.R. BRTLIBOI & Co. LLP Chartered Accountants Firm Registration Dumber: 301003E

per Raj Agrawal Place: Dew Delhi Partner Date: 11th May, 2015 Membership Dumber: 82028

---

Mar 31, 2014

We hove audited the accompanying financial statements of Orient Paper & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility For the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Recounting Standards notified under the Companies Ret, 1956 read with General Circular 8/2014 dated 4 Rpril 2014, issued by the Ministry of Corporate Rffairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

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

Basis For qualified opinion

Rs stated in Rote 35, no provision has been mode tor Water Tax demand amounting to ^35908.15 lacs (including interest and penaltg) since the Compang''s application tor waiver thereof is under consideration bg the Government of Madhga Pradesh Had the above liability been considered, there would have been a loss of ^Z3Z79.33 lacs (after considering tax impact) as against the reported profit of ^4Z3.64 lacs and reserves & surplus as at the balance sheet date would have been ^1754Z. 79 lacs as against the reported figure of f 4IZ45.76 lacs

Our audit opinion on the financial statements for the previous gear was also gualified in respect of the above matter

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter stated in the Basis for Qualified Opinion paragraph the financial statements give the information required by the Hct in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(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 the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. Hs required by the Companies (Huditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4H) of section 227 of the Hct, we give in the Hnnexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

(d) Except for the matter stated in the Basis tor Qualified Opinion paragraph, in our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Recounting Standards notified under the Companies Hct, 1956 read with General Circular 8/2014 dated 4 Rpril 2014 issued by the Ministry of Corporate Affairs;

(e) On the basis of written representations received from the

directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Hct, 1956.

Annexure to the Independent Auditors'' Report

(Referred to in our report oF even dote to the members oF Orient Paper 6 Industries Limited os ot ond For the year ended 31st March, 2014)

(i) (a) The Company has maintained proper records showing Full particulars, including quantitative details and situation oF Fixed assets.

(b) HII Fixed assets have not been physically verified by the management during the year but there is a regular programme oF verification (except for assets ot the written down value ot Rs.931.78 lacs at Brajrajnagar unit due to suspension of production activities) which, in our opinion, is reasonable having regard to the size oF the Company and the nature oF its assets. Hs informed, no material discrepancies were noticed on such verification. However, discrepancies if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of ^3Z.90 lacs at Brajrajnagar unit due to suspension of production activities

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in (a) above.

(iii) (a) Recording to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Hct, 1956. Accordingly, the provisions of clause 4 (iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon.

(b) Recording to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Hct, 1956. Accordingly, the provisions of clause 4 (iii) (e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of some of the items of inventories and certain fixed assets are of proprietary nature for which alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) Recording to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Hct, 1956 that need to be entered into the register maintained under the above section, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Hct, 1956 in respect of paper, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty and other material statutory dues applicable to it though there have been slight delays in few cases and also certain payments are not yet made as indicated in (b) below.

(b) Recording to the information and explanations given to us, undisputed amounts pagable in respect of provident Fund, investor education and protection fund, empiogees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom dutg excise dutg, cess and other material statutorg dues outstanding at the gear end for a period of more than six months from the date theg became pagable, are as follows :-

Nameof the Staute : Orisso Municipal Act

Nature of the Due : Industrial Licence Fees

Amount in lacs : 23.92

Period to which the : 1996-97 to 2012-13 amount relates

Due Date : Beginning of the respective years.

Date of Payment : not yet Paid

(c) Recording to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :-

Name of the Statute Nature of the Dues Period to which the amount relates

Central Excise and Disallowance of Cenvat credit 1979-83, Customs Ret, 1944 on inputs and capital goods 1986-98,2000-2010

Disallowance on cenvat credit 2004-05 to 2007-08, on various input services 2010-11 & 2011-12 Inclusion of interest in 1994-96 Assessable value

Disallowance of refund on 1976-77 to 1983-84 post manufacturing expenses of paper

Differential duty on 1975 to 1977,1978 manufacture of paper/ duty to 1985,1993-97, on various inputs due to 2000-01, 2002-03 & difference in classification/ 2005-07 Duty on shortage /excess etc. classification/ Duty on shortage /excess etc.

MP Sales Tax Demand with respect 1998-99, 2000-02 & Rct,1961/Central to disallowance of cash 2005-06 Sales Tax ACt discount, levy of higher rate 1956 of purchase tax, difference in classification of goods etc.

Other State/Central Sales tax on stock transfer/ Various Sales Tax Act export sales, non submission of forms, penalty etc.

Income Tax Tax deducted at source & 2006-07 to 2008-09 Act,1961 interest thereon MP. Upkar Energy development cess 2001-2002 to 2011-12 Rdhinium, 2004 on consumption of Captive power including surcharge

Name of the Statute Amount In Lacks Forum where dispute is Pending

Central Excise and 347.58 Deputy/Rssistant Customs Act 1944 Commissioner / Commissioner/ High Court/ CESTRT 29.03 Deputy/Rssistant

Commissioner / Commissioner 10.99 Dy. Commissioner/ Commissioner

149.06 Deputy Commissioner

78.74 Asst Commissioner/ Deputy Commissioner/ Commissioner Appeals/Rddl. Commissioner/ Jt. Commissioner

MP Sales Tax 59.28 Deputy Commissioner Act 1961 / Central Appeals/Rppellate Board/ Sales Tax Act 1956 High Court

Other State/ Central 205.75 Asst. Commissioner/ Sales Tax Act Deputy Commissioner/ Sales Tax officer / Sales Tax Appellate Tribunal/ High court/ Supreme Court

Income tax Act 1961 24.89 Commissioner (Rppeals) M.P.Upkar 4,173.56 Supreme Court Adhinium 2004

(x) The Company has no occumuloted losses ot the end of the Financial year without considering the impact ot the matter sated in the Basis for Qualified Opinion paragraph. The Company has not incurred cash loss in the current year but it had incurred cash loss in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any bank and financial institutions. Further, the Company did not have any outstanding debentures during the year.

(xii) Recording to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Hccordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) Recording to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

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

(xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Ret, 1956.

(xix)The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BRTLIBOI 6 Co. LLP Chartered Accountants Firm Registration Plumber: 301003E

per Raj Rgrawal Place: Flew Delhi Partner Date: 8th May, 2014 Membership Plumber: 82028

---

Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Orient Paper & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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

AUDITOR''S RESPONSIBILITY

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

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

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

BASIS FOR QuALIFIED OPINION

As stated in to Note 38, no provision has been made for Water Tax demand amounting to Rs. 28030.34 lacs (including interest and penalty) since the Company''s application for waiver thereof is under consideration by the Government of Madhya Pradesh. Had the above liability been considered, loss for the year would have been Rs. 22159.39 lacs (after considering tax impact) as against the reported loss of Rs. 3223.49 lacs and reserves & surplus as at the balance sheet date would have been Rs. 22861.65 lacs as against the reported figure of Rs. 41797.55 lacs.

Our audit opinion on the financial statements for the previous year was also qualified in respect of the above matter.

QuALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of the matter stated 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 fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

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

(Referred To In Our Report Of Even Date To The Members Of Orient Paper & Industries Limited As At And 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)All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of Rs. 1150 lacs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of Rs. 32.90 lacs at Brajrajnagar unit, due to suspension of production activities.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in (a) above.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (a) to

(d) of the Order are not applicable to the Company and hence not commented upon.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of some of the items of inventories and certain fixed assets are of proprietary nature for which alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services.. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered.

(b) I n our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of paper, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty and other material statutory dues applicable to it though there have been slight delays in few cases and also certain payments are not yet made as indicated in (b) below.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues outstanding at the year end for a period of more than six months from the date they became payable, are as follows :-

Name of the Nature of the Amount (Rs in Period to which statute dues lacs) the amount relates

Orissa Municipal Industrial Licence 22.51 1996-97 to 2011- Act Fees 12

Electricity Duty Interest on duty 74.43 1998-99 to 2009- Act (Orissa) payable on own 10 generation of power

Name Due Date Date of Payment

Orissa Municipal Beginning of the Not yet Paid respective years

Electricity Duty Subsequent Not yet Paid month after accrual

(c) According to t he records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :-

Name of the Nature of dues Period to which the statute amount relates

Central Excise and Disallowance of Cenvat credit 1979-83, Customs Act, 1944 on inputs and capital goods 1986_98 2000.2010

Disallowance on cenvat credit 2004-05 to 2007-08, on various input services 2010-11

Inclusion of interest in 1994-96 Assessable value

Disallowance of refund on post 1976-77 to 1983-84 manufacturing expenses of paper

Differential duty on 1975 to 1977, 1978 manufacture of paper/ duty to 1985, 1993-97, on various inputs due to 2000-01, 2002-03 & difference in classification/ 2005-07 Duty on shortage / excess etc.

MP Sales Tax Demand with respect to 1998-99, Act,1961/ Central disallowance of cash discount, 2000-02 & 2005-06 Sales Tax Act 1956 levy of higher rate of purchase tax, difference in classification of goods etc.

Other State/ Central Sales tax on stock transfer/ Various Sales Tax Acts export sales, non submistion of forms, penalty etc.

Income Tax Tax deducted at source & 2006-07 to 2008-09 Act,1961 interest thereon

M.P. Upkar Energy development cess 2001-2002 to Adhinium, 2004 on consumption of Captive 2011-12 power including surcharge

Name Amount (Rs Forum where dispute is in lacs) pending

Central Excise 310.48 Deputy/Assistant Commissioner / Commissioner/ High Court/ CESTAT

30.26 Deputy/Assistant Commissioner / Commissioner

10.99 Dy. Commissioner/ Commissioner 149.06 Deputy Commissioner

41.19 Asst Commissioner/ Deputy Commissioner/ Commissioner Appeals/Addl. Commissioner/ Jt. Commissioner 59.28 Deputy Commissioner Appeals/Appellate Board/ High Court

234.45 Asst. Commissioner/ Deputy Commissioner/ Sales Tax officer / Sales Tax Appellate Tribunal/ High court/ Supreme Court

2,632.27 Commissioner (Appeals)

3,537.17 Supreme Court

(x) The Company has no accumulated losses at the end of the financial year. The Company has incurred cash loss in the current year but it had not incurred cash loss in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that Rs. 11335 lacs raised on short term basis have been used for long- term investment (without considering permanent capital) representing mainly acquisition of fixed assets.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company had created security in respect of debentures issued in earlier years. The said debentures have been transferred to another Company under a scheme of arrangement approved by Hon''ble High Court of Orissa.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI & CO. LLP

Chartered Accountants

Firm Registration Number: 301003E

per Raj Agrawal

Place: New Delhi Partner

Date: 8th May, 2013 Membership Number: 82028

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of ORIENT PAPER & INDUSTRIES LIMITED (the Company) as at 31st March, 2012 and also the Statement of Profit & Loss and 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. As stated in to Note No.40, no provision has been made for Water Tax demand amounting to Rs.21879.32 lacs (including interest and penalty) since the Company's application for waiver thereof is under consideration by the Government of Madhya Pradesh. Had the above liability been considered, profit for the year would have been Rs. 6447.01 lacs (after considering tax impact) as against the reported profit of Rs. 21227.58 lacs and reserves & surplus as at the balance sheet date would have been Rs.95027.79 lacs as against the reported figure of Rs.109808.36 lacs.

In respect of above, the previous year's audit report was similarly modified.

5. Further to our comments in the Annexure referred to above :-

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

iii) 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;

iv) In our opinion, the Balance Sheet, the Statement of Profit & Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representations received from the directors as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as 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 statements of account, except for the possible impact of our comments on the matter stated in para

(4) above, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :-

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

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

iii) in the case of Cash Flow statement, of the cash flows for the year ended on that date.

annexure to the auditors' report (referred to in our report of even date to the members of orient paper & industries limited as at and for the year ended 31st march, 2012)

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

b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for assets of the written down value of Rs.1416.86 lacs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

c) There was no disposal of a substantial part of fixed assets during the year.

ii) a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of Rs.32.90 lacs at Brajrajnagar unit, due to suspension of production activities.

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

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in

(a) above.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (a) to (d) of the Order are not applicable to - the Company and hence not commented upon.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii ) (e) to (g) of the Order are not applicable to the Company and hence not commented upon.

iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items purchased are of a proprietary nature and alternate sources do not exist for obtaining quotations thereof, it appears that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposit from the public.

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

viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of paper, cement, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

ix) a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty and other material statutory dues applicable to it though there have been slight delays in certain cases and also certain payments are not yet made as indicated in (b) below.

b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues outstanding at the year end for a period of more than six months from the date they became payable, are as follows :

Name of the statute Nature of the Amount Period to which the Due Date Date of Payment dues (Rs in lacs) amount relates

Orissa Municipal Act Industrial Licence 21.10 1996-97 to Beginning of the Not yet Paid Fees 2010-11 respective years

Electricity Duty Act (Orissa) Interest on duty payable 74.43 1998-99 to Subsequent Not yet Paid on own generation of power 2009-10 month after accrual

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :

Name of the statute Nature of the dues Period to which Amount Forum where dispute the amount (Rs. in lacs) is pending relates

Central Excise and Disallowance of Cenvat credit 1979-83, 778.08 Deputy/ Assistant Commissioner/ Customs Act, 1944 on inputs and capital goods 1986-98, Commissioner /High

2000-2010 Court/ CESTAT

Inclusion of interest in Assessable value 1994-96 10.99 Dy. Commissioner/ Commissioner

Disallowance of refund on post 1976-77 to 149.06 Deputy Commissioner manufacturing expenses of paper 1983-84

Differential duty on manufacture of 1975 to 1977, 47.49 Asst Commiss -ioner/ Deputy paper/ duty on various inputs due to 1978 to 1985, Commissioner/ Commissioner difference in classification/ Duty on 1993-97, 2000-01, Appeals/Addl. Commissioner/ shortage /excess etc. 2002-03 & 2005-07 Jt. Commissioner

A. P. Sales Tax/AP Vat Act/ Demand on second sales and freight 1983-85, 1990-91, 282.23 Asst. Commissioner/ Appellate Central Sales Tax Act, 1956 charges realized separately by raising 1993-94 to Dy. Commissioner/ Sales Tax Appellate debit invoices and other matters 2004-05 & 2009-10 Tribunal/ High Court.

MP Sales Tax Act, 1961/ Demand with respect to disallowance of 1998-99, 59.27 Deputy Commissioner Appeals/ Central Sales Tax Act 1956 cash discount, levy of higher rate of 2000-02 & 2005-06 Appellate Board/High Court purchase tax, differ -ence in classific ation of goods etc.

Other State /Central Sales Tax Acts Sales tax on stock transfer/ export sales, Various 212.51 Asst. Commiss ioner/ Deputy non submission of forms, penalty etc. commissioner/ Sales Tax officer/Sales Tax Appellate Tribunal/ High court/ Supreme Court

Income Tax Act,1961 Tax deducted at source & interest thereon 2006-07 to 2008-09 2,699.77 Commissioner (Appeals)

M.P. Upkar Adhinium, 2004 Energy development cess on consumption 2001-2002 to 3,090.61 Supreme Court of Captive power including surcharge 2011-12

x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year and in the immediately preceding financial year.

xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

xv) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

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

xviii) The Company has made preferential allotment of shares to a company covered in the register maintained under section 301 of the Companies Act, 1956. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company.

xix) According to the information and explanations given to us, the Company had created security in respect of debentures issued in earlier years and outstanding during the year.

xx) The Company has not raised any money through a public issue during the year.

xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI & CO.

Firm Registration Number : 301003E

Chartered Accountants

per Raj Agrawal

Place : New Delhi. Partner

Date : 2nd May,2012 Membership No. 82028

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of ORIENT PAPER & INDUSTRIES LIMITED, as at 31st March, 2011 and also the Profit & Loss Account and 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. As stated in to Note No.9 on Schedule - 22, no provision has been made for Water Tax demand amounting to Rs.17076.58 lacs (including interest and penalty) since the Companys application for waiver thereof is under consideration by the Government of Madhya Pradesh. Had the above liability been considered, profit for the year would have been Rs. 2906.28 lacs (after considering tax impact) as against the reported profit of Rs. 14310.45 lacs and reserves & surplus as at the balance sheet date would have been Rs.75111.80 lacs as against the reported figure of Rs.86515.97 lacs.

5. Further to our comments in the Annexure referred to above :–

(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 account 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 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 March 31, 2011 from being appointed as 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 statements of account, subject to our comments in para (4) above, 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 & Loss Account, of the profit of the Company for the year ended on that date; and

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

Annexure to the Auditors Report (Referred to in our report of even date to the Members of Orient Paper & Industries Limited as at and 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) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for the written down value of Rs. 1725.81 lacs at Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year except for the value of Rs.32.90 lacs at Brajrajnagar unit, due to suspension of production activities.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of inventories for the reasons mentioned in (a) above.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, clauses iii (b) to (d) of the Order are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, clauses iii (f) & (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items purchased are of a proprietory nature and alternate sources do not exist for obtaining quotations thereof, it appears that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas and we have not observed any continuing failure to correct major weakness in internal control system of the company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of paper, cement, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company has been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty and other statutory dues with appropriate authorities though there had been slight delays in certain cases and also certain payments are not yet made as indicated in (b) below.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding at the year end for a period of more than six months from the date they became payable, are as follows :

Name of the Nature of the dues Amount Period to Due Date Date of statute (Rs in lacs) which the Payment amount relates

Orissa Municipal Act Industrial Licence Fees 19.69 1996-97 to Beginning of the Not yet 2009-10 respective years Paid

Electricity Duty Act Interest on duty payable 74.43 1998-99 to Subsequent month Not yet (Orissa) on own generation of power 2009-10 after accrual Paid

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :-

Name of the Nature of dues Period to which Amount Forum where statute the amount relates (Rs. in lacs) dispute is pending

Central Excise and Disallowance of Cenvat credit 1979-83, 1986-98, 929.34 Deputy/Assistant Customs Act, 1944 on inputs and capital goods 2000-2010 Commissioner/ Commissioner/ High Court/ CESTAT

Inclusion of interest in 1994-96 10.99 Dy. Commissioner/ Assessable value Commissioner

Disallowance of refund on post 1976-77 to 1983-84 149.06 Deputy Commissioner manufacturing expenses of paper

Differential duty on manufacture 1975 to 1977, 44.98 Asst Commissioner /Deputy of paper/ duty on various inputs 1978 to 1985, Commissioner/ Commissioner due to difference in classification/ 1993-97, 2000-01, Appeals/Addl. Commissioner/ Duty on shortage / excess etc. 2002-03 & 2005-07 Jt. Commissioner

A. P. Sales Tax/AP Demand on second sales and 1983-85, 1990-91, 285.96 Asst. Commissi -oner/ Appellate Vat Act/ Central freight charges realized separately 1993-94 to 2005-06 Dy. Commissioner / Sales Tax Sales Tax Act, by raising debit invoices and other Appellate Tribunal/High Court. 1956 matters

MP Sales Tax Act, Demand with respect to 1998-99, 59.27 Deputy Commissioner 1961/Central Sales disallowance of cash discount, 2000-02 & 2005-06 Appeals/ Appellate Board/ Tax Act 1956 levy of higher rate of purchase High Court tax, difference in classification of goods etc.

Other State/ Sales tax on stock transfer/export Various 138.37 Asst. Commissioner/ Deputy Central Sales Tax sales, non submission of forms, Commissioner/ Sales Tax Acts penalty etc. officer / Sales Tax Appellate Tribunal/ High court/ Supreme Court

Income Tax Act, Tax deducted at source & 2006-07 to 2008-09 2748.39 Commissioner (Appeals)* 1961 interest thereon

M.P. Upkar Energy development cess on 2001- 2002 to 2332.76 Supreme Court Adhinium, 2004 consumption of Captive power 2010-11 including surcharge

* The Company proposes to file appeal

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that at the close of the year, 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 to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company has issued 95 debentures of Rs.100 lacs each. The Company has created security/ charge in respect of the debentures issued.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations 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 S.R. Batliboi & Co.

Firm Registration Number : 301003E

Chartered Accountants

per Raj Agrawal

Place : New Delhi Partner

Date : 27th April, 2011 Membership No. 82028

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of ORIENT PAPER & INDUSTRIES LIMITED, as at 31st March, 2010 and also the Profit & Loss Account and 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Attention is drawn to Note No.8 on Schedule 24 regarding non disclosure of Companys proportionate interest in the Joint Ventures assets, liabilities, income, expenses etc. for the reasons mentioned therein which, however, is not in compliance with the disclosure requirement of Accounting Standard-27 notified under the Companies Accounting Standards Rules, 2006 but does not have any impact on the profit for the year.

In the previous year, our report was similarly modified for the above.

5. Without qualifying our report, attention is drawn to Note. No.9 on Schedule -24 regarding demand on account of Water Tax which is under reconsideration by the Madhya Pradesh State Government.

6. Further to our comments in the Annexure referred to above:-

(i) We have obtained all the information and explanations, subject to para 4 above, 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 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 comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, except for the matter referred to in para 4 above

(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 March 31, 2010 from being appointed as 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 statements of account, 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 & Loss Account, of the profit of the Company 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

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification (except for Brajrajnagar unit, due to suspension of production activities) which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of fixed assets for the reasons mentioned above.

(c) There was no substantial disposal of fixed assets during the year

(ii) (a) The management has conducted physical verification of nventory at reasonable intervals during the year except for Brajrajnagar unit, due to suspension of production activities.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification. However, discrepancies, if any, at Brajrajnagar unit are unascertainable due to non verification of stocks for the reasons mentioned in (a) above.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, clauses iii (b) to (d) of the Order are not applicable

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, clauses iii (f) & (g) of the Order are not applicable

iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items purchased are of a special nature and alternate sources do not exist for obtaining quotations thereof, it appears that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financia year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time

(vi) The Company has not accepted any deposit from the public

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Centra Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of paper, cement, electrical consumer durables and chemicals and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company has been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income- tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other statutory dues with appropriate authorities though there had been slight delays in certain cases and also certain payments are not yet made as indicated in (b) below.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding at the year end for a period of more than six months from the date they became payable, are as follows:

Name of the statute Nature of Amount Period to Due Date Date of

the dues (Rs in lacs) which the Payment

amount relates

Orissa Municipal Act Industrial Licence Fees 18.29 1996-97 to Beginning of the

2008-09 respective years Not yet Paid

Electricity Duty Act (Orissa) Interest on duty payable 73.64 1998-99 to Subsequent month

on own generation of power 2009-10 after accrual Not yet Paid

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty & cess on account of any dispute, are as follows :-

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutua benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) According to the information and explanations provided to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that at the close of the year, 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 to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company had issued 50 and 25 debentures of Rs.100 lacs each. The Company has created security/ charge in respect of the debentures issued

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations 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 S. R. Batliboi & Co.

Firm Registration Number-301003E Chartered Accountants

Per Raj Agrawal

New Delhi Partner

4th May, 2010 Membership No. 82028