Auditor Report of Rama Petrochemicals Ltd.

Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

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

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

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

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

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

Basis of Qualified Opinion

The Value of materials lying in the Bonded warehouse, auctioned by the Custom authorities being shown as 'Claims Receivable' amounting to Rs. 1,87,71,179/- which is doubtful of recovery (Refer Note 18.1)

Qualified Opinion

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

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

Emphasis of Matters

We draw attention to the following matters in the Notes to the standalone financial statements:

a) Without qualifying the report we like to bring to your attention that the company's net worth has been completely eroded and it has been declared as a Sick Industrial Company by BIFR vide order dated 01.07.2002. As explained in Note 28, the management is of the view that the Company can be revived and made viable and accordingly the company's accounts have been prepared on Going Concern assumption. The revival of the Company's operations depends upon the Company being able to obtain the alternative main feed stock. In absence of any other information indicating to the contrary, we have accepted this view and accordingly the accounts have been prepared on the basis of "Going Concern Concept".

Our opinion is not modified in respect of this 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 a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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

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

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

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

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

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

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

i) The Company has disclosed the impact of pending litigations on its financial position in note 27 to the standalone financial statements.

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

iii) There were no amounts which were required to be transferred to Investor Education & Protection Fund by the Company.

The Annexure referred to in our report to the members of Rama Petrochemicals Limited ('the Company') for the year Ended on 31st March, 2015.

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

b) The Management of the Company has physically verified the fixed assets in accordance with its policy of physical verification at reasonable intervals. The discrepancies, if any noticed during such verification have been suitably adjusted in the books of account.

ii) a) According to the information and explanations given to us, the management has conducted physical verification of the inventories at reasonable intervals.

b) In our opinion and according to the information and explanations given to us, the procedures followed by the management for physical verification of inventory are reasonable and adequate in relation to the size of the Company and the nature of the business.

c) No material discrepancies have been noticed on physical verification of the stocks as compared to book records in so far as it appears from our examination of the books.

iii) a) The company has not granted any loans to parties covered in the register maintained under section 189 of the Act.

b&c) Since no loans have been granted to parties covered in the register maintained under section 189 of the Act, the question of receipt of principal and interest, and overdue amount, does not arise.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchase of inventory, fixed assets and for sale of goods and services. During the course of our audit, no major weaknesses have been noticed in the internal control system.

v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public.

vi) According to the information and explanation given to us, the government has prescribed maintenance of cost records pursuant to Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under sub-section (1) of section 148 of the Companies Act. Since, there is no turnover of manufacturing goods in the preceeding financial year, the same is not applicable.

vii) a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employee's

State Insurance, Sales Tax, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other statutory dues have been regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March, 2015 for a period of more than six months from the date it became payable except:

Name of the Nature of the dues Amount Period to which Due Date statute Rs. the amount relates

The Customs Custom Duty on import 59,32,740/- 1998-99 21.02.1998 Act, 1962 of Catalyst

Sales Tax Deferral Sales Tax 31,03,44,140/- 1988-1997 30.04.2014 Act, Liability

b. According to the records of the Company and information and explanations given to us the following are the dues of Sales Tax on account of disputes:

Name of the Nature of dues Amount Period to which the statute Rs. amount relates

Sales Tax Act, Turnover Tax 18,02,591 F.Y. 1993-94



Sales Tax Act, Turnover Tax 18,03,494 F.Y 1994-95



Name of the Forum where dispute is statute pending

Sales Tax Act, Dy. Commissioner of Commercial Tax Bhavnagar

Sales Tax Act, Dy. Commissioner of Commercial Tax Bhavnagar

According to the information and explanations given to us and the records of the Company examined by us there are no dues of Income Tax, Wealth Tax, Service Tax, Excise Duty and Custom Duty or Cess which have not been deposited on account of any dispute.

c. There were no amounts which were required to be transferred to Investor Education & Protection Fund by the Company.

viii) The company has accumulated losses of Rs. 65,92,15,674/- as at 31st March,2015 which are more than 50% of its net worth. During the financial year covered by our audit and in the immediately preceding financial year the Company has incurred cash losses amounting to Rs. 26,59,707/- & Rs. 21,17,691/- respectively.

ix) On the basis of our examination of the books and according to the information and explanations given to us, there are no borrowings from financial institutions, banks or debenture holders.

x) In our opinion, and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

xi) To the best of our knowledge and belief and according to the information and explanations given to us, the Company has not availed any term loan during the year hence the question of applying it for the purposes for which the loans were obtained, does not arise.

xii) 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 on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For Dayal and Lohia Chartered Accountants Firm's Regn. No. 102200W

(Anil Lohia) Place - Mumbai Partner Date - 29th May, 2015. Membership No. 031626

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Mar 31, 2014

We have audited the accompanying financial statements of RAMA PERTROCHEMICALS LIMITED, 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 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.

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, subject to:

1) Non provision of

(a) Value of materials lying in the Bonded warehouse, auctioned by the Customs being shown as Claims Receivable amounting to Rs. 1,87,71,179/- under Note-16 which is doubtful of recovery (Refer Note-16.1) and liabilities towards interest on unpaid custom duty up to March 31, 2014 aggregating to Rs. 1,81,51,909/- and unpaid customs duty of Rs. 4,32,740/- (Refer Note- 25 (a).

(b) Demand of Interest on late payment of customs duty up to March 31, 2014 Rs. 19,62,185/- (Refer Note-25 (b)).

The above has resulted in understatement of loss for the year by Rs. 11,86,548/-, accumulated losses by Rs. 3,93,18,013/-, outstanding liability by Rs. 2,05,46,834/-, and overstatement of Other Current Assets by Rs. 1,87,71,179/-.

2) Non Payment of statutory liability on account of sales tax aggregating Rs. 30,99,30,262/- upto March 31, 2014 as explained in Note-24(c).

(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 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.

Emphasis of Matter

Without qualifying the report we like to draw your attention to that the company''s net worth has been completely eroded and has been declared as sick industrial company by BIFR vide order dated 01.07.2002. As explained in Note No. 26, the management considers that the methanol division can be made viable and accordingly the company''s accounts have been prepared on going concern assumption. The revival of the Company''s operations depends upon the Company being able to obtain the alternative main feed stock. In absence of any other information indicating to the contrary, we have accepted this assumption.

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, 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 Act, 1956.

(Referred to in our Report of even date to the members of RAMA PERTROCHEMICALS LIMITED on the financial statements for the year ended 31st March, 2014.).

1. In respect of its Fixed assets

a) The Company has maintained proper records showing full particulars including quantitative details and situations of fixed assets on the basis of available information.

b) Management has certified that they have carried out physical verification of fixed assets and no material discrepancy noticed on such verification.

c) The Company has not disposed off any substantial part of fixed assets so as to affect its going concern.

2. In respect of its inventories

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

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

c) No material discrepancies have been noticed on physical verification of stocks as compared to book records in so far as it appears from our examination of the books.

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

e) According to the information and explanations given to us, the company has not taken any loans, secured or unsecured from the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly sub clause (f) and (g) are not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of inventory, fixed assets and for sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

5. In respect of transactions covered under section 301 of the Companies Act, 1956, according to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Therefore, provision of sub-clause (b) of clause 4 (v) of the Order is not applicable.

6. According to the information and explanation given to us, the company has not accepted any deposits u/s 58A, 58AA or any other relevant provisions of the Companies Act, 1956, during the year.

7. The Company does not have a formal internal audit system during the year.

8. According to the information and explanation given to us, the government has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the methanol division of the company. The manufacturing activities are suspended and hence the Company has applied for the exemption for not maintaining the cost records and has not been maintaining any such records.

9. (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, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(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, wealth- tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed 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 statute the dues Which the Date of amount Payment relates

The Customs Custom Duty 59,32,740/- 1998-99 21.02.1998 - Act, 1962 on import of Catalyst

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

Name of the Nature of dues Amount statute (Rs.)

Income Tax Act, 1961 Demand for income tax 27,00,45,311

Income Tax Act, 1961 Demand for income tax 34,53,167

Income Tax Act, 1961 Demand for income tax 1,19,98,802

Sales Tax Act, Turnover Tax 18,02,591

Sales Tax Act, Turnover Tax 18,03,494

Irrigation Dept. Water Charges 25,92,05,087





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

Income Tax Act, 1961 Block Assessment High Court A.Y. 87-88 to 97-98

Income Tax Act, 1961 A.Y. 1997-98 High Court

Income Tax Act, 1961 A.Y. 1998-99 High Court

Sales Tax Act, F.Y. 1993-94 Dy. Commissioner of Commercial Tax Rajkot

Sales Tax Act, F.Y. 1994-95 Dy. Commissioner of Commercial Tax Rajkot

Irrigation Dept. - High Court

10. The company has accumulated losses amounting to Rs. 34,22,61,212/- as on 31st March, 2014. The Company has incurred cash loss during the year and in the immediately preceding financial year, it has incurred cash losses amounting to Rs. 21,17,691/- and Rs. 1,36,20,924/- respectively.

11. According to the information and explanation given to us and on the basis of our examination of the books, there is no dues to banks or financial institutions hence the question of default does not arise.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or any other securities.

13. In our opinion, the Company is not a Chit Fund, Nidhi or Mutual Fund/Society and therefore the provisions of clause 4 (xiii) of the Order are not applicable.

14. 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.

15. According to the information and explanations given to us, and the representations made by the management, the Company has given corporate guarantee for loans taken by others from banks and financial institutions.

16. In our opinion and on the basis of information and explanations given to us, no term loans are availed by the Company during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that as on the date of balance sheet, Short Term Funds to the extent of Rs. 12,14,93,297/- have gone in to funding the accumulated losses of the Company.

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

19. The Company has not issued debentures during the year.

20. The Company has not raised any money by public issue during the year.

21. According to the information and explanations given to us, and to the best of our knowledge and belief no fraud on or by the Company, has been noticed or reported during the year.

For Dayal and Lohia Chartered Accountants (Firm''s Registration No.102200W)

S.L. Khandelwal Place: Mumbai Partner Date : 28th May, 2014 Membership No.101388

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Mar 31, 2012

We have audited the attached Balance Sheet of Rama Petrochemicals Limited ('the Company') as at March 31, 2012 and also the Statement of Profit and Loss and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management.Our responsibility is to express an opinion on these financial statements based on our audit.

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

2. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956' we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, on the basis of such checks of the books and records of the company as we considered appropriate and the information and explanation given to us during the course of our audit.

3. Further to our comments in the paragraph 2 above, unless indicated to the contrary in other paragraphs below, we report that:

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

ii. In our opinion, proper books of 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, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account.

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

v. In our opinion and based on the declaration given by the directors and other information and explanations given to us, none of the directors are disqualified as on 31st March, 2012 from being appointed as directors in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. The Company has not provided for: -

a) Interest on unpaid custom duty upto March 31, 2012 aggregating to Rs. 15,779 thousand (P.Y Rs. 14,592 thousand) and unpaid customs duty Rs. 433 thousand (P.Y. Rs. 433 thousand) - Refer Note No. 26 (a).

b) Demand of Interest on late payment of customs duty upto March 31, 2012 Rs. 1,962 thousand (P.Y. Rs. 1,962 thousand) - Refer Note No. 26 (b).

The above has resulted in understatement of loss for the year by Rs. 1,187 thousand, accumulated losses by Rs. 18,174 thousand, and outstanding liability by Rs. 18,174 thousand.

vii. We report that:

a) The company has not paid statutory liability on account of sales tax aggregating Rs. 2,98,504 thousand ( P.Y Rs. 2,83,507 thousand) upto March 31, 2012 as explained in Note No. 25(c).

b) Due to non disclosure / non availability of information for dues to Micro, Small and Medium Enterprises as explained in Note No. 7.1, we are unable to quantify the impact of interest provision if any, on such MSME parties.

viii. The company's net worth has been completely eroded and has been declared as sick industrial company by BIFR vide order dated 01.07.2002. As explained in Note No. 27, the management considers that the methanol division can be made viable and accordingly the company's accounts have been prepared on going concern assumption. The revival of the Company's operations depends upon the Company being able to obtain the alternative main feed stock. In absence of any other information indicating to the contrary, we have accepted this assumption.

ix. In our opinion and to the best of our information and according to the explanation given to us, subject to our comments in paragraph 3 (vi), (vii) and (viii) above, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true & fair view in conformity with accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March31, 2012;

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

ANNEXURE TO AUDITORS' REPORT

[Referred to in paragraph 3 of the Auditors' Report of even date to the members of Rama Petrochemical Limited on the financial statements for the year ended 31st March 2012]

1. In respect of its Fixed assets:

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

b) The fixed assets have been physically verified by the management during the year and no material discrepancies have been noticed on such verification.

c) The Company has not disposed off any substantial part of fixed assets so as to affect its going concern status.

2. In respect of its inventories:

a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have to be confirmed by them. In our opinion, the frequency of verification is reasonable.

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

c) No material discrepancies have been noticed on physical verification of stocks as compared to book records in so far as it appears from our examination of the books.

3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) According to the information and explanation given to us, the Company has not granted any loan, secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

b) According to the information and explanation given to us, the Company has not taken any loan, secured or unsecured, from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchase of inventory, fixed assets and for sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956, according to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Therefore, the provision of sub-clause (b) of clause 4 (v) of the Order is not applicable to the Company.

6. The Company has not accepted any deposits from the public within the meaning of Section 58A, 58AA or any other relevant provision of the Act and Rules framed there under.

7. The Company does not have a formal internal audit system during the year.

8. According to the information and explanation given to us, the government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for the methanol division of the Company. The manufacturing activities are suspended and hence the Company has applied for the exemption for not maintaining the cost records and has not been maintaining any such records.

9. (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, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(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, wealth- tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed 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 statute Nature of the dues Amount Period to which Due Date Date of (Rs. in Thousand) the amount relates Payment The Customs Act, Custom Duty on 5,933 1997-98 21.02.1998 - 1962 import of Catalyst

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

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

Income Tax Act, 1961 Demand for income tax 1,51,734 Block Assessment High Court A.Y. 87-88 to 97-98

Income Tax Act, 1961 Demand for income tax 3,453 A.Y. 1997-98 High Court

Income Tax Act, 1961 Demand for income tax 11,999 A.Y. 1998-99 High Court

Income Tax Act, 1961 Demand for income tax 3,130 A.Y. 2009-10 CIT Appeals, Mumbai

Central Excise Act 360 F.Y.1993-94 Asst. Commissioner of Central

Excise Duty on Shortages

Central Excise Act 10 F.Y. 1994-95 Excise, Khopoli Div. Raigad

Sales Tax Act 1,803 EY1993-94 Dy. Commissioner of Turnover Tax

Sales Tax Act 1,803 F.Y. 1994-95 Commercial Tax Bhavnagar

Irrigation Dept. Water Charges 1,30,733 - High Court

10. The company has accumulated losses amounting to Rs. 3,24,295 thousand as on 31st March, 2012. During the year company has not incurred cash loss and in the immediately preceding year, it has incurred cash loss of Rs. 25,867 thousand.

11. On the basis of our examination of the books and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

12. According to the information and explanation given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a Chit Fund, Nidhi or Mutual Fund/Society.

14. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

15. According to the information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion and on the basis of information and explanations given to us no term loans are availed by the Company during the year.

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

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

19. The Company has not issued debentures during the year.

20. The Company has not raised money by way of public issue during the year.

21. According to the information and explanations given to us, and to the best of our knowledge and belief no fraud on or by the Company, has been noticed or reported during the year.

For Dayal and Lohia Chartered Accountants Firm Reg.no.102200W (S.L. Khandelwal)

Place : Mumbai Partner

Date : May 30, 2012 M. No.: 101388

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Rama Petrochemicals Limited (the Company) as at March 31. 2010 and also the Profit and Loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order. 2003. as amended by the Companies (Auditors Report) (Amendment) Order. 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act. 1956 of India (the Act) and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in the Anncxure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

i We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit except to the extent stated in paragraph vii,

ii. In out opinion, proper books of account as required by law have been kept by the Company so far a» appears from our examination of those books except to the extent stated in paragraph vi, vii and riii:

iii. The balance sheet, profit and 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 and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 ol the Companies Act, 1956, except for Accounting Standard- 29 on "Provisions, contingent liabilities and contingent assets", with respect to matters stated in paragraph 4 (vi) (a) and 4 (vi) (h).

v. On the basis of the written representations received from the directors, as on March 31, 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 its a director in terms of clause (g) of sub-section (I) of section 274 of the Companies Acl. 1956

vi. The Company has not provided for: -

a) Interest on working capital loan upto March 31, 2010 aggregating to lis.24233.24 thousands

(IYRs. 16940.22.thousands). h) Interest on unpaid custom duty upto March 31, 2010 aggregating to Rs. 5730.57 thousands (IY Rs. 5041.50 thousands).

The above has resulted in understatement of loss for the year by Rs. 7982.09 thousunds, accumulated losses by Rs.29963.XI thousands. Secured Loans by Rs.24233.24 thousands and outstanding liability by Rs. 5730.57 thousands. vii. We report that:

a) The company has not paid statutory liability on account of sates tax aggregating Rs. 262625.83 thousands ( P.Y Rs. 235562.89 thousunds ) upto March 31, 2010 us explained in Note No. 2 to schedule 18.

b) Liabilities amounting to Rs.4772.10 thousands, written back during the year and debit / credit balances us on March 31, 2010 are subject to confirmation /reconciliation us explained in Note No.4 to Schedule 18.

c) Due to non disclosure /non availability of information for dues to Micro, Small and Medium Enterprises as explained in Note No.5 to Schedule 18, we are unable to quantify the impact of interest provision If any. on such MSME parties.

viii. The companys net worth has been completely eroded and has been declared as sick industrial company by HITR vide order dated 01.07.2002. As more fully explained in Note No. 8 to schedule 18, the management considers that the methanol division can be made viable and accordingly the companys accounts have been prepared on going concern assumption. These factors, along with other matters set forth in Note 8 to schedule 18. raise substantial doubt that the company will be able to continue as a going concern.

ix. In our opinion and to the best of our information and according to the explanation given to us. subject to our comments in paragraph 4 (vi), (vii) and (viii) above, the said accounts give the information required by the Companies Act. 1956, in the manner so required and give a true & fair view in conformity with 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, 2010;

b) in the case of the profit and loss account, of the loss for the year ended on that dale; and

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

ANNXXRE TO AUDITORS REPORT

(Referred to in paragraph 3 of the Auditors Report of even date to the members of Rama Petrochemical Limited on the financial statements for the year ended 31" March 2010)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The fixed assets of the company have been physically verified by the management during the year and no . . material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable. . (c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have to be confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies wen; noticed on physical verification carried out at the end of the year.

(iii) fa) The Company has not granted any loans, secured or unsecured to companies, firms or parties listed in the register maintained under section 301. of the Companies Act, 1956 and hence clause 4 tiii) (a). (b) and (J) of the Companies (Auditors Report) order 2003 (as amended) are not applicable to the company. I b) The Company has not taken any loans secured or unsecured, from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act. 1956 and hence clause 4 (iii) it) and (g) of the Companies (Auditors Report) Order 2003 as amended, are not applicable to the company. (iv) In our opinion and according to the information and explanations given to us. there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to 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 weakness in internal control system of the company.

(v) According to the information and explanation given to us by the management, we are of the opinion that the company has not entered any contract or arrangement during the year that needs to be entered into the register maintained under section 301 of the Companies Act, 1956. Hence clause 4 (v) (b) of the Companies (Auditors Report) Order 2003 as amended, is not applicable to the company. < vi, The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) The Com/mm dues not have an Internal Audit System.

(viii) To the best of our knowledge and as explained, the government has prescribed maintenance of cost records under Section 209( I )
(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, service tax. customs duty, excise duty, cess and other material statutory dues applicable to it.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A 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. wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed 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 Nature of Amount (Rs Period to which Due Date Date of Payment the statute the dues in thousands) the amount relates

The Customsf Custom Duly 5500 1997-98 21.02.1998 - Act. 1962 on import of Catalyst

(c) According to tlie records of the Company, the dues outstanding of income-tax, sales-lax, wealth-tux. service tax, customs duly, excise duty and cess on account of any dispute, are as follows:

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

Income Tax Act. 1961 Demand forlncome tax 2085 AY.1990-91 Hligh Court, Mumbai Income Tax Act. 1961 Demand forincome tax 3452 AY.1997-98 ITAT Mumbai

Income lax Act.1961 Demand forincome tax 11998 AY.1998-99 ITAT Mumbai

Income Tax Act. 1961 Demand forincome tax 151733 AY.1987-88 to High Court, Mumbai AY.1997-98 (Block Assessment)

Central Ex cise Act Excise Duty on. Shortages 360 F.Y.1993-94 Asst. Commiss ioner of

Central Ex cise Act Excise Duty on Shortages 10 F.Y.1994-95 Cenlral Excise Khopoli Div. Raigad

Central Ex cise Act Modvat on Caus tic Soda 22 F.Y.1995-96 Asst. Commis sioner

Central Ex cise Act Modvat on Caus titSoda 20 F.Y.199I-98 of Central Excise

Centra] Ex cise Act Modvat on Caus tic Soda 24 F.Y.I99S-99 Khopoli Div. Rajgad

ix) The accumulated losses at Ihe end of the financial year arc more than fifty percent of its net worth. The company has incurred cash losses during the year amounting to Rs.12069 thousands and in the immediately preceding financial year amounting to Rs.25912 thousands.

(xi) Based on our audit procedures and as per the information and explanation given by the management, the company has defaulted in repayment of dues to bank amounting to Rs.53260.06 thousands since August 2002. (xii) According to the information and explanation given to us and based on the documents and records produced to us. the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii.i In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4

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

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

(xiv) of the Companies (Auditors Report) Order, 2()03 (as amended) aic not applicable to the Company. t

xv I In our opinion and according to the information and explanations given to us. the company has not given any guarantee for loans taken by others from banks or financial institutions during the year. However in the absence of relevant details being made available for .verification, we arc unable to comment on whether terms & conditions are prejudicial to I he i merest of the company in case of guarantees for loan taken by others from a hank in earlier year and outstanding as at Ihe balance sheet date.

(xvi) The Company has not obtained any term loan during the year and does not have any term loan outstanding during the year. (xvii) According to the information and explanations given to us and on an overall examination of Ihe balance sheet of the Company, we report that ihe companv has used funds raised on short term basis for long term investment, to the extent of Rs. 13331 thousands. (xviiii The Company has not made preferential allotment of shares to parlies and companies covered in the register maintained under section 301 of the Act.

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

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

(xi) Based upon ihe 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 tlie Company has been noticed or reported during the course of our audit.

For Haribhakti & Co. Chartered Accountants Firm Registration No. I03523W

Sarah George

Place : Mumbai Partner Date : May 28, 2010 Membership No.: 45255