Auditor Report of Tahmar Enterprises Ltd.

Mar 31, 2014

We have audited the attached financial statements of Sarda Papers Limited (hereinafter referred to as the Company), comprising of the Balance Sheet as at 31st March 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended along with the Significant Accounting Policies and other explanatory information forming an integral part thereof.

II. 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 Section 211(3C) of the Companies Act, 1956 (hereinafter referred to as the Act) read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

III. Auditors'' 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 of 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 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 opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall financial statement presentation.

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

Report on Other Legal and Regulatory Requirements

1. 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 Act, we enclose in the Annexure a statement on the matters specified in paragraph

4 of the said Order, to the extent applicable to the Company during the year under review.

2. Further to our comments in the Annexure referred to in 1. above, as required by Section 227(3) of the Act, we report as follows:

(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, 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 Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in subsection (3C) of Section 211 of the Act to the extent applicable, except wherever expressly stated otherwise;

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

(f) Attention is invited to the following Notes:

(i) Note No. 21 regarding non-provision in the Company''s books in respect of impairment, if any in the Company''s fixed assets, in non-compliance with the recommendations of Accounting Standard-28, Impairment of Assets. The amount of non - provision on the carrying value of the fixed assets as well as on the loss for the year is unascertainabie;

(ii) Note No. 8 regarding non-provision of depreciation for the year on Plant and Machinery and Buildings due to closure of plant on account of suspension of manufacturing operations and consequential overstatement of fixed assets and understatement of loss for the year by Rs.7.73 Lacs; and

(iii) As referred in para 17 of Accounting Standard- 22, Accounting for taxes on income, Deferred tax assets should be recognized on brought forward business losses as per Income Tax Act, 1961, only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income would be available against which such deferred tax assets can be realized. However, as referred to in Note No.9, the Company has in the earlier years, recognized Deferred Tax Assets on such losses amounting to Rs. 268.66 Lacs(Net), in violation of the recommendations of the above Accounting Standard, thus having consequential effect on the balance of Net Deferred Tax Assets, which was unmoved during the year, with Nil impact on the Loss for the year.

(iv) Note 24(b), regarding inadequate provision towards obsolescence of inventory -Amount Unascertainable

(g) Emphasis of Matter

We draw attention to Note No. 20 of the financial statements, regarding the preparation of financial statements of the Company on a going concern basis. In view of the matter stated therein relating to revival of operations of the Company and the recent positive developments, accompanying financial statements have been prepared under going concern assumption.

Further we draw attention to Note No. 31 regarding non-compliance by the Company with the requirements of Section 383A of the Act in respect of appointment of a whole-time Company Secretary.

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

V. Opinion

Subject to the extent to what was stated in 2 (f) above and read together with para 2(g) above on emphasis of matter, in our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

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

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

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

Annexure to the Auditor''s Report

(Referred to Paragraph 3 of the Auditor''s Report of even date)

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks, as we considered appropriate, we further report as under:

(i) Fixed Assets

(a) The Company has maintained fixed assets register showing full particulars including quantitative details and situation of the fixed assets.

(b) As explained to us, the management has physically verified the fixed assets in a phased manner, the periodicity of which in our opinion is reasonable.

(c) The Company has disposed off significant part of the fixed assets during the year under review. However, such disposal has not affected the going concern since in the Company''s view it is actively pursuing various options of business to be carried in near future.

(ii) Inventory

We were explained that the management has conducted physical verification of inventory at regular intervals during the year under review, the periodicity of which, in our opinion and the procedures of such verification followed by the management are both reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification of the said inventory upon comparison with the said records.

(iii) Loans & Advances granted and / or taken

(a) During the year under review, the Company has not granted any loans, secured or unsecured, to the parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) (i) During the year, the Company has not taken interest-free unsecured loans from a body corporate

representing a party covered in the register maintained under Section 301 of the Companies Act, 1956.

(ii) In respect of the existing interest-free unsecured loan of Rs.34.76 Lacs taken by the Company from a director being a party covered in the register maintained under Section 301 of the Companies Act, 1956 in earlier years remains outstanding during the year under review, we are of the opinion that the other terms and conditions of the said loan are not prima facie prejudicial to the interests of the Company.

(iv) Internal Controls

In our opinion, the Company has adequate internal control procedures commensurate with the size and the nature of its business, for the purchase of inventory, fixed assets, for the sale of goods and provision of services. We have not come across any significant weakness in the present internal control system.

(v) Transactions covered by Section 301 of the Companies Act. 1956

The Company has entered the transactions that are to be entered with the parties listed in the register maintained under Section 301 of the Companies Act, 1956.

There are no transactions involving sale of goods or provision of services (each exceeding Rs.5 Lacs) entered into with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 during the year under review.

(vi) Public Deposits

The Company has not accepted any deposits from the public within the purview of the Reserve Bank of India and the provisions of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii) Internal Audit

In our opinion, the Company has no formal internal audit system at any time during the current year.

(viii) Cost Records

As explained to us, the present Coated Paper products manufactured by the Company do not fall in the category prescribed by the Central Government for maintenance of cost accounts and records under Section 209 (1) (d) of the Companies Act, 1956 during the year under review.

(ix) Statutory Dues

(a) As per the records verified by us, the Company is generally regular in depositing the statutory dues including Income tax, Sales Tax, Service Tax, Excise Duty, Customs Duty and Investor Education and Protection Fund with the appropriate authorities during the year under review.

Keeping in view the present circumstances, statutes pertaining to Employee''s State Insurance Corporation, Wealth Tax, Provident Fund and Cess are not applicable to the Company during the year under review.''

According to the information and explanations given to us, no undisputed amounts payable were in arrears, as at the end of the year for a period of more than six months.

(b) The disputed statutory dues aggregating to Rs. 21.77 Lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Note: * includes Rs. 0.50 Lacs deposited by the Company under protest but charged to revenue.

** includes Rs. 1.00 Lacs deposited by the Company under protest but charged to revenue.

(x) Accumulated Losses

As per the records of the Company, the accumulated losses of the Company have exceeded the entire Net Worth of the Company as at the end of the current financial year. The Company has not incurred any cash losses during the current financial year. (Previous Year 4.93)

(xi) Dues to Financial Institutions / Banks

From the books of accounts verified by us, during the year, the Company has no dues pending to be payable to bank/ Financial Institution. The Company has not borrowed any amount through Debentures.

(xii) Loans against pledge of securities

During the year, the Company has not granted any loans and /or advances on the basis of security by way of pledge of shares, debentures and other securities to any party.

(xiii) Application of Special Statutes

The provisions of special statutes applicable to Chit Fund / Nidhi / Mutual Benefit Fund / Societies are not applicable to the Company during the year under review.

(xiv) Dealing Shares. Securities etc.

The Company has not dealt with Shares, Securities, etc. during the year under review. Also, the Company does not have any investment in the books of accounts during the year under review.

(xv) Guarantees given

As explained to us, the Company has not given any guarantee in respect of loans taken by others from Banks / Financial Institutions.

(xvi) Application of funds raised

No Term Loans were raised by the Company during the year.

(xvii) Short term funds

Based on our verification of the books of accounts during the year and the overall Cash flows of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) Preferential allotment of shares

As per the records verified by us, the Company has not made any preferential allotment of shares to parties / concerns listed in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) Debentures

The Company has not issued any debentures since its inception and hence no securities are required to be created in respect thereof.

(xx) Public issue

No money has been raised by the Company by way of public issue during the year under review.

(xxi) Frauds

During the course of examination of the books of accounts and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanation given to us, we have not come across any fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management causing the financial statements to be materially misstated.

For Shyam Malpani & Associates Chartered Accounts Firm Registration No. 120438W

Shyam Malpani Proprietor Membership No. F-34171

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Mar 31, 2012

1. We have audited the attached Balance Sheet of Sarda Papers Limited as on 31st March, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company 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 by the Companies Auditor's Report (Amendment) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and based on the information and explanations given to us in this regard, we enclose in the Annexure a Statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company during the year.

4. Further to our comments in the Annexure referred to in para 3 above, we report as follows:

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

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

iii. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement referred to in this report are in agreement with the books of accounts;

iv. In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable, except in respect of what is stated in para vi (a) and (c) below.

v. On the basis of written representations received from the concerned directors as on 31a March, 2012 and taken on record by the Board, we report that none of the directors is disqualified as on the said date from being appointed as a director under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956, as on 31st March 2012;

vi. Attention is invited to the following Notes:

(a) Note No. 25 regarding non-provision in the Company's books in respect of any impairment i in the Company's fixed assets, in non-compliance with the recommendations of Accounting Standard-28, Impairment of Assets. The amount of non - provision on the carrying value of the fixed assets as well as on the loss for the year is unascertainable;

(b) Note No. 8 regarding non-providing of depreciation for the year on Plant and Machinery due to closure of plant on account of discontinuation of manufacturing operations and consequential overstatement of fixed assets and understatement of loss for the year by Rs.35.10 Lacs; and

(c) As referred in para 17 of Accounting Standard- 22, Accounting for taxes on Income, Deferred tax assets should be recognized on brought forward business losses as per Income Tax Act, 1961, only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income would be available against which such deferred tax assets can be realized. However, as referred to in Note No. 9, the Company has in the earlier years, recognized Deferred Tax Assets on such losses amounting to Rs. 268.66 Lacs, net after considering the Deferred Tax Liability of Rs. 59.55 Lacs, in violation of the recommendations of the above Accounting Standard, thus having consequential effect on the balance of Net Deferred Tax Assets, which was unmoved during the year, with Nil impact on the Loss for the year.

vii. Except to the extent to what was stated in 4 vi (c) above, where we expressed our disclaimer of opinion as regards the Company's continued preparation of financial statements on recognition of Deferred Tax Assets on brought forward business losses and subject to what is stated in para 4. vi. (a) and (b) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the Significant Accounting Policies and other Notes on Accounts which give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

(b) In the case of the Statement of Profit and Loss Account, of the Loss of the Company for the Year ended on that date; and

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

Annexure to the Auditor's Report

(Referred to Paragraph 3 of the Auditor's Report of even date)

In terms of the information and explanations given to us and the; books and records examined by us and on the basis of such checks, as we considered appropriate, we further report as under:

(i) Fixed Assets

(a) The Company has maintained fixed assets register showing full particulars including quantitative details and situation of the fixed assets. However the said register is pending updation in order to incorporate full details regarding the situation and description of fixed assets.

(b) As explained to us, the management has physically verified the fixed assets in a phased manner, the periodicity of which in our opinion is reasonable. We cannot comment about the discrepancies, if any on such verification in view of (i) (a) above.

(c) The Company has not disposed off any significant part of the fixed assets during the year under review.

(ii) Inventory

We were explained that the management has conducted physical verification of inventory at regular intervals during the year under review, the periodicity of which, in our opinion and the procedures of such verification followed by the management are both reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion, the Company is maintaining prbper records of inventory and no material discrepancies were noticed on physical verification of the said inventory upon comparison with the said records.

(iii) Loans & Advances granted and / or taken

(a) During the year under review, the Company has not granted any loans, secured or unsecured, to the parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) (i) During the year, the Company has not taken interest-free unsecured loans from a body corporate representing a party covered in the register maintained under Section 301 of the Companies Act, 1956.

(ii) In respect of the existing interest-free unsecured loan of Rs. 173.90 Lacs taken by the Company from a director being a party covered in the register maintained under Section 301 of the Companies Act, 1956 in earlier years and remaining outstanding throughout the year under review, we are of the opinion that the other terms and conditions of the said loan are not prima facie prejudicial to the interests of the Company.

(iv) Internal Controls

In our opinion, the Company has adequate internal control procedures commensurate with the size and the nature of its business, for the purchase of inventory, fixed assets, for the sale of goods and provision of services. We have not come across any significant weakness in the present internal control system.

(v) Transactions covered bv Section 301 of the Companies Act. 1956

The Company has entered the transactions that are to be entered with the parties listed in the register maintained under Section 301 of the Companies Act, 1956.

There are no transactions involving sale of goods or provision of services (each exceeding Rs.5 Lacs) entered into with the parties listed in the register maintained under Section 301 of the Companies Act, 1956 during the year under review.

(vi) Public Deposits

The Company has not accepted any deposits from the public within the purview of the Reserve Bank of India and the provisions of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii) Internal Audit

In our opinion, the Company has no formal internal audit system at any time during the current year.

(viii) Cost Records

As explained to us, the present Coated Paper products manufactured by the Company do not fall in the category prescribed by the Central Government for maintenance of cost accounts and records under Section 209 (1) (d) of the Companies Act, 1956 during the year under review.

(ix) Statutory Dues

(a) As per the records verified by us, the Company is generally regular in depositing the statutory dues including Provident Fund, Sales Tax, Service Tax, Excise Duty, Customs Duty and Investor Education and Protection Fund with the appropriate authorities during the year under review.

Keeping in view the present circumstances, statutes pertaining to Employee's State Insurance Corporation, Wealth Tax, and Cess are not applicable to the Company during the year under review.

(b) The disputed statutory dues aggregating to Rs. 30.83 Lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under;

Sr. Name of Nature of Amount Assessment Forum where No. the statute the Dues (Rs. in Lacs) Year dispute is pending

1 Central Excise Duty 19.77* 2004-05 Central Excise and Service tax Excise Act, and Penalties Appellate Tribunal, Mumbai 1944

2 Central Excise Duty 5.70 2005-06 Central Excise and Service tax Excise Act, and Penalties Appellate Tribunal, Mumbai 1944

3 Central Excise Duty 5.36 2005-06 Central Excise and Service tax Excise Act, and Penalties Appellate Tribunal, Mumbai 1944

Note: * includes Rs. 2.00 Lacs deposited by the Company under protest but charged to revenue.

(x) Accumulated Losses

As per the records of the Company, the accumulated losses of the Company have exceeded the entire Net Worth of the Company as at the end of the current financial year. The Company has not incurred any cash losses during the current financial year.

(xi) Dues to Financial Institutions / Banks

From the books of accounts verified by us, during the year, the Company has no dues pending to be payable to bank/ Financial Institution. The Company has not borrowed any amount through Debentures.

(xii) Loans against pledge of securities

During the year, the Company has not granted any loans and /or advances on the basis of security by way of pledge of shares, debentures and other securities to any party.

(xiii) Application of Special Statutes

The provisions of special statutes applicable to Chit Fund / Nidhi / Mutual Benefit Fund / Societies are not applicable to the Company during the year under review.

(xiv) Dealing Shares. Securities etc.

The Company has not dealt with Shares, Securities, etc. during the year under review. Also, the Company does not have any investment in the books of accounts during the year under review.

(xv) Guarantees given

As explained to us, the Company has not given any guarantee in respect of loans taken by others from Banks / Financial Institutions.

(xvi) Application of funds raised

No Term Loans were raised by the Company during the year.

(xvii) Short term funds

Based on our verification of the books of accounts during the year and the overall Cash flows of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) Preferential allotment of shares

As per the records verified by us, the Company has not made any preferential allotment of shares to parties and /or to concerns listed in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) Debentures

The Company has not issued any debentures since its inception and hence no securities are required to be created in respect thereof.

(xx) Public issue

No money has been raised by the Company by way of public issue during the year under review.

(xxi) Frauds

On our verification of the books of accounts and other relevant records and based on the information and explanations given to us, we have not noticed or reported any fraud on or by the Company during the year under review.

For Malpani & Associates

Chartered Accountants Firm Registration No:120438W

Shyam Malpani

Proprietor Membership No. F - 34171 Place: Mumbai Date: 30th May, 2012

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Mar 31, 2011

1. We have audited the attached Balance Sheet of Sarda Papers Limited as on 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company 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 by the Companies Auditor's Report (Amendment) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and based on the information and explanations given to us in this regard, we enclose in the Annexure a Statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company during the year.

4. Further to our comments in the Annexure referred to in para 3 above, we report as follows:

i. The accounts of the Company for the Year ended 31st March 2011 continued to be prepared on a going concern basis, keeping in view the ongoing management's efforts to revive the opera- tions of the Company by pursuing rehabilitation scheme of the Board for Industrial and Finan- cial Reconstruction (BIFR). However, the erosion of entire Net Worth of the Company and the continued closure of operations of the Company had adversely affected the Going concern concept, as referred to in Note No. 11.2 of Schedule-P.

However, the financial statements for the current year have not been adjusted for the recover- ability and classification of assets and liabilities as a consequence of the inability of the Company to continue as a going concern. The Company is of the opinion that the extent of the effects of the resultant adjustments to the assets and liabilities of the Company as at the end of the year and on the loss for the year are presently not ascertainable. We disclaim our opinion in the matter.

ii. 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;

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

iv. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement referred to in this report are in agreement with the books of accounts;

v. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable, except with the recommendations of with Accounting Standard - 28, Impairment of Assets and with Accounting Standard - 22 Accounting for Taxes on Income.(Refer notes no 11.9 and 15 respectively)

vi. On the basis of written representations received from the concerned directors as on 31st March, 2011 and taken on record by the Board, we report that none of the directors is disqualified as on the said date from being appointed as a director under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956, as on 31st March 2011;

vii. Attention is invited to the following Notes in Schedule - P:

(a) Note No. II. 9 regarding non provision in the Company's books in respect of any impair- ment in the Company's fixed assets, in non - compliance with the recommendations of Accounting Standard - 28, Impairment of Assets. The amount of non - provision on the carrying value of the fixed assets as well as on the loss for the year is unascertainable;

(b) Note No. II 10 regarding non-providing of depreciation for the year on Plant and Machin- ery due to closure of plant on account of discontinuation of manufacturing operations and consequential overstatement of fixed assets and understatement of losses incurred by Rs.35.38 Lacs, and

(c) As referred in para 17 of Accounting Standard 22, Accounting for taxes on income, De- ferred tax assets should be recognized on brought forward business losses as per Income Tax Act, 1961, only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such de- ferred tax assets can be realized. The Company's future sustainabllity is in question, in view of the closing down of its operations as explained in Note No.ll-2 of Schedule -P and also as per our comments in para 4(1) above. However, as referred to in Note No. Il.-17(b), the Company has recognized Deferred Tax Assets on such losses amounting to Rs. 268.66 Lacs, net after considering the Deferred Tax Liability of Rs. 47.86 Lacs. The above ac- counting treatment is in violation of the recommendations of Accounting Standard -22, having consequential effect on the Deferred Tax Liability of Rs. 47.86 Lacs which was not created and on Deferred Tax Asset which was created to the extent of Rs. 268.66 Lacs, thus resulting in the over statement of Profit (Net) for the year to the above extent. We disclaim our opinion on the accounting treatment adopted by the Company in this regard.

viii. Except to the extent to what was stated in Para 4. i. and 4 vii (b) above, where we expressed our disclaimer of opinion as regards the Company's continued preparation of financial statements on Going Concern Concept and on recognition of Deferred Tax Assets on brought forward business losses and subject to what is stated in para 4. v and vii. (a) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the Significant Accounting Policies and other Notes on. Accounts appearing in Schedule - P give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

(b) In the case of the Profit and Loss Account, of the Loss of the Company for the Year ended on that date; and

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

Annexure to the Auditor's Report (Referred to Paragraph 3 of the Auditor's Report of even date)

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks, as we considered appropriate, we further report as under:

(i) Fixed Assets

(a) The Company has maintained fixed assets register showing full particulars including quantitative details and situation of the fixed assets. However the said register is pending updation in order to incorporate full details regarding the situation and description of fixed assets.

(b) As explained to us, the management has physically verified the fixed assets in a phased manner, the periodicity of which in our opinion is reasonable. We cannot comment about the discrepancies, if any on such verification in view of (i) (a) above.

(c) The Company has not disposed off any significant part of the fixed assets during the year under review.

(ii) Inventory

We were explained that the management has conducted physical verification of inventory at regular intervals during the year under review, the periodicity of which, in our opinion and the procedures of such verification followed by the management are both.reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification of the said inventory upon comparison with the said records.

(iii) Loans & Advances granted and / or taken

(a) During the year under review, the Company has not granted any loans, secured or unsecured, to the parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) (i) During the year, the Company has not taken interest-free unsecured loans from a body corporate representing a party covered in the register maintained under Section 301 of the Companies Act, 1956.

(ii) In respect of the existing interest-free unsecured loan of Rs. 186.50 Lacs taken by the Company from a director being a party covered in the register maintained under Section 301 of the Companies Act, 1956 in earlier years and remaining outstanding throughout the year under review, we are of the opinion that the other terms and conditions of the said loan are not prima facie prejudicial to the interests of the Company.

(iv) Internal Controls

In our opinion, the Company has adequate internal control procedures commensurate with the size and the nature of its business, for the purchase of inventory, fixed assets, for the sale of goods and provision of services. We have not come across any significant weakness in the present internal control system.

(v) Transactions covered by Section 301 of the Companies Act. 1956

The Company has maintained register as per the requirements of Section 301 of the Companies Act, 1956. However, there are no transactions involving sale of goods or provision of services (each exceeding Rs.5 Lacs per annum) entered into with the parties listed in the said register maintained, during the year under review.

(vi) Public Deposits

The Company has not accepted any deposits from the public within the purview of the Reserve Bank of India and the provisions of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii) Internal Audit

In our opinion, the Company has no formal internal audit system at any time during the current year.

(viii) Cost Records

As explained to us, the products manufactured by the Company do not fall in the category prescribed by the Central Government for maintenance of cost accounts and records under Section 209 (1) (d) of the Companies Act, 1956 during the year under review.

(ix) Statutory Dues

(a) As per the records verified by us, the Company is generally regular in depositing the statutory dues including Provident Fund, Sales Tax, Service Tax, Excise Duty, Customs Duty and Investor Education and Protection Fund with the appropriate authorities during the year under review.

Keeping in view the present circumstances, statutes pertaining to Employee's State Insurance Corporation, Wealth Tax, and Cess are not applicable to the Company during the year under review.

(b) The disputed statutory dues aggregating to Rs. 30.83 Lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Sr. Name of Nature of Amount Assessment No. the statute the Dues (Rs. In Year Lacs)

1 Central Excise Duty 19.77* 2004-05 Excise Act, and Penalties 1944

2 Central Excise Duty 5.70 2005-06 Excise Act, and Penalties 1944

3 Central Excise Duty 5.36 2005-06 Excise Act, and Penalties 1944

Name of Forum where the statute dispute is pending

Central Central Excise and Service Excise Act, tax Appellate Tribunal, Mumbai 1944

Central Central Excise and Service Excise Act, tax Appellate Tribunal, Mumbai 1944

Central Central Excise and Service Excise Act, tax Appellate Tribunal, Mumbai 1944

Note: * includes Rs. 2.00 Lacs deposited by the Company under protest but charged to revenue.

(x) Accumulated Losses

As per the records of the Company, the accumulated losses of the Company have exceeded the entire Net Worth of the Company as at the end of the current financial year. Also, the Company has incurred cash losses of Rs. 0.21 Lacs during the current financial year as well as in the immediately preceding financial year amounting to Rs. 122.55 Lacs.

(xi) Dues to Financial Institutions / Banks

From the books of accounts verified by us, during the year, the Company has no dues pending to be payable to bank/ Financial Institution. The Company has not borrowed any amount through Debentures.

(xii) Loans against pledge of securities

During the year, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities to any party.

(xiii) Application of Special Statutes

The provisions of special statutes applicable to Chit Fund/ Nidhi/Mutual Benefit Societies are not applicable to the Company during the year under review.

(xiv) Dealing Shares. Securities etc.

The Company has not dealt with Shares, Securities, etc. during the year under review. Also, the Company does not have any investment in the books of accounts during the year under review.

(xv) Guarantees given

As explained to us, the Company has not given any guarantee in respect of loans taken by others from Banks / Financial Institutions.

(xvi) Application of funds raised

No Term Loans were raised by the Company during the year.

(xvii) Short term funds

Based on our verification of the books of accounts during the year and the overall cash flows of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) Preferential allotment of shares

As per the records verified by us, the Company has not made any preferential allotment of equity shares to parties and /or to concerns listed in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) Debentures

The Company has not issued any debentures since its inception and hence no securities are required to be created in respect thereof.

(xx) Public Issue

No money has been raised by the Company by way of public issue during the year under review.

(xxi) Frauds

On our verification of the books of accounts and other relevant records and based on the information and explanations given to us, we have not noticed or reported any fraud on or by the Company during the year under review.

For Malpani & Associates Chartered Accountants Firm Registration No:120438W

Shyam Malpani Proprietor Membership No. F - 34171 Place : Mumbai Date : 27th August, 2011

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Mar 31, 2010

1. We have audited the attached Balance Sheet of Sarda Papers Limited as on 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company 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 by the Companies Auditors Report (Amendment) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and based on the information and explanations given to us in this regard, we enclose in the Annexure a Statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company during the year.

4. Further to our comments in the Annexure referred to in para 3 above, we report as follows:

i. The accounts of the Company for the Year ended 31st March 2010 continued to be prepared on a going concern basis, keeping In view the ongoing managements efforts to revive the operations of the Company by pursuing rehabilitation scheme of the Board for Industrial and Financial Reconstruction (BIFR). However, the erosion of entire net worth of the Company and the closing down of manufacturing operations during the year had adversely affected the Going concern concept, as referred to In Note No. 11.2 of Scheduled.

However, the financial statements for the current year have not been adjusted for the recoverability and classification of assets and liabilities as a consequence of the Inability of the Company to continue as a going concern. The Company Is of the opinion that the extent of the effects of the resultant adjustments to the assets and liabilities of the Company as at the end of the year and on the loss for the year are presently not ascertainable. We disclaim our opinion In the matter.

ii. 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;

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

iv. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement referred to in this report are in agreement with the books of accounts;

v. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable, except with the recommendations with Accounting Standard - 28,lmpairment of Assets and with Accounting Standard - 22 Accounting for Taxes on lncome.(Refer notes no II. 10and 16respecitvely)

vi. On the basis of written representations received from the concerned directors as on 31" March, 2010 and taken-on record by the Board, we report that none of the directors is disqualified as on the said date, from being appointed as a director under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956, as on 31st March 2010;

vii. Attention is invited to the following Notes in Schedule - P:

(a) Note No. II. 10 regarding non provision In the Companys books In respect of any Impairment In the Companys fixed assets, In non - compliance with the recommendations of Accounting Standard - 28, Impairment of Assets. The amount of non - provision on the carrying value of the fixed assets as well as on the loss for the year Is unascertalnable; and

(b) As referred In para 18 of Accounting Standard 22, Accounting for taxes on Income, Deferred tax assets should be recognized on brought forward business losses as per Income Tax Act, 1981, only to the extent that there Is virtual certainty supported by convincing evidence that sufficient future taxable Income will be available against which such deferred tax assets can be realized. The Companys future sustalnability Is In question. In view of the closing down of Its operations as explained In Note No.ll-2 of Schedule -P and also as per our comments In para 40 above. However, as referred to In Note No. Il.-16(b), the Company has recognized Deferred Tax Assets on such losses amounting to Rs. 220.80 Lacs, net after considering the Deferred Tax Liability of Rs. 59.59 Lacs. The above accounting treatment Is In violation of the recommendations of Accounting Standard -22, having consequential effect on the Deferred Tax Liability of Rs. 59.59 Lacs which was not created and on Deferred Tax Asset which was created to the extent of Rs. 280.39 Lacs, thus resulting In the under statement of Loss (Net) for the year to the above extent We disclaim our opinion on the accounting treatment adopted by the Company In this regard. viii. Except to the extent to what was stated In Para 4.1, and 4 vi (b) above, where we expressed our disclaimer of opinion as regards the Companys continued preparation of financial statements on Going Concern Concept and on recognition of Deferred Tax Assets on brought forward business losses and subject to what is stated in para 4. v and vii. (a) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the Significant Accounting Policies and other Notes on Accounts appearing in Schedule - P give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

(b) In the case of the Profit and Loss Account, of the Loss of the Company for the Year ended on that date; and

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

Annexure to the Auditors Report (Referred to Paragraph 3 of the Auditors Report of even date)

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks, as we considered appropriate, we further report as under

I) Fixed Assets

(a) The Company has maintained fixed assets register showing full particulars including quantitative details and. situation of the fixed assets. However the said register is pending updation in order to incorporate full details regarding the situation and description of fixed assets.

(b) As explained to us, the management has physically verified the fixed assets in a phased manner, the periodicity of which in our opinion is reasonable. We cannot comment about the discrepancies, if any on such verification in view of 0) (a) above.

(c) The Company has not disposed off any significant part of the fixed assets during the year under review.

(ii) inventory

We were explained that the management has conducted physical verification of inventory at regular intervals during the year under review, the periodicity of which, in our opinion and the procedures of such verification followed by the management are both reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification of the said inventory upon comparison with the said records.

(iii) Loans & Advances granted and / or taken

(a) During the year under review, the Company has not granted any loans, secured or unsecured, to the parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) (i) During the year, the Company has not taken interest-free unsecured loans from a body corporate representing a party covered in the register maintained under Section 301 of the Companies Act, 1956.

(ii) In respect of the existing interest-free unsecured loan of Rs. 190.00 Lacs taken by the Company from a director being a party covered in the register maintained under Section 301 of the Companies Act, 1956 in earlier years and remaining outstanding throughout the year under review, we are of the opinion that the other terms and conditions of the said loan are not prima facie prejudicial to the interests of the Company.

The Company has been referred to the BIFR and hence no servicing on the loans taken was made during the financial year 2009-10. Hence, 0) overdue principal; (ii) the regularity of the Company in repayment of principal; and (iii) reasonability of the steps taken by the Company towards repayment of the said loans are not applicable during the year.

(iv) Internal Controls

In our opinion, the Company has adequate internal control procedures commensurate with the size and the nature of its business, for the purchase of inventory, fixed assets, for the sale of goods and provision of services. We have not come across any significant weakness in the present internal control system.

(v) Transactions covered bv Section 301 of the Companies Act 1956

The Company has entered the transactions that are to be entered with the parties listed in the register maintained under Section 301 of the Companies Act, 1956.

There are no transactions involving sale of goods or provision of services (each exceeding Rs.5 Lacs) entered into with the parties listed In the register maintained under Section 301 of the Companies Act, 1956 during the year under review.

(vi) Public Deposits

The Company has not accepted any deposits from the public within the purview of the Reserve Bank of India and the provisions of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii) Internal Audit

In our opinion, the Company has no formal internal audit system from 01st July, 2009 till the end the current year.

(viii) Cost Records

As explained to us, the present Coated Paper products manufactured by the Company do not fall in the category prescribed by the Central Government for maintenance of cost accounts and records under Section 209 (1) (d) of the Companies Act, 1956 during the year under review.

(ix) statutory Dues

(a) As per the records verified by us, the Company is generally regular in depositing the statutory dues including Provident Fund, Sales Tax, Service Tax, Excise Duty, Customs Duty and Investor Education and Protection Fund with the appropriate authorities during the year under review.

Keeping in view the present circumstances, statutes pertaining to Employees State Insurance Corporation, Wealth Tax, and Cess are not applicable to the Company during the year under review.

(b) The disputed statutory dues aggregating to Rs. 30.83 Lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under :

Sr. Name of Nature of Amount Order in Forum where No. the statute the Dues (Rs. in Lacs) Appeal No. /dt dispute is pending

1 Central Excise Duty 19.77* 2004-05 Central Excise and Service tax Excise Act, 1944 and Penalties Appellate Tribunal, Mumbai

2 Central Excise Duty 5.70 2005-06 Central Excise and Service tax Excise Act, 1944 and Penalties Appellate Tribunal, Mumbai

3 Central Excise Duty 5.36 2005-06 Central Excise and Service tax Excise Act, 1944 and Penalties Appellate Tribunal, Mumbai

Note: * includes Rs. 2.00 Lacs deposited by the Company under protest but charged to revenue.

(x) Accumulated Losses

As per the records of the Company, the accumulated losses of the Company have exceeded the entire Net Worth of the Company as at the end of the current financial year. Also, the Company has incurred cash losses of Rs.122.55 Lacs during the current financial year as well as in the immediately preceding financial year amounting to Rs. 39.51 Lacs.

(xi) Dues to Financial Institutions / Banks

From the books of accounts verified by us, during the year, the Company has defaulted in the repayment of Working Capital Term Loan principal amounting to Rs.52.74 Lacs and interest amounting to Rs.10.90 Lacs. The Company has not borrowed any amount through Debentures.

(xii) Loans against pledge of securities

During the year, the Company has not granted any loans and /or advances on the basis of security by way of pledge of shares, debentures and other securities to any party.

(xiii) Application of Special Statutes

The provisions of special statutes applicable to Chit Fund / Nidhi / Mutual Benefit Fund / Societies are not applicable to the Company during the year under review.

(xiv) Dealing Shares. Securities etc.

The Company has not dealt with Shares, Securities, etc. during the year under review. Also, the Company does not have any investment in the books of accounts during the year under review.

(xv) Guarantees given

The Company has not given any guarantee in respect of loans taken by others from Banks / Financial Institutions the terms of which, in our opinion, are prejudicial to the interest of the Company.

(xvi) Application of funds raised

No Term Loans were obtained by the Company during the year. In respect of the Term Loan taken by the Company in the earlier years from the Banks, in our opinion the said loans have been applied for the purpose for which they were obtained.

(xvii) Short term funds

Based on our verification of the books of accounts during the year and the overall Cash flows of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) Preferential allotment of shares

As per the records verified by us, the Company has not made any preferential allotment of shares to parties and /or to concerns listed in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) Debentures

The Company has not issued any debentures since its inception and hence no securities are required to be created in respect thereof.

(xx) Public issue

No money has been raised by the Company by way of public Issue during the year under review.

(xxi) Frauds

On our verification of the books of accounts and other relevant records and based on the information and explanations given to us, we have not noticed or reported any fraud on or by the Company during the year under review.



For Malpani & Associates

Chartered Accountants

Firm Registration No:120438W

Shyam Malpani

Proprietor

Membership No. F - 34171

Place : Mumbai

Date : 21st September, 2010