Auditor Report of Speciality Papers Ltd.

Mar 31, 2015

1. We have audited the attached Balance Sheet of SPECIALITY PAPERS LIMITED as at 31st March, 2015, the Profit and Loss account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit

2. Management's Responsibility for the Financial Statements

Management is responsible for the preparation of the financial statements as per section 134 (5) of the Companies Act, 2013 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 ! 33 of the Companies Act,2013 read with Rule 7 of the companies (Accounts) Rules, 2014.This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements give a true and fair view and are free from material misstatement, whether due to fraud or error

3. Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We 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 to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and 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 preparation and fair presentation of the financial statements in order to design audit procedures that arc 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.

5. Opinion

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

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015:

b) In the case of the Profit and Loss Account, of the profit/ loss for the year ended on that date: and

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

Report on other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order,2015 ("the Order") issued by the Central Government of India in terms of Section 143 (11) of the Act, we give in the Annexure a statement on the matters specified in paragraph 3 and 4 of the Order.

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

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

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

d) In our opinion, the Balance Sheet, Statement of Profit & Loss account, and Cashflow Statement dealt comply with the Accounting Standards referred to in section 133 of the Companies, Act 2013 read rule 7 of the Companies (Accounts) Rules, 2014;

e) On the basis of written representations received from the Directors, as on 31st March, 2015 and taken on record by the Board of Directors, we report that non of the directors is disqualified from being appointed as a director in terms of section 164 (2) of the Companies Act,2013.

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) Rule, 2014,in our opinion and to the best of our information and according to the explanations given to us :

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses if any. on long term contracts including derivative contracts.

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

Annexure to Independent Auditors' Report

Referred to in paragraph 1 under ' Report on Other Legal and Regulatory Requirements Section of our report of even date.

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

(b) Fixed Assets have been physically verified by the Management during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us, the Company has not disposed off any substantial part of fixed assets during the year.

2. (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out at the end of the year.

3. (a) During the year company has not granted any interest free loans and advances to the parties covered in the register maintained under Section 189 of the Companies' act 2013.

(b) In respect of loans/advances granted, repayment of the principal amount is stipulated

(c) There is no overdue amount of loans/advances granted to companies, firms or other parties listed in the register maintained under Section 189 of the Companies' act 2013.

(d) The Company has taken Interest free loans from Three parties covered in the register maintained under section 189 of the Companies Act, 2013. The year end total balance of loans taken from such parties was 1941.66 lakhs.

In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions in respect of loans taken from these parlies are prima facie not prejudicial to the interest of the company.

In respect of loans taken, there is no agreed period for repayment of these loans.

In our opinion and according to the information and explanations given to us. there are adequate

4. internal control procedures commensurate with the size of the company and the nature of is business, for the purchase of inventory and fixed assets and for the sale of goods,The Company has not accepted deposit from the public within the meaning of section 73 to76 of

5. the Companies Act, 2013 read with the "Companies (Acceptance of Deposits) Rules. 2014 (us amended).. Hence the provision of clause 3(vi) are not applicable to the Company.

6. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148( 1 ) of the Companies Act, 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

7. a) According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also Management representations, undisputed statutory dues in respect Provident fund, Professional Tax, Income Tax, Sales Tax, VAT. Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and material statutory dues, if any. applicable to it, has been regularly deposited with the appropriate authorities.

b) According to the records of the Company, there are no dues of Provident fund. ESIC Income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty. Cess and material statutory dues,if any, applicable to it, has been regularly deposited with the appropriate authorities that have not been deposited on amount of any deposit.

c) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Investor's education and Protection fund and other material statutory dues applicable to it, if any,

8. The Company has accumulated losses exceeding fifty percent of its net worth as on the balance sheet date and has incurred cash loss during the financial year and immediately preceding financial year.

9. In our opinion and according to the information and explanation given to us and the books accounts verified by us, the company has not defaulted in repayment of dues to a financial institution or bank.

10. The Company has not granted any loans and advances on the basis of security by way pledge of shares, debentures and other security.

11. 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,

12. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

For JAMES SHAH & CO. CHARTERED ACCOUNTANT

Proprietor M.No.36195 Place: Mumbai Date: 15/09/2015

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Mar 31, 2014

1. We have audited the attached Balance Sheet of SPECIALITY PAPERS LIMITED as at 31st March, 2014, the Profit and Loss account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit

2. Management's Responsibility for the Financial Statements

Management is responsible for the preparation of the 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

3. Auditor's responsibility

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

4. 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.

5. Opinion

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

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

b) In the case of the Profit and Loss Account, of the profit/ 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.

6. Report on other Legal and Regulatory Requirements

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.

7. 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 purposes of our audit.

b) 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 the 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 accounts;

d) In our opinion, the Balance Sheet, Statement of Profits & Loss account and Cashflow Statement dealt comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies, Act 1956, excepts for comments in paragraph 8 and 9 above;

e) On the basis of written representations received from the Directors, as on 31st March, 2014 and taken on record by the Board of Directors, we report that three directors have been disqualified from being appointed as a director in terms, of clause (g) of sub-section (1) of section 274 of the Act of the Companies Act, 1956.

Annexure to Independent Auditors' Report

Referred to in paragraph 6 of the Our Report of even date.

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

(b) Fixed Assets have been physically verified by the Management during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us, the Company has not disposed off any substantial part of fixed assets during the year.

2. (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

The Company is maintaining proper records of inventory and no material discrepancies were 'noticed on physical verification carried out at the end of the year.

3 .(a) During the year company has not granted any interest free loans and advances to the parties covered in the register maintained under Section 301 of the Companies' act 1956

(b) In respect of loans/advances granted, repayment of the principal amount is stipulated

(c) There is no overdue amount of loans/advances granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(d) The Company has taken Interest free loans from eight parties covered in the register maintained under section 301 of the Companies Act, 1956. The year end balance of loans taken from such parties was 4305.54 lakhs.

In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions in respect of loans taken from these parties are prima facie not prejudicial to the interest of the company.

In respect of loans taken, there is no agreed period for repayment of these loans.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

5. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangement referred to in section 3 01 of the Act that need to be entered in the register maintained under section 301 have been so entered

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs have been entered in to during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted deposit from the public within the meaning of section 58A and 58AA of the Companies Act, 1956. Hence the provision of clause 4(vi) are not applicable to the Company.

7. According to the information and explanations provided by the management, the Company's present internal audit system is commensurate with its size and the nature of its business

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(l)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained

9. According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also Management representations, undisputed statutory dues in respect of Provident fund, Professional Tax, Income Tax, Sales Tax, VAT, Wealth Tax, Sendee Tax, Custom Duty, Excise Duty, Cess and material statutory dues, If any, applicable to it, has been regularly deposited with the appropriate authorities.

10. The Company has no accumulated losses exceeding fifty percent of its net worth as on the balance sheet date and has incurred cash loss during the financial year and immediately preceding financial year.

11. In our opinion and according to the information and explanation given to us and the books of accounts verified by us, the company has not defaulted in repayment of dues to a financial institution or bank.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other security.

13. The provisions of any special statute as specified under clause (xiii) of paragraph 4 of the Order applicable to chit fund/nidhi/mutual benefit fund are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in securities.

15. 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.

16. According to the information and explanations given to us, term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us we report that no short term funds were raised.

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

19. The Company has not issued any debentures.

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

21. To the best of our knowledge and belief and according to the information and explanations given to us no fraud on or by the company was noticed or reported during the year.

For JAMES SHAH & CO. CHARACTED ACCOUNTANT

Mr. James Krishnan Proprietor Place: Mumbai. Date: 15/09/2014

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Mar 31, 2013

Report on the Financial Statements

1. We have audited the attached Balance Sheet of SPECIALITY PAPERS LIMITED as at 31st March, 2013, the Profit and Loss account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company''s management Our responsibility is to express an opinion on these financial statements based on our audit

2. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of the 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

3. Auditor''s responsibility

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

4. 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.

5. Opinion

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

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

b) In the case of the Profit and Loss Account, of the profit/ 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.

6. Report on other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4 A) 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.

7. 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 purposes of our audit.

b) 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 the 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 accounts;

d) In our opinion, the Balance Sheet, Statement of Profit & Loss account, and Cash flow statement dealt comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies, Act 1956, excepts for comments in paragraph 8 and 9 above;

e) On the basis of written representations received from the Directors, as on 31st March, 2013 and taken on record by the Board of Directors, we report that three directors have been disqualified from being appointed as a director interms of clause (g) of sub-section (1) of section 274 of the Act of the Companies Act, 1956.

Annexure to Independent Auditors'' Report

Referred to in paragraph 6 of the Our Report of even date.

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

(b) Fixed Assets have been physically verified by the Management during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us, the Company has not disposed off any substantial part of fixed assets during the year.

2. (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

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

3. (a) During the year company has not granted any interest free loans and advances to the parties covered in the register maintained under Section 301 of the Companies'' act 1956.

(b) In respect of loans/advances granted, repayment of the principal amount is stipulated

(c) There is no overdue amount of loans/advances granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act,1956.

(d) The Company has taken Interest free loans from eight parties covered in the register maintained under section 301 of the Companies Act, 1956. The year end balance of loans taken from such parties was 4305.54 lakhs.

In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions in respect of loans taken from these parties are prima facie not prejudicial to the interest of the company.

In respect of loans taken, there is no agreed period for repayment of these loans.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

5. (a) According to the information and explanations provided fay the management, we are of the opinion that the particulars of contracts or arrangement referred to in section 301 of the Act that need to be entered in the register maintained under section 301 have been so entered

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs have been entered in to during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted deposit from the public within the meaning of section 58A and 58AA of the Companies Act, 1956. Hence the provision of clause 4(vi) are not applicable to the Company.

7. According to the information and explanations provided by the management, the Company''s present internal audit system is commensurate with its size and the nature of its business

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(I) (d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained

9. According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also Management representations, undisputed statutory dues in respect of Provident fund, Professional Tax, Income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and material statutory dues, if any, applicable to it, has been reqularly deposited with the appropriate authorities.

10. The Company has no accumulated losses exceeding fifty percent of its net worth as on the balance sheet date and has incurred cash loss during the financial year and immediately preceding financial year.

11. In our opinion and according to the information and explanation given to us and the books of accounts verified by us, the company has not defaulted in repayment of dues to a financial institution or bank.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other security.

13. The provisions of any special statute as specified under clause (xiii) of paragraph 4 of the Order applicable to chit fund/nidhi/mutual benefit fund are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in securities.

15. 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.

16. According to the information and explanations given to us, term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us we report that no short term funds were raised.

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

19. The Company has not issued any debentures.

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

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

FOR M/S SHEKHARKUMAR & CO. CHARTERED ACCOUNTANT FRNO-135537W

(Shekharkumar B. Jha) Proprietor Place: Mumbai. M.No.151619 Date: 15/09/2013

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Mar 31, 2009

We have audited the attached Balance Sheet of SPECIALITY PAPERS LIMITED as at 31st March, 2009 and also the Profit and Loss account 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:

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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors report) Order 2003 (as amended) issued by the Central Government of India in terms of section 227(4A) of the Companies act ,1956, we enclose in the Annexure a statement on the matters specified therein.

2. Further to our comments in the annexure referred to in paragraph 1 above, we state that:

a) The balances of Debtors, Creditors and Loans and Advances are subject to confirmation and reconciliation.

b) We are informed that die records of inventory of stores and spares is under compilation and that the closing stock of stores has been taken and valued as per physical verification on the year end date. Impact of variation, if any on the profit is not quantifiable.

c) The Company has not provided for Interest on all unpaid statutory dues.

d) Cheques to the tune of Rs. 992554/- have been issued but they have remained uncleared till the report date.

e) 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.

f) Subject to what is stated in paragraph (a) (b) (c) and (d) above, 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 the books;

g) Balance Sheet and Profit and Loss Account and Cash flow statement dealt with by this report are in agreement with the books of accounts;

h) In our opinion , the Profit & Loss account, Balance Sheet and the Cash flow statement dealt with by this report, comply with the mandatory accounting standards referred in to Sub-section (3C) of section 211 of the companies Act 1956.

i) On the basis of written representations received from the Directors, as on 31s March, 2009 and taken on record by the Board of Di rectors, we report that none of the Directors is disqualified as on 31stMarch, 2009 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Act;

j) Subject to our comments in paragraph (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 in conjunction with Schedules "A" to "O"; 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 2009,

b) In the case of the Profit and Loss ace ount, of the Profit for the year ended on that date; and

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

ANNEXURE TO THE AUDITORS REPORT

ANNEXURE REFERRED TO IN PARAGRAPH 1. OF AUDITORS REPORT TO THE MEMBERS OF SPECIALITY PAPERS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2009.

1.(a) In our opinion, the records relating to fixed assets of the company need to be updated and modified to display full particulars including qua ntitative details and situation of fixed assets. We are informed that the company is in the process of updating these records.

(b) As per the information and explanations given to us the company will be able to physically verify the fixed assets only after the records relating to fixed assets are updated.

(c) The Company has not disposed off a substantial part of fixed assets during the year.

2.(a) The inventory of the Company except for waste paper and Stores has been physically verified by the management during the year. In respect of inventory lying with third parties, these have been substantially confirmed by them. In our opinion, the frequency of verification is reasonable however verification of inventory of stores and waste paper needs to be streamlined.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management except for waste paper and stores, were found reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of records of inventory, in our opinion, except for waste paper and stores, the Company has maintained proper records of inventory and discrepancies noticed on physical verification between the physical stocks and the book records were not material in relation to the operations of the company.

3.(a) The company has granted unsecured loan to two companies/ firm / persons covered in the register maintain under section 301 of the companies act 1956, The maximum amount involved during the year was Rs.5.43 Lacs (PY Rs.307.22) and the maximum amount outstanding at any time during the year for the loan granted to such companies/ firm was Rs. 5.43 Lacs (P.Y. Rs. 307.22).

(b) The company has granted interest free loan. There is no fixed schedule for repayment of these loans.

(c) There is no stipulated repayment schedule for these loans. Thus this clause does not apply.

(d) There is no overdue amount exceeding Rs. One Lac in case of loans given by the company.

(e) The company has taken unsecured loan from 8 companies/ Firm/ Persons covered in the register maintained under section 301 of the Companys Act 1956. The maximum amount involved during the year was Rs.3377.78 Lacs (P.Y. Rs. 3069.16) and the maximum balance outstanding of loan taken from such companies at any time during the year was Rs. 3101.66 Lacs (P.Y. Rs. 1845.85)

(f) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions in respect of loans taken from these parties are prima facie not prejudiced to the interest of the company.

(g) Since the company has taken interest free loan s, and there is no stipulated repayment schedule for these loans, this clause does not apply.

4. In our opinion and according to the information a nd explanations given to us , there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regards to the purchase of inventory & fixed assets and with regards to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct the major weaknesses in internal controls.

5.(a) In our opinion and according to the information and explanation given to us, the transactions that need to be entered into the Register maintain ed under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions that need to be entered in the register in pursuance of Section 301 of the act, where the amount of such transaction with each party exceeds Rs. Five Lacs, during the financial year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from the public.

7. The Company presently does not have a formal internal audit system.

8. As per the information and explanations given to us the Company is in the process of compiling cost records required to be maintained as pres cribed by the Central Government under Clause (d) of sub-section (1) of Secti on 209 of the Companies Act 1956.

9(a) The Company has generally been irregular in depositing undisputed dues including Provident

Funds, Employees State Insurance dues, Labour welfare fund, Sales Tax and Income Tax with appropriate authorities. According to the information and explanations given to us and as examined from the books of accounts of the Compan y, there are statutory dues outstanding for more than six months at the year end date.

(b) According to the records of the Company, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Custom Duty or Excise Duty or Cess on account of any dispute except for TDS amounting to Rs. 2276161/- for which the appeals are pending.

10. The Company has no accumulated losses as on the balance sheet date.

11. Based on our audit procedures and the information and explanations given by management, we are of the opinion that the Company has not defaulted in

repayment of its dues to any financial institution or bank during the year.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other security.

13. The provisions of any special statute as specified under clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

15. 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.

16. According to the information and explanations given to us, term loans have been applied for the purpose for which they were raised.

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 no funds raised on short term basis have been used for long term investment.

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

19. The Company has not issued any debentures.

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

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

FOR KAPADIA SHAH & CO.

CHARTERED ACCOUNTANTS

Shreyas S. Kapadia

Partner

Membership No.41548

Place: Vapi

Date: 02.09.2009