Auditor Report of Sri Chamundeswari Sugars Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of SRI CHAMUNDESWARI SUGARS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March ,2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended on that date, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditors' Responsibility

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

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal! financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operative effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March ,2015, and its LOSS and its cash flows for the year ended on that date. Emphasis of Matter

We draw attention to Note No: 37 (1) and (2) to the financial statements which specifies the claims disputed challenged by the company.

Our opinion is not modified in respect of this matter. Report on Other Legal and Regulatory Requirements As required by the Companies (Auditors Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub- section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 8. As required by Section 143 (3) of the Act, we report that:

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

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

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

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

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

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

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note 37(1) and (2) to the financial statements; (ii) The Company has a long-term lease contract for operating a Sugar Unit at Srinivasapura, Hassan District. As per the management representation, there are no material foreseeable losses which require provision on account of this. The company, during the year, has not entered into any derivative contracts. (iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection fund by the company.

Annexure referred to Auditors report of even date

Re: Sri Chamundeswari Sugars Limited (the "Company")

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

(b) These fixed assets have been physically verified by the management at reasonable intervals. No material discrepancies were noticed on such verification. ii. (a) Physical verification of the inventory has been conducted at reasonable intervals by the management. (b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. , (c) The Company is maintaining proper records of inventories.

No material discrepancies were noticed on physical verification of inventory. iii. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act. iv. There is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets ,for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in internal control system. v. In our opinion and according to the information and explanations given to us in respect of deposits accepted by the company from public, amounting to Rs,11,68,00,000/- (553 depositors) remaining unpaid as on 31.03.2015. An application under section 74 (2) of the Companies Act, 2013 has been made by the Company to the Company Law Board, Chennai Bench seeking extension of time till 31.03.2016 for repayment of those deposits and order of the Company Law Board is awaited. The Company has not accepted any deposits from public during the year. vi. We have broadly reviewed the cost records maintained by the Company specified under sub-section (1) of Section 148 of the Companies Act, and are of the opinion that, the prescribed accounts and records have been made and maintained. vii. (a) The company has deposited with appropriate authorities, with delay on many occasions, undisputed statutory dues, including provident fund, employees' state insurance, income-tax, sales-tax, service tax, duty of excise, duty of customs, value added tax, cess and other statutory dues. There are no such statutory dues as at the last day of the financial year, remaining in arrears for a period of more than six months from the date they became payable. (b) According to the information and explanation given to us and records of the Company, the statutory dues that have not been deposited on account of dispute are as under:

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

The Central Excise 2022.88 FY: 2005-06 Commissioner Excise Act, Duty to 2012-13 of Central 1944 Excise, Mysore

(c) The amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Act and rules framed there under has been transferred to such fund within time.

viii. The company's accumulated losses at the end of the financial year does not exceed 50% of its Net worth. The Company has incurred cash losses during the year and cash profit in the immediately preceding year.

ix. Defaults by the Company in repayment of dues to banks and financial institutions are as under:

(a) Default in repayment of dues to Banks:

Amount of Amount since Particulars Default Period of paid (Rs,in lakhs) Default (Rs,in lakhs)

Principal 198.12 January 2015 Nil

January 2015 &

Interest 4.1 Nil February 2015

(b) Default in repayment of dues to financial institution:

Amount of Amount since Particulars Default Period of paid (Rs,in lakhs) Default (Rs,in lakhs)

Principal 360.89 Sep 14 to Nil Mar 15

Interest 20.50 16.2.15 to Nil 15.3.15

(c) The Company has not accepted any debentures.

x. The Company has not given guarantees for loans taken by others from banks or financial institutions.

xi. Term loans availed during the year have been applied for the purpose for which the loans were obtained.

xii. According to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the year.

For P.N. Raghavendra Rao & Co.,

Chartered Accountants

Firm Registration Number: 003328S

P.R.Vittel

May 30, 2015 Partner

Coimbatore Membership Number: 018111

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Mar 31, 2014

1. We have audited the accompanying financial statements of M/s. Sri Chamundeswari Sugars Limited (the "Company"), which comprise the Balance Sheet as at March 31,2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

2. The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under ''the Companies Act, 1956'' (the "Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of the Section 133 of the Companies Act, 2013.

This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with 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 auditors'' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. 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.

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

Opinion

6. In our opinion, and to the best of our information and according to the explanations given to us, the accompanying 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 Statement of Profit and Loss, of the Loss for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of Ministry of Corporate Affairs in respect of the Section 133 of the Companies Act, 2013; and

(e) on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

Annexure referred to in paragraph 7 of our report of even date Re : Sri Chamundeswari Sugars Limited (the "Company")

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

(b) As explained to us, the fixed assets have been physically verified by the management during the year at reasonable intervals and no material discrepancies were noticed on such physical verification.

(c) The Company has not disposed off substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

ii. (a) As explained to us, inventories have been physically verified by the management at regular intervals during the year. In our opinion, the frequency of verification is reasonable.

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

(c) The Company has maintained proper records of inventories. As explained to us, there was no material discrepancies noticed on physical verification of inventory as compared to the book records.

iii. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clause 4(iii)(a) to (d) of the Companies (Auditor''s Report) Order, 2003 ("CARO" or "Order) are not applicable to the Company and hence not commented upon. (b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clause 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

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

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

vi. In our opinion and according to the information and explanations given to us, in respect of the deposits accepted by the company from the public, the directives issued by the Reserve Bank of India and the provisions of the Act and the rules framed there under, where ever applicable, have been complied with. No order has been passed by the Company law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vii. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. viii. We have broadly reviewed the books of account maintained by the Company in respect of certain manufacturing activities where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under Clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the information and explanations given to us and the records of the Company verified by us, undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income- tax, sales-tax, wealth-tax, service tax, excise duty, customs duty, cess and other material statutory dues as applicable, have been generally regularly deposited with the appropriate authorities during the year though there are slight delays in few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales tax, wealth-tax,service tax, excise duty, customs duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us and records of the Company, the statutory dues that have not been deposited on account of any dispute are as under:

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

Excise Duty 2022.88 FY : 2005-06 to Commissioner of 2012-12 Central Excise, Customs & Service Tax, Mysore

x. The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

xi. According to the records of the Company examined by us and the information and explanations given by the management, the Company has not defaulted in repayment of dues to financial institutions or banks.

xii. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

xvi. In our opinion and based on the information and explanations given to us by the management, term loans availed by the company were prima facie, applied by the company during the year for the purposes for which they were obtained.

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

xviii.During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act.

xix. In our opinion and according to the information and explanations given to us, the Company has not issued any debentures during the year.

xx. As informed to us, the Company has not raised any money by public issue during the year. Accordingly, the provisions of Clause 4(xx) of the Order are not applicable to the Company.

xxi. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For P.N. Raghavendra Rao & Co., Chartered Accountants Firm Registration Number : 003328S

P.R.Vittel May 29, 2014 Partner Coimbatore Membership Number : 018111

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Mar 31, 2012

We have audited the attached Balance Sheet of M/s. Sri Chamundeswari Sugars Limited as at 31st March 2012, the Statement of Profit and Loss Account for the year ended on the date attached thereto and also the Cash Flow Statement for the year ended on that date. 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.

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

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

1. In respect of its fixed assets:

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

b. As explained to us, the fixed assets have been physically verified by the management during the year reasonable intervals and no material discrepancies were noticed on such physical verification.

c. The Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of the inventories:

a. As explained to us, inventory has been physically verified by the management at regular intervals during the year.

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

c. The Company has maintained proper records of inventory. As explained to us there were no material discrepancies noticed on physical verification of inventory as compared to the book records.

3. In respect of loans, either granted or taken by the company, Secured or Unsecured to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956;

a. The company has not granted any loan, secured or unsecured during the year to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b. The company has not taken any loan, secured or unsecured during the year from parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanation given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any significant weaknesses in internal control system.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanation given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section.

b. In our opinion and according to the information and explanations furnished to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, in respect of the deposits accepted by the company from the public, the directives issued by the Reserve Bank of India and the provisions of the Act and the rules framed there under, where ever applicable, have been complied with. No order has been passed by the Company law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal.

7. In our opinion the internal audit system of the company is commensurate with its size and nature of its business.

8. The Central Government has prescribed maintenance of Cost Records under Section 209( l)(d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, prima facie, the prescribed accounts and records have been made and maintained.

9. In respectof statutory dues:

a. According to the records of the company, undisputed statutory dues such as Provident Fund, Investor Education and Protection Fund, Emoplyees State Insurance, Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess etc., have been deposited with the appropriate authorities with delay on certain occasions. There are no arrears of such statutory dues outstanding for a period of more than six months as at 31st March 2012.

b. The disputed statutory dues that have not been deposited on account of matters pending before appropriate authorities are as under:

Nature of period Forum wherein Rs. in dues dispute pending lakhs

Income Tax AY 1990-91 CIT (Appeals III) 43.13 Bangalore

Central Excise AY 2006-07 to 56.52 Appellate Tribunal 2007-08

10. The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11. According to the records of the company examined by us and information and explanations given to us, the company has defaulted in repayment of principal and interest to Bank/Financial Institution and the details of which are given below:

As at Amount & Particulars 31.03.2012 Duration Since paid Date of (Rs.in lakhs) Rs.ln lakhs Payment

Banks From Rs.36.29 lakhs- Principal 43.59 01.01.2012 43.59 16.04.2012 & Rs. 7.30 lakhs- 28.04.2012

Institution From

Principal 375.00 15.07.2011 375.00 26.05.2012 Interest 62.96 15.01.2012 - - to 14.03.2012

12.In our Opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, clause 4(xiii) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks orfinancial institutions.

16. The Company has not availed any term loans during the year.

17. According to the information and explanations given to us and on the overall examination of the Balance Sheet of the Company, we are of the opinion that during the year the Company has not utilized short-term funds raised during the yearfor long-term investments.

18. During the year, the Company has not made any preferential allotment of shares to companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations given to us during the year the Company has not issued any debentures.

20. The Company has not raised any money by way of public issue duringtheyear.

21. In our opinon and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year, that cause thefinancial statements to be materially misstated.

II. Further to our comments under Para I above, we report that:

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

2. 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;

3. The Balance Sheet, the Statement Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4. In our opinion the Balance Sheet, the Statement of Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards, referred in sub section (3C) of Section 211 of the Companies Act, 1956;

5. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified, as on 31st March, 2012, from being appointed as directors in terms of clause (g) of sub-section (1) of section 274 of the Companies Act 1956.

6. 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 thereon give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting principles generallyaccepted in India:

a. In so far as it relates to Balance Sheet, of the state of affairs of the Company as at 31st March 2012;

b. In so far as it relates to the Statement of Profit and Loss Account, of the Profit of the Company for the year ended on that date: and

c. In so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

For P.N.Raghavendra Rao & Co.,

Chartered Accountants

ICAI Reg. No. : FRN003328S

P R Vittel

Date : 29.05.2012 Partner

Place : Coimbatore Membership No.: 018111

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Mar 31, 2011

We have audited the attached Balance Sheet of M/s. Sri Chamundeswari Sugars Limited as at 31st March 2011, the Profit and Loss Account for the year ended on the date attached thereto and also the Cash Flow Statement for the year ended on that date. 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.

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

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

1. In respect of its fixed assets:

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

b. As explained to us, the fixed assets have been

physically verified by the management during the year at reasonable intervals and no material discrepancies were noticed on such physical verification.

c. The Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of the inventories:

a. As explained to us, inventory has been physically verified by the management at regular intervals during the year.

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

c. The Company has maintained proper records of inventory. As explained to us, there were no material discrepancies noticed on physical verification of inventory as compared to the book records

3. In respect of loans, either granted or taken by the company, secured or Unsecured to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

a. The company has not granted any loan, secured or unsecured during the year to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b. The company has not taken any loan, secured or unsecured during the year from parties covered in the register maintained under section 301 of the Companies Act, 1956 .The terms of the same are not prejudicial to the interest of the company.

4. In our opinion and according to the information and explanation given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any significant weaknesses in internal control system.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanation given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section.

b. In our opinion and according to the information and explanations furnished to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, in respect of the deposits accepted by the company from the public, the directives issued by the Reserve Bank of India and the provisions of the Act and the rules framed there under, where ever applicable, have been complied with. No order has been passed by the Company law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

7. In our opinion the internal audit system of the company is commensurate with its size and nature of business.

8. The Central Government has prescribed maintenance of Cost Records under Section 209(1 )(d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, prima facie, the prescribed accounts and records have been made and maintained.

9. In respect of statutory dues:

a. According to the records of the Company, undisputed statutory dues such as Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess etc., have been deposited with the appropriate authorities with delay on certain occasions. There are no arrears of such statutory dues outstanding for a period of more than six months as at 31st March 2011.

b. The disputed statutory dues that have not been deposited on account of matters pending before appropriate authorities are as under:

Nature of Period Forum wherein dispute Rs. dues pending in lakhs Income AY 1990-91 CIT (Appeals III), 43.13 Tax Bangalore

Central AY 2006-07 to Appellate Tribunal 56.52 Excise 2007-08

Purchase From Sep.'08 to High Court of Karnataka 669.52 Tax Oct.'10

10. The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11. According to the records of the company examined by us and information and explanations given to us, the company has not defaulted in repayment of principal and interest to banks/institutions.

12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi/mutual benefit fund/society.Therefore, clause4(xiii) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments.

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. In our opinion, the term loan availed during the year have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on the overall examination of the Balance Sheet of the Company, we are of the opinion that during the year the Company has not utilized short-term funds raised during the year for long-term investments.

18. During the year, the Company has not made any preferential allotment of shares to companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations given to us during the year the Company has not issued any debentures.

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

21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year, that causes the financial statements to be materially misstated.

II. Further to our comments under Para I above, we report that:

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

2. 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;

3. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards, referred in sub section (3C) of Section 211 of the Companies Act, 1956;

5. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified, as on 31st March, 2011, from being appointed as directors in terms of clause(g) of sub-section (1) of section 274 of the Companies Act 1956;

6. 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 thereon give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting principles generally accepted in India:

a. In so far as it relates to Balance Sheet, of the state of affairs of the Company as at 31st March 2011;

b. In so far as it relates to the Profit and Loss Account, of the Profit of the Company for the year ended on that date: and

c. In so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. For P.N.Raghavendra Rao & Co Chartered Accountants ICAI Reg No.: FRN003328S P.R.VITTEL Partner Membership No. 018111

Date : 20.05.2011 Place : Coimbatore

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Mar 31, 2010

We have audited the attached Balance Sheet of M/s. Sri Chamundeswari Sugars Limited as at 31st March 2010, the Profit and Loss Account for the year ended on the date attached thereto and also the Cash Flow Statement for the year ended on that date. 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

1. In respect of its fixed assets:

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

b. As explained to us, the fixed assets have been physically verified by the management during the year at reasonable intervals and no material discrepancies were noticed on such physical verification.

c. The Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of the inventories:

a. As explained to us, inventory has been physically verified by the management at regular intervals during the year.

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

c. The Company has maintained proper records of inventory. As explained to us there were no material discrepancies noticed on physical verification of inventory as compared to the book records.

3. In respect of loans, either granted or taken by the company, secured or Unsecured to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

a. The company has not granted any loan, secured or unsecured during the year to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b. The company has not taken any loan, secured or unsecured during the year from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanation given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any significant weaknesses in internal control system.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanation given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section.

b. In our opinion and according to the information and explanations furnished to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, in respect of the deposits accepted by the company from the public, the directives issued by the Reserve Bank of India and the provisions of the Act and the rules framed there under, where ever applicable, have been complied with. No order has been passed by the Company law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

7. In our opinion the internal audit system of the company is commensurate with its size and nature of business.

8. The Central Government has prescribed maintenance of Cost Records under Section 209(1 )(d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are, prima facie, of the opinion that the prescribed accounts and records have been made and maintained.

9. In respect of statutory dues:

a. According to the records of the Company, undisputed statutory dues such as Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, sales tax, service tax, Customs Duty, excise duty, cess etc have been deposited with the appropriate authorities with delay on certain occasions. There are no arrears of such statutory dues outstanding for a period of more than six months as at 31 st March 2010.

b. The disputed statutory dues that have not been deposited on account of matters pending before appropriate authorities are as under:

Nature of dues Period Forum wherein Rs

dispute pending lakhs

Income Tax AY 1990-91 CIT (Appeals III), 43.13

Bangalore Central Excise AY 2006-07to 2007-08 Appellate Tribunal 56.52

10. The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11. According to the records of the company examined by us and information and explanations given to us, the company has defaulted in payment of interest to bank/institution and the details of which are given below:

Particulars As at Duration Amount and date of

31.3.2010 subsequent payment

Rs lakhs (Rs lakhs)

Bank 36.30 From 36.30(13.05.2010,

February 2010 25.05.2010 & 28.05.2010)

Institution 153.81 From 60.27(13.04.2010,

December 2009 21.05.2010)

12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, clause4(xiii) of the Companies (Auditors Report) Order 2003 is not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments.

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. In our opinion, the term loan availed during the year have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on the overall examination of the Balance Sheet of the Company, we are of the opinion that during the year the Company has not utilized short-term funds raised during the yearfor long-term investments.

18. During the year, the Company has not made any preferential allotment of shares to companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations given to us during the year the Company has not issued any debentures.

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

21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year, that causes the financial statements to be materially misstated.

II. Further to our comments under Para I above, we report that:

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

2. 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;

3. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards, referred in sub section (3C) of Section 211 of the Companies Act, 1956;

5. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified, as on 31st March, 2010, from being appointed as directors in terms of clause(g) of sub-section (1) of section 274 of the Companies Act 1956;

6. 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 thereon give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting principles generally accepted in India:

a. In so far as it relates to Balance Sheet, of the state of affairs of the Company as at 31 st March 2010;

b. In so far as it relates to the Profit and Loss Account, of the Profit of the Company for the year ended on that date: and

c. In so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

For P.N.Raghavendra Rao &Co Chartered Accountants Place:Coimbatore Date:28.05.2010 (P.R Vittel) Partner M.No.18111