Assam Petro-Chemicals Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956 ("the Act") which shall continue to apply in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances 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.

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

Basis for Qualified Opinion

(i) Amortization of ROC fees Expenses:

Expenses related to ROC fees for enhancement of authorised share capital total amounting to Rs. 1,66,50,510 had been amortized as per decision of the management in the Financial Year 2012-13 and accordingly Rs. 33,30,102 (Refer Note 9.C) has been charged under Depreciation and Amortization expenses in the current year and balance amount Rs. 99,90,306 shown as Unamortized Expenses under Other Non-Current Assets (Refer Note 11). On the basis of Accounting Standard (AS)-26 Para 56 under The Companies Accounting Standards Rules, 2006, the whole expenses related to ROC fees for enhancement of authorised share capital of Rs. 1,66,50,510 should have been charged to Statement of Profit and Loss as reported last year in our Audit Report. ROC fees expenses neither created any tangible asset nor any intangible asset. Thus, on the basis of above Accounting Standard (AS)-26 Para 56 whole of the balance amount Rs. 1,33,20,408 should have been charged to Statement of Profit and Loss under ''Prior Period Items''. This has resulted in overstatement of Profit and Other Current Assets by Rs. 99,90,306

(ii) Provision for Pay revision of Arrear salaries of employees for the Year 2009-10 & 2010-11 :

As mentioned in CAG comments on the accounts for the year 2012-13, Rs. 6,27,54,977 being the arrear payable against pay revision of salaries of employees for the years 2009-10 & 2010-11 should have been provided for and shown under ''Current Liabilities'' instead of disclosing it under ''Contingent Liabilities'' as the same was approved by the Board of Directors of the Company and Government of Assam.

But no provision has been made by the company charging to Statement of Profit and Loss Rs. 6,27,54,977 as ''Prior period Items and shown under ''Short-term provisions''. This has resulted in overstatement of Profit by Rs. 6,27,54,977 and understatement of Short-term provisions by Rs. 6,27,54,977.

(iii) Unused Old catalyst not written off:

As per Note no. 25.9 "The Company is carrying unused catalyst valued Rs. 65,97,535 which is more than 20 years old. A committee has been constituted for disposal of the same. The loss/gain on sale will be accounted for at the time of disposal." The company has not identified & charged to Statement of Profit and Loss, the loss on impairment of above asset.

Moreover, As mentioned in CAG comments for the year 2011-12, formal order by the Managing Director of the company had been issued for treating old catalyst worth Rs. 20,12,234 as obsolete on 26/11/2004 as reported last year in our Audit Report.

On the basis of above, in our opinion, the company should have charged to Statement of Profit and Loss Rs. 45,85,301as ''Other Expenses'' and Rs. 20,12,234 as ''Priorperiod Items''. This has resulted in overstatement of Profit and Inventory by Rs. 65,97,535.

(iv) The total effect of the qualification in Para (i), (ii) & (iii) above is that the Profit has been overstated by Rs. 7,93,42,818 and overstatement of ''Other Current Assets'' by Rs. 99,90,306 and ''Inventory'' by Rs. 65,97,535 and understatement of ''Short-term provisions'' by Rs. 6,27,54,977.

Qualified Opinion

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

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

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

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

Emphasis of Matter

(i) We draw attention to Note 3(v) and Note 24.1 to the financial statements related to Equity capital money received from Government of Assam amounting Rs. 1702 lakhs shown under Share Application money pending allotment for which legal formalities relating to issue of share capital will be taken by the Board in due course as mentioned in above notes. Our opinion is not qualified in respect of this matter.

(ii) We draw attention to Note No. 25.11 to the financial statements.

The documents in respect of Subsidiary Company (Pragjyotish Fertilizers and Chemicals Ltd. (PFCL) required to be attached with the Balance Sheet of this Company as per section 212(1) of the Companies Act, 1956, have not been attached. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d. except for the matter described in the basis for qualified opinion Paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. The provisions of Section 274(1)(g) of the Companies Act, 1956 regarding "Disqualifications of Directors" do not apply to this company, being a Government Company, as per notification No. G.S.R. 829 (E) dated 21.10.2003 issued by the Ministry of Company Affairs, Government of India;

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

[Annexure referred to in paragraph under ''Report on other legal and Regulatory requirements'' section of our report of even date on the accompanying financial statements of ASSAM PETRO-CHEMICALS LIMITED for the year ended on 31st March, 2014]

(I) (a) The Company has not maintained proper records showing full particulars including quantitative details and situation of fixed assets.The records maintained for a part period do not tally with the financial statements.

(b) According to the information given to us, Physical verification of fixed assets has not been done by the management during the year and as such material discrepancies with financial records, if any, could not be noticed and have not been dealt with in the books of account.

(c) The Company has not disposed off substantial part of fixed assets during the year and thus the going concern concept of the Company has not been affected.

(ii) (a) As explained to us the inventories of Stores and Spares have been physically verified by the management. In our opinion, the frequency of verification is reasonable.

(b) In accordance with the information and explanations given to us, the procedures of physical verification of inventory followed by the management appear to be 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 the inventory records, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared with book records were not material considering the size of the company and the nature of its business.

(iii) (a) The Company has granted loan to its subsidiary M/s Pragjyotish Fertilizers & Chemicals Limited which is Rs. 41,84,185 and advance for Share Application Money to the Subsidiary Company is Rs. 4,80,000 as on 31st March, 2014. The Company has made provision for the full amount i.e. Rs. 41,84,185 & Rs. 4,80,000 respectively considering them doubtful.

(b) The Company had also granted loans to Assam Tea Corporation Limited as per details given in Note No. 25.10. As per above details, the repayment of principal of loan II was received on 22.10.2009 against the due date of 10.04.2009 and the interest due Rs. 4,25,686 has not been received so far. In case of loan I, out of principal Rs. 35,00,000 , Rs. 10,00,000 only was received on 17.03.2011 against the due date of 07.08.2007.The Balance amount of principal of Rs. 25,00,000 is still overdue. Interest accrued and due Rs. 26,76,856 has not been received so far. Though the Company is pursuing through Govt. of Assam for the recovery of the balance amount of principal and the amount of interest overdue, however the steps are not reasonable in view of long overdues.

(c) 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 Companies Act,1956 and as such, clauses (iii)(e), (f) & (g) of para 4 of the Order are not applicable.

(iv) In our opinion and according to information and explanations given to us, except non-maintenance of Fixed Asset register, no physical verification of Fixed Assets, there is an adequate internal control system commensurate with size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. We are not giving our opinion on the effectiveness of the entity''s internal control. As informed to us, steps have been taken to correct weaknesses in Internal Control System but still the weaknesses persist.

(v) According to the information and explanations given by the management, there are no transactions that need to be entered in the register maintained under section 301 of the Companies Act'' 1956.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year and hence directives issued by the Reserve Bank of India and provisions of sections 58A, 58AA or any other relevant provisions of Companies Act,1956 and the rules framed there under are not applicable.

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

(viii) We have broadly reviewed the Cost records maintained by the company pursuant to the Companies ( Cost Accounting Records) Rules 2011 prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956, for maintenance of Cost records and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) According to the information and explanations given to us and as per the records of the company, the company has been generally regular in depositing undisputed statutory dues including Provident Fund, Income tax, Sales tax, VAT, Custom duty, Excise duty and other statutory dues with the appropriate authorities during the year.

(b) According to the information and explanation given to us there is no material amount of the disputed tax etc. which are not deposited with appropriate authority as at 31st March''2014. However, the Company has received certain demands and show cause notices for payment of duty and penalty as detailed in Note No. 24.02.

(x) As per the records of the company, the company has accumulated Losses of Rs. 60.60 lakhs (Previous year Rs. 842.11 lakhs) as at 31st March''2014 and the Company has not incurred any cash losses in the financial year ended on that date or in the immediate preceding financial year.

(xi) According to the information and explanations given to us the Company has not defaulted in repayment of dues to the bank, and the Company has not taken any loans from any financial institutions.

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

(xiii) The Company is not a chit fund/nidhi/mutual benefit/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(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) According to the information and explanations given to us, the Company has not obtained any term loan during the year.

(xvii) According to the information and explanations given to us, we report that the funds raised on short-term basis have not been used for long-term investment.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us no fraud on or by the Company has been noticed or reported during year.

For L. K. Kejriwal & Co. (CA. Samta Agarwal) Place: Guwahati Chartered Accountants Partner Date: 04/08/2014 Firm Registration No. 001368C Membership No. 068296

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fi nancial statements of Assam Petro-Chemicals Limited ("the Company”), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profi t and Loss and Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows 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 fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial 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 fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our qualifi ed audit opinion.

Basis for Qualifi ed Opinion

(i) Amortisation of ROC fees Expenses:

Expenses related to ROC fees for enhancement of authorised share capital total amounting Rs. 1,66,50,510 /- has been amortised as per decision of the management and accordingly Rs. 33,30,102/-(Refer Note 9.C) has been charged under Depreciation and Amortisation expenses and balance amount Rs. 1,33,20,408/- shown as Unamortised Expenses under Other Non-Current Assets (Refer Note 11). On the basis of Accounting Standard (AS)-26 Para 56 under The Companies Accounting Standards Rules, 2006, in our opinion, the whole expense related to ROC fees for enhancement of authorised share capital Rs. 1,66,50,510/- should have been charged to Statement of Profi t and Loss. This has resulted in overstatement of Profi t and Other Current Assets by Rs. 1,33,20,408/-

(ii) Methanol Revamping Expenses:

Feasibility Study Expenses Rs. 40,32,106/- relating to Methanol Revamping Expenses shown under capital work in progress and Health Study Expenses Rs. 43,65,589/- relating to Methanol

evamping Expenses shown under Long term loans and advances for which the Board had taken decision on 25-08-2010 that no further action will be taken for implementation of 30 % Methanol Expansion scheme of the existing Methanol Plant. Based on the decision taken by the Board on 25.08.2010, in our opinion, the whole expense related to Methanol Revamping Expenses Rs.83,97,695 /- should have been charged to Statement of Profi t and Loss. This has resulted in overstatement of Profi t by Rs. 83,97,695/-, capital work in progress by Rs. 40,32,106/- and Long term loans and advances by Rs. 43,65,589/-.

(iii) Provision for Pay revision shown under exceptional items:

Provision for Pay Revision (Arrear Salary) - Rs.6,55,61,915/- and Arrear Contribution to PF Rs. 1,07,83,211/- have been shown under exceptional items (Refer Note 23B). Based on discussions made in Para 14 & Para 16 of the Accounting Standard (AS) -5 under The Companies Accounting Standards Rules, 2006 and Para 9.6 of the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, in our opinion ''the amount should have been shown under Employees benefi ts expenses’. This resulted in ''understatement of employees benefi ts expenses’ by Rs.7,63,45,126/- and overstatement of ''exceptional items’ by Rs. 7,63,45,126/-

(iv) Unused Old catalyst not written off :

As per Note no. 25.10 "The Company is carrying unused catalyst valued Rs. 65,97,535/- which is more than 20 years old. A committee has been constituted for disposal of the same. The loss/gain on sale will be accounted for at the time of disposal.” The company has not identifi ed & charged to Statement of Profi t and Loss, the loss on impairment of above asset.

Moreover, As mentioned in CAG comments for the year 2011-12, formal order by the Managing Director of the company had been issued for treating old catalyst worth Rs. 20,12,234.00 as obsolete on 26/11/2004.

On the basis of above, in our opinion, the company should have charge to Statement of Profi t and Loss Rs.45,85,301/- as ''Other Expenses’ and Rs. 20,12,234/- as ''Prior period Items’. This has resulted in overstatement of Profi t and Inventory by Rs. 65,97,535/-

(v) The Total effect of the qualifi cations in Para (i), (ii) & (iv) above is that the Profi t has been overstated by Rs.2,83,15,638/- and overstatement of ''other Current Assets’ by Rs. 1,33,20,408/-, ''capital work in progress’ by Rs. 40,32,106/- , ''Long term loans and advances’ by Rs. 43,65,589/- and ''Inventory’ by Rs. 65,97,535/-. The effect of qualifi cations in Para (iii) above is inter-se in the statement of Profi t & Loss and has no effect on Profi t for the year in the statement of Profi t & Loss and on the Balance Sheet.

Qualifi ed Opinion

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

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

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

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

Emphasis of Matter

(i) We draw attention to Note 3(v) and Note 24.1 to the fi nancial statements related to Equity capital money received during the year from Government of Assam amounting Rs. 1702 lakhs shown under Share Application money pending allotment for which legal formalities relating to issue of share capital will be taken by the Board in due course as mentioned in above notes. Our opinion is not qualifi ed in respect of this matter.

(ii) We draw attention to Note No. 25.12 to the fi nancial statements.

The documents in respect of Subsidiary Company (Pragjyotish Fertilizers and Chemicals Ltd. (PFCL) required to be attached with the Balance Sheet of this Company as per section 212(1) of the Companies Act, 1956, have not been attached. Our opinion is not qualifi ed in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

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

c. the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. except for the matter described in the basis for qualifi ed opinion Paragraph, in our opinion, the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. The provisions of Section 274(1)(g) of the Companies Act, 1956 regarding "Disqualifi cations of Directors” do not apply to this company, being a Government Company, as per notifi cation No. G.S.R. 829 (E) dated 21.10.2003 issued by the Ministry of Company Affairs, Government of India;

f. Since the Central Government has not issued any notifi cation as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

[Annexure referred to in paragraph under ''Report on other legal and Regulatory requirements’ section of our report of even date on the accompanying fi nancial statements of ASSAM PETRO-CHEMICALS LIMITED for the year ended on 31st March, 2013]

(i) (a) The Company has not maintained proper records showing full particulars including quantitative details and situation of fi xed assets. The records maintained for a part period do not tally with the fi nancial statements.

(b) According to the information given to us, Physical verifi cation of fi xed assets has not been done by the management during the year and as such material discrepancies with fi nancial records, if any, could not be noticed and have not been dealt with in the books of account.

(c) The Company has not disposed off substantial part of fi xed assets during the year and thus the going concern concept of the Company has not been affected.

(ii) (a) As explained to us the inventories of Stores and Spares have been physically verifi ed by the management during the year. In our opinion, the frequency of verifi cation is reasonable.

(b) In accordance with the information and explanations given to us, the procedures of physical verifi cation of inventory followed by the management appear to be 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 the inventory records, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verifi cation of inventory as compared with book records were not material considering the size of the company and the nature of its business.

(iii) (a) The Company has granted loan to its subsidiary M/s Pragjyotish Fertilizers & Chemicals Limited which is Rs.38,36,585/- and advance for Share Application Money to the Subsidiary Company is Rs.4,80,000/- as on 31st March, 2013. The Company has made provision for the full amount i.e. Rs.38,36,585/- & Rs.4,80,000/- respectively considering them doubtful.

(b) The Company had also granted loans to Assam Tea Corporation Limited as per details given in Note No. 25.11. As per above details, the repayment of principal of loan II was received on 22.10.2009 against the due date of 10.04.2008 and the interest due Rs.5,15,671/- has not been received so far. In case of loan I, out of principal Rs.35,00,000/-, Rs.10,00,000/- only was received on 17.03.2011 against the due date of 07.08.2007. The Balance amount of principal of Rs.25,00,000/- is still overdue. Interest accrued and due Rs. 27,49,005/- has not been received so far. Though the Company is pursuing through Govt. of Assam for the recovery of the balance amount of principal and the amount of interest overdue, however the steps are not reasonable in view of long overdues.

(c) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act,1956 and as such, clauses (iii)(e), (f) & (g) of para 4 of the Order are not applicable.

(iv) In our opinion and according to information and explanations given to us, except non-maintenance of Fixed Asset register, no physical verifi cation of Fixed Assets, there is an adequate internal control system commensurate with size of the company and the nature of its business for the purchase of inventory, fi xed assets and for the sale of goods. As informed to us, steps have been taken to correct weaknesses in Internal Control System but still the weaknesses persist.

(v) According to the information and explanations given by the management, there are no transactions that need to be entered in the register maintained under section 301 of the Companies Act’ 1956.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year and hence directives issued by the Reserve Bank of India and provisions of sections 58A, 58AA or any other relevant provisions of Companies Act,1956 and the rules framed there under are not applicable.

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

(viii) We have broadly reviewed the Cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules 2011 prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956, for maintenance of Cost records and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) According to the information and explanations given to us and as per the records of the company, the company has been generally regular in depositing undisputed statutory dues including Provident Fund, Income tax, Sales tax, VAT, Custom duty, Excise duty and other statutory dues with the appropriate authorities during the year.

(b) According to the information and explanation given to us there is no material amount of the disputed tax etc. which are not deposited with appropriate authority as at 31st March ''2013. However, the Company has received certain demands and show cause notices for payment of duty and penalty as detailed in Note No. 24.02.

(x) As per the records of the Company, the Company has accumulated Losses of Rs.791.79 lakhs (Previous year Rs.1130.02 lakhs) as at 31st March, 2013 and the Company has not ncurred any cash losses in the financial year ended on that date or in the immediate preceding fi nancial year. (xi) According to the information and explanations given to us the Company has not defaulted in repayment of dues to the bank, and the Company has not taken any loans from any fi nancial institutions. (xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund/nidhi/mutual benefi t/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(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 fi nancial institutions.

(xvi) According to the information and explanations given to us, the Company has not obtained any term loan during the year.

(xvii) According to the information and explanations given to us, we report that the funds raised on short-term basis have not been used for long-term investment.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us no fraud on or by the Company has been noticed or reported during year.

For L. K. Kejriwal & Co.

Chartered Accountants

Firm Registration No. 001368C

Sd/-

(CA. Samta Agarwal)

Partner

Membership No. 068296

Place: Guwahati

Date: 25/09/2013

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Mar 31, 2012

1. We have audited the attached Balance Sheet of ASSAM PETRO-CHEMICALS LIMITED as at 31st March, 2012, and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

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

I. The documents in respect of Subsidiary Company (Pragjyotish Fertilizers and Chemicals Ltd. (PFCL) required to be attached with the Balance Sheet of this Company as per section 212(1) of the Companies Act, 1956, have not been attached. (Refer Note No. 28.20)

II. Changes in the Significant Accounting Policies

During the year, there is a change in the Accounting Policy relating to charging off the value of catalyst in the Profit & Loss A/c. As per disclosure in Note No. 11 relating to ''Other Non- Current Assets,'' "The value of Catalyst in the plant has been taken on the basis of Certificate issued by the Engineering Department of the company. This has been amortised as per production capacity i.e. 1,00,000 MT, which is a variation of the accounting treatment of earlier years. The impact of variation on Statement of Profit & Loss is increase in profit by f 1,35,57,828/-."

III. Unused old catalyst held for disposal

As per Note No. 28.15 "The company is carrying unused catalyst valued Rs. 65.98 lakhs which is more than 20 years old. A committee has been constituted for disposal of the same. The loss / gain on sale will be accounted for at the time of disposal". The Company has not identified & charged to Profit & Loss Account, the loss, if any, on impairment of above asset.

IV. Fixed Asset - Replacement of Reformer Tubes

The Company has replaced 42 Nos. of imported reformer tubes costing f 3,90,83,964/- in reformer section of the Methanol Plant, which has been capitalized by the Company considering the replacement as to be "betterment or improvement" as given in Note No. 28.13. The reasoning given by the management in above note No. 28.13 is very complex and highly technical. Thus we are not able to express an opinion on the above accounting treatment made by the Company.

Subject to above

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

ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow statement dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v) The provisions of Section 274(1)(g) of the Companies Act, 1956 regarding "Disqualifications of Directors" do not apply to this company, being a Government Company, as per notification No. G.S.R. 829 (E) dated 21.10.2003 issued by the Ministry of Company Affairs, Government of India;

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

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

(b) in the case of the Statement of Profit and Loss, 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.

ANNEXURE TO THE DRAFT AUDITORS'' REPORT

[Annexure referred to in paragraph 3 of our report of even date on the accounts of ASSAM PETRO- CHEMICALS LIMITED for the year ended on 31st March, 2012]

(i)

(a) The Company has not maintained proper records showing full particulars including quantitative details and situation of fixed assets. The records maintained for a part period do not tally with the financial statements.

(b) According to the information given to us, Physical verification of fixed assets has not been done by the management during the year and as such material discrepancies with financial records, if any, could not be noticed and have not been dealt with in the books of account.

(c) The Company has not disposed off substantial part of fixed assets during the year and thus the going concern concept of the Company has not been affected.

(ii) According to the information given to us, physical verification of Inventory has not been conducted by management during the year and as such material discrepancies, if any, could not be noticed. An audit firm was appointed to conduct stock audit. They submitted their report pointing out irregularities in the stock records. As informed to us, steps have been taken/ are being taken to regularise those irregularities.

(iii) (a) The Company has granted loan to its subsidiary M/s Pragjyotish Fertilizers & Chemicals Limited which is Rs. 38,36,585 as on 31st March, 2012. Further, advance for Share Application Money to the Subsidiary Company is Rs. 4,80,000 as on 31st March, 2012. The Company has made provision for the full amount i.e. Rs. 38,36,585 & Rs. 4,80,000 respectively considering them doubtful.

(b)The Company had also granted loans to Assam Tea Corporation Limited as per details given in Note No. 28.14. As per above details, the repayment of principal of loan II was received on 22.10.2009 against the due date of 10.04.2008 and the interest due Rs. 1,45,941 has not been received so far. In case of loan I, out of principal Rs. 35,00,000, Rs. 10,00,000 only was received on 16.03.2011 against the due date of 07.08.2007. The Balance amount of principal of Rs. 25,00,000 is still overdue. Interest accrued and due Rs. 19,76,045 has not been received so far. Though the Company is pursuing through Govt. of Assam for the recovery of the balance amount of principal and the amount of interest overdue, however the steps are not reasonable in view of long overdues.

(c) 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 Companies Act,1956 and as such, clauses (iii)(e), (f) & (g) of para 4 of the Order are not applicable.

(iv) In our opinion and according to information and explanations given to us, except non- maintenance of Fixed Asset register, no physical verification of Fixed Assets & Inventory, there is an adequate internal control system commensurate with size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. As informed to us, steps have been taken to correct weaknesses in Internal Control System but still the weaknesses persist.

(v) According to the information and explanations given by the management, there are no transactions that need to be entered in the register maintained under section 301 of the Companies Act'' 1956.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year and hence directives issued by the Reserve Bank of India and provisions of sections 58A, 58AA or any other relevant provisions of Companies Act,1956 and the rules framed there under are not applicable.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business but the scope of internal audit has not been defined and the Internal Audit Report is not comprehensive.

(viii) We have broadly reviewed the Cost records maintained by the company pursuant to the Companies ( Cost Accounting Records) Rules 2011 prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956, for maintenance of Cost records and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) According to the information and explanations given to us and as per the records of the company, except VAT payable on Natural Gas etc. Rs. 41,07,284/- for which liability created in the earlier years (Note No. 28.19), the company has been generally regular in depositing undisputed statutory dues including Provident Fund, Income tax, Sales tax, VAT, Custom duty, Excise duty and other statutory dues with the appropriate authorities during the year.

(b) According to the information and explanation given to us there is no material amount of the disputed tax etc. which are not deposited with appropriate authority as at 31st March ''2012. However, the Company has received certain demands and show cause notices for payment of duty and penalty after the Balance Sheet date as detailed in Note No. 28.11.02 (i) (a).

(x) As per the records of the Company, the Company has accumulated Losses of Rs. 1130.02 Lakhs (Previous year f 1023.82 Lakhs) as on 31st March, 2012 which are less than 50% of its net worth. The Company has not incurred cash losses during the year, however it had incurred cash losses in the immediately preceding financial year.

(xi) According to the information and explanations given to us the Company has not defaulted in repayment of dues to the bank, and the Company has not taken any loans from any financial institutions.

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

(xiii) The Company is not a chit fund/nidhi/mutual benefit/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(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) According to the information and explanations given to us, the Company has not obtained any term loan during the year.

(xvii) According to the information and explanations given to us, we report that the funds raised on short-term basis have not been used for long-term investment.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us no fraud on or by the Company has been noticed or reported during year.

For L. K. Kejriwal & Co. Chartered Accountants

Firm Registration No. 001368C

Sd/-

(CA. Samta Agarwal)

Place : Guwahati Partner

Date : 19.12.2012 M.No. 068296

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Mar 31, 2011

1. We have audited the attached Balance Sheet of Assam Petrochemicals Limited as at March 31, 2011 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 (together 'the Order'), issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act; 1956, we give in the Annexure, a statement on the matters specified in paragraph 4 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, 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 the audit;

(b) Subject to our comments in Paragraph 1 and 2 of the Annexure. 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 these books, and proper returns, adequate for the purposes of our audit, have been received from the branches with the exception of the Books of Accounts of the wholly owned subsidiary Pragjyotish Fertiliser & Chemicals Ltd.

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

(d) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) The provisions of Section 274(g) of the Companies Act, 1956 regarding 'Disqualifications of Directors', do not apply to this company, being a Government Company. A Government Company is exempted from the provisions of Section 274(g) vide Extra Ordinary Gazette Notification no. G.S.R. 829 (E) dialed 21.10.2003 issued by the Department of Company Affairs, Govt. of India.

(f) Subject to our comments in the Annexure to this report and Rs. 41,07,055/- being written back as provision no longer required, referred in Notes on Accounts point no. 15. in our opinion, and to the best of our information and according, to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

i.. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011

ii. in the case of the Profit and Loss Account, of the profit for the year ended on that date and

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

Annexure to the Auditors' Report

(Referred to in Paragraph 3 of our Report of even date)

1. (a) The Company Kits no. maintained proper records showing full particulars including quantitative details and situation of fixed assets. The management during the year has also not physically verified the Fixed Assets of the Company, and as such material discrepancies, if any could not be verified with financial records.

(b) Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

2. (a) According to the information & explanation given to us, the management has not conducted physical verification of raw materials and chemicals at the year end and has not maintained proper records of these items during the year. Discrepancies if any, as compared to the book records, could therefore not be verified.

(b) The physical verification of stores and spare parts has not been conducted in a systematic manner and in our opinion; the procedures of physical verification followed by the management are not reasonable and adequate in relation to the size of the company and the nature of its business. Moreover, proper records were not maintained of stores and spares, and discrepancies, if any have not been dealt with the books of account.

3. (a) Based on the audit procedures applied by us and according to the information and explanations given to us, the Company has granted loans, secured or unsecured to/from companies, firms or other parties covered in the register required to be maintained under Section 301 of the Companies Act, 1956, However, the company has not maintained such a register as required under the relevant provisions of the Companies Act 1956,

(b) There are two Companies covered in the register required to be maintained under Section 301 of the Companies Act, 1956, to whom the Company has granted unsecured loans accumulated to Rs. 63.36 Lakhs. This consists of loan to Assam Tea Corporation Ltd Rs. 25 Lakhs and Pragjyotish fertilisers & Chemicals Ltd. Rs. 38.36 Lakhs.

(c) In our opinion, the Loan to Assam Tea Corporation Ltd was given without any covenants as to repayment period, rate of interest etc. and hence are prima facie prejudicial to the interest of the company: principal & interest has been not been regularly recovered and there are overdue receivables. According to the information and explanations given to us, Loan to Pragiyotish Fertilizers & Chemicals Ltd was given without any covenants as to repayment period, rate of interest etc and hence are prima facie prejudicial to the interest of the company.

4. In our opinion and according to the information and explanations given to us, there are no contracts and arrangements referred to in Section 301 of the Companies Act, 1956 entered into during the year that need to be entered in the register maintained under that Section. Accordingly, sub clause (b) of Sub-para (v) of para 4 of the Order is not applicable to the Company for the current year.

5. The company does not have an adequate internal control procedure commensurate 'with the size of the company and the nature of its business, for the purchase of Inventory and Fixed Assets and for the sale of goods and services. During the course of our audit, the following observations were noted by as:

a. Fixed Assets

Despite previous observations by Statutory Auditors the Fixed Assets Register has not been completed. A firm was commissioned in 2007 for the same purpose and has yet to submit a final report that would be incorporated into the financial system.

b. Inventory (Including Stock of Raw Materials and Chemicals Rs. 2,67,80,876) Stores & Spare parts Rs. 6,01,57,653 A random physical check of some 'catalysis' show high value items (including imported) appearing in stores ledger since 1996 and are physically lying in the storage area, Inventory records including priced stores ledger is maintained manually No physical verification has been carried out for several years.

There appear to be a large number of obsolete and/or slow moving items which are continued to be carried in the Inventory. No classification of inventory has been done to evaluate obsolete/slow moving items.

c. Advances to suppliers

The company has paid advances amounting to Rs. 1,12,81,995/- to several suppliers in earlier Financial Years for various goods & services which have either not been rendered/supplied and/or not been rendered/supplied within the stipulated timeframe in the Work Orders. The extent to which these advances are recoverable could not be determined by us and hence we are unable to form an opinion on their impact in the Profit & Loss Account for the year ended 31st March 2011. In our opinion, suitable provisions/write-offs should be made in the financial statements after such review.

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

7. In our opinion, the company does not have an internal audit system that is commensurate with the size of the company and the nature of its business. In our opinion the financial accounting system together with the internal control system is not commensurate with the nature and size of the business.

8. We have broadly reviewed the hooks of account maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act,. 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has during the year, been generally regular in depositing with the appropriate authorities, undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty. Excise Duty, Cess were in arrears, as at March 31, 2011, for a period of more than six months front the date they became payable.

10. The Company has incurred Rs. 10,23,82,288/- losses in this financial year. There is no accumulated loss coming from earlier financial year.

11. According to the information and explanations given to us, and based on checks carried out by us, the Company did not have any borrowing from a financial institution or bank or debenture holders and hence clause 4(xi) of the Companies (Auditor's Report) Order, 2003 (as amended) is not applicable.

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

13. In our opinion and according to information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of sub-para (xiii) of para 4 of the Order are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other Investments. Therefore the provisions of sub-para (xiv) of Para 4 of the Order are not applicable to the Company.

15. In our opinion and according to information and explanations provided to us, the Company has not provided guarantees for loans taken by others from banks and financial Institutions.

16. The company did not have any term loan outstanding during the year.

17. According to the information and explanations given to us. and on an overall examination of the Balance Sheet of the Company, funds raised on short-term basis have, prima facie, not been used during the year for making long-term investments.

18. According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to panics and companies covered in the Register maintained under Section 301 of the Companies Act. 1956.

19. The Company has not raised any monies by way of issue of debentures. Therefore, the provisions of sub-para (xix) of para 4 of the Order are not applicable to the Company.

20. The Company has not made any public issue during the year.

21. According to information and explanations given to us and based on audit procedures performed and representations obtained from the management, we report that no material fraud on or by the Company , has been noticed or reported during the year under audit.

For S. Ganguli & Associates Chartered Accountants FRN: 302192E

CA. Prosenjit Kumar De Partner Membership No. : 053952

Place : Guwahati Date: 28th September, 2011

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Mar 31, 2010

1. We have audited the attached Balance Sheet of Assam petrochemicals ltd. as at 31st March, 2010, and also the Profit and Loss account and cash Flow statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order. 2004 (together with the Order"), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act 1956, we give the Annexure, a statement on the matters specified in paragraph 4 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, 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 the audit;

(b) Subject to our comments in Paragraph 1 and 2 of the Annexure, 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 these books, and proper returns, adequate for the purpose of our audit have been received from the branches with the exception of the Books of Accounts of the wholly owned subsidiary Pragyotish Fertilizer & Chemicals Ltd.

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

(d) The Balance Sheet and Profit and Loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956,

(e) The provisions of Section 274 (g) of the Companies act, 1956 regarding 'Disqualification of Directors', do not apply to this company, being a Government Company. A Government Company is exempted from the provisions of Section 274(g) vide Extra Ordinary Gazette Notification no. GSR. 829 (E) dated 21.10.2003 issued by the Department of Company Affairs, Govt. of India.

(f) Subject to our comments in the Annexure to this report in our opinion, and to the best of our information and ac- cording to the explanations given to us, the said accounts give the information required by the Companies Act. 1956, in the manner so required and give true and fair view in conformity with the accounting principles generally accepted in India.;

i. in the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2010

ii. in the case of the Profit and loss account, of the profit for the year ended on that date; and

iii. in the case of the Cash flow Statement, of the cash flow for the year ended on that date.



Annexure to the Auditors' Report (Refer to in Paragraph 3 of our Report of even date)

1. (a) The Company has rot maintained proper records showing full particulars including quantitative details and situation of the fixed assets. The management during the year has also not physically verified the Fixed Assets of the company, and as such, material discrepancies, if any could not be verified with the financial records. (b) Fixed assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption,

2. (a) According to the information and explanation given to us, the management has not conducted physical verification of finished stock, stock-in-progress, raw materials and chemicals at the year end, and has not maintained proper records of there items during the year. Discrepancies if any, as compared to tie book records, could therefore not be verified.

(b) The physical verification of store and spare parts has not been conducted in a systematic manner and in our opinion, the procedure of physical verification followed by the management are not reasonable and adequate in relation to size of the company and the nature of its business. Moreover, proper records were not maintained of stores and spares, and discrepancies, if any have not been dealt with the books of account.

3. (a) Based on the audit procedures applied by us and according to the information and explanations given to us, the company has granted loans, secured or unsecured to/from companies, firms or other parties covered in the register required to be maintained under section 301 of the Companies act, 1956. However, the company has not maintained such a register as required under the relevant provisions of the Companies Act.

(b) There are two companies covered in the register required to be maintained under Section 301 of the Companies Act, 1956, to whom the company has granted unsecured ban aggregating to Rs. 85.36 lakhs. This consists of loan to Assam Tea Corporation Ltd Rs. 50.00 Lakhs and Pragjyotjsh Fertilizers and Chemicals Ltd. Rs. 35.36 Lakhs.

(c) In our opinion, Loan to Assam Tea corporation Ltd. was given without any covenants as to repayment period, rate of interest etc. And hence are prima facie prejudicial to the interest ot the company: principal and interest has been not been regularly recovered and there ere overdue receivable. According to the information and explanation given to us, loan to Pragjyotish Fertilizers & Chemicals Ltd. was given without any covenants as to repayment period, rate of interest etc, And hence are prima facie prejudicial to the interest of the company

4. In our opinion and according to the information and explanation given to us , there are no contracts and arrangements referred to in Section 301 of the Companies act. 1956 entered into during the year that need to be entered in the Register maintained under that section. Accordingly, sub-clause (b) of sub para (v) of para 4 of the Order is not applicable to the company for the current year.

5. The company does not have an adequate internal control procedure commensurate with the size of the company and of the nature of its business, for the purpose of Inventory and Fixed assets and for sale of goods and services. During the course of our audit, the following observations were noted by us:

a. Fixed Assets1 Despite previous observations by Statutory auditors the fixed assets Register has not been completed. A firm was commissioned in 2007 for the same purposes and has yet to submit a final report that would be incorporated into the financial system.

b. Inventory (Including stock of Raw Materials and Chemicals Rs- 27147068/-) stores &. Spares Rs. 5,95,19,723/-.

A random physical check of some 'catalysts' show they were imported high value items appearing in store ledger since 1996 imported from suppliers including overseas suppliers) and are lying in drums in the storage area. Inventory records including priced store ledger is maintained manually. Mo physical verifications has teen carried out (or several years.

There appear to be large number of obsolete and/or slow moving items which are continued to be carried in the inventory. No classification of inventory has been done to evaluate obsolete/slow moving items.

c. Advances to suppliers

The company has paid advances amounting to Rs. 1,35,90,000/- to several suppliers for various goods and services which either not been rendered/supplied and/or not been rendered/supplied within the stipulated time frame in the work orders. The extent to which these advances are recoverable could not be determined by us and hence we are unable to form an opinion on their impact in the Profit and loss Account for the yearended 31st March 2010.

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

7. In our opinion, the company does not have an internal audit system that is commensurate with the size of the company and the nature of its business, In our opinion the financial accounting system together with internal control system is not commensurate with the nature and size of the business.

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the Rules made by the Central Government for maintenance of cost records under section 209 (1) (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. (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the company has, during the year, been generally regular in depositing with the appropriate authorities, undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, no undisputed amounts payable in respect of Income Tax, Sales Tax. Wealth Tax, Service Tax, Custom Duty. Excise Duty, Cess were in arrears as at March 31.2010, for a period of more than six month, six month from the date they become payable.

10. The company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the financial year immediately proceeding such financial year.

11. According to the information and explanation given to us, and based on checks carried out by us, the company did not have any borrowing from a financial institutions or banks or debenture holders and hence clause 4 (ix) of the Companies (Auditors Report) Order, 2003 (as Amended) is not applicable.

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

13. In our opinion and according to information and explanation given to us, the company is not a Chit Funds or a Nidhi/mutual benefit fund/society Therefore the provisions of sub-para (xiii) of para 4 of the Order are not applicable to the Company.

14. According to the information and explanation given to us, Subject to the following.

a. Investment in Mutual funds of Bharati Axa Regular Return Rs. 45,00,000

b. Investments Mutual fund of SBI Regular Floater Rs. 4500000 Which in our opinion is not in the normal course of business. The company is not dealing or trading inn shares, securities, debentures and other investments. Therefore the provisions of sub-para (xiv) of para 4 of the Order are not applicable to the company.

15. In our opinion and according to information and explanation given to us, the company has not provided guarantees for loan taken by others from banks and other financial institutions.

16. The Company did not have any term loan outstanding during the year.

17. According to the information and explanations given to us, and on an overall examination of the Balance sheet of the Company, fund raised on short-term basis have, prima facie, not Seen used during the year for making long term investments.

18. According to the information and explanation given to us, during the year the Company has hot made any preferential allotment or shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not raised any monies by way of issue of debentures. Therefore, the provisions of Sub para (xix) of para 4 of the Order are not applicable to the company.

20. The Company has not made any public issue during the year

21. According to information and explanations given to us and based on audit procedures performed and representations obtained from the management, we report that no material fraud on or by the company, has been noticed or reported during the year under audit.

For M/s. S. Ganguli & Associates Chartered Accountants

Sd/- (CA. D.P. SAHA) Partner (M. No. 003935)

Place: Guwahati Date: October 11, 2010

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Mar 31, 2002

We have audited the attached Balance Sheet of ASSAM PETROCHEMICALS LIMITED as at 31st March, 2002 and also the Profit & Loss Account of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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.

As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988, issued by the Central Government of India in terms of sub- I section (4 A) of section 227 of the Companies Act, 1 1956, we enclose in the Annexure-I a statement on 1 the matters specified in paragraphs 4 and 5 of the said order.

Further to our comments in the Annexure-I referred to above, and our observations in the Annexure-ll, we report that:

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

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

iii) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

iv) In our opinion, the Balance Sheet and Profit & Loss Account dealt with by this report comply with the accounting standards referred to in sub- section (3 C) of section 211 of the Companies Act, 1956.

v) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2002; and

(b) in the case of the Profit & Loss Account, of the loss for the year ended on that date.

ANNEXURE-1 Report under Manufacturing and Other Companies (Auditors Report) order, 1988,

i) The company has maintained Fixed Assets Register showing particulars including quantative details and situation of fixed assets. No physical verification of the Fixed Assets except furniture & fixtures and hospital equipments, was conducted during the year under audit. No reconcilation of item wise original cost and depreciation to date as per fixed asset register with the aggregate value as appearing in the books of accounts has been prepared.

ii) There has been no revaluation of Fixed Assets during the year.

iii) The physical verification of Stock of Finished Goods was conducted by the management periodically. The physical verification of stores, spare parts and raw materials was not conducted by the company during the year under audit.

iv) In our opinion and according to the information and explanations given to us, the procedure of physical verification for the finished goods followed by the management was reasonable and adequate in relation to the size of the company and nature of its business.

v) No material discrepancies were noticed on physical verification of finished goods as compared to book records. However, pending reconciliation of stores, spare parts and raw- materials as stated in paragraph (iii) above, we are unable to comment upon the discrepancies in stock of stores, spare parts and raw materials.

vi) In our opinion and on the basis of our examination, the valuation of stores, spare parts and raw-materials is fair and proper in accordance with normally accepted accounting principles and is on the same basis as in preceeding year. Finished Goods were valued at selling price or cost price whichever is lower.

vii) The Company has not taken any loan from companies, firms or other parties listed in the Registers maintained under Section 301 and 370 (1-C) of the Companies Act, 1956.

Provisions of section 370 of the Companies Act, 1956 are not applicable to a company with effect from 31st October, 1998.

viii) The company has not granted any loans secured or unsecured to companies firms or other parties i listed in the Register maintained under section 301 of the Companies Act, 1956 and/or to companies under the same management as defined under sub-section (1B) of Section 370 ii of the Companies Act, 1956. Provisions of section 370 of the Companies Act, 1956 are ii not applicable to a company with effect from 31st October, 1998.

ix) Loans and Advances in the nature of loan given to employees have been repaid regularly i together with interest thereon as stipulated or rescheduled.

x) The company has written procedures for internal controls for purchase of stores, raw-materials including components, plant & machinery, equipments and other assets, and from our examination of books of accounts we are of the opinion that the internal control procedure for purchase of stores and raw-materials including components and for purchase of plant and machinery and other assets and for sale of goods seems to be adequate.

xi) We have been informed that during the year no transactions of purchase of goods and materials i and sale of goods, materials and services, were made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 as aggregating during the year to Rs. 50,000/- or more in respect of each party.

xii) During the year under review, the company has determined stores and materials worth Rs. 3,12,515.53 as unserviceable or damaged as well as items not moved for a period of over 10 years and charged to consumption of stores and spares as per standing approval of Board of Directors.

xiii) The company has not accepted any deposits from Public within the meaning of Section 58A of the Companies Act, 1956 and the Rules framed thereunder.

xiv) As informed to us the company does not have any realisable by products. Reasonable records have been maintained by the company for the sale and disposal of realisable scrap.

xv) The company is conducting internal audit by the personnel in addition to regular duties in accounts Deptt., who gave their report annually. The system adopted by the company is not commensurate with its size and nature of business and required further strengthening.

xvi) According to the information given to us, the company is required to maintain cost records under Section 209(1)(d) of the Companies Act, 1956.

xvii) Provident Fund dues have generally been regularly deposited with the appropriate authorities.

xviii) According to the information and explanations given to us, no undisputed statutory dues were outstanding for a period of more than six months as on 31st March, 2002 from the date of becoming payable.

xix) According to the information and explanation given to us, in our opinion, no personal expenses have been charged to Profit & Loss Account other than those payable under contractual obligations or in accordance with generally accepted business practices duly authorised.

xx) The company is not a sick industrial company within the meaning of Clause (O) of sub-section (1) of Section 3 of Sick Industrial Companies (Special Provisions) Act, 1985.

For Choudhury & Hazarika Chartered Accountants

Sd/- (K.N. Choudhury) Partner

Place : Guwahati Dated : 3rd June, 2002