Indu Nissan Oxo Chemicals Industries Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2014

We have audited the accompanying financial statements of Indu Nissan Oxo Chemicals Industries Limited as at 31st March 2014, which comprise of the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss, and Cash Flow Statement of the Company for the year ended on that date annexed thereto, 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 and financial performance in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 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

Basis for Qualified Opinion

(a) Attention is invited to sub-note No. 2 (d) of Note No. 29. The Company has defaulted in redemption of Debentures, which fell due on the 10th of July, 1998 aggregating to Rs.550.18 Lac and the amount of interest including penal interest calculated at simple rests accrued as of 31st March, 2013 is Rs.1422.04 Lac of which the Company was unilaterally written back interest element of RS. 1334.01 Lac mentioning that it is in process of negotiating with debenture holders as to the repayment of dues, and the Company does not anticipate any interest payment, and the same has been treated by the Company as other revenues. The Company has reached to settlement with the debenture holders post year end. The debenture holders have agreed to settle the amount payable @ 30% of principal amount outstanding subject to certain terms and conditions. The Company is in process of liquidating some of its assets and pay off the debenture holders. In case the Company is not able to pay the settled amount within stipulated period, the settlement may be cancelled by the debenture holders. The Company has approached BIFR for the permission to sell the assets, and is confident of getting the permission. The Company in anticipation of liquidating the assets and paying off the debenture holders has written back the balance amount not payable to capital reserve. Since the event in opinion of Company, is occurring after the balance sheet date that requires adjustment to the amount payable on balance sheet date, this adjustment is carried out. The Company, following to settlement, does not anticipate additional interest liability as demanded by the debenture holders due to which Company has not provided interest for the current year as well as company has written back the interest of RS. 133,401,338 provided in the earlier years. We are unable to form our opinion on this as the entire matter is contingent and subject to approval of BIFR for sale of assets, and further the Company is able to sell the assets post such approval in open market and fetch necessary amount to pay off the debenture holders, but for which entire settlement may get cancelled.

(b) Attention is invited to sub-note No. 6 of Note No. 29 - Other Notes to Accounts regarding confirmation of account of various parties, the balances have been taken as per books of account. We in the absence of confirmations are unable to ascertain the nature of adjustments that may be required in respect of various accounts and the resultant effects thereof on the accounts.

(c) Attention is invited to sub-note no. 2 (a) of Note No. 29 - Other Notes to Accounts. In respect of Inter Corporate Deposits received from Himalaya Machinery Limited. the Company had based on legal opinion, written back interest amounting to Rs. 23.43 Lac during the financial year ended 31st March 2002. Further the Company has not provided any interest for the period 1.10.2000 to 31.03.2014 the interest of which works out to Rs. 156.87 Lac calculated at simple rests @27%. Including current year''s interest of Rs. 11.64 Lac.

(d) Provision for Gratuity payable to employees has been made only up to 31st March. 2006 based on management estimates. Provision for gratuity and retirement benefits for the current year has not been made. In the absence of any actuarial valuation we are unable to quantify the impact of the same on the Statement of Profit and Loss. This practice of the Company is not in conformity with the AS-15. Attention is invited to sub-note no. 2 (h) of Note No. 29 as regards the decision of hon''ble Labour Court directing the Company to pay a sum of RS. 1299.61 Lac towards labour payments. The Company has filed miscellaneous application before the hon''ble Court for review instead of filing further appeal. Considering the significance of amount, we are not able to form our opinion in this regard.

(e) Attention is invited to sub-note no. 2 (b) of Note No. 29 of Other Notes to Accounts. Based on management''s perception, the Company had written back Interest accrued on Working Capital Loans amounting to Rs 493 Lac during preceding financial years. We are informed that, the management is in negotiation with the bankers as regards repayment of the working capital loans at a reduced principal amount and no interest. However, no finality has been reached as to reduced payment of loan or for that matter, non payment of interest. No provision for interest payable on this account is made during the year, which the Company otherwise used to provide every year amounting to Rs. 52.98 Lac up to March 31. 2010 on an estimated basis. This year, no amount has been quantified by the management as not provided. In absence of any supporting evidence available or for that matter any confirmation from the bankers, we are unable to express our opinion on this item;

(f) Attention is invited to Note no. 7 (d) of Notes to Accounts. Based on management''s perception, the Company has not provided for interest on term loan payable to Kotak Mahindra Bank. We are explained by the management that, it is in negotiation with the bankers as regards repayment of the term loan at a reduced amount than what has been standing to the credit of bankers, although no tangible and convenincing correspondence was made available to us. No finality has been reached as to reduced payment of loan as stated above. No provision for interest payable on this account is made during the year, which the Company otherwise used to provide every year amounting to Rs. 112.88 Lac up to March 31, 2011 on an estimated basis. This apart, interest provided uptill earlier years is shown as payable unlike writing back the same in lines with other bank and debentures. This year, no amount has been quantified by the management as not provided. In absence of any supporting evidence available or for that matter any confirmation from the bankers, we are unable to express our opinion on this item;

(g) in absence of confirmations from creditors, especially secured creditors, we are unable to opine on the outstanding balances shown in accounts including interest provided and payable thereon. Similarly, the creditors written back amounting to RS. 1.82 Lac and shown as income are all based on the management''s perception, and no tangible evidence was placed for our verification;

(h) The Company has not carried out physical verification of closing stock of Rs. 2.58 Lac, and the valuation is based on management''s estimates, and no evidence of physical availability of stock was provided to us. As regards cash in hand of RS. 6.31 Lac, we are informed that, the same is in possession of the Managing Director. In view of this, closing stock of RS. 2.58 Lac and cash in hand of Rs. 6.31 Lac are accepted as certified by the management;

(i) the combined effect of the above qualifications over financial results is not determinable in view of absence of relevant components and information from the management.

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:

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

(ii) in case of Statement of Profit and Loss, of the loss of the Company for the year ended on that date.

(iii) in case of cash flow statement, of cash flow of the Company for the year ended on that date.

Emphasis of Matter

(a) Attention is invited to sub-note no. 2 (c) of Note No. 29 - Other Notes to Accounts. The Custom department had imposed penalty of Rs. 1000 Lac on the Company.

which was disputed by the Company. On appeal before CESTAT, the said penalty was reduced to Rs. 700 Lac vide order dated March 31, 2011, Subsequently CESTAT removed the penalty levied by the department. At Present department is in appeal before Hone''ble High Court of Gujarat and hence no provision for this liability is made in the accounts, contending this being contingent liability. Our opinion is not qualified in respect of this matter.

(b) Attention is invited to sub-note no. 2 (e) of Note No. 29 - Other Notes to Accounts. Amount receivable from RSEB (Rajasthan State Electricity Board) in respect of Assets given on Lease is shown at Rs.412.19 Lac against security deposit received from RSEB of Rs.653.09 Lac. We have been informed that Company has filed a suit against RSEB before Rajasthan High Court for the recovery of Rs.964.92 Lac inclusive of interest @ 20% after making adjustment of DPA (Deferred Payment Agreement) decision of which remains pending. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors'' 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 enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

(a) we have obtained all the information and explanation, except mentioned earlier in this report, more particularly confirmations from lenders and creditors, including the secured lenders / creditors, which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

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

(e) The Company has defaulted in redemption of Debentures, which fell due on the 10th of July, 1998 aggregating to Rs.550.18 Lac and the amount of interest including penal interest calculated at simple rests accrued as of 31st March 2013 is Rs. 1422.04 Lac (of which the Company had unilaterally written back interest element of RS. 1334.01 Lac in the year ended 31st March 2013, and no provision is made for the year ending 31st March 2014), thereby, the directors of the Company are disqualified from being appointed as director under clause (g) of sub section 1 of section 274 of the Companies Act. 1956 (although the Company has reached to settlement with debenture holders, no payment has actually been made as stated in Basis for Qualified Opinion).

(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 REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE IN CASE OF Indu Nissan Oxo Chemical Industries Limited

(i) (a) The Company has not maintained proper records showing full particulars of, including quantitative details and situation, of fixed assets since the same is not updated.

(b) As plant of the Company is not in operation, the Company has not carried out physical verification of the assets at periodic intervals. In respect of assets given on lease, no confirmation from the lessee has been produced before us, stating that the assets leased under the agreements are existing, but owing to dispute with the lessee, the same cannot be confirmed. The Company has written off some non existing assets during preceding years based on perception of the management.

(c) The Company has not disposed off substantial portion of its fixed assets during the year; accordingly the going concern status of the Company is not affected from this perspective. However, the Company is not in active operations since many years, and there are no indications as to its being restarted, we are unable to state whether the Company will remain a going concern in foreseeable future.

(ii) (a) We have been informed by the management that, Stock of goods have been physically verified by the management at reasonable intervals during the year; though no records of physical verification or valuation on the date of balance sheet were produced before us. The stock of stores, packing material, and semi finished goods is valued based on Chartered Engineers'' Certificate dated 13/10/ 2010 as reduced by the stock sold during earlier year, and a further written off of value on the management''s estimate as to net realizable value.

(b) In view of above, we are unable to comment on the procedure of physical verification of stocks followed by the management.

(c) In view of above, we are unable to comment on the maintenance of proper stock records by the management

(iii) (a) 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 Companies Act 1956.

(b) Since no loans are granted, the sub-clause dealing with rate of interest and other terms and conditions of loans given by the company are not applicable.

(c) Since no loans are granted, the sub-clause dealing with receipt of the principal amount and interest on regular basis is not applicable.

(d) Since no loans are granted, the sub-clause dealing with overdue amount more than rupees one Lac is not applicable.

(e) The Company has taken interest free unsecured loans from One party covered in the register maintained under section 301 of the Act. The amount involved in the transactions at the year end was Rs.44.13 Lac and on maximum basis Rs. 174.42 Lac.

(g) We are informed that, these are demand loans, and there is no stipulation put in view of the financial conditions of the Company.

(v) (a) According to the information and explanation given to us and on the basis of representation received from the Management, particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section 301 have been properly entered in the said register;

(b) In our opinion, and according to the information and explanation provided by the management, no transactions were entered as specified under section 301 of the Companies Act 1956, and accordingly no entries were required to be made in the register maintained under section 301 of The companies Act, 1956 and exceeding during the year by Rs. 500,000/- or more.

(vi) The Company has not accepted any deposits from public within the meaning of the provisions of section 58A and section 58AA or any relevant provisions of the Companies Act, 1956 and the rules made there under. We have been informed by the management that there has been no order passed by the Company law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company with respect to compliance of the provisions of section 58A or 58AA or any other provisions of the Companies Act 1956.

(vii) The Company does not have any formal Internal Audit System commensurating with its size and nature of business.

(viii) We have been informed by the management that, the Central Government has not prescribed the method of maintenance of cost records u/s. 209 (1) (d) of the Companies Act, 1956 to the industry to which the Company pertains.

(ix) (a) The Company has defaulted in payment of undisputed statutory dues as given below. The extent of arrears of Statutory Dues outstanding (after adjusting pre-paid taxes) for than six months as on the year end is as follows:

Nature of Amount (Rs.) Statutory Dues (in lacs)

Investor Education and Protection Fund 16.26

Income Tax 188.97

Fringe Benefit Tax 0.27

Sales Tax 47.85

Profession Tax 1.53

Service Tax 1.2

Bajwa Gram Panchayat 10.29

Tax Deducted at Source 4.33

The Company has requested the Income-tax Department to adjust refunds of subsequent years against outstanding dues of earlier years for which, we are informed, no communique is received from the Income- tax Department except with respect to Assessment Year 1995-96 where the demand is adjusted against refund of Assessment Year 2010-11.

In the case of Income tax deducted at source, the Company has deducted tax on payment basis whereas provisions of chapter VXII-B of the Income-tax Act 1961 require deduction of tax on payment or credit in the books of account whichever is earlier. Details of payments wherein tax should have been deducted on credit basis are not available. Hence we are unable to state the exact amount of the defaulted tax deducted at source liability. The above mentioned amount is tax deducted at source on payments made but not deposited with the Central government. Rent paid in Court as described in Sub Note no. 2 (j) of Note NO. 29, the Company has not made TDS stating that the same is merely a deposit with hon''ble Court as per directions.

(b) As per information and explanation given to us, the following are details of disputed statutory dues that has not been paid to the concerned authorities.

Name of Forum Period to Unpaid the where which Amount Statutory dispute is the amount (Rs. in Dues pending relates Lacs)

1 Income tax Assessing Officer 1996-97 16.61 (Set Aside by hon''ble ITAT)

2 Income tax Assessing Officer 1997-98 14.14 (Set Aside by hon''ble ITAT)

3 Income tax ITAT-Ahmedabad 1999-00 0.63

4 Income Tax ITAT-Ahmedabad 2000-01 0.55

5 Custom Duty Gujarat High Court 1995-96 700

6 Excise Penalty CES Appellate 2004-05 to Tribunal 2007-08 0.41

7 Income tax Penalty ITAT-Ahmedabad 2007-08 18.01

8 Income Tax ITAT-Ahmedabad 2007-08 Nil, Quantum Beause of Brought forward loss

(x) (a) The Company as at the end of year under audit has accumulated losses exceeding fifty percent of its net worth.

(b) The Company has incurred any cash losses during the financial year covered by our audit or but not in the immediately preceding financial year. For arriving at profit for this purpose, write back of liabilities has been considered as part of cash profits.

(xi) (a) The Company has defaulted in redemption of debentures, which fell due on the 10th July 1998 aggregating to Rs 550.18 lacs and the amount of interest accrued as of date is Rs. 1422.04 Lac calculated on simple rests inclusive of penal interest as agreed upon in terms and conditions of issue of the debenture. As stated in our report, the Company has not made provision for interest on debentures during the current year, the Company has unilaterally written back interest element of RS. 1334.01 Lac mentioning that it is in process of negotiating with debenture holders as to the repayment of dues, and the Company does not anticipate any interest payment, and the same has been treated by the Company as other revenues. The Company has reached to settlement with the debenture holders post year end. The debenture holders have agreed to settle the amount payable @ 30% of principal amount outstanding subject to certain terms and conditions. The Company is in process of liquidating some of its assets and pay off the debenture holders. In case the Company is not able to pay the settled amount within stipulated period, the settlement may be cancelled by the debenture holders. The Company has approached BIFR for the permission to sell the assets, and is confident of getting the permission. The Company in anticipation of liquidating the assets and paying off the debenture holders has written back the balance amount not payable to capital reserve. Since the event, in opinion of Company, is occurring after the balance sheet date that requires adjustment to the amount payable on balance sheet date, this adjustment is carried out. The Company, following to settlement, does not anticipate additional interest liability as demanded by the debenture holders due to which Company has not provided interest for the current year as well as company has written back the interest of RS. 133,401,338 provided in the earlier years. We are unable to form our opinion on this as the entire matter is contingent and subject to approval of BIFR for sale of assets, and further the Company is able to sell the assets post such approval in open market and fetch necessary amount to pay off the debenture holders, but for which entire settlement may get cancelled.

(b) in respect of term loans from financial institution, the Company has defaulted in repayment of their dues. Following table brings out the amount of default and the period from which default is made:

Term Sr Loans from Principal Interest Total Default commencing No Finanacial (Rs. in (Rs. in (Rs. in on Institutions Lacs) Lacs) Lacs) Principal Interest

1 Kotak 261.30 1447.44 1708.74 31-Mar-08 30-Sep-08 Mahindra Bank (taken over from IDBI)

TOTAL 261.30 1447.44 1708.74

As stated in our report, the Company has not provided for interest payable on above loan during the current year. The figure of default in interest excludes interest not provided during the current year in absence of any confirmation from the bank to this effect.

Sr. Cash Principal Interest Total Default commencing on No. Credits (Rs. in (Rs. in (Rs. in from Banks Lacs) Lacs) Lacs) Principal Interest

1 ARCIL 125.67 Nil 125.67 30-Sep-98 30-Sep-98 (UBI)

TOTAL 125.67 Nil 125.67

In case of ARCIL, interest outstanding is indicated as zero in view of write back of interest payable during earlier years.

(xii) The Company has not granted any loan and advance on the basis of security by of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit/ nidhi/ Mutual benefit fund / society and clause xiii of the order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments;

(xv) We have been informed that, the Company has not given any guarantee for loans taken by others from bank or financial institutions;

(xvi) The Company, during the year has not obtained any term loan. Hence, the cause as to utilization of funds is not applicable. As regards past terms loans outstanding on the balance sheet date, the Company has informed us that they were utilized for the purpose for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance sheet, we are of the opinion that the Company has not used short term fund for long term investment.

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

(xix) During the year the Company has not issued new debentures. As regards to the outstanding debentures they are secured by first Legal Mortgage in English Form on all the Company''s movable and immovable properties. Present and future, situated at Bajwa Dist. Vadodara in the state of Gujarat and a floating charge on all other movable and immovable properties, present and Future, subject to prior charge created in favour of the Company''s Bankers on stock of raw-materials, Finished and semi-finished goods, consumable stores, Book debts, for its working capital requirements.

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

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

FOR SHAH, SHAH & SHAH CHARTERED ACCOUNTANTS

(Mehul Shah) PARTNER

Mumbai: August 19, 2014 M. No. 049361 FRN: 116457W

---

Mar 31, 2010

We have audited the attached Balance Sheet of M/s. INDU NISSAN OXO CHEMICAL INDUSTRIES LIMITED, as at 31" March, 2010 and also the Profit and Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by Companies (Auditors Report) Order, 2003 issued by Central Govt. 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 & 5 of the said order.

2. Further to our comments in the Annexure referred to in paragraph 1 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 our audit.

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

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 of the Company.

d) In our opinion, the Profit and Loss account and the Balance Sheet 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 company has defaulted in redemption of Debentures, which fell due on the 10th of July, 1998 aggregating to Rs.552.07 lacs and the amount of interest accrued as of 31" March, 2010 is Rs.1249.92 lacs, thereby, the directors of the company are disqualified from being appointed as director under clause (g) of sub section 1 of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said Accounts subject to and read together with the notes thereon, and further subject to the following and matters referred to in annexure 1 attached hereto :

1) Reference is invited to Note No.7 Regarding confirmation of accounts, the balances have been taken as per books of accounts. We in the absence of confirmations are unable to ascertain the nature of adjustment that may be required in respect of various accounts and the resultant effects thereof on the accounts.

2) The custom department has imposed penalty of Rs.1000 Lakhs on the company, which has been disputed by the company and appeal for the same is pending before the CESTAT. The company should have provided for the liability amounting to Rs.1000 lakhs. Had the provision for custom duty liability been made in earlier year, debit balance in profit & loss account would

have been higher by Rs. 1000 Lakhs. [Refer para.3 clause (k), of Significant Accounting Policies and Notes to the Accounts]

3) Net amount receivable from RSEB (Rajasthan State Electricity Board) in respect of Asset given on Lease is shown at Rs.412.19 lacs. However, in the absence of confirmation from RSEB, we are unable to ascertain and opine as regards to the actual amount recoverable from RSEB. However we have been informed that company has filed a suit against RSEB before Rajasthan High Court for the recovery of Rs.964.92lacs inclusive of interest @ 20% after making adjustment of DPA (Deferred Payment Agreement). [Refer para.2, clause (e), sub clause (ii) of Significant Accounting Policies and Notes to the Accounts]

4 i) In respect of Inter Corporate Deposits received from Himalaya Machinery Limited, the company based on legal opinion had written back interest amounting to Rs. 23.43 during the financial year ended 31" March, 02 due to which debit balance in profit and loss ale is lower by Rs.23.43 lacs. Further the company has not provided any interest for the period 1.10.2000 to 31.03.2010.

ii) The company has not provided any interest during the current period although the agreement requires provision of interest @ 21% p.a. which amounts to Rs.9.03 lacs. The profit for the current year would have been lower by Rs.9.03 lacs had the interest been provided.

Hi) The combined effect of the above results in the reduction of debit balance in Profit and Loss

a/c by Rs.263.61lacs. [Refer Para. 3(b) of the Significant Accounting Policies and Notes to Accounts]

5) Provision for Gratuity has been made only upto 31st March, 2006 based on management estimates. Provision for gratuity and retirement benefits for the current year has not been made. In the absence of any actuarial valuation we are unable to quantify the impact of the same on the Profit and Loss Account. This practice of the company is not in conformity with the AS - 15.

Give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

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

and

ii) in the case of Profit & 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 FOR THE YEAR ENDED 31st MARCH, 2010 OF INDU NISSAN OXO CHEMICAL INDUSTRIES LIMITED.

On the basis of such checks as we considered appropriate and in terms of the information and explanations given to us, we state that: -

(i) (a) The company has maintained records showing particulars including quantitative details and the general location of its Fixed Assets other than those given on lease.

(b) As explained to us, the Company has a procedure to carry out a physical verification of the assets at periodic intervals, which in our opinion is reasonable. No material discrepancies were noticed on such verification. Physical verification of assets, (except assets given on lease), we are informed, was carried out during the year, which did not reveal any material discrepancy, on such verification. In respect of assets given on lease, no confirmation from the lessee has been produced before us, stating that the assets leased under the agreements are existing, and are lying in good condition as on 31* March, 2010.

(c) No substantial part of fixed assets have been disposed off during the year, which can affect the going concern

(ii) (a) The Stock of goods have been physically verified by the management at reasonable intervals during the year

(b) In our opinion and according to the information and explanations given to us, the procedure of physical verification of stocks followed by the management were found to be reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion the company has maintained proper records of inventory, stores and spares. (Ref Note. 2(d)(ii) & 2(d)(iii)).

(iii) (a) The company has taken unsecured interest free loans from the following two parties and the maximum amount involved during the year is as follows:

Maximum Year end

Balance balance

1. Mehool Bhuva Rs. 6.28 Rs. 6.28

Lacs Lacs

2. Narendra Holdings Rs. 76.49 Rs. (4.00)

Pvt. Ltd. fs Lacs Lacs

In our opinion such loans are prima facie not prejudicial to the interest of the Company. In absence of any stipulations as regards to repayment, we are unable to state whether the repayment is regular or not.

(b) The Company has not granted any loans and advances to any person listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company

and the nature of business with regard to the purchases of inventory and fixed assets and sale of goods.

(v) (a) Based on the audit procedures applied by us and according to the information and explanation provided by the management, we are of the opinion that the transaction that need to be entered into the register maintained under Sec 301 have been properly entered in the said register;

(b) In our opinion and according to the information and explanation provided by the management, no transactions were entered and accordingly no entries were required to be made in the register maintained under sec 301 of The companies Act,1956 and exceeding during the year by Rs. 500,000/- or more.

(vi) Since the Company has not accepted deposits from the public, compliance of the directives issued by the Reserve Bank of India and the provisions of Section 58Aand 58AA of the Companies Act, 1956 and the rules framed thereunder does not arise.

(vii) The Company does not have any formal Internal Audit System.

(viii) The Central Government has vide its order no.20/200/ C/AB - 2000 dated 10th august, 2000 prescribed maintenance of cost records u/s. 209(1 )(d) of the Companies Act, 1956. However the company has replied to the Central Government that the product manufactured by it are not prescribed u/s.209(1)(d) and clarification from the Central Government to this effect is awaited.

(ix) (a) The company has defaulted in payment of statutory dues. The extent of arrears of Statutory Dues as on 31* March,2010 is as follows:

Nature of Amount (Rs.)

Statutory Dues (in lakhs)

Investor Protection Fund 16.61

Income Tax 308.56

Fringe Benefit Tax 3.13

Sales Tax 42.21

Service Tax 1.68

Profession Tax 1.52

Bajwa Gram Panchayat 6.92

Tax Deducted at Source 3.90

Custom duty 1000

In the case of Income tax deducted at source, the company has deducted tax on payment basis whereas Sec 194 of The Income tax Act 1961 requires tax to be deducted on payment or credit in the books of accounts whichever is earlier. Details of payments wherein tax should have been deducted on credit basis is not available .Hence we are unable to state the exact amount of the defaulted tax deducted at source liability. The above mentioned amount is tax deducted at source on payments made but not deposited with the Central government.

b) The following are details of disputed Income tax .sales tax that has not been paid to the concerned authorities.

Name of Forum Period to Unpaid the where which Amount Statutory dispute is the amount (Rs. in Dues pending relates Lacs)

1 Central Excise Comm. 1993-96 35.74

(Appeals)

2 Central Excise Tribunal 2001-02 7.39

3 Central Excise Tribunal 2000-01 34.72

4 Sales Tax Sales Tax 1990-91,91-92 24.43

Tribunal 1992-93

5 Income tax ITAT- Block

Ahmedabad assessment 108.26 ending on 12-9-1998

6 Income tax ITAT- 1995-96 153.26

Ahmedabad

7 Income tax ITAT- 1996-97 16.61

Ahmedabad

8 Income tax Cit 1999-00 0.63

(Appeals)

9 Income tax Cit 2000-01 0.55

(Appeals)

10 Custom Duty CESTAT- 1995-96 1000.00

West Zone





(x) (a) The company as at the end of period under audit has accumulated losses exceeding fifty percent of its net worth. The accumulated losses of the company are worth Rs. 10807.58 lacs and the Networth amounts to Rs. (6577.93) lacs

(b) buring the year, company has earned profit of Rs. 464.87 lacs

(c) In the year immediately preceding the previous year the company incurred cash losses worth Rs. 142.72 lacs.

(xi)(a)The company has defaulted in redemption of debentures, which fell due on the 10th July 1998 aggregating to Rs 552.07 lacs and the amount of interest accrued as of date is Rs. 1249.92 lacs.

(b) In respect of term loans from financial institution, the company has defaulted in repayment of their dues. Following table brings out the amount of default and the period from which default is made.

Tetm Sr Loans from Principal nterest Total commenangon No Finanacial (in (in (In Lacs) Institutions Lacs) Lacs) Defeult Principal Interest

1 Kotak 261.30 1334.56 1595.86 31-Mar-98 30-Sep-98 MaNndra Banl

TOTAL 261.30 1334.56 159186





Sr. Cash Pricial Indent Total Defauit commicing on

No Credits (in (In (In

from Banks las) Las) Las) Principal Merest 1 ARCIL 125.67 439.93 565.61 30-Sep-98 30-Sep-98 - (UBI)

TOTAL 125.67 439.93 565.61



(xii) The company has not granted any loan and advance on the basis of security by of pledge of shares, debentures and other securities..

(xiii) The company is not a chit/ nidhi/ Mutual benefit fund / society and clause xiii of the order is not applicable.

(xiv) The company is not dealing or trading in shares , securities, debentures and other investments;

(xv) On the basis of the information and explanation given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions;

(xvi) The company, during the year has not obtained any term loan.

(xvii) According to the information and explanations given to us, and the examination carried by us, for the current year no fund raised by the company, for short term has been used for long term investment and further no funds have been raised on long term basis. In respect of funds raised in previous years, due to unavailability of past records, we are unable to opine on the utilizations of such funds.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act

(xix) During the year the Company has not issued new debentures. As regards to the outstanding debentures they are secured by first Legal Mortgage in English Form on all the Companys movable and immovable properties, Present & future, situated at Bajwa Dist. Vadodara in the state of Gujarat and a floating charge on all other movable and immovable properties, present & Future, subject to prior charge created in favour of the Companys Bankers on stock of raw-materials, Finished and semi-finished goods, consumable stores, Book debts, for its working capital requirements.

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

(xxi) Based on- the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the year



For V.R. MOMAYA & ASSOCIATES

CHARTERED ACCOUNTANTS.

KISHORM.RAJSHIRKE

PARTNER

PLACE : MUMBAI

DATED : 09.08.2010