Parasrampuria Synthetics Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2015

We have audited the accompanying the standalone financial statements of Parasrampuria Synthetics Limited which comprises the balance sheet as at 31 st March 2015 and the Statement of Profit and Loss and the 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 Statement.

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

Auditor's Responsibility.

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

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

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

Basis of Adverse Opinion:

1. Refer Note 20.04 regarding non-compliance of Accounting Standard AS 15 "Employees Benefits (revised)" to the extent of non provision of leave encashment and inadequate provision for gratuity without ascertaining actuarial valuation;

2. Refer Note No. 20.05 regarding non-prevision of pre- lease charges for the year of Rs 8888.91 lacs,

3. Refer Note No. 20.07 regarding non-provision of interest on debentures, Inter Corporate Deposits, suppliers outstanding, and lease rental dues for the year of Rs 12963.93 lacs;

4. Refer Note no. 20.08 regarding non-provision of Import Duty of Rs 780.65 lacs, becoming due in earlier years,

5. Refer Note No.20.21(d) non-provision of interest on loan liabilities, demurrage and insurance charges relating to imported machinery lying at port of Rs.280774.94 lacs, Rs.106.97 lacs and Rs.118.34 lacs respectively,

6. Interest and pre lease liabilities reported at Rs 1,13225.31 lacs and other liabilities for project including abandoned project reported as Rs.2158.60 lacs, being stated lower by Rs 302853.09 lacs, Rs 1642783.91 lacs (including 1340156.12 lacs of interest and pre lease liabilities of earlier years) and Rs. 2803.72 lacs respectively, balance of fixed assets (gross) reported at Rs 39980.33 lacs being stated lower by Rs 48498.15 lacs, accumulated losses reported at Rs 166253.96 lacs being stated lower by Rs 1642943.88 lacs and other payable reported at Rs 48362.42 lacs being stated lower by Rs 780.65 lacs;

7. Non compliance of Accounting Standard AS - 28 "Impairment of Assets" to the extent the management is unable to ascertain the impact of such impairment owing to its inability to determine the value in business and/or net realizable values;

8. Refer Note No. 20.10 regarding part recovery of Rs 13,554.76 lacs from debtors by way of purchase of land and building in earlier period. The Management is of the view that the value at which the said properties had been acquired is fair as the same were valued by Government approved valuer. We express our inability to comment on the same in the absence of current valuation and any variance which may arise in future on realisation;

9. Refer note No 20.11(c) regarding Capital Work in Progress and pre-operative Expenses amounting to Rs 20941.82 lacs relating to abandoned project. We are unable to comment on the realiseability and subsequent loss that may arise in due course especially in view of accidental fire at port;

10. Refer Note No. 20.20 (a), in view of company's reference pending before Hon'ble BIFR and in expectancy of reliefs and concessions in the form of restructuring of terms loan liabilities & interest waivers, the management being of the view that Company's financial position will improve, the accounts have been prepared on going concern basis. Whereas the circumstances demonstrates otherwise, therefore we are unable to comment on the assumption of going concern;

11. Refer Note No.20.14 regarding non confirmation of balances with customers, suppliers, other creditors, recoverable advances, loans from financial institutions & banks and working capital facilities from various banks and by bank for fixed deposits lying with them for renewal, consequential impact of which cannot be determined at this stage;

Adverse Opinion:

In our opinion, because of significance of the matter described in para 1 to 11 of Basis of Adverse Opinion and due to the cumulative impact being unascertainable, therefore the aforesaid financial statements do not give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Emphasis of Matter:

1. Refer Note No. 1.1 & 1.2 relating to non- redemption of preference Shares and Note No. 5.7 regarding non- creation of debenture redemption reserve;

2. Refer note No.20.03 regarding non-renewal of insurance policies on Fixed and Current Assets expired in earlier years, resulting in contravention of provision contained in respective loan agreements with secured lenders;

3. Refer Note No 20.21(a) regarding disposal of assets of khushkhera units by ARCIL;

Report on Other Legal and Regulatory Matters

1. As required by the Companies (Auditors' Report) Order, 2015 issued by the central government of India in exercise of power conferred by sub section 11 of section 143 of the Act, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. As required by sub section 3 of section 143 of the Act, we report that:

a) We have sought and obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit and found them to be satisfactory;

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 except those stated in our opinion paragraph;

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 aforesaid standalone financial statement comply with the accounting standards specified under section 133 of the Act, read with rule 7 of Companies (Accounts) Rules,2014 except AS 15 and AS 28.

e) The Company had defaulted in redemption of debentures and payment of interest thereon on due dates resulting into disqualification of directors as per section 164 of the Companies Act, 2013.

Annexure to the Independent Auditors' Report (Referred to in our report of even date)

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

(b) All the assets have not been physically verified by the Management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. As regards Plant & Machinery and equipment lying at Custom warehouse partly damaged by fire as reported by CWC, we have been informed that they are still under the charge of Court Receiver appointed by the Hon'ble Bombay High Court (refer Note No.20.11).

(ii) (a) The inventory has been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by 'he Management are 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 records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been suitably adjusted in the books of account.

(iii) a) According to the information and explanations given to us, the Company has not granted loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

c) Since there are no such loans, the comments regarding terms & conditions, repayment of the principal amount & interest thereon and overdue amounts are not required.

(iv) As per the information and explanations given to us, certain contracts of job work & sale of goods are of specialized nature for which comparable prices are not available. Read with above, in our opinion, there is 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 sale of goods. Further, on the basis of our examination of the books of records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of major weaknesses in the aforesaid internal control procedures.

(v) The Company has not accepted any deposits from the public during the year in accordance with the provision of section 73 to section 76 of the Act and the rules framed there under.

(vi) In respect of activities of the Company covered by the Order issued by Central Government under section 148(1) of the Companies Act, 2013, for maintenance of cost records, we have relied upon the Cost Audit Report and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) As per the books and records examined by us and information & explanations given to us, the company has not been regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues, wherever applicable, with the appropriate authorities.

The arrears on account of such dues relating to Provident fund, Employees State Insurance, TDS, sales tax, Excise duty & outstanding at the end of financial year for a period of more than six months from the date they became payable are Rs.34.90 lacs, Rs.40.64 lacs, Rs. 9.00 lacs, Rs. 132.78 lacs, & Rs. 146.02 lacs respectively.

(b) According to the information and explanations given to us and as per the books and records examined by us, the dues of sales tax, entry tax, purchase tax, wealth tax, Service Tax, excise duty, custom duty & cess which have not been deposited on account of any dispute and the forum where the dispute is pending are as under:

S STATUS NATURE AMOUNT NOT NO OF LIABILITY DEPOSITED (Rs. In lacs)

01. Custom Duty Custom Duty 57.20 Act, 1962

02. State Sales Tax Entry Tax/ 95.80 Act, 1944 Sales Tax 27.94

6.44

8.44

7.59

347.17

03. Central Excise Act, 1944 Excise Duty 485.96

04. Central ExciseAct, 1944 Differential Duty 23.20

05. Sales Tax, Act, 1994 Sales Tax 0.37

06. Central ExciseAct, 1944 Excise Duty 3628.40



07. Central ExciseAct, 1944 Excise Duty (T&TA) 93.27

08. Central ExciseAct, 1944 Excise Duty 122.04

09. FEMA, 1973 Foreign Exchange 1003.00

10. FEMA, 1973 Foreign Exchange 78.60

11. Central ExciseAct, 1944 Excise Duty 33.64



12. Central ExciseAct, 1944 Demand about 18.50 effective rate of duty

13. Central ExciseAct, 1944 SLP against the 404.36 order of CESTAT - 408.29 Rajsthan High 15.03 Court 2.00

14. Central ExciseAct, 1944 Cenvat 17.17

15. Central ExciseAct, 1944 Cenvat 10.43



S STATUS YEAR TO FORUM IN WHICH NO WHICH IT DISPUTES IS PERTAINS PENDING

01. Custom Duty 2003-2004 Hon'ble Supreme Act, 1962 Court

02. State Sales Tax 2002-2003 Appellant Board Bhopal Act, 1944 2003-2004 Appellant Board Bhopal

2004-2005 D.C. Appeal, Indore

2005-2006 D.C. Appeal, Indore

2006-2007 Appellant Board Bhopal

2007-2008 D.C. Appeal, Alwar

03. Central Excise Act, 1944 2001-2002 Commissioner, 2005-2006 Indore

04. Central ExciseAct, 1944 2002-2003 Hon'ble Supreme Court

05. Sales Tax, Act, 1994 1998-1999 Asstt. Sales Tax Officer- IV

06. Central ExciseAct, 1944 2002-2003 Special Leave Petition is pending before Hon'ble Supreme Court

07. Central ExciseAct, 1944 2000-2001 Protective SCN against Refund. Appellant Forum

08. Central ExciseAct, 1944 2007-2008 CESTAT, New Delhi 2008-2009

09. FEMA, 1973 2003-2004 Hon'ble High Court Delhi

10. FEMA, 1973 2004-05 Tribunal Enforcement Directorate

11. Central ExciseAct, 1944 2000-01 Matter Pending before Hon'ble Rajasthan High Court

12. Central ExciseAct, 1944 2000-01 Matter Pending before CESTAT

13. Central ExciseAct, 1944 July 04 to Matter Pending before March 09 Hon'ble Supreme 100% penalty Court Demand Penalty

14. Central ExciseAct, 1944 Khushkhera Department has filed unit SLP in Supreme Court

15. Central ExciseAct, 1944 Khushkhera Department has filed Unit SLP in Supreme Court

(c) No amount is required to transferred to investor education and protection fund in accordance with relevant provisions of the Companies Act.

(viii) The Company has accumulated losses of Rs. 166253.96 lacs as on 31st March, 2015 which is exceeding the net worth. Further the Company has incurred cash loss of Rs. 483.52 lacs during this current financial year but has not incurred any cash loss in the immediately preceding financial year.

(ix) The company has defaulted in repayment of dues to financial institutions, banks and debenture holders. The period of default and the amounts involved along with the first date of defaults are as under:

(Rs. in lacs)

INSTITUTIONS/ RUPEE TERM NCD / WORKING BANKS LOAN & FOREIGN DEBENTURES CAPITAL CURRENCY LOAN LOAN

IDBI 5613.26

IFCI 8850,35

ICICI 6320.14

RIICO 87,44

SCICI LTD 2963,75

AXIS BANK 950,00

PNB 2986,96

CANARA BANK 1092,02

S.B.B.J 58.98

S.B.I (HOMEFINANCE) 369,08

SBOP 785,59

NCD (14%) Series A 1200,00

NCD (14%) Series B 1016,79

NCD (15%) Series C 1300,00

NCD (17.5%) Series D 1513.20

UTI (17,5%) Series E 700,00

CANARA BANK 4025.16

S.B.B.J 520.49

P.N.B 3103,93

BANK OF BARODA 1006,88

S.B.T 604,42

S.B.O.P 1814,38

AXIS BANK 1009-66

NOVA SCOTIA 3199.91

I.R.B.I, 500.00

S.B.O.T, 555,60

I.D.B.I,

BANQUE INDOSUZI

S.I.D.B.I

UTI.

INSTITUTIONS/ UNSECURED FIRST DATE BANKS LOAN OF DEFAULTS

IDBI 30.06.97

IFCI 30,06.97

ICICI 30.06,97

RIICO 30,06.97

SCICI LTD 30,06,97

AXIS BANK 30,06,97

PNB 30,06,97

CANARA BANK 30,06,97

S.B.B.J 30,06,97

S.B.I (HOMEFINANCE) 30,06,97

SBOP 30,06,97

NCD (14%) Series A Refer below

NCD (14%) Series B Refer below

NCD (15%) Series C Refer below

NCD (17.5%) Series D Refer below

UTI (17,5%) Series E Refer below

CANARA BANK 30.06.97

S.B.B.J 30.06.97

P.N.B 30,06.97

BANK OF BARODA 30.06,97

S.B.T 30,06,97

S.B.O.P 30,06,97

AXIS BANK 30,06.97

NOVA SCOTIA 30.06.97

I.R.B.I, 30,06,97

S.B.O.T, 30,06,97

I.D.B.I, 353,35 30,06,97

BANQUE INDOSUZI 448,29 30,06.97

S.I.D.B.I 131.28 30.06,97

UTI. 400,00 30,06,97

DEBENTURES HOLDERS NCD DEBENTURES FIRST DATE OF DEFAULTS

SERIES A 280,00 25,12,97

SERIES A 280,00 25,12.98

SERIES A 280,00 25.12.99

SERIES A 52.50 08,01.98

SERIES A 52,50 08,01.99

SERIES A 52,50 08,01,00

SERIES A 8,75 04,04,98

SERIES A 8.75 04.04.99

SERIES A 8.75 04,04,00

DEBENTURES HOLDERS NCD DEBENTURES FIRST DATE OF DEFAULTS

SERIES A 70.00 10.03.98

SERIES A 70.00 10.03.99

SERIES A 70,00 10,03.00

SERIES A 875 31.08,98

SERIES A 875 31.08,99

SERIES A 8.75 31.08.00

SERIES B 323.54 04.04,98

SERIES B 323.54 04.04.99

SERIES B 369.71 04.04,00

SERIES C 945.00 31.01.99

SERIES C 420.00 17.04.99

SERIES D 529.62 21.01.99

SERIES D 529,62 21.01,00

SERIES D 529.62 21.01.01

SERIES E 700.00 25.02.99

Company has also defaulted in payment of lnterest in respect of above mentioned loans to financial Institutions, Banks and Debentures Holders and the same is continuing till 31st March 2015. The above liabilities are net off of an amount of Rs.2006.92 lacs which has been adjusted from the loan liabilities of IFCI and SBI Home Finance Ltd in pursuance of sale certificate issued by ARCIL under the SARFAESI Act Further the change in the name of lenders, due to assignment to such loan liabilities, has not been incorporated.

(x) As explained to us the company had given a guarantee in the past for loan taken by others from banks/ financial institutions, the conditions whereof were not prejudicial to the interest of the company.

(xi) We are informed that the Company has not obtained any term loan during the year.

(xii) During the course of our examination of the books and records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

For Jain Raj Associates (Chartered Accountants) FRN 007535N

Place: New Delhi (CA. P. K. Jain) Date : June 30th ,2015 Proprietor (M.No. 86396)

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of Parasrampuria Synthetics Limited as at 31 st March 2011 and also the Profit and Loss Account 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. 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 Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (collectively the Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks of books and records of the company as we considered appropriate, 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 above, 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 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

iv. In our opinion, 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 except non-compliance of Accounting Standard AS 15 "Employees Benefits (revised)" to the extent of non provision of leave encashment and inadequate provision for gratuity without ascertaining actuarial valuation (refer Note B - 6 of Schedule 15), non-compliance of Accounting Standard AS-13 'Accounting for Investments' to the extent of non-provision of diminution in value of investment in equity shares of Rajasthan Polyester Ltd and Rajasthan Texfabs Ltd of Rs.52 lacs and non compliance of Accounting Standard AS - 28 "Impairment of Assets" to the extent the management is unable to ascertain the impact of such impairment owing to its inability to determine the value in business and/or net realizable values.

v. The Company had defaulted in redemption of debentures and payment of interest thereon on due dates and also defaulted in repayment of principal amount of fixed deposits accepted from public and payment of interest thereon on respective due dates. In view of the Companies (Disqualification of Directors under section 274(1 )(g) of the Companies Act, 1956) Rules, 2003 issued by the Department of Company Affairs in the Ministry of Finance on 21st October, 2003, we are of the opinion that the directors of the company are disqualified for appointment as directors of the company.

vi. (a) The Company has been technically advised and has accordingly, since inception, considered plant & Machinery of Cotton Spinning Unit and Terry Towel Unit as a continuous process plant within the meaning of footnote No. 7 to Schedule XIV of the Companies Act, 1956 and has accordingly provided depreciation [Refer - Policy Note No 7 (a)] This being a technical matter, we cannot form an independent opinion on such classification of assets and are, therefore, unable to comment thereon.

(b) RefernoteNo. 12 of Schedule-15 regarding part recovery of Rs 13,554.76 lacs from debtors by way of purchase of land and building in earlier period. The Management is of the view that the value at which the said properties had been acquired is fair as the same were valued by Government approved valuer. We express our inability to comment on the same in the absence of current valuation and any variance which may arise in future on realisation

(c) Refer note No. 5 of Schedule - 15 regarding non-renewal of insurance policies on Fixed and Current Assets expired in earlier years, resulting in contravention of provision contained in respective loan agreements with secured lenders.

(d) Refer note No13 of Schedule-15 regarding Capital Work in Progress andpre-operative Expenses amounting to Rs 21217.39 lacs relating to abandoned project. We are unable to comment on the realisability and subsequent loss that may arise in due course specially in view of accidental fire at port.

(e) Attention of the members is invited to Foot Note No. A & B to Schedule - 1 relating to non- redemption of preference Shares and Note No. 22 of Schedule 15 wherein the company is a sick industrial company and its reference is registered with Hon'ble BIFR and in expectancy of reliefs and concessions in the form of restructuring of terms loan liabilities & interest waivers, the management being of the view that Company's financial position will improve, the accounts have been prepared on going concern basis

(f) Parasfab International, the Terry Towel unit of the company remain closed during the financial year 2010-11 and ARCIL, the asset reconstruction company, in whose favour the liabilities of the unit were assigned by the Financial Institutions and Banks, has taken possession of the unit by invoking section 13(4) of SARFAESI Act. Whereas assets and liabilities are still shown under respective heads of account.

(g) Attention of members is drawn to the non - compliance ofSec-383A, regarding appointment of Company Secretary.

(vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to note no. 10 of Schedule-15 regarding non-provision of Import Duty of Rs 780.65 lacs, becoming due in earlier years, Note No. 7 regarding non-provision of pre lease charges for the year of Rs 3636.42 lacs, Note No. 3 .regarding non creation of debenture redemption reserve, Note No. 9 regarding non-provision of interest on debentures, Inter Corporate Deposits, suppliers outstanding, and lease rental dues for the year of Rs 11979.80 lacs, Note No.22(b) non -provision of interest on loan liabilities, demurrage and insurance charges relating to imported machinery lying atport of Rs.131711.71 lacs, Rs.106.97 lacs and Rs.118.34 lacs respectively, non provision for Leave Encashment non- provision of gratuity on actuarial valuation basis, non-provision of impairment loss amount being unascertained and note No. 16 regarding non confirmation of balances with customers, suppliers, other creditors, recoverable advances, loans from financial institutions & banks and working capital facilities from various banks and by bank for fixed deposits lying with them for renewal, consequential impact of which cannot be determined at this stage, interest and pre lease liabilities reported at Rs 113225.31 lacs and other liabilities for project including abandoned project reported as Rs.2161.32 lacs, being stated lower by Rs 148245.34 lacs, Rs 704374.26 lacs (including Rs 556354.23 lacs of interest and pre lease liabilities of earlier years) and Rs. 1902.49 lacs respectively, balance of fixed assets (gross) reported at Rs 44817.03 lacs being stated lower by Rs 20858.69 lacs, accumulated losses reported at Rs 166513.29 lacs being stated lower by Rs 703632.99 lacs and other current liabilities reported at Rs 10018.83 lacs being stated lower by Rs 780.65 lacs, and read with other Notes 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 Balance Sheet, of the state of affairs of the Company as at 31 st March 2011;

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

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

Annexure to the Auditors' Report Referred to in paragraph 3 of our report of even date.

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

(b) All the assets have not been physically verified by the Management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. Plant & Machinery and equipment lying at Custom warehouse partly damaged by fire as reported by CWC, we have been informed that they are still under the charge of Court Receiver appointed by the Hon'ble Bombay High Court (refer Note No. 13 of schedule 15). And, the assets of Khushkhera unit also could not be verified as the procession of unit is taken over by ARCIL.

(c) During the year, the Company has not disposed off any substantial part of Fixed Assets.

(ii) (a) The inventory, except material in transit and lying with third parties, has been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable. Material in transit and lying with third parties has been confirmed by subsequent receipt of material to a large extent.

(b) The procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been suitably adjusted in the books of account.

iii) a) According to the information and explanations given to us, the Company has not granted loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

c) Since there are no such loans, the comments regarding terms & conditions, repayment of the principal amount & interest thereon and overdue amounts are not required.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business forthe purchase of inventory & fixed assets and for sale of goods and services. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any major weaknesses in the aforesaid internal control systems.

v) (a) According to the information and explanations given to us, the company has not made any contracts & arrangements that were required to be entered into the register maintained under section 301 of the Companies Act, 1956.

vi) The Company has not accepted any deposits during the year from public to which the provisions of Section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and Rules framed there under apply.

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

viii) In respect of activities of the Company covered by the Order issued by Central Government under section 209(1) (d) of the Companies Act, 1956, for maintenance of cost records, we have broadly reviewed these records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We are, however, not required to make a detailed examination of the same.

ix) (a) As per the books and records examined by us and information & explanations given to us, the company has not been regular in depositing the undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax Custom Duty, ExciseDuty, Cess and other material statutory dues, wherever applicable, with the appropriate authorities.

The arrears on account of such dues relating to Provident fund, Employees State Insurance, income tax, sales tax, professional tax and Excise duty outstanding at the end of financial year for a period of more than six months from the date they became payable are Rs. 86.52 lacs, Rs.12.03 lacs, Rs.52.01 lacs, Rs.166.46 lacs, Rs.0.22 lacs and Rs.304.04 lacs respectively.

(b) According to the information and explanations given to us and as per the books and records examined by us, the dues of sales tax, entry tax, purchase tax, wealth tax, Service Tax, excise duty, custom duty & cess which have not been deposited on account of any dispute and the forum where the dispute is pending are as under:

S. STATUS NATURE AMOUNT NOT NO OF LIABILITY DEPOSITED (Rs. In lakhs)

01. Custom Duty Custom Duty 57.20 Act, 1962

02. State Sales Tax Entry Tax/ 119.82 Act, 1944 Sales Tax 35.32

6.58 14.09

8.10

47.82

347.17

03. Central Excise Act, 1944 Excise Duty 437.73

04. Central Excise Act, 1944 Differential Duty 23.20

05. Sales Tax, Act, 1994 Sales Tax 0.37

06. Central ExciseAct, 1944 Excise Duty 3571.24

07. Central ExciseAct, 1944 Excise Duty (T&TA) 93.27

08. Central ExciseAct, 1944 Excise Duty 122.04

09. FEMA, 1973 Foreign Exchange 1003.00

10. FEMA, 1973 Foreign Exchange 78.60

11. Central ExciseAct, 1944 Excise Duty 829.68



S. STATUS YEAR TO FORUM IN WHICH NO WHICH IT DISPUTES IS PERTAINS PENDING

01. Custom Duty 2003-2004 Hon'ble Supreme Act, 1962 Court 02. State Sales 2002-2003 D.C. Appeal, Indore Tax Act, 1944 2003-2004 D.C. Appeal, Indore

2004-2005 D.C. Appeal, Indore

2005-2006 D.C. Appeal, Indore

2006-2007 D.C. Appeal, Indore

2008-2009 D.C. Appeal, Indore

2007-2008 D.C. Appeal, Alwar

03. Central Excise 2001 -2002 Commissioner, Act, 1944 2005-2006 Indore

04. Central Excise 2002-2003 Hon'ble Supreme Court Act, 1944

05. Sales Tax 1998-1999 Asstt Sales TaxOffcer-IV Act, 1994

06. Central ExciseAct, 2002-2003 Appeal against the order (Adjudicate) Jaipur is being filed

07. Central ExciseAct, 1944 2000-2001 Protective SCN against Refund. Appealant Forum

08. Central ExciseAct, 1944 2007-2008 CESTAT, New Delhi 09. FEMA, 1973 2008-2009 10. FEMA, 1973 2003-2004 Hon'ble High Court

11. Central ExciseAct, 1944 2004-2005 Tribunal Enforcement Directorate July 2004 to CESTAT, New Delhi March 2009

x. The Company has accumulated losses of Rs. 166513.29 lacs as on 31st March, 2011 which is exceeding the net worth. Further the Company has not incurred cash loss during the financial year.

xi. The company has defaulted in repayment of dues to financial institutions, banks and debenture holders. The period of default and the amounts involved along with the first date of defaults are as under:

INSTITUTIONS/ RUPEE TERM NCD / WORKING UNSECUREDl FIRST DATE BANKS LOAN & FOREIGN DEBENT- URES CAPITAL LOAN OF DEFAULTS CURRENCY LOAN LOAN

IDBI 5613.26 30.06.97

IFCI 10792.07 30.06.97

ICICI 6320.14 30.06.97

RIICO 87.44 30.06.97

SCICI LTD 2963.75 30.06.97

UTI BANK 950.00 30.06.97

"PNB 2986.96 30.06.97

CANARA BANK 1092.02 30.06.97

S.B.B. 58.98 30.06.97

S.B.I (HQMEFINANCE 449.29 30.06.97

SBOP 785.59 30.06.97

NCD (14%) Series A 1200.00 Refer below

NCD (14%) Series B 1016.79 Refer below

NCD (15%) Series C 1300.00 Refer below

NCD (17.5) Series D 1513.20 Refer below

UTI (17.5%) Series E 700.00 Refer below

CANARA BANK 4020.30 30.06.97

"S.B.B.J 529.23 30.06.97

P.N.B 3105.18 30.06.97 BANK OF BARODA 1006.87 30.06.97

S.B.T 604.42 30.06.97

S.B.O.P 1814.38 30.06.97

TJTI 1012.09 30.06.97

"NOVA SCOTIA 3199.91 30.06.97 TR.B.I. 500.00 30.06.97 .B.O.T 556.60 30.06.97

I.D.B.I. 353.35 30.06.97

BANQUE INDOSUZI 448.29 30.06.97

S.I.D.B.I 131.28 30.06.97

U.T.I. 400.00 30.06.97

DEBENTURES HOLDERS NCD DEBENTURES FIRST DATEOF DEFAULTS SERIES A 280.00 25.12.97

SERIES A 280.00 25.12.98

SERIES A 280.00 25.12.99

SERIES A 52.50 08.01.98

SERIES A 52.50 08.01.99

SERIES A 52.50 8.01.00

SERIES A 8.75 04.04.98 _ SERIES A 8.75 04.04.99

SERIES A 8.75 04.04.00

SERIES A 70.00 10.03.98

SERIES A 70.00 10.03.99

SERIES A 70.00 10.03.00

SERIES A 8.75 31.08.98

SERIES A 8.75 31.08.99

SERIES A 8.75 31.08.00

SERIES B 323.54 04.04.98

SERIES B 323.54 04.04.99

SERIES B 369.71 04.04.00

sERIES C 945.00 31.01.99

SERIES C 420.00 17.04.99

SERIES D 529.62 21.01.99

SERIES D 529.62 21.01.00

SERIES D 529.62 21.01.01

SERIES E 700.00 25.02.99

Company has also defaulted in payment of Interest in respect of abovementioned loans to financial Institutions, Banks and Debentures Holders and the same is continuing till 31st March 2011.

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

xiii. The provisions of special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Society are not applicable to the Company.

xiv. According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments and hence the related reporting requirements are not applicable.

xv. As explained to us the company had given a guarantee in the past for loan taken by others from banks/ financial institutions, the conditions whereof were not prejudicial to the interest of the company.

xvi. We are informed that the Company has not obtained any term loan during the year.

xvii. We report that the funds raised on short term basis in earlier years had been used for long term investments being the enterprise facing huge losses and liquidity problems due to recovery of landed properties from debtors (refer to point no 12 of Schedule 15B) and settlement of long term liabilities out of currently available funds. The financial impact of the same is not ascertainable.

xviii. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xix. During the period covered by our audit report, the Company has not issued any secured debentures. However, for debentures issued in the past, necessary security has been created.

xx. The Company has not raised any money by way of public issues during the year.

xxi. During the course of our examination of the books and records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

Notes:

A Out of 7,00,000 Redeemable Cumulative Preference Shares of Rs.100/- each privately placed 2,00,000 Shares had fallen due for redemption on April 1, 1997, 1,66,666 Shares on January 10, 1999, 1,66,666 Shares on January 10, 2000 and 1,66,667 Shares on January 10, 2001 which could not be redeemed due to financial crunch in the Company.

B 42,37,200 16% Redeemable/Convertible Preference Shares of Rs.75/- each allotted in September 1996 were redeemable at the option of the holder thereof in 3 equal annual installment commencing from the third year from the date of allotment or convertible into equity vide its terms of prospectus dated May 11, 1996: The conversion option has not been exercised by the holders thereof nor has the company received any request for redemption. The Shares being partly paid-up, redemption option cannot be proceeded with.

1. Debentures of all series had fallen due for redemption but due to financial crunch, the Company could not redeem the same. Total amount of redemption due upto March 31,2011 is Rs.5930,65 Lacs.

2. All the debentures and term loans from financial institutions/banks are secured by a first mortgage of all the immovable properties, both present and future. The term loans are further secured by hypothecation of all the movables(save and except book debts)including movable machinery, spares, tools and accessories, present and future, subject to prior charge created/to be created in favour of the bankers on the stock of raw materials, semi-finished goods, consumables stores and book debts and such other movables agreeable for securing the borrowing for working capital in the ordinary course of business. The mortgage and charges shall rank pari-passu. The term loans are also secured by personal guarantees of two Directors.

3a. Working Capital facilities from banks are secured against hypothecation of Stock of raw materials, stock in process, finished goods, packing materials, book debts and goods with processing agents and further secured by personal guarantees of three Directors of the Company. These facilities are further secured by mortgage by way of deposit of title deeds of some of the properties purchased from debtors in the earlier years.

3b. Working Capital facilities from banks also include amounts relating to devolvement of letter of credits, interest and other charges.

3c. Short term loans from IRBI (secured) and working capital loan from IDBI which is unsecured are also secured by pledge of shares of promoters

For Jain Raj Associates

(Chartered Accountants)

Place: New Delhi (CA P. K. Jain)

Date : 05.08.2011 Proprietor (M.No. 86396)

FRN 007535N

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Parasrampuria Synthetics Limited as at 31st March 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. 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 Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (collectively the Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks of books and records of the company as we considered appropriate, 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. /e, 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 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

iv. In our opinion, 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 except non-compliance Of Accounting Standard AS 15 "Employees Benefits (revised)" to the extent of.non provision of leave encashment and inadequate provision for gratuity without ascertaining actuarial valuation (refer Note B - 6 of Schedule 15), non-compliance of Accounting Standard AS-13 Accounting for Investments to the extent of non-provision of diminution in value of investment in equity shares of Rajasthan Polyester Ltd and Rajasthan Texfabs Ltd of Rs.52 lacs and non compliance of Accounting Standard AS - 28 "Impairment of Assets" to the extent the management is unable to ascertain the impact of such impairment owing to its inability to determine the value in business and/or net realizable values.

v. The Company had defaulted in redemption of debentures and payment of interest thereon on due dates and also defaulted in repayment of principal amount of fixed deposits accepted from public and payment of interest thereon on respective due dates. In view of the Companies (Disqualification of Directors under section 274(1 )(g) of the Companies Act, 1956) Rules, 2003 issued by the Department of Company Affairs in the Ministry of Finance on 21st October, 2003, we are of the opinion that the directors of the company are disqualified for appointment as directors of the company except the nominees of financial institutions and banks on the Companys Board.

vi. (a) The Company has been technically advised and has accordingly, since inception, considered plant & Machinery of Cotton Spinning Unit and Terry Towel Unit as a continuous process plant within the meaning of footnote No. 7 to Schedule XIV of the Companies Act, 1956 and has accordingly provided depreciation [Refer - Policy Note No 7 (a)] This being a technical matter, we cannot form an independent opinion on such classification of assets and are, therefore, unable to comment thereon.

(b) RefernoteNo. 12of Schedule-15 regarding part recovery of Rs 13,554.76 lacs from debtors by way of purchase of land and building in earlier period. The Management is of the view that the value at which the said properties had been acquired is fair as the same were valued by Government approved valuer. We express our inability to comment on the same in the absence of current valuation and any variance which may arise in future on realisation.

(c) Refer note No. 5 of Schedule - 15 regarding non-renewal of insurance policies on Fixed and Current Assets expired in earlier years, resulting in contravention of provision contained in respective loan agreements with secured lenders.

(d) Refer note No13 of Schedule-15 regarding Capital Work in Progress and pre-operative Expenses amounting to Rs 21217.39 lacs relating to abandoned project. We are unable to comment on the realisabilityandsubsequentloss that may arise in due course specially in view of accidental fire at port.

(e) Attention of the members is invited to Foot Note No. A & B to Schedule -1 relating to non- redemption of preference Shares and Note No. 22 of Schedule 15 wherein in view of company been declared sick industrial company by Honble BIFR and in expectancy of reliefs and concessions in the form of restructuring of terms loan liabilities & interest waivers, the management being of the view that Companys financial position will improve, the accounts have been prepared on going concern basis

(f) Parasfab International, the Terry Towel unit of the company remain closed during the financial year 2009-10 and ARCIL, the asset reconstruction company, in whose favour the liabilities of the unit were assigned by the Financial Institutions and Banks, has taken possession of the unit by invoking section 13(4) of SARFAESI Act. Whereas assets and liabilities are still shown under respective heads of account.

(g) Attention of members is drawn to the non - compliance of Sec-383A, regarding appointment of Company Secretary.

(vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to note no. 10 of Schedule-15 regarding non-provision of Import Duty of Rs 780.65 lacs, becoming due in earlier years, Note No. 7 regarding non-provision of pre lease charges for the year of Rs 3636.42 lacs, Note No. 3, regarding non creation of debenture redemption reserve, Note No. 9 regarding non-provision of interest on debentures, Inter Corporate Deposits, suppliers outstanding, and lease rental dues for the year of Rs 10690.36 lacs, Note No.22(b) non -provision of interest on loan liabilities, demurrage and insurance charges relating to imported machinery lying at port of Rs.108,568.95 lacs, Rs.106.97 lacs and Rs.118.34 lacs respectively, non provision for Leave Encashment non-provision of gratuity on actuarial valuation basis, non-provision of impairment loss amount being unascertained and note No. 16 regarding non confirmation of balances with customers, suppliers, other creditors, recoverable advances, loans from financial institutions & banks and working capital facilities from various banks and by bank for fixed deposits lying with them for renewal, consequential impact of which cannot be determined at this stage, interest and pre lease liabilities reported at Rs 113225.31 lacs and other liabilities for project including abandoned project reported as Rs.2161.32 lacs, being stated lower by Rs 123121.04 lacs, Rs 556354.23 lacs (including Rs 433458.50 lacs of interest and pre lease liabilities of earlier years) and Rs. 1677.17 lacs respectively, balance of fixed assets (gross) reported at Rs 44813.95 lacs being stated lower by Rs 16530.17 lacs, accumulated losses reported at Rs 166426.90 lacs being stated lower by Rs 555387.65 lacs and other current liabilities reported at Rs 10394.23 lacs being stated lower by Rs 780.65 lacs, and read with other Notes give the information required by the Companies Act, 1956 in the mariner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

(c) I n the case of 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.

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

(b) All the assets have not been physically verified by the Management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. As regards Plant & Machinery and equipment lying at Custom warehouse partly damaged by fire as reported by CWC, we have been informed that they are still under the charge of Court Receiver appointed by the Honble Bombay High Court (refer Note No. 13 of schedule 15). Except for Khushkhera unit of the Company as the possession of the unit is taken over by ARCIL.

(c) During the year, the Company has not disposed off any substantial part of Fixed Assets.

(ii) (a) The inventory, except material in transit and lying with third parties, has been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable. Material in transit and lying with third parties has been confirmed by subsequent receipt of material to a large extent.

(b) The procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been suitably adjusted in the books of account.

iii) a) According to the information and explanations given to us, the Company has not-granted loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

c) Since there are no such loans, the comments regarding terms & conditions, repayment of the principal amount & interest thereon and overdue amounts are not required.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory & fixed assets and for sale of goods and services. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have we been informed of any major weaknesses in the aforesaid internal control systems.

v) (a) According to the information and explanations given to us, we are of the opinion that during the period, the particulars of contracts & arrangements that were required to be entered, into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupee five lacs in respect of each party during the period have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits during the year from public to which.the provisions of Section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and Rules framed thereunder apply. However, in respect of balance amount of deposits aggregating Rs.2.42 lacs being amount due upto the year end, received from four depositors in earlier years, the company has entered into out of Court settlement with the aforesaid depositors envisaging payment over a period of time.

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

viii) In respect of activities of the Company covered by the Order issued by Central Government under section 209(1) (d) of the Companies Act, 1956, for maintenance of cost records, we have broadly reviewed these records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We are, however, not required to make a detailed examination of the same.

ix) (a) As per the books and records examined by us and information & explanations given to us, the company has not been regular in depositing the undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax,, Sales Tax, Service Tax Custom Duty, ExciseDuty, Cess and other material statutory dues, wherever applicable, withthe appropriate authorities.

The arrears on account of such dues relating to Provident fund, Employees State Insurance, income tax, sales tax, professional tax and Excise duty outstanding at the end of financial year for a periodof more than six months from the date they became payable are Rs. 132.91 lacs, Rs.26.03lacs, Rs.53.88 lacs, Rs.303.84 lacs, Rs.0.22 and Rs. 146.02 lacs respectively. Howeyer, till the date of our report Rs12.00 lacs, 5.39 lacs and Rs.25.50, respectively in respect of Provident Fund, Employees State Insurance and income tax have been deposited.

(b) According to the information and explanations given to us and as per the books and records examined by us, the dues of sales tax, entry tax, purchase tax, wealth tax, Service Tax, excise duty, custom duty &cess which have not been deposited on account of any dispute and the forum where the dispute is pending are as under:

S. STATUS NATURE AMOUNT NOT YEAR TO NO OF LIABILITY DEPOSITED WHICH IT (Rs. In lakhs) PERTAINS

I. Custom Duty Custom Duty 57.19 2003-2004 Act, 1962

2. State Sales Tax Entry Tax/ 136.74 2002-2003

Act, 1944 Sales Tax 39.60 2003-2004

6.58 2004-2005

16.85 2005-2006

6.84 2006-2007

60.51 2007-2008

347.17 2007-2008

3. Central Excise Act, 1944 Excise Duty 473.73 2001-2002

2005-2006

4. Central Excise Act, 1944 Differential Duty 23.20 2002-2003

5. Central Excise Act, 1944 Differential Duty 10.44 2003-2004

6. Central Excise Act, 1944 Excise Duty 17.17 2004-2005

7. Sales Tax, Act, 1994 Sales Tax 0.37 1998-1999

8. Central Excise Act, 1944 Excise Duty 3571.24 2002-2003

9. Central Excise Act, 1944 Excise Duty (T&TA) 93.27 2000-2001

10. Central Excise Act, 1944 Excise Duty 122.04 2007-2008

2008-2009

II. FEMA, 1973 Foreign Exchange 1003.00 2003-2004

12. FEMA, 1973 Foreign Exchange 78.60 2004-2005

S. STATUS FORUM IN WHICH MO. DISPUTES IS PENDING

1. Custom Duty Act, 1962 Honble Supreme Court

2. State Sales Tax Act, 1944 Appealant Board, Bhopal

D.C. Appeal, Indore

D.C. Appeal, Indore

D.C.Appeal, Indore

D.C. Appeal, Indore

D.C. Appeal, Indore

D.C. Appeal, Alwar

3. Central ExciseAct, 1944 Commissioner, Indore

4. Central ExciseAct, 1944 Honble Supreme Court

5. Central Excise Act, 1944 CESTAT, New Delhi

6. Central ExciseAct, 1944 CESTAT, New Delhi

7. Sales Tax, Act, 1994 AsstL Sates Tax Officer- IV

8. Central ExciseAct, 1944 Appeal against the order of Commissioner (Adjudicate) Jaipur is being filed

9. Central ExciseAct, 1944 Protective SCN against Refund. Appealant Forum

10. Central ExciseAct, 1944 CESTAT, New Delhi

11. FEMA, 1973 Honble Supreme Court

12. FEMA, 1973 Tribunal Enforcement

Directorate x. The Company has accumulated losses of Rs. 166426.90 lacs as on 31st March, 2010 which is exceeding the net worth. Further the Company has not incurred cash loss during the financial year.

xi. The company has defaulted in repayment of dues to financial institutions, banks and debenture holders. The period of default and the amounts involved along with the first date of defaults are as under:

INSTITUTIONS/ RUPEE TERM NCD / WORKING UNSECURED FIRST LOAN & DEBE DATE BANKS FOREIGN NTURES CAPITAL LOAN OF DEFAULTS CURRENCY LOAN LOAN

IDBI 5613.26 30.06.97

IFCI 10792.07 30.06.97

ICICI 6320.14 30.06.97

RIICO 87.44 30.06.97

SCICI LTD 2963.75 30.06.97

UTI BANK 950.00 30.06.97

INSTITUTIONS/ RUPEE TERM NCD / WORKING UNSECURED FIRST DATE BANKS LOAN & DEBEN FOREIGN TURES CAPITAL LOAN OF DEFAULTS CURRENCY LOAN LOAN

PNB 2986.96 30.06.97

CANARA BANK 1092.02 30.06.97

S.B.B.J 58.98 30.06.97

S.B.I (HOMEFINANCE) 449.29 30.06.97

SBOP 785.59 30.06.97

NCD (14%) Series A1 200.00 Refer below

NCD (14%) Series B 1016.79 Refer below

NCD (15%) Series C 1300.00 Refer below

NCD (17.5) Series D 1513.20 Refer below

UTI (17.5%) Series E 700.00 Refer below

CANARA BANK 4020.30 30.06.97

S.B.B.J 529.23 30.06.97

P.N.B 3105.18 30.06.97

BANK OF BARODA 1006.87 30.06.97

S.B.T 604.42 30.06.97

S.B.O.P 1814.38 30.06.97

U.T.I 1012.09 30.06.97

NOVA SCOTIA 3l99.91 36.66.97

I.R.B.I. 500.00 30.06.97

S.B.O.T. 556.60 30.06.97

I.D.B.I. 353.35 30.06.97

BANQUE INDOSUZI 448.29 30.06.97

S.I.D.B.I 131.28 30.06.97

U.T.I. 400.00 30.06.97

DEBENTURES HOLDERS NCD DEBENTURES FIRST DATEOF DEFAULTS SERIES

SERIES A 280.00 25.12.98

¦SERIES A 280.00 25.12.99

SERIES A 52.50 08.01.98

SERIES A 52.50 08.01.99

SERIES A 52.50 08.01.00

SERIES A 8.75 04.04.98

SERIES A 8.75 04.04.99

SERIES A 8.75 04.04.00

SERIES A 70.00 10.03.98

SERIES A 70.00 10.03.99

SERIES A 70.00 10.03.09

SERIES A 8.75 31.08.98

DEBENTURES HOLDERS NCD DEBENTURES FIRST DATEOF DEFAULTS

SERIES A 8.75 31.08.99

SERIES A 8.75 31.08.00

SERIES B 323.54 04.04.98

SERIES B 323.54 04.04,99

SERIES B 369.71 04.04.00

SERIES C 945.00 31.01.99

SERIES C 420.00 17.04.99

SERIES D 529.62 21.01.99

SERIES D 529.62 21.01.00

SERIES D 529.62 21.01.01

SERIES E 700.00 25.02.99

Company has also defaulted in payment of Interest in respect of abovementioned loans to financial Institutions, Banks and Debentures Holders and the same is continuing till 31st March 2010.

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

xiii. The provisions of special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Society are not applicable to the Company.

xiv. According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments and hence the related reporting requirements are not applicable.

xv. As explained to us the company had given a guarantee in the past for loan taken by others from banks/ financial institutions, the conditions whereof were not prejudicial to the interest of the company.

xvi. We are informed that the Company has not obtained any term loan during the year.

xvii. We report that the funds raised on short term basis in earlier years had been used for long term investments being the enterprise facing huge losses and liquidity problems due to recovery of landed properties from debtors (refer to point no 12 of Schedule 15B) and settlement of long term liabilities out of currently available funds. The financial impact of the same is not ascertainable.

xviii. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xix. During the period covered by our audit report, the Company has not issued any secured debentures. However, for debentures issued in the past, necessary security has been created.

xx. The Company has not raised any money by way of public issues during the year.

xxi. During the course of our examination of the books and records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

For Jain Raj Associates

(Chartered Accountants)

Place: New Delhi (CAP.K.Jain)

Date: 12.08.2010 Proprietor (M.No. 86396)

FRN 007535N