SDF Industries Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2014

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

Management''s Responsibility forthe Financial Statements

The management of the company is responsible forthe preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe 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, read with general Circular 15/2013 dated, 13th September 2013 of Ministry of Corporate Affairs in respect of section 133 of the Companies Act 2013 and

e) on the basis of written representations received from the directors as on March 31,2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDIT REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF THE SDF INDUSTRIES LIMITED FOR THE YEAR ENDED 31 ST MARCH 2014

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

(b) As explained to us, the major items of the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets and that no material discrepancies have been noticed on such verification.

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

ii. (a) We are informed that the inventory have been physically verified by the management at the end, the frequency of which in our opinion is reasonable in regard to the size of the Company and the nature of its business.

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

(c) The Company is maintaining proper records of inventory and as informed to us no discrepancies of material nature were noticed on physical verification 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. Accordingly clauses ''b'' ''c'' and''d'' of paragraph 4(iii) of the order is not applicable.

(e) The Company has taken unsecured loans from one party covered in the register maintained under section 301 of the Act. The maximum amount involved during the year and year end balance is Rs. 73,19,402/-.

(f) Since no terms and conditions have been prescribed in respect of the said loans, we are unable to comment whether the rate of interest and other terms and conditions are prejudicial to the interest of the Company.

(g) Since no terms and conditions have been prescribed in respect of the said loans, we are unable to comment upon the repayment of principal and interest.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control system commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

v. (a) To the best of our knowledge and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under the 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 such contracts or arrangements exceeding the value of rupees five lakhs entered during the year, are at prices which are reasonable, having regard to the prevailing market prices at the relevant time.

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

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

viii. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed records are maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident fund, Employees State Insurance, Investor Education and Protection Fund, Income tax, and other material statutory dues with the appropriate authorities during the period. According to the explanations given to us there are no arrears of undisputed statutory dues outstanding fora period of more than 6 months from the date on which they became payable except for the dues mentioned below.

Name of the Nature of the Amount Period to which Statute Dues (Rs.) amount relates

KGSTAct1963 Turnover tax 3,69,82,841/- 1997-98 to 2008-09

KVAT2003 Sales tax 2,86,876/- 2007-08 to 2009-10

(b) According to the information and explanations given to us and as per our verification of the records of the Company, the following disputed amounts of tax /duties have not been deposited with appropriate authorities as at 31 st March 2014:

Name of Nature of Amount Period to which Forum where Statute the Dues (Rs.) amount relates dispute is pending ESI ACT ESI 46,35,480/- 2005-2010 The Employees'' Insurance Court, Palakkad

x. The accumulated loss at the end of the financial year is more than fifty percent of its net worth. The company has not incurred cash loss as per statement of profit and loss for the current financial year as well as in the immediately preceding year.

xi. As per the information furnished to us, the Company has not defaulted in repayment of dues to the financial institution or banks or debenture holders.

xii. The Company has not granted any loans or advances in the nature of loans on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The Company is not a Chit fund/Nidhi/Mutual Benefit Fund/society and hence the reporting requirement under Clause 4(xiii) of the Order is not applicable.

xiv. The Company is not dealing or trading in shares, securities, debentures or other investments, the relative reporting requirements are not applicable.

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

xvi. According to the information and explanations given to us, and as per the records verified by us, the Company has not availed any term loans. Hence clause (xvi) of the order is not applicable.

xvii. According to the information and explanations given to us and as per the records verified by us, the funds raised on short term basis have not been used for long term investment.

xviii. Company has not made preferential allotment of shares to the parties covered in the register maintained under section 301 of the Companies Act, 1956, during the year.

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

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

xxi. According to the information and explanation given to us, and as per our verification of the records of the Company, no fraud either on or by the Company has been noticed or reported during the year.

For Varma & Varma Chartered Accountants FRN:004532S

S. Raghunandan Partner Membership No.: 23592

Calicut

30.05.2014

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of SDF Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31,2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). 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. 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 opinion.

Basis for Qualified Opinion

i) As stated in Note No 13.1, the balance in trade receivables, amounting to Rs. 42,82,115/- is subject to confirmation/reconciliation. No provision forbad and doubtful debts has been made in books in respect of such amounts, the effect of which cannot be ascertained

ii) As stated in Note No 25 the company has neither ascertained nor provided for interest due on turnover tax demand of Rs. 3,69,82,841/- forthe reasons stated therein.

Qualified Opinion

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

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

b) in the case of the Profit and Loss Account, of the profit/ loss forthe year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements

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

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

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of ouraudit, excepf as stated in Basis for Qualified Opinion paragraph.

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) on the basis of written representations received from the directors as on March 31,2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE REFERRED TO IN PARAGRAPH (3) OF OUR AUDIT REPORT OF EVEN DATE OF SDF INDUSTRIES LIMITED

I. (a) The Company is maintaining a fixed asset register showing the particulars including quantitative details and situation of most of its fixed assets.

(b) As explained to us, the major items of the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable having regard to the size of the company and the nature of its assets and that no material discrepancies have been noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, there has been no significant disposal of fixed assets during the year so as to affect the going concern.

ii. (a) We are informed that the physical verification of the inventory has been conducted by the management at the end of the year which in our opinion is reasonable having regard to the size of the company and the nature of its business.

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

(c) In our opinion and according to the information and explanations given to us, the company has maintained proper records of inventories and no material discrepancies were noticed on physical verification 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. Accordingly clauses ''b'' ''c'' and ''d'' of paragraph 4(iii) of the order is not applicable.

(e) The company has taken unsecured loans from two parties covered in the register under section 301 of the Act. The maximum amount involved is 70.48 lakhs.

(f) Since no terms and conditions have been prescribed in respect of the said loan, we are unable to comment whether the rate of interest and other terms and conditions of the loan is prejudicial to the interest of the company

(g) Since no terms and conditions have been prescribed in respect of the said loan, we are unable to comment upon the repayment of principal and interest.

iv. In our opinion and according to the information and explanations given to us, there exist adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion and according to the explanations given to us, there is no continuing failure to correct major weaknesses in internal controls.

v. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under the 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 such contracts or arrangements have been made at prices which are reasonable, having regard to the prevailing market prices at the relevant time.

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

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

viii. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed records are maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix. a)As per the information and explanations furnished to us, and according to our examination of records of the company, the company has been generally regular in depositing undisputed statutory dues including Provident fund, Employees State Insurance, Investor Education and Protection Fund, Income tax, Wealth Tax, Service tax, Sales Tax, Customs duty, Excise duty and Cess with the appropriate authorities except for dues as stated below. There has been minor delay in remittance of Income Tax Deducted at Source, Provident Fund & Employees State Insurance during the course of the year.

Details of arrears of undisputed statutory dues as at 31st March, 2013 outstanding for a period of more than six months from the date on which they became payable are shown below;

Name of the Nature of the Amount Period to which Statute Dues (Rs.) amount relates

KGST Act 1963 Turn over tax 3,69,82,841/- 1997-98 to 2008-09

KVAT 2003 Sales tax 2,86,876/- 2007-08to2009-10

(b) According to the information and explanations given to us and the records of the company examined by us, the disputed statutory dues aggregating to Rs. 46,35,480/- have not been deposited on account of disputed matters pending before appropriate authorities. Details of disputed statutory dues:

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

ESI ACT ESI 46,35,480/- 2005-2010 The Employees Insurance Court, Palakkad

x. The accumulated loss at the end of the financial year is more than fifty percent of its net worth. The company has not incurred cash loss in the financial year or in the immediately preceding financial year. xi. As per the information furnished to us, the company has not defaulted in repayment of dues to the financial institution or banks or debenture holders.

xii. The company has not given any loans or advances in the nature of loans on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The Company is not a Chit Fund/Nidhi/Mutual Benefit Fund/society and hence the reporting requirement under Clause 4(xiii) of the Order is not applicable.

xiv. The company is not dealing or trading in shares, securities, debentures or other investments, the relative reporting requirements are not applicable.

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

xvi. According to the information and explanations given to us, and as per the records verified by us, the company has not availed any term loans.

xvii. According to the information and explanations given to us and as per the records verified by us, the funds raised on short term basis have not been used for long term investment.

xviii. Company has not made preferential allotment of shares to the parties covered in the register maintained under section 301 of the Companies Act, 1956, during the year.

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

xx. The company has not raised any money by public issue during the year.

xxi. According to the information and explanation given to us, and as per our verification of the records of the Company, no fraud either on or by the Company has been noticed or reported during the year.



For Varma & Varma

Chartered Accountants, FRN:004532S

Calicut:

29.05.2013 S. Raghunandan

Partner, M No: 23592

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Mar 31, 2011

We have audited the attached Balance Sheet of "SDF INDUSTRIES LIMITED" as at 31st March, 2011, the Profit and Loss Account and the cash flow statement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 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 give in the annexure statements on the matters specified in paragraph 4 and 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 purposes 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, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion and to the best of our information and according to the explanations given to us, the said accounts comply with the accounting standards referred to in Section211 (3C) of the Companies Act; 1956.

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

f) As stated in Note B(13) in Schedule 16, the company has neither ascertained not provided for interest due on the turnover tax demand of Rs. 265.79 lakhs - for the reasons stated therein.

Subject to the matters stated in (f) herein above, in our opinion and to the best of our information and according to the explanation given to us, the said accounts read with notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the Accounting Principles generally accepted in India:

(I) In the case of the balance Sheet, of the state of affairs of the company as at 31st March, 2011.

(ii) I n the case of the Profit & Loss Account, of the profit of the company 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 REFERRED TO IN PARAGRAPH I OF OUR AUDIT REPORT OF EVEN DATE

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

(b) According to the information and explanations furnished to us, the fixed assets of the company have been physically verified by the management at the end of the year, which in our opinion is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us no material discrepancies have been noticed on such verification.

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

2 (a) We are informed that the physical verification of the inventories has been conducted by the management at the end of the year which in our opinion is reasonable having regard to the size of the company and the nature of its business.

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

(c) In our opinion, the company has maintained proper records of inventories and no material discrepancies were noticed on physical verification by the management.

3 (a) According to the information and explanations given to us, the Company has not granted loans to parties covered by the register maintained under section 301 of the Companies Act 1956. Hence clauses 3(b) to 3(d) of the order are not applicable.

(e) According to the information and explanations given to us, the Company has taken loans from one party covered by the register maintained under section 301 of the Companies Act 1956. The amount involved is Rs.70.50 lakhs

(f) The loans are interest free and other terms and conditions are not prima facie prejudicial to the interests of the Company

(g) Since there is no stipulation regarding repayment of interest/principal, we are unable to comment on the regularity of repayment.

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

5 a) According to the information and explanation given to us, we are of the opinion that the particulars of all contracts or arrangements that need 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 explanation given to us, the transactions made in pursuance of such contracts/arrangements, which are in the nature of joint manufacturing activity, are governed by the terms of the agreement.

5. In our opinion and according to the information and explanations given to us the Company has not accepted any deposits in terms of the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act; 1956.

7. In our opinion, the company has an adequate internal audit system commensurate with the size of the company and the nature of its business.

3. As per the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under section 209(1 )(d) of the Companies Act,1956 in respect of any of the activities of the company.

9 (a) As per the information and explanations furnished to us, and according to our examination of records of the company, the company has been regular in depositing undisputed statutory dues including Income tax, sales tax with the appropriate authorities during the year excepf as given below. There have been minor delays in payment of Provident Fund and Tax deducted at source during certain months There are no amounts to be deposited towards Investor Education and Protection Fund, Wealth Tax, Customs duty, Excise duty and Cess dues. There are no arrears of undisputed statutory dues as at 31st March, 2011 outstanding for a period of more than six months from the date on which they became payable except the following cases.

Name of the Nature of the Amount Period to which Statute Dues (Rs in Lakhs) amount relates

KGST Act 1963 Turn overtax 264.22 1997-98 to 200849

(b) According to the information and explanations given to us and the records of the company examined by us the following amounts have not been deposited on account of dispute.

Name of the Nature of the Amount period to which" Forum where Statute Dues (Rs in Lakhs) amount relates dispute is pending_

Abkari Act Excise Duty 16.19 1996-97 Excise Commissioner Trivandrum

10. The accumulated loss at the end of the financial year is more than fifty percent of its net worth. The company has not incurred cash loss during the year. The company has not incurred cash loss in the immediately preceding financial k year.

11. According to the information and explanations given to us and the records of the Company examined by us, the company has defaulted in repayment of dues to the financial institutions and banks. As the details are not available, it is not possible to quantify the defaulted amount. However the dues have been settled under one time settlement during the year. There are no debentures issued.

12. In our opinion and according to the information and explanations given to us, the company has not granted any loans or advances in the nature of loans on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund/nidhi/mutual benefit company and hence the provisions thereof are not applicable.

14. In our opinion and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures or other investments.

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

16. According to the information and explanations given to us and the records of the company examined by us, term owns availed by the company were applied for the purpose for which loans were obtained.

17. According to the information and explanations given to us and the records of the company examined by us, the funds raised on short term basis have not been used for long term investment.

18. During the year the Company has not made any allotment of shares.

19. The Company has not issued any debentures during the year.

20. The company has not raised any money by public issues during the year.

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

ForVarma&Varma Chartered Accountants FRN:004532S (Sd./-) S. Raghunandan

Calicut Partner

16.11.2011 M No. 23592

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Mar 31, 2010

We have audited the attached Balance Sheet of "SDF INDUSTRIES LIMITED" as at 31 st March, 2010, the Profit and Loss Account and the cash flow statement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. 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 give in the annexure statements on the matters specified in paragraph 4 and 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 purposes 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, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion and to the best of our information and according to the explanations given to us, the said accounts comply with the accounting standards referred to in Section 211 (3C) of the Companies Act; 1956.

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

f) As stated in Note No.B(15) in Schedule 17, the company has neither ascertained nor provided for interest due on the turn over tax demand of Rs. 263.54 lakhs for the reasons stated therein.

g) Attention is invited to Note No.B (7) in Schedule 17 regarding non providing of interest of Rs.20. 16 lakhs on the OTS amount for the reasons stated therein.

Subject to the matters stated in (f) herein above, in our opinion and to the best of our information and according to the explanation given to us, the said accounts read with notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the Accounting Principles generally accepted in India:

(i) In the case of the balance Sheet, of the state of affairs of the company as at 31st March, 2010.

(ii) In the case of the Profit & Loss Account, of the profit of the company 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 REFERRED TO IN PARAGRAPH I OF OUR AUDIT REPORT OF EVEN DATE

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

(b) According to the information and explanations furnished to us, the fixed assets of the company have been physically verified by the management at the end of the year, which in our opinion is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us no material discrepancies have been noticed on such verification.

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

2(a) We are informed that the physical verification of the inventories has been conducted by the management at the end of the year which in our opinion is reasonable having regard to the size of the company and the nature of its business.

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

(c) In our opinion, the company has maintained proper records of inventories and no material discrepancies were noticed on physical verification by the management.

3 (a) According to the information and explanations given to us, the Company has not granted loans to parties covered by the register maintained under section 301 of the Companies Act 1956. Hence clauses 3(b) to 3(d) of the order are not applicable.

(e) According to the information and explanations given to us, the Company has taken loans from two parties covered by the register maintained under section 301 of the Companies Act 1956. The amount involved is Rs.50 lakhs.

(f) The loans are interest fee and other terms and conditions are not prima facie prejudicial to the interests of the company.

(g) There is no stipulation regarding repayment of interest / principal.

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

5 a) According to the information and explanation given to us, we are of the opinion that the particulars of all contracts or arrangements that need 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 explanation given to us, the transactions made in pursuance of such contracts/arrangements which in the nature of joint manufacturing activity, are governed by the terms of the agreement.

6. In our opinion and according to the information and explanations given to us the Company has not accepted any deposits in terms of the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act; 1956.

7. In our opinion, the company has an adequate internal audit system commensurate with the size of the company and the nature of its business.

8. As per the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 in respect of any of the activities of the company.

9 (a) As per the information and explanations furnished to us, and according to our examination of records of the company, the company has been regular in depositing undisputed statutory dues on account of Provident fund, Income tax and Sales Tax dues with the appropriate authorities during the year except as given below. There are no amounts to be deposited towards Investor Education and Protection Fund, Wealth Tax, Service tax, Customs duty, Excise duty and Cess dues. There are no arrears of undisputed statutory dues as at 31st March, 2010 outstanding for a period of more than six months from the date on which they became payable except the following cases.

Name of the Nature of the Amount Period to which Statute Dues (Rs in Lakhs) amount relates

KGSL Act 1963 Tumover tax 260.37 1997-98 to 2008-09

(b) According to the information and explanations given to us and the records of the company examined by us the following amounts have not been deposited on account of dispute.

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

KGST Act 1963 Turnover Tax 6.60 1997-98 DC (Commercial Taxes) Thrissur

Abkari Act Excise Duty 16.19 1996-97 Excise Commissi- oner Trivandrum

10. The accumulated loss at the end of the financial year is more than fifty percent of its net worth. The company has not incurred cash loss during the year. The company has not incurred cash loss in the immediately preceding financial year.

11. According to the information and explanations given to us and the records of the Company examined by us, the company has defaulted in repayment of dues to the financial institutions and banks. As the details are not available, it is not possible to quantify the defaulted amount. There are no debentures issued.

12. In our opinion and according to the information and explanations given to us, the company has not granted any loans or advances in the nature of loans on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund/nidhi/mutual benefit company and hence the provisions thereof are not applicable.

14. In our opinion and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures or other investments.

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

16. According to the information and explanations given to us and the records of the company examined by us, term loans availed by the company were applied for the purpose for which loans were obtained.

17. According to the information and explanations given to us and the records of the company examined by us, the funds raised on short term basis have not been used for long term investment.

18. During the year the Company has not made any allotment of shares.

19. The Company has not issued any debentures during the year.

20. The company has not raised any money by public issues during the year.

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

For Varma & Varma

Chartered Accountants

FRN : 004532S

(Sd./-)

S. Raghunandan

Calicut: Partner

28.08.2010 M No: 23592