SIL Business Enterprises Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2012

We have audited the attached Balance Sheet of SIL BUSINESS ENTERPRISES LIMITED as at March 31, 2012 and also the Profit and Loss Account of the Company for the year ended on that date, annexed thereto and the cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditors'' Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraph 4 & 5 of the said order.

2. Subject to our comments in the paragraph (1 and 2) above we state that:

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

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

d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except Accounting Standard - AS - 1 Preparation of the Accounts on going concern basis in Note No. 3 in part B of the Notes on accounts to the financial statements.

e) in view of default in repayment of fixed deposit to the public by the company and as per the explanation given to us, all the directors, who were in the office as on 31st March 2012 are disqualified from being appointed / reappointed as director in other public company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) Attention is invited to the following notes forming part of notes to the accounts: -

i) Note No. 1B (2)

Regarding non-provision for differential liabilities of Rs 64,50,00,000 (approx.) towards Secured Lenders and appropriation of sale proceeds of Rs 19,00,00,000/- (approx) towards interest and non-provision of income tax liabilities, amount unascertained.

ii) Note No. 1B (3)

Regarding the preparation of the accounts on going concern basis, even though the Company is not having any definite source of income due to the sale of majority of the fixed assets by secured lenders

iii) Note No. 1B (4)

Regarding liability of Rs 24,63,00,000/- (approx.) to Global Trust Bank Limited, which is now merged and known as Oriental Bank of Commerce (OBC) in respect of unsecured Debentures after adjusting a credit of Rs 5,65,00,000/- (approx.) towards the amount received by them for which no details were provided by the Bank to the Company. No effect has been given in the accounts for the same.

Further no provision has been made in the accounts for interest thereon from the date of suit due to the said bank in respect of the aforesaid Debentures, amount unascertained. We are not expressing our opinion of its consequential impact on Company''s Account, as the matter is subjudice.

iv) Note No. 1B (5)(a)

Regarding non-provision of disputed income tax liability of Rs 23,43,00,000/-(approx) and interest / Penalty thereon and tax liability pertaining to sale of fixed assets, for which details are not available.

v) Note No. 1B (5) (b)

Regarding non -provision of disputed sales tax liability of Rs 95,46,000/- (approx.)

vi) Note No. 1B (6)

Regarding non-provision and non-ascertainment of interest on Loan from MPSIDC, ADCB ICD and Overdue Fixed Deposits, and non-provision of differential amount of claim made by MPSIDC which is Rs 2,16,42,00,000/- (approx) as against liability provided in books of Rs 28,00,00,000/- (approx).

vii) Note No. 1B (7) (a)

Regarding non-payment of overdue fixed deposits and non- compliance of instructions issued by company law board u/s 58A (9) of the Companies Act, 1956

viii) Note No 1B (7) (b)

Regarding settlement of fixed deposit liability without approval of Company Law Board and writing back of interest provision and crediting short payment of fixed deposit to Reserves and Surplus.

ix) Note No. 9

Regarding non- availability of confirmation from debtors, creditors and loans & advances and unsecured loans.

x) Note No. 20

Regarding non-appointment of the Managing Director and payment of Director and Committees fees amounting to Rs 2,60,000/- lacs in addition to reimbursement of expenses for maintaining non executive chairman office & other expenses.

We are unable to express our opinion in respect of the impact of our observations stated in Para (f) above on the profitability for the year and its assets and consequential impact on the reserves of the Company.

g) Subject to the foregoing, we are unable to express our opinion on the accounts of the Company as for the year ended 31st March 2012 which gives a true and fair view in conformity with the accounting principles generally accepted in India.

i) in the case of Balance Sheet, of the state of affairs of the Company as at March, 2012 and

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS'' REPORT TO THE MEMBERS OF SIL BUSINESS ENTERPRISES LTD ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2012.

ANNEXURE TO THE AUDITORS'' REPORT (Referred to in paragraph 1 of our Report of even date)

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

(b) Most of the fixed Assets have been sold by the secured lenders, therefore the management, as informed, could not carry out the physical verification of the fixed assets.

(c) According to the information and explanations given to us, the going concern status of the Company has severely impacted due to sale of substantial fixed assets by the secured lenders. Reference is invited to note no.1B (3) annexed to the accounts.

(ii) The Company does not have any inventory during the year. Hence the procedure of maintenance and verification of the same is not applicable.

(iii) The Company has neither granted nor taken any loans, secured or unsecured to/from companies/firms or other parties covered in the register maintained under section 301 of the Companies Act,1956. Accordingly, sub clause (b), (c) and (d) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, the Company has not entered into any transactions during the year with parties entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion according to information and explanation given to us, the Company has not accepted any Fixed Deposit during the year as covered by under Section 58A and 58AA of the Companies Act, 1956. However, the Company has defaulted in payment of matured deposit of Rs 12,70,00,000/- (approx.) and interest thereon upto date of maturity. Moreover, the Company has also not provided for interest in respect of such matured Fixed Deposits from the date of maturity till date in the Accounts.

Some of Fixed Deposit holders had taken legal actions and obtained order from the Company law board in the matter. However, the Company could not fully comply with the said order. Further as informed to us, certain Fixed Deposit holders had approached the Company expressing their willingness to accept partial payment as referred in Note 1B (7) (b). As legally advised to the company, such settlement does not contravene the provision of section 58A and 58AA of the Companies Act, 1956.

(vii) In our opinion, the Company does not have a formal internal audit system.

(viii) According to the information and explanation given to us, Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956.

(ix) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amount payable in respect of above were in arrears, as at March 31, 2012 for more than six month from the date on which they become payable.

(x) According to information and explanation given to us, there are no dues of sales tax, income tax, custom tax, wealth tax, excise duty / cess which have not been deposited on account of any dispute except as stated herein below: Rs (approx)

Name of Statute / Form where dispute is pending Amount Of Nature of Dues Dues

Income Tax Act

Income Tax Tribunal (s) 985,79,000

Bombay High Court 1357,30,000

Sales Tax Act

High Court/ Sales Tax Commissioner (Appeals) 95,46,000

(xi) The Company''s accumulated Losses at the end of the year are higher than 50 % of its net worth. However, it has not incurred cash losses during the year as well as in the immediate preceding financial year.

(xii) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues to the financial institutions or banks as following

Nature of Dues Year Amount of Default (As per Company''s Books of Accounts)

Term Loan 2002-2003 Onwards 67,911,250

Working Capital Loan - 343,944,917

Other Unsecured Loan - Do - 519,840,201

Further reference is invited to Note No. 1B (6) (ii) regarding default in payment of dues and interest and Note No. 4 regarding dispute of repayment to Global Trust Bank now merged and known as the Oriental Bank of Commerce. Reference is also invited to Note No. 2 regarding sale of fixed assets by the financial institutions against their dues.

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

(xiv) In our opinion, the Company is not a chit fund or a nidhi/mutul benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xvi) Based on our examination of the records and the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions.

(xvii) The company has not raised any new term loans during the year.

(xviii) The fund raised on short term basis during the year have not been used on long term investment and vice versa

(xix) The Company has not made any preferential allotment of shares during the year.

(xx) The Company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

(xxi) The company has not made any public issue of any securities during the year and therefore the question of disclosing the end-use of money does not arise.

(xxii) Based upon the audit procedure performed and the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For BHANGARIA & Co.

Chartered Accountants

ICAI Regn No. 129105W

(CA. Nikunj Govind Bhangaria)

Proprietor

Membership No. : 121369

Place: Mumbai

Dated: August 23, 2012.

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Mar 31, 2011

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

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

1. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraph 4 & 5 of the said order.

2. Subject to our comments in the paragraph (1 and 2) above we state that:

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

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

d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except Accounting Standard - AS - 1 Preparation of the Accounts on going concern basis in Note No. 3 in part B of the Notes on accounts to the financial statements.

e) in view of default in repayment of fixed deposit to the public by the company and as per the explanation given to us, all the directors, who were in the office as on 31st March 2011 are disqualified from being appointed / reappointed as director in other public company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) Attention is invited to the following notes forming part of notes to the accounts': -

i) Note No. 2(a) to 2(d)

Regarding non-provision for differential liabilities of 64.5 crores towards Secured Lenders and appropriathn of sale proceeds of T19 crores towards interest and non-provision of income tax liabilities, amount unascertained.

ii) Note No. 3

Regarding the preparation of the accounts on going concern basis, even though the Company is not having any definite source of income due to the sale of majority of the fixed assets by secured lenders

iii) Note No. 4

Regarding liability of Rs. 24.63 crores to Global Trust Bank Limited, which is now merged and known as Oriental Bank of Commerce (OBC) in respect of unsecured Debentures after adjusting a credit of Rs. 5.65 crores towards the amount received by them for which no details were provided by the Bank to the Company.

No effect has been given in the accounts for the same. Further no provision has been made in the accounts for interest thereon from the date of suit due to the said bank in respect of the aforesaid Debentures, amount unascertained. We are not expressing our opinion of its consequential impact on Company's Account, as the matter is subjudice.

iv) Note No. 5(a)

Regarding non-provision of disputed income tax liability of Rs. 23.43Crores and interest / Penalty thereon and tax liability pertaining to sab of fixed assets, for which details are not available and recovery of tax deducted at source of Rs. 50.50 lacs.

v) Note No. 5 (b)

Regarding non -provision of disputed sales tax liability of Rs.95.46Lacs

vi) Note No. 6

Regarding non-provision and non-ascertainment of interest on Loan from MPSIDC, ADCB ICD and Overdue Fixed Deposits, and non-provision of differential amount of claim made by MPSIDC which is Rs. 216.42 crores as against liability provided in books of Rs. 28 crores.

vii) Note No. 7 (a)

Regarding non-payment of overdue fixed deposits and non- compliance of instructions issued by company law board u/s 58A (9) of the Companies Act, 1956

viii) Note No 7 (b)

Regarding settlement of fixed deposit liability without approval of Company Law Board and writing back of interest provision and crediting short payment of fixed deposit to Reserves and Surplus.

ix) Note No. 8

Regarding expenses debited to various heads of accounts amounting to Rs. 10.50 lacs for which requisite evidence are not available.

x) Note No. 9

Regarding non- availability of confirmaton from debtors, creditors and loans & advances and unsecured loans.

xi) Note No. 12

Regarding non-appointment of the Managing Director and payment of Director and Committees fees amounting to Rs. 3.36 lacs in addition to reimbursement of expenses of Rs. 1.14 lacs for maintaining non executive chairman office & other expenses,

xii) Note No. 14

Regarding non-availability of documents in respect of sale of assets of Chennai.

xiii) Note No. 16

Regarding writing off the balances of non-operative current and scheduled bank account aggregating to Rs.12.04 Lacs.

We are unable to express our opinion in respect of the impact of our observations stated in Para (f) above on the profitability for the year and its assets and consequential impact on the reserves of the Company.

g) Subject to the foregoing, we are unable to express our opinion on the accounts of the Company as for the year ended 31st March 2011 which gives a true and fair view in conformity with the accounting principles generally accepted in India.

i) in the case of Balance Sheet, of the state of affairs of the Company as at March, 2011 and

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS' REPORT TO THE MEMBERS OF SIL BUSINESS ENTERPRISES LTD ON THE ACCO UNTS FOR THE YEAR ENDED 31ST MARCH 2011.

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph 1 of our Report of even date)

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

(b) Most of the fixed Assets have been sold by the secured lenders, therefore the management, as informed, could not carry out the physical verification of the fixed assets.

(c) According to the information and explanations given to us, the going concern status of the Company has severely impacted due to sale of substantial fixed assets by the secured lenders. Reference is invited to note no.2 of part B in schedule of notes to the accounts.

(ii) The Company does not have any inventory during the year. Hence the procedure of maintenance and verification of the same is not applicable.

(iii) The Company has neither granted nor taken any loans, secured or unsecured to/from companies/firms or other parties covered in the register maintained under section 301 of the Companies Act,1956. Accordingly, sub clause (b), (c) and (d) are not applicable

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, the Company has not entered into any transactions during the year with parties entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion according to information and explanation given to us, the Company has not accepted any Fixed Deposit during the year as covered by under Section 58A and 58AA of the Companies Act, 1956. However, the Company has defaulted in payment of matured deposit of Rs.12.70 Crores and interest thereon upto date of maturity. Moreover, the Company has also not provided for interest in respect of such matured Fixed Deposits from the date of maturity till date in the Accounts.

Some of Fixed Deposit holders had taken legal actions and obtained order from the Company law board in the matter. However, the Company could not fully comply with the said order. Further as informed to us, certain Fixed Deposit holders had approached the Company expressing their willingness to accept partial payment as referred in Note 7(b) of part B in schedule of notes to the accounts. As legally advised to the company, such settlement does not contravene the provision of section 58A and 58AA of the Companies Act, 1956.

(vii) In our opinion, the Company does not have a formal internal audit system.

(viii) According to the information and explanation given to us, Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956.

(ix) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amount payable in respect of above were in arrears, as at March 31, 2011 for a year of more than six month from the date on which they become payable.

(x) According to information and explanation given to us, there are no dues of sales tax, income tax, custom tax, wealth tax, excise duty / cess which have not been deposited on account of any dispute except as stated herein below:

Rs. In Lacs

Name of Statute / Form where dispute is pending Amount Of Nature of Dues Dues

Income Tax Act Income Tax Tribunal (s) 985.79 Bombay High Court 1357.30

Sales Tax Act High Court/ Sales Tax Commissioner (Appeals) 95.46

(xi) The Company's accumulated Losses at the end of the year are higher than 50 % of its net worth. However, it has not incurred cash losses during the year as well as in the immediate preceding financial year.

(xii) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues to the financial institutions or banks as following

Nature of Dues Year Amount of Default (As per Company's Books of Accounts)

Term Loan 2002-2003 67,911,250 Onwards

Working Capital Loan -- 343,944,917

Other Unsecured Loan - Do - 519,840,201

Further reference is invited to Note No.6 (ii) regarding default in payment of dues and interest and Note No. 4 regarding dispute of repayment to Global Trust Bank now merged and known as the Oriental Bank of Commerce. Reference is also invited to Note No. 2 regarding sale of fixed assets by the financial institutions against their dues.

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

(xiv) In our opinion, the Company is not a chit fund or a nidhi/mutul benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xvi) Based on our examination of the records and the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions.

(xvi i) The company has not raised any new term loans during the year.

(xviii) The fund raised on short term basis during the year have not been used on long term investment and vice versa

(xix) The Company has not made any preferential allotment of shares during the year.

(xx) The Company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

(xxi) The company has not made any public issue of any securities during the year and therefore the question of disclosing the end-use of money does not arise.

(xxii) Based upon the audit procedure performed and the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

FOR R.S.SHAH & ASSOCIATES Place: Mumbai Chartered Accountants Date: January 16, 2012. (R.S.Shah) Partner Membership No. 30108

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Mar 31, 2010

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

We have conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements 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 Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraph 4 & 5 of the said order.

2. Further to our comments in the annexure referred to in paragraph (1) above we state that:

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

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

d) in our opinion, the Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 except Accounting Standard - 28 regarding provision for impairment of assets.

e) in view of default in repayment of fixed deposit to the public by the company and as per the explanation given to us, all the directors, who were in the office as on 31st March 2010 are disqualified from being appointed / reappointed as director in other public company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) Attention is invited to the following notes forming part of notes to the accounts:-

i) Note No. 2

Regarding non-provision and non-ascertainment of interest on Loan from MPSIDC, ADCB ICD and Overdue Fixed Deposits, claim made by MPSIDC is Rs. 176.78 crores as against liability provided in books of Rs. 49.05 crores.

ii) Note No. 3

Regarding Non-availability of bank statements and confirmation of current accounts amounting to Rs. 10.89 lacs fixed deposit of Rs. 8.74 lacs and funded and non-funded facilities outstanding as on 31st March 2010 from bank and institution and non provision/short provision of interest till date on such loan, amount unascertained.

iii) Note No. 4

Regarding preparation of accounts on going concern basis.

iv) Note No.5

Regarding liability of Rs. 24.63 crores to Global Trust Bank Limited, which is now merged and known as Oriental Bank of Commerce (OBC) in respect of unsecured Debentures after adjusting a credit of Rs. 5.65 crores towards the amount received by them for which no details were provided by the Bank to the Company. No effect has been given in the accounts for the same. Further no provision has been made in the accounts for interest thereon from the date of suit due to the said bank in respect of the aforesaid Debentures, amount unascertained. We are not expressing our opinion of its consequential impact on Companys Account, as the matter is subjudice.

v) Note No. 7 (a)

Regarding non-provision of disputed income tax liability of Rs. 23.43 Crores and interest / Penalty thereon.

vi) Note No.7 (b)

Regarding non-provision of disputed sales tax liability of Rs. 95.46 Lacs.

vii) Note No. 8(a)

Regarding delay/non-provision in payment of overdue fixed deposits and non- compliance of instructions issued by company law board u/s 58A (9) of the Companies Act, 1956

viii) Note No 8(b)

Regarding settlement of fixed deposit liability without approval of company law board and writing back of interest provision and crediting short payment of fixed deposit to capital reserve on settlement.

ix) Note No. 9

Regarding expenses debited to various heads of accounts amounting to Rs. 18.51 lacs for which requisite evidence are not available and short amount received of Rs. 1.37 lacs on closure of bank accounts for which requisite evidence are not available.

x) Note No. 11

Regarding non- availability of confirmation from debtors,- creditors and loans & advances.

xi) Note No. 14

Regarding non-appointment of the Managing Director and payment of Director and Committees fees amounting to Rs. 14.60 lacs in addition to reimbursement of expenses of Rs. 13.05 lacs for maintaining non executive chairman office & other expenses.

xii) Note No. 15

Regarding allowing of lump sum discount of Rs. 78.26 lacs towards Job Charges Income.

xiii) Note No. 16

Regarding non-provision of repairs charges of Rs. 6.78 lacs. Which is disputed by the company and withholding of windmill having net book value of Rs. 210 lacs as on 31st march 2010.

xiv) Note No. 17

Regarding recovery of Service Tax Cenvtable of Rs. 10.30 lacs

We are unable to express bur opinion in tespect of the impact of our observations stated in Para (f) above on the loss for the year and its assets and consequential impact on the reserves of the Company.

g) Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the 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 Balance Sheet, of the state of affairs of the Company as at March, 2010 and

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS REPORT TO THE MEMBERS OF SIL BUSINESS ENTERPRISES LTD ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2010.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 1 of our Report of even date)

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

(b) Fixed assets have not been physically verified by the management during the year. Reference is also invited to Note No. 16 of part B in Schedule of Notes to Accounts.

(c) According to the information and explanations given to us, there is no major disposal of assets during the year so as to affect the going concern status of the Company. However reference is invited to note no. 4 of part B in schedule of notes to the accounts.

(ii) The Company does not have any inventory during the year, hence the procedure of maintenance and verification of the same is not applicable.

(iii) The Company has neither granted nor taken any loans, secured or unsecured to/from companies/firms

or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

Accordingly, sub clause (b), (c) and (d) are not applicable

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, the company has not entered into any transactions during the year with parties entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion according to information and explanation given to us, the Company has not accepted any Fixed Deposit during the year as covered by under Section 58A and 58AA of the Companies Act, 1956. However, the Company had defaulted in payment of matured deposit of Rs. 12.75 Crores and interest thereon upto date of maturity. Moreover, the company has also not provided for interest in respect of such matured Fixed Deposits from the date of maturity till date in the Accounts.

Some of Fixed Deposit holders had taken legal actions and obtained order from the Company law board in the matter. However, the Company could not fully comply with the said order. Further as informed to us, certain Fixed Deposit holders had . approached the Company expressing their willingness to accept partial payment as referred in Note 8 (b) of part B in schedule of notes to the accounts. As legally advised to the company, such settlement does not contravene the provision of section 58A and 58AA of the Companies Act, 1956.

(vii) In our opinion, the Company does not have a formal internal audit system.

(viii) According to the information and explanation given to us, Central Government has not prescribed the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956.

(ix) According to the records of the Company, the company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate*authorities. According to the information and explanations given to us, no undisputed amount payable in respect of above were in arrears, as at March 31, 2010 for a year of more than six month from the date on which they become payable.

(x) According to information and explanation given to us, there are no dues of sales tax, income tax, custom tax, wealth tax, excise duty / cess which have not been deposited on account of any dispute except as stated herein below:

Rs. In Lacs

Name of Statute/ Form where dispute is pending Amount Of Nature of Dues Dues

Income Tax Act

Income Tax Tribunal (s) 911.81

Commissioner (Appeal) 73.99 Bombay High Court 1357.30

Sales Tax Act

High Court/

Sales Tax Commissioner (Appeals) 95.46

(xi) The Companys accumulated Losses at the end of the year are higher than 50 % of its net worth however it has not incurred cash losses during the year covered by our audit but has incurred cash losses during the immediately preceding financial period. Further reference is invited to note no. 19 of part B in schedule of notes to the accounts.

(xii) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues to the financial institutions or banks as following

Amount of Default Nature of Dues Year (As per Companys Books of Accounts)

Term Loan

2002-2003 75,957,230

Allahabad Bank and I.C.I.C.I. Bank, Onwards

Working Capital Loan

Allahabad Bank, State Bank of Hyderabad,

Federal Bank and Abu Dhabi Commercial Bank " " 343,944,917

Other Unsecured Loan

Abu Dhabi Comm- Bank, The Greater. Co-

operative Bank Limited and MP. State

Industrial. Development. Corporation. Ltd. " " 325,924,920

Further reference is invited to Note No. 2 & Note No.3 regarding default in payment of dues and interest and Note No. 5 regarding dispute of repayment to Global Trust Bank now merged and known as the Oriental Bank of Commerce.

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

(xiv) In our opinion, the Company is not a chit fund or a nidhi/mutul benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xvi) Based on our examination of the records and the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions.

(xvii) The company has not raised any new term loans during the year.

(xviii) The fund raised on short term basis during the year have not been used on long term investment and vice versa

(xix) The Company has not made any preferential allotment of shares during the year.

(xx) The Company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

(xxi) The company has not made any public issue of any securities during the year and therefore the question of disclosing the end-use of money does not arise.

(xxii) Based upon the audit procedure performed and the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For R.S.SHAH & ASSOCIATES

Chartered Accountants

(R.S.SHAH)

PARTNER

Place: Mumbai

Membership No. 30108

Dated: August 17, 2010

---

Mar 31, 2009

We have audited the attached Balance Sheet of SIL BUSINESS ENTERPRISES LIMITED as at March 31, 2009 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the period ended on that date, annexed thereto and the cash flow statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well .as evaluating the overall financial statements 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 Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraph 4 & 5 of the said order.

2. Further to our comments in the annexure referred to in paragraph (1) above we state that:

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

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

d) in our opinion, the Balance Sheet,. Profit and Loss Account and cash flow statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except Accounting Standard - 28 regarding provision for impairment of assets.

e) in view of default in repayment of fixed deposit to the public by the company and as per the explanation given to us, all the directors, who were in the office as on 31st March 2009 are disqualified from being appointed / reappointed as director in other public company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) Attention is invited to the following notes forming part of notes to the accounts :

i) Note 1.2

Regarding non-provision and non-ascertainment of interest on Overdue Fixed Deposits.

ii) Note 2

Regarding Non-availability of bank statements and confinnation of current accounts - amounting to Rs. 16.98 lacs, Margin money of Rs.8.74 lacs and funded and non-funded facilities outstanding as on 31st March 2009 from bank and institution and non-provision / short provision of interest till date on such loan, amount unascertained. *

iii) Note 4

Regarding liability of Rs.24.63 crores to Global Trust Bank Limited, which is now merged and known as Oriental Bank of Commerce (OBC) in respect of unsecured Debentures after adjusting a credit of Rs.5.65 crores towards the amount received by them for which no details were provided by the Bank to the Company. No effect has been given in the accounts for the same. Further no provision has been made in the accounts for interest thereon from the date of suit due to the said bank in respect of the aforesaid Debentures, amount unascertained. We are not expressing our opinion of its consequential impact on Companys Account, as the matter is subjudice.

iv) Note No.6

Regarding non - provision of balance amount of KNL of Rs. 0.55 crores.

v) Note No. 7(a)

Regarding non-provision of disputed income tax liability of Rs.25.18 Crores and interest / Penalty thereon of various years.

vi) Note No.7 (b)

Regarding non-provision of disputed sales tax liability of Rs.95.46 Lacs.

vii) Note No. 8 (a)

Regarding delay/non-provision in payment of overdue fixed deposits and non- compliance of instructions issued by company law board u/s 58A (9) of the Companies Act, 1956

viii) Note No 8 (b)

Regarding settlement of fixed deposit liability without approval of company law board and writing back of interest provision and crediting short payment of fixed deposit to capital reserve on settlement.

ix) Note No. 10 (a) & (b)

Regarding expenses debited to various heads of accounts amounting to Rs. 54.38 lacs and short amount received of Rs.5.37 lacs on closure of a bank account for which requisite evidence are not available.

x) Note No. 12

Regarding non-. availability of confirmation from debtors, creditors and loans & advances.

xi) Note No. 14

Regarding non-appointment of Managing Director and payment of Director and Committees fees amounting to Rs. 25.60 lacs in addition to reimbursement of expenses ofRs. 17.94 Lacs for maintaining non executive chairman office & other expenses..

xii) Note No. 17

Regarding non-provision of diminution in value of the investment.

We are unable to express our opinion in respect of the impact of our observations stated in Para (f) above on the loss for the year and its assets and consequential impact on the reserves of the Company.

g) Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the 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 Balance Sheet,, of the state of affairs of the Company as at March, 2009 and

ii) in the case of Profit and Loss Account, of the loss of the Company for the period ended on that date.

iii) in the case of cash flow statement, of the cash flows for the period ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS REPORT TO THE MEMBERS OF SIL BUSINESS ENTERPRISES LTD ON THE ACCOUNTS FOR THE PERIOD ENDED 31ST MARCH 2007.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 1 of our Report of even date)

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

(b) A substantial portion of the fixed assets has been physically verified by the management during the year and in our opinion the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us, there is no major disposal of assets during the year so as to affect the going concern status of the Company. However reference is invited to note no. 3 of part B in schedule of notes to the accounts.

(ii) The Company does not have any inventory during the period, hence the procedure of maintenance and verification of the same is not applicable.

(iii) The Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub-clause (b), (c) and (d) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods.- During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, the company has not entered into any transactions during the year with parties entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion according to information and explanation given to us, the Company has not accepted any Fixed Deposit during the year as covered by under Section 58A and 58AA of the Companies Act, 1956. However, the Company had defaulted in payment of matured deposit of Rs 13.23 Crores and interest thereon upto date of maturity.

Some of Fixed Deposit holders had taken legal actions and obtained order from the Company law board in the matter. However, the Company could not fully comply with the said order. Further as informed to us, certain Fixed Deposit holders had approached the Company expressing their willingness to accept partial payment as referred in Note 9 (b) of part B in schedule of notes to the accounts. As legally advised to the company, such settlement does not contravene the provision of . section 58A and 58AA of the Companies Act, 1956.

(vii) The Company does not have a formal internal audit system.

(viii) We have broadly reviewed the books of account and other records maintained by the Company in respect of resin where, pursuant to the rule made by the Central Government, the maintenance of cost records have been prescribed under Section 209(1 )(d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained, We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete. .

(ix) Accordingto the records of the Company, the company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and

explanations given to us, no undisputed amount payable in respect of above were in arrears, as at March 31, 2009 for a year of more than six month from the date on which they become payable.

(x) According to information and explanation given to us, there are no dues of sales tax, income tax, custom tax, wealth tax, excise duty / cess which have not been deposited on account of any dispute except as stated herein below: Rs. In Lacs

Name of Statute/ Form where dispute is pending Amount Of Nature of Dues Dues

Income Tax Act Income Tax Tribunal (s) 1153.39 Commissioner (Appeal) 7.74 Bombay High Court 1357.30

Sales Tax Act High Court/ Sales Tax Commissioner (Appeals) 95.46

(xi) The Companys accumulated Losses at the end of the year are higher than 50 % of its net worth and it has incurred cash losses during the year covered by our audit and also incurred cash losses during the immediately preceding financial year. Further reference is invited to note no. 19 of part B in schedule of notes to the accounts.

(xii) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues to the financial institutions or banks as following

Amount of Default Nature of Dues Year (As per Companys Books of Accounts)

Term Loan

Allahabad Bank (Now taken by JMF Asset 2002-2003 Reconstruction Ltd.) and I.C.I.C.I. Bank (Now 72,261,020 taken by Kotak Mahindra Bank Ltd.) Onwards

Working Capital Loan Allahabad Bank (Now taken by JMF Asset Reconstruction Ltd.), State Bank of Hyderabad, Federal Bank and Abu Dhabi Commercial Bank " " 343,944,917

Other Unsecured Loan

Abu Dhabi Comm. Bank and M.P. State Industrial. Development. Corporation. Ltd. " " 305,000,000

Further reference is invited to Note No 2 regarding default in payment of dues and interest and Note No. 4 regarding dispute of repayment to Global Trust Bank now merged and known as the Oriental Bank of Commerce.

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

(xiv) In our opinion, the Company is not a chit fund or a nidhi/mutul benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xvi) Based on our examination of the records and the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions.

(xvii) The company has not raised any new term loans during the year.

(xviii) The fund raised on short term basis during the year have not been used on long-term investment and vice versa

(xix) The Company has not made any preferential allotment of shares during the year.

(xx) The Company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

(xxi) The company has not made any public issue of any securities during the year and therefore the question of disclosing the end-use of money does not arise.

(xxii) Based upon the audit procedure performed and the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

FOR R.S.SHAH & ASSOCIATES Chartered Accountants (R.S.Shah) Partner Membership No. 30108