Auditor Report of Ballarpur Industries Ltd.

Mar 31, 2018

INDEPENDENT AUDITORS'' REPORT

TO THE MEMBERS OF BALLARPUR INDUSTRIES LIMITED Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Ballarpur Industries Limited (the "Company"), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Ind AS Financial Statements

The Board of Directors of the Company is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the "Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standard) Rules, 2015, as amended, and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

In conducting our Audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

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

Basis for Qualified Opinion

We draw reference to Note 40 accompanying the standalone Ind AS financial statements, wherein the company has not accrued the liability towards outstanding Put Options which forms the basis for our qualified opinion. The management is unable to quantity the liability with respect to the outstanding Put Options. Accordingly, we are unable to quantify the impact.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except to the effects / possible effects of matter described in basis for qualified opinion paragraph, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with Ind AS and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2018, and its loss, total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Emphasis of matter

We draw attention to Note 41 accompanying the standalone financial statements which contains conditions along with other matters that indicate the existence of a material uncertainty that may cast a significant doubt on the Company''s ability to continue as a going concern. The management is confident that the Company will be able to continue as a going concern.

Our opinion is not modified in respect of the above matter.

Other matters

The standalone Ind AS financial statements for the previous year ended 31 March 2017 was audited by the predecessor auditor who, vide their report dated 23 May 2017, expressed a modified opinion on the same.

We have audited the adjustments as described in note 38 accompanying the standalone financial statements to restate the standalone balance sheet as at 01 April 2016 and the standalone statement of profit and loss for the year ended 31 March 2017. In our opinion, the said adjustments are appropriate and have been properly applied. We further state that we were not engaged to audit or apply any procedures to the standalone financial statements of the Company for the year ended 31 March 2017 and the periods prior to that date other than with respect to the aforesaid adjustments and accordingly we do not express an opinion or any other form of assurance on the aforesaid standalone financial statements.

Our report is not modified in respect of the above matters

Report on Other Legal and Regulatory Requirements

1) As required by Section 143 (3) of the Act, we report to the extent applicable that:

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

(b) in our opinion, expect for the effects of matter described in the Basis for Qualified Opinion paragraph above, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) in our opinion, proper returns adequate for the purposes of our audit have been received from Unit Kamalapuram which has not been visited by us;

(d) the Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this report are in agreement with the relevant books of account and returns;

(e) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standard) Rules, 2015, as amended;

(f) in our opinion, the matter described in the Basis for Qualified Opinion paragraph above may have an adverse effect on the functioning of the Company.

(g) on the basis of the written representations received from the Directors of the Company as on 31 March 2018 taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 2018 from being appointed as a Director in terms of Section 164

(2) of the Act;

(h) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure ''A''; and

(i) with respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

(i) the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statement - Refer Note 43 to the standalone Ind AS financial statements;

(ii) the Company did not have any long-term contracts including derivative contracts, for which there were any material foreseeable losses;

(iii) there has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company;

(iv) The reporting on disclosures related to Specified Bank Notes is not applicable to the Company for the year ended 31 March 2018

2) As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of section 143 (11) of the Act, we give in the Annexure ''B'', a statement on the matters specified in paragraphs 3 and 4 of the Order.

Report on the Internal Financial Controls Over Financial Reporting under Clause

(i) of Sub-section 3 of Section 143 of the Companies Act, 2013

We have audited the internal financial controls over financial reporting of Ballarpur Industries Limited ("the Company") as at 31 March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company as of and for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting ("the Guidance Note") issued by the Institute of Chartered Accountants of India ("ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 ("the Act").

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A Company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

(b) As informed to us, certain property, plant and equipment have been physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us and the records examined by us and based on the examination of the scanned copies of the title deeds of all the immovable properties deposited with the bankers, we report that the title deeds of all the immovable properties that have been pledged as security against borrowings and other facilities availed by the Company, are held in the name of the Company.

In respect of immovable property of land that have been taken on lease by the Company, we report that the lease agreements are in the name of the Company, except for land as detailed below, for which the Company is yet to register the title deeds.

(ii) As explained to us, inventories have been physically verified by the Management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable considering the operational status of the manufacturing units of the Company. As explained to us, the discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, reporting under paragraph 3 (iii) of the Order does not arise.

(iv) In our opinion and according to the information and explanations given to us, the Company has not advanced any loan, made any investment, given any guarantee or provided any security to which the provisions of Section 185 and 186 of the Companies Act, 2013 are applicable. Accordingly, reporting under paragraph 3 (iv) of the Order does not arise.

(v) According to the information and explanations given to us, the Company has not accepted any deposits during the year and does not have any unclaimed deposits as at 31 March 2018. Accordingly, reporting under paragraph 3 (v) of the Order does not arise.

(vi) The Central Government has specified maintenance of cost records under section 148(1) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended) for the operations of the Company. We have broadly reviewed the cost records maintained by the Company in respect of manufacture of paper, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii)(a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, except for dues in respect of service tax, the Company is not generally regular in depositing undisputed statutory dues of provident fund, employees'' state insurance, income-tax, sales tax, duty of excise, value added tax, goods and service tax, cess, professional tax and welfare fund during the year with appropriate authorities and there have been serious delays in a large number of cases. According to the information and explanations given to us, statutory dues outstanding as at 31 March 2018 for a period of more than six months from the date they became payable is given below:

Type of asset	Total no. of instances	Cost as at 31 March 2018 ('' in lakhs)	Book value as at 31 March 2018 ('' in lakhs)
Leasehold Land (Refer Note 5(b) to the standalone financial statements)	1	8.90	7.13

Nature of disputed dues	Period to which the amount relates	Amount in '' Lakhs
Provident fund	May 2017 to August 2017	767
Income-tax deducted at source	March 2017 to August 2017	216
Professional tax	June 2016 to August 2017	17
Grama panchayath tax	2016-17	21
Pension fund	June 2017 to August 2017	1

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of income tax, sales tax, duty of customs, duty of excise, value added tax as at 31 March 2018 which have not been deposited on account of a dispute pending are given in Appendix 1 to this report.

According to the information and explanations given to us and the records of the Company examined by us, there are no dues of service tax as at 31 March 2018 which have not been deposited with the statutory authorities on account of a dispute.

(viii) In our opinion and 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 loans or borrowing to banks, financial institutions and debenture-holders, for which the lender-wise details are as follows. The Company did not have any loans or borrowing from government.

Lender	Repayment of Principal		Payment of interest
	Period of default (Days)	Amount of default ('' Lakhs)	Period of default (days)	Amount of default ('' Lakhs)
EXIM Bank	60 - 152 days	1,109	1 - 243 days	620
State Bank of India	9 - 555 days	875	1 - 455 days	959
IDBI	1 - 366 days	875	1 - 424 days	1,496
ICICI	9 - 190 days	4,125	1 - 212 days	3,130
Phoenix Arc Pvt Ltd	-	-	1 - 243 days	673
Life Insurance Corporation of India	-	-	62 - 427 days	1,810
		6,984		8,688

(ix) In our opinion and according to the information and explanations given to us, the Company has neither taken any term loans during the year nor has raised any money by way of initial public offer or further public offer (including debt instruments). Accordingly reporting under paragraph 3 (ix) of the Order does not arise.

(x) To the best of our knowledge and according to the information and explanations given to us, no material fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not paid or provided for, managerial remuneration during the year. Accordingly reporting under paragraph 3 (xi) of the Order does not arise.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, reporting under paragraph 3 (xii) of the Order does not arise.

(xiii)In our opinion and according to the information and explanations given to us and the records of the Company examined by us, all transactions with the related parties are in compliance with section 177 of Companies Act, 2013 where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Indian Accounting Standards.

We are informed by the Management that the transactions entered into by the Company with the related parties are in its ordinary course of business and are on arm''s length basis. Accordingly, reporting on compliance of section 188 of Companies Act, 2013 does not arise.

(xiv)According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, reporting under paragraph 3 (xiv) of the Order does not arise.

(xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them during the year. Accordingly, reporting under paragraph 3 (xv) of the Order does not arise.

(xvi)The Company is not engaged in the business of non-banking financial institution and is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, reporting under paragraph 3 (xvi) of the Order does not arise.

Appendix 1 to Annexure B: The particulars of income tax, sales tax, duty of customs, duty of excise, value added tax as at 31 March 2018 which have not been deposited with statutory authorities on account of a dispute

Name of the statute	Period to which the amount relates	Forum where disputes are pending	Amount involved ('' In Lakhs)	Amount disputed and not paid ('' In Lakhs)
Central Excise Act, 1944	April and May 2011, April - Dec 2009, 2005-2009	CESTAT, Chandigarh	130	130
Central Excise Act, 1944	2013-2014	Commissioner (Appeals)	6	6
Central Excise Act, 1944	2015-2016	CESTAT, Chandigarh	55	51
Central Excise Act, 1944	2012-2013	CESTAT, Hyderabad	724	724
Central Excise Tariff Act, 1985	1996-1997	Assistant Commissioner, Yamuna nagar	17	17
Central Excise Tariff Act, 1985	1996-1997	Joint Commissioner, Panchkula	11	11
Central Excise Tariff Act, 1985	2005-2010	CESTAT, Chandigarh	70	63
Central Sales Tax Act, 1956	2001-2002	Appellate Deputy Commissioner, Secundarabad	29	15
Central Sales Tax Act, 1956 (*)	2017-2018	DCCT, Saharanpur	2	2
Central Sales Tax Act, 1956 (*)	2017-2018	DCCT, Saharanpur	18	18
Central Sales Tax Act, 1956 (*)	2017-2018	DCCT, Saharanpur	3	3
Central Sales Tax Act, 1956 (*)	2017-2018	DCCT, Kerala Commercial Taxes Department	3	3
Customs Act, 1962	2012-2013	Commissioner Customs (Appeals), Kandla	38	31
Customs Act, 1962	2012-2013	Commissioner Customs (Appeals), Jam Nagar	33	30
Electricity Act, 2003	2016-2017	Supreme Court of India	386	386
Haryana VAT Act 2003	2015-2016	Joint Excise & Taxation Commissioner Appeals, Ambala	1	1
Income-tax Act, 1961	AY 2008-09	Supreme Court of India	3,955	3,955
Punjab General Sales Tax 1948	1989-1990 to 1994-1995	Punjab Sale Tax Tribunal, Chandigarh	64	-
UP Trade Tax Act, 1948	1997-1998	Trade Tax Tribunal, Saharanpur	1	1
UP Trade Tax Act, 1948	2002-2003	Trade Tax Tribunal, Saharanpur	1	1
UP Trade Tax Act, 1948	1994-1995	High Court, Uttaranchal	12	12
UP VAT Act 2008	2016-2017	Deputy Commissioner Assessment, Saharanpur	35	35

Note 1: The above amounts do not include penalty and interest.

(*): With respect to the dues stated above, the Company is in the process of filing appeal with Deputy Commissioner Commercial Tax.

for SHARP & TANNAN

Chartered Accountants

(Firm''s Registration No. 003792S)

V. Viswanathan

Partner

Membership No. 215565

Place: New Delhi

Date : 22 May 2018

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Mar 31, 2017

INDEPENDENT AUDITORS''

REPORT

TO THE MEMBERS OF BALLARPUR INDUSTRIES LIMITED

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Ballarpur Industries Limited (''the Company''), which comprise the balance sheet as at 31st March 2017, the statement of profit and loss (including other comprehensive income), cash flow statement and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as "standalone Ind AS financial statements") in which are incorporated the audited financial statements for the year ended on that date of the Unit of the Company audited by other auditor.

Management''s Responsibility for the Standalone Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

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

Basis for Qualified Opinion

We draw attention to Note 44 of the standalone Ind AS financial statements regarding the liability for the put option on the Company pertaining to subsidiaries to be provided on the settlement.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone Ind AS 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 including the Ind AS, of the financial position of the Company as at 31^st March 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to Note 45 of the standalone Ind AS financial statements regarding invocation of Strategic Debt Restructuring by the Lenders due to nonfulfillment of debt obligations. On the basis of projected business plan as agreed with the lenders, these financial statements have been prepared on a going concern basis. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that may be necessary if the Company is unable to continue as going concern.

Our opinion is not modified/qualified in respect of this matter.

Other Matter

We did not audit the Ind AS financial statements of Kamlapuram Unit of the Company included in the standalone Ind AS financial statements of the Company whose Ind AS financial statements reflect total assets of '' 31,043.98 lacs as at 31^st March 2017 and total revenues of '' 118.38 lacs for the year ended on that date, as considered in the standalone Ind AS financial statements. The Ind AS financial statements of this Unit has been audited by the Unit Auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this Unit is solely on the report of such Unit Auditor.

Our opinion is not modified/qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.

2. As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and report of the Unit auditor;

c) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the reports on the accounts of the Unit Kamlapuram of the Company audited under Section 143 (8) of the Act by such Unit Auditor have been sent to us and have been properly dealt with by us in preparing this report;

d) The balance sheet, the statement of profit and loss (including other comprehensive income) , cash flow statement and the statement of changes in equity dealt with by this Report are in agreement with the books of account and report of the unit auditor;

e) In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with relevant rule issued thereunder;

f) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

g) On the basis of the written representations received from the directors as on 31st March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March 2017 from being appointed as a director in terms of Section 164 (2) of the Act;

h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B"; and

i) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 40 to the standalone Ind AS financial statements;

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 22 & 27 to the standalone Ind AS financial statements;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv. the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note 43 to the standalone Ind AS financial statements.

The Annexure referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirement" section of our Independent Auditors'' Report to the members of the Company on the Ind AS Financial Statements for the year ended 31^st March 2017, we report that:

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

b) The fixed assets were physically verified during the year by the Management.

No material discrepancies were noticed on such physical verification.

c) On examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except in Unit Kamlapuram, land value at Rs. 44 lacs acquired under agreements and under possession of the Unit are yet to be registered in the name of the Unit.

2. The inventory, except goods-in-transit, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. The Company has not granted any loan, secured or unsecured, to Companies, firms or other parties covered in the registers maintained in pursuance of Section 189 of the Act. Accordingly, paragraph 3(iii) of the Order is not applicable to the Company.

4. According to the information and explanation given to us, the Company has not granted any loans or made investment or provided any security/ guarantee as covered by provisions of Sections 185 and 186 of the Act. Accordingly, Paragraph 3(iv) of the Order is not applicable to the Company.

5. According to the information and explanation given to us and the examined by us, the Company has not accepted any deposits from the public during the year. Accordingly, Paragraph 3(v) of the Order is not applicable to the Company.

6. We have broadly reviewed the books of account and records maintained by the Company relating to the products of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Subsection (1) of Section 148 of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

7. a) According to the information and explanation given to us, undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities though there has been a slight delay in few cases.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income-Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and other statutory dues as applicable to it were outstanding, as at 31st March 2017 for a period of more than six months from the date they became payable except as given below:-

NAME OF THE STATUTE	Amount in Lacs	Period	Actual date of payment
Provident Fund	138.10	May-16 to Aug- 16	Not Paid
Professional Tax	3.63	June-16 to Aug-16	Not Paid
Provident Fund	15.87	April-2016	Not Paid
Sale Tax	.32	June-2016	Not Paid
Excise Duty & Service Tax	5.43	Apr-16 to Sep-16	Not Paid
TDS	102.48	July-16 to Sep-16	Not Paid
Professional Tax	.07	Sep-16	Not Paid
Total	265.90

b) According to the information and explanations given to us, there are no dues of Income-Tax, Sales tax, Value added tax, Service Tax, Duty of Customs, Duty of Excise, Cess which have not been deposited with the appropriate authorities on account of disputes other than those mentioned in "Annexure A (1)" to this report.

8. According to the information and explanations give to us and based on our examination of the records of the Company, the company has not defaulted in repayments of loans or borrowing to a financial institutions, bank, government or dues to debenture holders except as given below:

9. The Company has not raised money by way of initial public offer or further public offer (including debt instruments). However the moneys raised by way of term loan which were applied for the purpose for which those were obtained.

Sr. No.	Bank/ Financial Institution	Amount of default as at the balance sheet date( In Lacs)	Due date of Repayment	Payment Status
1.	Exim Bank	714.28	31-Oct-2016	Not paid
2.	Exim Bank	714.28	31-Jan-2017	Not Paid
3.	State Bank of Travancore	125.00	23-Sep- 2016	Not Paid
4.	State Bank of Travancore	125.00	23-Dec- 2016	Not Paid
5.	State Bank of Travancore	125.00	23-Mar- 2017	Not Paid
6.	The South Indian Bank	500.00	26-Mar-2017	Not Paid
7.	IDBI Bank	125.00	31-Mar-2017	Not Paid
	Total	2,428.56

10. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

11. According to the information and explanations given to us, no managerial remuneration has been paid or provided under the provisions of Section 197 read with Schedule V to the Act. Accordingly, paragraph 3(xi) of the Order is not applicable to the Company.

12. As the Company is not a Nidhi Company, accordingly clause (xii) of paragraph

3 of the order is not applicable to the Company.

13. According to the information and explanation given to us, all transactions with related parties are in compliance with section 177 and 188 of the Act, wherever applicable and the details have been disclosed in the Ind AS Standalone Financial Statements as required by the applicable accounting standards.

14. According to the information and explanation given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debenture during the year.

15. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, clause (xv) of the paragraph 3 of the Order is not applicable.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

Name of Statute	Nature of dues	Amount (Rs, in Lakhs)	Period to which the amount relates	Forum where the dispute is pending
Central Excise Tariff Act 1985	Excise	21.6	1996-97; 2010-11;	Asst. Commissioner, Yamuna Nagar
Central Excise Tariff Act 1985	Excise	11.32	1996-97	Joint Commissioner, Panchkula
Central Excise Tariff Act 1985	Excise	38.48	2009-10; 2015-16	Commissioner Panchkula
Central Excise Tariff Act 1985	Excise	694.29	2003-04 to 2010-11	CESTAT, Delhi & Chandigarh
Central Excise Tariff Act 1985	Excise	232.67	2004-05 to 2009-10	Commissioner (Appeals), Delhi
Customs Act,1962	Custom	36.47	2012-13	The Commissioner Custom (Apeals), Kandla
Customs Act,1962	Custom	32.83	2012-13	Commissioner Custom (Apeals), Jam Nagar
Punjab General Sales Tax Act, 1948	Sales Tax	582.68	1989 to 1995	Punjab VAT Tribunal, Chandigarh
UP Trade Tax, 1948	Sales Tax	0.98	1997-98	Trade Tax Tribunal, Saharanpur
UP Trade Tax, 1948	Sales Tax	0.66	2002-03	Trade Tax Tribunal, Saharanpur
UP Tax on Entry of Goods Act, 2000	Entry Tax	1.92	2001-02	Trade Tax Tribunal, Saharanpur
UP VAT Act, 2008	Sales Tax	1.22	2008-09	Joint Commisioner Appeals-Saharanpur
UP VAT Act, 2008	Sales Tax	1.47	2008-09	Trade Tax Tribunal, Saharanpur
UP Trade Tax, 1948	Sales Tax	11.74	1994-95	Nainital High Court
Central Sales Tax Act,1956	Sales Tax	0.53	2008-09	Dy. Commissioner (Appeals), Patiala
Central Sales Tax Act,1956	Sales Tax	0.88	2011-12	Jt. Commissioner (Appeals), Ambala
Haryana VAT Act, 2003	Sales Tax	2.76	2015-16	Jt. Excise & Taxation Commissioner Appeals-Ambala
UP VAT Act, 2008	Sales Tax	5.99	2014-15	Addl. Commissioner (Appeal)-Saharanpur
UP VAT Act, 2008	Sales Tax	1.12	2010-11	Addl. Commissioner (Appeal)-Saharanpur
UP VAT Act, 2008	Sales Tax	35.1	2016-17	Dy. Commissioner Assessment-Saharanpur
UP VAT Act, 2008	Sales Tax	0.74	2009-10	Addl. Commissioner Gr-2,Saharapur
Kerala Vat Act,2005	Sales Tax	6.8	2011-12	Commissioner (Appeals), Kerala
Central Sales Tax, 1956	Sales Tax	14.7	2001-2002	Applellate Deputy Commissioner (CT), Secunderabad
Central Excise Act, 1944	Excise duty and Penalty	723.68	2012-2013	Customs, Excise and Service tax Applellate Tribunal Hyderabad
Income Tax Act, 1961	Income Tax	3,981.36	1981-82 to 1990-91, 1997-98, 1999-2000, 2000-01, 2002-03, 2003-04, 2004-05, 2006-07 to 2010-11	Pending before high court
Income Tax Act, 1961	Income Tax	1,785.38	1994-95, 2005-06, 2009-10	Pending before tribunal
Income Tax Act, 1961	Income Tax	3,954.81	2008-09	Pending before Supreme Court
Total		12,182.18

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Ballarpur Industries Limited ("the Company") as of 31^st March 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company''s assets that could have a material effect on the Ind AS financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31^st March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

ASHWIN MANKESHWAR

Partner

Membership No. 046219 For and on behalf of

K. K. Mankeshwar & Co.,

Chartered Accountants

FRN: 106009W

New Delhi,

dated the 23^rd May, 2017

---

Mar 31, 2015

We have audited the accompanying standalone financial statements of M/s Ballarpur Industries Limited ("the Company"), which comprise the Balance Sheet as at 31 March, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the nine months period then ended, and a summary of significant accounting policies and other explanatory information in which are incorporated the audited financial statements for the nine months period ended on that date of the Unit of the Company audited by other auditors.

MANAGEMENT''S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

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

AUDITOR''S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

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

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

BASIS FOR QUALIFIED OPINION

As reported by auditor of Kamalapuram unit, the ability of the unit to continue as a going concern is dependent on the success of obtaining benefits from the State Government of Telangana as referred in Note No. B-36. However, the financial statements have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that may be necessary if the Unit is unable to continue as a going concern.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone 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, of the state of affairs of the Company as at 31 March, 2015, and its profit and its cash flows for the nine months period ended on that date.

other matter

We did not audit the financial statements of Kamalapuram Unit of the Company included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs. 64,737 lacs as at 31 March, 2015 and total revenues of Rs. 267 lacs for the nine months period ended on that date, as considered in the standalone financial statements. The financial statements of this Unit has been audited by the unit auditor whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this Unit, is based solely on the report of such Unit Auditor.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1 As required by the Companies (Auditor''s Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub- section 11 of Section 143 of the Act, we give in the Annexure—A a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2 As required by section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, 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 and report on the financial statements audited by Unit''s Auditor, have been properly dealt with by us while preparing our report;

c) The Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the audited report from the Unit;

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31 March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on

31 March, 2015 from being appointed as a director in terms of Section 164(2) of the Act.

g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements —Refer Note B-27 to the financial statements; ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long- term contracts including derivative contracts—Refer Note B-6 and B-10 to the financial statements; iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE ‘A'' TO INDEPENDENT AUDITORS'' REPORT

The Annexure referred to in our Independent Auditors'' Report to the members of the Company on the standalone financial statements for the nine months period ended 31 March, 2015, we report that: 1a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b) The fixed assets were physically verified during the nine months period by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification. 2a) The inventory were physically verified during the nine months period by the Management at reasonable intervals. Materials lying with third parties, have substantially been physically verified or confirmed by the third parties. In our opinion, the frequency of verification is reasonable.

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

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

3 The Company has not granted any loan, secured or unsecured, to Companies, firms or other parties covered in the registers maintained in pursuance of Section 189 of the Act. Accordingly, paragraph 3(iii) of the Order is not applicable to the Company.

4 There are adequate internal control systems 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, except having regard to the explanation that certain items purchased / services availed are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations. During the course of our audit, no major weakness has been noticed in the internal control system.

5 The Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Act and the rules framed there under, where applicable with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Law Tribunal or Reserve Bank of India or any court or any other tribunal on the Company. 6 We have broadly reviewed the books of account and records maintained by the Company relating to the products of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Sub-section (1) of Section 148 of the Companies Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. 7a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities as applicable to it.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues as applicable to it were outstanding, as at 31 March 2015 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Income tax, Wealth tax, Sales tax, Value added tax, Service tax, Customs duty, Excise duty and Cess which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned in Annexure B to this report.

c) According to the information and explanations given to us and the records of the Company, the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act and rules there under has been transferred to such fund within time.

8 The Company does not have any accumulated losses as on 31 March, 2015 and it has not incurred any cash losses in the nine months period ended on that date or in the immediately preceding financial year.

9 The Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

10 In our opinion and according to the information and explanations given to us, the terms and conditions of guarantee given by the Company for loans taken by others from banks or financial institution are not prima facie prejudicial to the interests of the Company.

11 On an overall basis, the term loans taken and / or utilized during the nine months period have been applied for the purpose for which they were obtained, other than temporary deployment of such funds.

12 In accordance with the generally accepted auditing practices in India, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the nine months period, nor have we been informed of such case by the Management.

NAME OF STATUTE NATURE OF AMOUNTS PAYMENT (IN LAKHS)

Central Excise tariff act 1985 Excise 24.33

Central Excise tariff act 1985 Excise 11.32

Central Excise tariff act 1985 Excise 19.54

Central Excise tariff act 1985 Excise 262.32

Customs act, 1962 Custom 40.28

Customs act, 1962 Custom 33.08

Central Excise tariff act 1985 Excise 694.29

punjab General sales tax act, 1948 sales tax 511.31

Up trade tax, 1948 sales tax 0.98

Up trade tax, 1948 sales tax 0.66

Up tax on Entry of Goods act, 2000 Entry tax 1.92

Up Vat act, 2008 sales tax 1.47

Up Vat act, 2008 sales tax 1.22

Up trade tax, 1948 sales tax 11.74

Central sales tax act, 1956 sales tax 0.53

Central sales tax act, 1956 sales tax 0.88

Central sales tax act, 1956 sale tax 14.70

Excise duty Central Excise Laws 723.68 and penalty

Income tax act, 1961 Income tax 3,001.11

Income tax act, 1961 Income tax 6,661.26

Total 12,016.62

NAME OF STATUTE PERIOD TO WHICH THE FORUM WHERE THE DISPUTE IS AMOUNT RELATES PENDING

Central Excise Tarriff Act 1985 1996–97; 2010-11; 2013–14 asst. Commissioner, yamuna Nagar

Central Excise Tariff Act 1985 1996–97 Joint Commissioner, panchkula

Central Excise Tariff Act 1985 2009–10 Commissioner, panchkula

Central Excise Tariff Act 1985 2004–05 to 2009–10 Commissioner (appeals)

Customs Act 1962 The Commissioner Custom (apeals), 2012–13 Kandla

Customs Act, 1962 Commissioner Custom (apeals), Jam 2012–13 Nagar

Central Excise Tariff Act 1985 2003-04 to 2010–11 CESTAT, New Delhi

Punjab General Sales Tax Act 1948 1989 to 1995 punjab Vat tribunal, Chandigarh

UP Trade Tax 1948 1997–98 Trade tax tribunal, saharanpur

UP Trade Tax 1948 2002–03 Trade tax tribunal, saharanpur

UP Tax on Entry of Goods Act 2000 2001–02 Trade tax tribunal, saharanpur

UP VAT Act 2008 2008–09 Trade tax tribunal, saharanpur

UP VAT Act 2008 2008–09 Joint Commisioner appeals-saharanpur

UP Trade Tax 1948 1994–95 Nainital high Court

Central Sales Tax Act 1956 2008–09 Dy. Commissioner (appeals), patiala

Central Sales Tax Act 1956 2011–12 Jt. Commissioner (appeals), ambala

Central Sales Tax Act 1956 sales tax appellate tribunal, hyderabad 2001–02 Division

Central Excise Laws Customs, Excise and services tax 2012–13 appellate tribunal, bangalore

Income Tax Act 1961 1981–82 to 1990–91, 1997–98, 1999–2000, 2000–01, 2002–03, pending before high Court 2003–04, 2004–05

Income Tax ACT 1961 1994–95, 2005–06, 2006–07, 2007–08, 2008–09, 2009–10, pending before the tribunal 2010–11





ABHAY UPADHYE

Partner

Membership No. 049354



For and on behalf of

K. K. MANKESHWAR & CO.,

Chartered Accountants

FRN-106009W



Date 26 May, 2015

Place New Delhi

---

Jun 30, 2014

We have audited the accompanying financial statements of M/s. Ballarpur Industries Limited ("the Company"), which comprise the Balance Sheet as at 30 June 2014, 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 in which are incorporated the audited financial Statements of the Unit of the Company, audited by other auditors.

MAAAGEMENT''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") read with the General Circular 15/2013 dated 13 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit 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 30 June 2014;

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

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

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'' a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and the reports on the financial statements audited by Unit''s Auditor, have been properly dealt with by us while preparing our report;

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 sub-section (3C) of Section 211 of the Companies Act, 1956; and

e) On the basis of written representations received from the directors as on 30 June, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on June 30 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 "a" to independent auditors'' report

The Annexure ''A'' referred to in our report to the members of Ballarpur Industries Limited (''the Company'') for the year ended 30 June 2014.

In terms of the information and explanations given to us and books and records examined by us in the normal course of audit and to the best of our information and belief, we state that:

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

b) The fixed assets were physically verified during the year by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) We are of the opinion that the fixed assets disposed off during the year do not constitute a substantial part of the fixed assets of the Company and such disposal has not affected the going concern.

2a) The inventory were physically verified during the year by the Management at reasonable intervals. Materials lying with third parties, have substantially been physically verified or confirmed by the third parties. In our opinion, the frequency of verification is reasonable.

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

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

3 The Company has not granted or taken any loan, secured or unsecured, to or from Companies, firms or other parties covered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) of the Order is not applicable to the Company.

4 There are adequate internal control systems 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, except having regard to the explanation that certain items purchased/services availed are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations. During the course of our audit, no major weakness has been noticed in the internal control system.

5 In respect of the transactions entered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956:

a) Transactions that needed to be entered into the register have been so entered.

b) 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 except certain transactions of purchase of goods/services availed and material of special nature for which alternative quotations are not available.

6 The Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board on the Company.

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

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

9a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues applicable to it.

b) No undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, custom duty and excise duty were outstanding, as on 30 June 2014 for a period of more than six months from the date they became payable.

c) The particulars of dues of sales tax, entry tax, excise duty, income tax, custom duty, water tax and cess as on 30 June 2014 which have not been deposited on account of disputes have been stated in Annexure B.

10 The Company has no accumulated losses as on 30 June 2014 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 The Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

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

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are, in our opinion, not applicable to the Company.

14 In our opinion, the Company is not a dealer in shares, securities, debentures and other investments.

15 In our opinion and according to the information and explanations given to us, the terms and conditions of guarantee given by the Company for loans taken by others from banks or financial institution are not prima facie prejudicial to the interests of the Company.

16 On an overall basis, the term loans taken and/or utilized during the year have been applied for the purpose for which they were obtained, other than temporary deployment of such funds.

17 On the basis of an overall examination of the balance sheet of the Company, there are no funds raised on a short- term basis which have been used for long-term investment other than temporary deployment of such funds.

18 The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act.

19 The Company has created security or charge in respect of secured debentures issued and outstanding at the year-end.

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

21 In accordance with the generally

accepted auditing practices in India, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

Annexure ''b'' to para 9 (c) of annexure ''a'' of our report of even date

NAME of THE STATUTE NATURE OF AMOUNT PERIODS To WHICH DISPUTED DUES (In LACS) THE AmoUnT RELATES

Central Excise Tariff Act 1985 Excise duty 118.89 2001-02 to 2010-11

Central Excise Tariff Act 1985 Excise duty 23.48 1996-97, 2001-02, 2002-03 & 2013-14

Central Excise Tariff Act 1985 Excise duty 164.77 2003-04 to 2010-11

Central Excise Tariff Act 1985 Excise duty 8.53 2007-08 to 2012-13

Central Excise Tariff Act 1985 Excise duty 90.73 2005-06 to 2008-09

Central Excise Tariff Act 1985 Excise duty 11.32 1996-97

Central Sales Tax Act, 1956 Sales Tax 0.53 2008-09

Punjab General Sales Tax Act, Sales Tax 558.64 1988-89 to 1948 1994-95

UP Tax on Entry of Goods Act, Entry Tax 1.92 2001-02 2000

UP Trade Tax, 1948 Sales Tax 13.89 1997-98 to 2000-01 & 2002-03

UP Trade Tax, 1948 Sales Tax 11.74 1994-95

UP VAT Act, 2008 Sales Tax 1.22 2008-09

UP VAT Act, 2008 Sales Tax 179.38 2007-08; 2008-09

Income Tax Act, 1961 Income Tax 3,001.11 1981-82 to 1990-91, 1997-98, 1999-2000, 2000-01, 2002-03, 2003-04, 2004-05

Income Tax Act, 1961 Income Tax 981.78 1994-95, 2005-06, 2006-07

Central Sales Tax Act, 1956 Sales Tax 14.70 2001-02

Total 5,182.63



NAME OF THE STATUTE FORUM WHERE THE DISPUTE IS PENDING

Central Excise Tariff Act 1985 Addl. Commissioner, Panchkula

Central Excise Tariff Act 1985 Asst. Commissioner, Yamuna Nagar

Central Excise Tariff Act 1985 CESTAT, New Delhi Tribunal

Central Excise Tariff Act 1985 Commissioner (Appeals), Gurgaon

Central Excise Tariff Act 1985 Commissioner, Panchkula Tribunal

Central Excise Tariff Act 1985 Joint Commissioner, Panchkula

Central Sales Tax Act, 1956 Dy.Commissioner (Appeals), Patiala

Punjab General Sales Tax Act, Punjab VAT Tribunal, Chandigarh Trade 1948

UP Tax on Entry of Goods Act, Tax Tribunal, Saharanpur 2000

UP Trade Tax, 1948 Trade Tax Tribunal, Saharanpur

UP Trade Tax, 1948 High Court, Nainital

UP VAT Act, 2008 Joint Commisioner (Appeals), Saharanpur

UP VAT Act, 2008 Trade Tax Tribunal, Saharanpur

Income Tax Act, 1961 Pending before High Court

Income Tax Act, 1961 Pending before the Tribunal

Central Sales Tax Act, 1956 Sales Tax Appellate Tribunal, Hyderabad Division

ABHAY UPADHYE Partner Membership No. 049354

For and on behalf of

K.K.MANKESHWAR & CO., Chartered Accountants FRN 106009W PLACE New Delhi DATE 27 August 2014

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Jun 30, 2013

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying Financial Statements of M/s Ballarpur Industries Limited ("the Company”), which comprise the Balance Sheet as at June 30, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information in which are incorporated the audited Financial Statements of the Unit of the Company, audited by other auditors.

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 audit opinion.

oPiNioN

oIn 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 June 30, 2013;

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

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

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'' a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and the reports on the Financial Statements audited by Unit''s Auditor, have been properly dealt with by us while preparing our report;

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow

Statement dealt with by this Report are in agreement with the books of account;

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

e) On the basis of written representations received from the directors as on June 30, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 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 ‘A'' TO INDEPENDENT AUDITORS'' REPORT

(The Annexure ‘A'' referred to in our report to the members of Ballarpur Industries Limited (‘the Company'') for the year ended June 30, 2013.)

In terms of the information and explanations given to us and books and records examined by us in the normal course of audit and to the best of our information and belief, we state that: 1a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) The fixed assets were 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 nature of its assets. No material discrepancies were noticed on such physical verification.

c) During the year, the Company has disposed off a substantial part of its fixed assets in respect of Unit Sewa & Unit Ashti of the Company with Unit Kamalapuram of Bilt Graphics Paper Products Limited in pursuance of slump exchange agreement and such disposal has, in our opinion, not affected the going concern status of the Company. 2a) The inventory were physically verified during the year by the Management at reasonable intervals. Materials lying with third parties have substantially been physically verified or confirmed by the third parties. In our opinion, the frequency of verification is reasonable.

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

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

3 The Company has not granted or taken any loan, secured or unsecured, to or from Companies, firms or other parties covered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) of the Companies (Auditor''s Report) Order is not applicable to the Company.

4 There are adequate internal control systems 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, except having regard to the explanation that certain items purchased/ services availed are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations. During the course of our audit, no major weakness has been noticed in the internal control system.

5 In respect of the transactions entered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956:

a) Transactions that needed to be entered into the register have been so entered.

b) 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 except certain transactions of purchase of goods/ services availed and material of special nature for which alternative quotations are not available.

6 The Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board on the Company.

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

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

9a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues applicable to it.

b) No undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, custom duty and excise duty were outstanding, as on June 30, 2013 for a period of more than six months from the date they became payable.

c) The particulars of dues of sales tax, excise duty, income tax and entry tax as on June 30, 2013 which have not been deposited on account of disputes have been stated in Annexure B.

10. The Company has no accumulated losses as on June 30, 2013 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 The Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

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

13 The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are, in our opinion, not applicable to the Company.

14 In our opinion, the Company is not a dealer in shares, securities, debentures and other investments.

15 The Company has not given guarantee for loans taken by others from banks or financial institutions.

16 On an overall basis, the term loans taken and/ or utilized during the year have been applied for the purpose for which they were obtained, other than temporary deployment of such funds.

17 On the basis of an overall examination of the Balance Sheet of the Company, there are no funds raised on a short- term basis which have been used for long-term investment other than temporary deployment of such funds.

18 The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Act.

19 The Company does not have any secured debenture during the year, accordingly, paragraph 4 (xix) of the Companies (Auditor''s Report) Order are not applicable to the Company.

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

21 In accordance with the generally accepted auditing practices in India, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

ABHAY UPADHYE

Partner

Membership No. 049354

For and on behalf of

K.K.MANKESHWAR & CO.,

Chartered Accountants

FRN- 106009W

New Delhi, dated the 29th August 2013

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Mar 31, 2013

1. We have audited the accompanying financial statements of EICL Limited, ("the Company"), which comprise of the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Statement of Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. 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 principles generally accepted in India, including 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.

Auditors'' Responsibility

3. 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 any material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 ofthe financial statements.

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

6. 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:

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

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

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

Report on Other Legal and Regulatory Requirements

7. 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 ofthe Order.

8. As required by Section 227(3) ofthe Act, we report that:

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

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

c. the financial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, the financial statements comply with the Accounting Standards referred to in sub-section (3C) of Section 211 ofthe Act; and

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 Act.

Annexure to the Independent Auditors'' Report of even date to the members of EICL Limited on the financial statements for the year ended March 31, 2013

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit and stocks lying with third parties. For stocks lying with third parties at the year-end, written confirmations have been obtained by the management.

(b) The procedures for physical verification of inventory 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 no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii)(d) of the Order are not applicable.

(b) The Company has taken unsecured loans from three parties covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year is Rs. 22,865,000 and the year-end balance is Rs. 4,489,000.

(c) In our opinion, the rate of interest and other terms and conditions of loans taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(d) In respect of loans taken, repayment of the principal amount and the interest is regular.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect ofthese areas.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion, the Company has complied with the directives issued by the Reserve Bank of India, the provisions of Sections 58A and 58AA and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975, as applicable, with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, in this regard.

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

(viii) According to the information and explanations given to us, the Companies (Cost Accounting Records) Rules, 2011 have become applicable to the Company during the current year and the said rules have not prescribed any specific formats for the cost statements relating to manufacturing operations. In terms with the clarification issued by the Ministry of Corporate Affairs, the Management believes that the records currently maintained by Company provide the information required under the said rules. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Clause (d) of sub-section(1) of Section 209 of the Act in respect of Company''s manufacturing operations and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, though there has been slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty, cess on account of any dispute, are as follows:

Name of the statute Nature of dues Amount (Rs.) Amount paid under protest (Rs.)

Central Excise Act, 1944 Misclassification of 63,494,596 - maize starch

Central Excise Act, 1944 MODVAT claimed on 54,905,715 - lubricant and transformer oil

Central Excise Act, 1944 MODVAT claimed on 52,464,020 1,241,379 lubricant and transformer oil

Income Tax Act, 1961 Disallowance in respect of 21,765,100 - provision made towards a gratuity fund

Income Tax Act, 1961 Disallowance in respect of 52,438,648 - interest claimed on lease transactions

Income Tax Act, 1961 Disallowance in respect of interest claimed as deductible expense

Name of the Statute Period to which Forum where the amount relates dispute is pending

Central Excise Act,1944 April 1, 1997 to Central Excise and December 18, 2001 Service Tax Appellate Tribunal, New Delhi

Central Excise Act,1944 Year 2000 to 2004 Central Excise and Service Tax Appellate Tribunal, New Delhi

Central Excise Act,1944 Year 2000 to 2004 Central Excise and Service Tax Appellate Tribunal, New Delhi

Income Tax Act, 1961 Assessment Year (AY) Commissioner of 2010-11 Income Tax (Appeals)

Income Tax Act, 1961 AY 1997-98 and Commissioner of AY 1999 to 2002 Income Tax (Appeals)

Income Tax Act, 1961 AY 1997-98 Commissioner of Income Tax (Appeals)

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to any bank or financial institution during the year. The Company did not have any outstanding debentures during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) ofthe Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, provisions of clause 4(xiii) ofthe Order are not applicable.

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

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest ofthe Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment by the Company.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) ofthe Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No.: 001076N

Sd/-

per Ashish Gupta

Partner

Membership No.: 504662

Place: Gurgaon

Date : May 03, 2013

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Jun 30, 2012

1. We have audited the attached Balance Sheet of M/s Ballarpur Industries Limited, as on 30th June 2012, the Statement of Profit and Loss & the Cash Flow Statement for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these Financial Statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 ('the Order') issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure 'A' a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

iv. In our opinion, the Balance Sheet, Statement of Profit and Loss & Cash Flow Statement read together with the Notes thereon comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. On the basis of written representations received from the Directors, as on 30th June, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on the said date from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and

vi. In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements read 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:

a. in the case of the Balance Sheet, of the state of affairs of the Company as on 30th June, 2012;

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 ows for the year ended on that date.

ANNEXURE 'A'

(Referred to in paragraph 3 of our report of even date)

In terms of the i nformation and explanations given to us and books and records examined by us in the normal course of audit and to the best of our information and belief, we state that:

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

b. The fixed assets were physically verified during the year by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c. In our opinion, the Company has not disposed off a substantial part of the its fixed assets during the year and going concern status of the Company is not affected.

2. a. The inventory were physically verified during the year by the Management at reasonable intervals. Materials lying with third parties, have substantially been physically verified or confirmed by the third parties. In our opinion, the frequency of verification is reasonable.

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

c. On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. The Company has not granted or taken any loan, secured or unsecured, to or from Companies, firms or other parties covered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) of the Companies (Auditor's Report) Order is not applicable to the Company.

4. There are adequate internal control systems 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, except having regard to the explanation that certain items purchased/ services availed are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations. During the course of our audit, no major weakness has been noticed in the internal control system.

5. In respect of the transactions entered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956:

a. Transactions that needed to be entered into the register have been so entered.

b. 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 except certain transactions of purchase of goods/ services availed and material of special nature for which alternative quotations are not available.

6. The Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board on the Company.

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

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

9. a. The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues applicable to it.

b. No undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, custom duty and excise duty were outstanding, as on 30th June, 2012 for a period of more than six months from the date they became payable.

c. The particulars of dues of sales tax, excise duty, income tax, custom duty, service tax, water tax and cess as on 30th June, 2012 which have not been deposited on account of disputes have been stated in Annexure 1.

10. The Company has no accumulated losses as on 30th June, 2012 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. The Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

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

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are, in our opinion, not applicable to the Company.

14. In our opinion, the Company is not a dealer in shares, securities, debentures and other investments

15. The Company has not given guarantee for loans taken by others from banks or financial institutions.

16. On an overall basis, the term loans taken and/ or utilized during the year have been applied for the purpose for which they were obtained, other than temporary deployment of such funds.

17. On the basis of an overall examination of the balance sheet of the Company, there are no funds raised on a shortterm basis which have been used for long-term investment other than temporary deployment of such funds.

18. The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Act.

19. The Company has created security or charge in respect of secured debentures issued and outstanding at the year-end.

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

21. In accordance with the generally accepted auditing practices in India, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

ABHAY UPADHYE

Partner

Membership No. 049354

For and on behalf of

K.K.MANKESHWAR & CO.,

Chartered Accountants

FRN-106009W

New Delhi, dated the

29th August 2012

---

Jun 30, 2010

1. We have audited the attached Balance Sheet of M/s Ballarpur Industries Limited, as at 30th June 2010, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto, in which are incorporated the audited accounts of Unit of the Company, audited by other auditors.

These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003, as amended

by the Companies (Auditors Report) (Amendment) Order, 2004 (‘the Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure ‘A a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

i. We have obtained all the

information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

iii. The reports on the accounts audited by the Unit Auditors, have been properly dealt with by us while preparing our report;

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

v. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement read together with the Notes thereon comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

vi. On the basis of written representations received from the Directors, as on 30th June, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30th June, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and

vii. In our opinion and to the best of our information and according to the explanations given to us, the said Accounts read 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:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at 30th June, 2010;

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

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

ANNEXURE ‘A

(Referred to in paragraph 3 of our report of even date)

In terms of the information and explanations given to us and books and records examined by us and the Unit Auditors in the normal course of audit and to the best of our information and belief, we state that:

1. a. The Company has maintained proper

records showing full particulars including quantitative details and situation of fixed assets.

b. The fixed assets were physically verified during the year by the Management in accordance with a programme of verification, covering all fixed assets over a period of three years. There were no material discrepancies noticed on such verification. In our opinion, having regard to the size of the Company and the nature of its operations, the frequency of verification is reasonable.

c. Based on the information and explanations given by the Management and on the basis of audit procedures performed by us, we are of the opinion that the fixed assets disposed off during the year does not constitute a substantial part of the fixed assets of the Company and such disposal has not affected the going concern.

2. a. The inventory (excluding stocks

with third parties and stocks lying at outside warehouses) has been physically verified by the Management. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the information and 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. On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. The Company has not granted or taken any loan, secured or unsecured, to or from companies, firms or other parties covered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) of the Companies (Auditors Report) Order is not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased/ services availed are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control systems 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, no major weakness has been noticed in the internal controls system.

5. In respect of the transactions entered in the registers maintained in pursuance of Section 301 of the Companies Act, 1956:

a. To the best of our knowledge and belief and according to the information and explanations given to us, transactions that needed to be entered into the register have been so entered.

b. In our opinion and according to the information and explanations given to us, and excluding certain transactions of purchase of goods/ services availed and material of special nature for which alternative quotations are not available, where each of such transactions is in excess of five lakh rupees in respect of any party, transactions have been made at prices which are prima facie reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of the Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board on the Company.

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

8. We have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of Paper pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies

Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. a. According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, custom duty and excise duty were outstanding, as at 30th June, 2010 for a period of more than six months from the date they became payable except where the liabilities are specifically deferred by the Government.

c. According to the information and explanations given to us and the records of the Company, the particulars of dues of sales tax, excise duty, custom duty, income tax and cess as on 30th June, 2010 which have not been deposited on account of disputes have been stated in Note 2(b) of Schedule M of the financial statements.

10. The Company has no accumulated losses as at 30th June, 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

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

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are, in our opinion, not applicable to the Company.

14. In our opinion, the Company is not a dealer in shares, securities, debentures and other investments

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

16. In our opinion, according to the information and explanations given to us and to the best of our knowledge and belief on an overall basis, the term loans taken and/ or utilized during the year have been applied for the purpose for which they were obtained, other than temporary deployment of such funds.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment and vice versa.

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

19. The Company has created security or charge in respect of secured debentures issued and outstanding at the year end.

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

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

DINESH KUMAR BACHCHAS PARTNER Membership No. 097820 For and on behalf of

K.K.MANKESHWAR & CO.,

CHARTERED ACCOUNTANTS FRN- 106009W

New Delhi, dated the 19th August 2010

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of English Indian Clays Limited (the "Company") as at March 31, 2010, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibilty of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the "Order"), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March 31,2010 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the company as at March 31,2010;

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

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

Annexure to Auditors Report

Referred to in paragraph 3 of the Auditors Report of even date to the members of English Indian Clays Limited on the financial statements for the year ended March 31, 2010

1. (a) The Company is maintaining proper records showing full particulars, including quantitative details

and situation, of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with Consignment agents aggregating to Rs 13.82 lacs) has been

physically verified by the Management during the year. In respect of inventory lying with Consign- ment agents, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verfication of inventory as compared to book records were not material.

3. (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 Act. Accordingly, clauses (b), (c) and (d) are not applicable to the Company.

(b) The Company has not taken any loans, secured, or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses (f) and (g) are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal contral system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. There are no services which are provided by the Company. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of

contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no Order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

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

8. The Central Goverment of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the products of the Company.

9. (a) According to the information and explanations given to us and the records of the Company

examined by us, in our opinion, the Company has generally been regular in depositing undisputed income tax, sales tax and value added tax though there has been a slight delay in a few cases, and has been regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales tax, wealth-tax, service-tax, customs duty, excise duty and cess as at [balance sheet date] which have not been deposited on account of a dispute, are as follows:

S. Name of Nature of dues Amount No. the statute (Rs.) 1 Income Disallowance of Refer Note 3 (a) on Tax Act, adjustment of Schedule 23A 1961 brought forward losses

2 Income Disallowance of 85,755,274 Tax Act, brought forward 1961 losses and other expenses

3 Income Disallowance of 11,803,923 Tax Act, brought forward 1961 losses and other expenses

4 Income Disallowance of 17,834,560* Tax Act, brought forward 1961 losses and other expenses

5 Income Disallowance of 6,079,530 Tax Act, brought forward 1961 losses and other expenses

6 Income Disallowance of 2,563,710 Tax Act, expenses 1961

7 Central Misclassification of 62,987,596## Excise Maize Starch Act, 1944 Transformer Oil (Demand + Penalty)

8 Central MODVAT Claimed 54,905,715 Excise on Lubricants & Refer Note 4 on Act, 1944 Transformer Oil Schedule 23A (Demand + Penalty)

9 Central MODVAT Claimed 51,222,640" Excise on Lubricants & Refer Note 4 on Act, 1944 Transformer Oil Schedule 23A (Demand + Penalty)

S. Name of Period to which Forum where No. the statute the amount the dispute is relates pending 1 Income 1998-99 Income Tax Tax Act, Appellate Tribunal 1961 has referred the case back to Assessing Officer for reassessment 2 Income 2002-03 CIT (Appeals) Tax Act, 1961

3 Income 2004-05 CIT (Appeals) Tax Act, 1961

4 Income 2005-06 CIT (A) referred Tax Act, the case back 1961 to Assessing Officer to redecide the case

5 Income 2006-07 CIT (Appeals) Tax Act, 1961

6 Income 2007-08 CIT (Appeals) Tax Act, 1961

7 Central 01.04.1997 to CESTAT, Delhi Excise 18.12.2001 Act, 1944

8 Central 2000 to 2004 CESTAT, Delhi Excise Act, 1944

9 Central 2000 to 2004 CESTAT, Delhi Excise Act, 1944

In respect of Income Tax / Excise case refer Note 3 on Schedule 23A and period refers to the Assessment Year

# excludes Rs 2,000,000 paid under protest to the department

## excludes Rs 507,000 paid under protest to the department

** excludes Rs1,241,379 paid under protest to the department __

10. The Company has no accumulated losses as at March 31, 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date. The Company does not have any debentures as at the balance sheet date.

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

13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. in our opinion, and 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 during the year.

16. In our opinion, and according to the information and explanations given to us on an overall basis, the term loans have been applied for the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short- term basis which have been used for long-term investment.

18. The Company has made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year. In our opinion and according to the information and explanations given to us, the price at which such shares have been issued is not prejudicial to the interest of the Company.

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. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and accroding to the information and explanations given to us, we have neither come, across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants Sd/- Anupam Dhawan Partner Gurgaon Membership Number: F-084451 May 18, 2010