Auditor Report of Dharani Sugars & Chemicals Ltd.

Mar 31, 2024

We have audited the accompanying Standalone financial
statements of Dharani Sugars and Chemicals Limited

(“the Company”), which comprise the balance sheet as
at March 31, 2023, and 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 notes to the Standalone
financial statements, including a summary of significant
accounting policies and other explanatory information

In our opinion and to the best of our information and
according to the explanations given to us, subject to the
effects of the matter described in the Basis for Qualified
Opinion section of our report, the aforesaid Standalone
financial statements give the information required by
the Companies Act, 2013 (“the Act”) in the manner so
required and give a true and fair view in conformity with
the Indian Accounting Standards, except Ind AS 19
“Employee Benefits” as more fully described in clause
(e) of Basis for Qualified Opinion section of the report,
prescribed under section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015,
as amended, (“Ind AS”) and other accounting principles
generally accepted in India, of the state of affairs of
the Company as at March 31, 2023, and its loss, total
comprehensive income, the changes in equity and its
cash flows for the year ended as on that date.

Basis for Qualified Opinion

We draw attention to the following matters:

a) Note 46 to the Standalone Financial Statements
regarding the fact that all the banks and financial
institutions have classified the borrowings of the
Company as non-performing assets. All the banks
and financial institutions have also issued notice
calling back the loans. Considering the above, as
in the previous periods, the Company has not (a)
provided interest on the outstanding borrowings from
banks and financial institutions; and (b) not restated
the foreign currency loans. In the opinion of the
management, in view of the One Time Settlement
(“OTS”) of the loans sought by the Company, there
will be no further interest liability on the Company
from the NPA date.

However, the Hon''ble NCLT, Chennai Bench,
admitted the CIRP application filed by a financial
creditor of the Company and we were informed by
the Resolution Professional that the financial and
operating creditors have lodged claims of principal
and interest due.

b) As more fully explained in Note 51 to the financial
statements, we were also informed by the RP that

i. the IRP reconvened the 1st CoC meeting on May
2, 2022 and pursuant to the decision made in the
1st CoC meeting, IRP issued ''Form G'' - Public
Announcement inviting Expression of Interest
(EoI) to submit Resolution Plans. As on last date
for receipt of EoI., i.e. June 1, 2022, 7 EoIs were
received. As per Regulation 35 of IBC, IRP has
appointed two sets of IBBI Registered Valuers to
estimate the fair value and the liquidation value,
which shall be shared with the members of CoC on
receipt of resolution plans. The physical verification
of inventory and fixed assets were carried out by
the Valuers;

ii. in the 6th CoC meeting held on September 28,

2022, the last date for submission of the final
revised resolution plan was decided as October 15,
2022 and 3 revised final resolution plans from the
Resolution Applicants were received as on date;

iii. further as per the e-voting results dated September
22, 2022 CoC approved the appointment of
Mr. Mahalingam Suresh Kumar, Insolvency
Professional as Resolution Professional subject to
approval by the Adjudicating Authority for which an
application is being filed by the CoC members with
NCLT; and

iv. On February 8, 2023 RP convened the 11th CoC
meeting in which the members decided to file
an appropriate application before the Hon''ble
NCLT, Chennai Bench seeking extension of CIRP
period by 30 days beyond the maximum timelines
specified under Section 12 of the IBC, 2016.The
case was heard by the NCLT on 3rd March 2023
and was posted for further hearing on 29th May

2023.

v. As the decision making on the plan is very crucial
taking into consideration various factors, the lenders
seek these 60 days additional timeline to decide on
the options either by themselves or through NARCL
suitably. RP also informed the COC members that
the chairman of the Dharani Sugars have filed a
Caveat Petition, that in case liquidation petition is
filed by the RP it shall be brought to their attention.

c) Note 50 to the Standalone Financial Statements
which explains that during June 2020 quarter, a
CIRP was admitted and a resolution professional
was appointed in the case of one of the major
investees of the Company by the Hon''ble NCLT,
Chennai Bench vide its order dated May 5, 2020.
The carrying amount of the investments as atMarch
31, 2023 is INR 1,455.53 Lakhs

The Hon''ble NCLT has passed an order approving
the resolution plan submitted by one of the resolution
applicants. Aggrieved by this Order, the investee
has filed an application before the Hon''ble National
Company Law Appellate Tribunal (“NCLAT”)

praying for quashing the order of the Hon''ble NCLT.
The Hon''ble NCLAT has set aside the resolution
plan approved and ordered to recommence the
CIRP process, including the consideration of 12A
application filed by the promoters of the investee
company. On an appeal against the order of
the Hon''ble NCLAT, the Hon''ble Supreme Court
has heard the arguments of both the sides and
judgement was delivered on May 3, 2023 directing
Adjudicating Authority (NCLT) to decide on the
fresh resolution plan as submitted by the promoter
approved by CoC on its 19th Meeting.

In our opinion, considering the present development,
the entire outstanding due from the above investee
is considered to be not recoverable.

In this regard we were informed by the management
that

The Promoter has recently (on October 11, 2022)
also given a proposal for settling the entire dues of
the CoC members U/S 12A of the IBC code and
the required funding has been arranged by way
of deposits and Bank Guarantee. The proposal
has been approved by the CoC with 100% voting
in favour of the proposal .As per the promoters
settlement Proposal U/s 12A of lBC, the dues of
all the secured and unsecured financial creditors,
operational creditors and all other stake holders
including shareholders are fully accommodated.

Accordingly, in the opinion of the management,
the Company will still be able to recover the entire
carrying amount of the investments, even in the
aforesaid CIRP conditions. Based on the above
estimate made by the management, no adjustment
has been made in the fair value of the investments
in the aforesaid investee. This is a matter of
qualification by the auditors.

Due to uncertainties involved in the CIRP process
as detailed above, the impact, if any, on the
Statement is not presently determinable in respect
of the above matter.

d) As more fully described in the Material Uncertainty
Relating to Going Concern section of this report,
there is a significant doubt on the Company''s ability
to continue as a going concern. We are unable to
comment on the appropriateness of preparing the
Statement on a going concern assumption and the
impact, if any, arising out of the above matter is not
presently determinable.

e) Ind AS 19 “Employee Benefits” requires provision
towards gratuity and compensated absences
should be made based on actuarial valuation.
However, the Company has not obtained any
actuarial report and made provision for the liability
on an estimated basis. Accordingly, we are unable
to comment on the adequacy of the provision made
and the compliance with the related disclosure
requirements of Ind AS 19.

f) We could not circulate for direct confirmation for
bank balances, borrowings, trade receivables, trade

payables, advances received/ paid and for deposits
received/ paid, as the necessary information was not
made available by the Company to us. Accordingly,
we are unable to comment on adjustment, if any,
that may be required had we circulated and received
direct confirmation for the aforesaid balances.

g) The Company has a program of verification to
cover all the items of property, plant and equipment
in a phased manner over a period of three years.
However, no physical verification has been carried
on by the management during the year. Accordingly,
we were unable to comment on whether any material
discrepancies were noticed on such verification and
whether they are properly dealt with in the financial
statements.

h) The Company has not filed the quarterly/ annual
financial results with the stock exchanges within
the stipulated time for certain quarters of the last
year and the current year. However, no provision
has been made in the financial statements towards
penalty payable for the aforesaid non- compliances.

i) Our audit report on the Standalone financial
statements is qualified in respect of matters referred
to clauses (a) to (h) above. The matters referred
to in clauses (a) to (c) have been qualified in the
earlier years as well by the previous auditors.

We conducted our audit in accordance with the standards
on auditing (SAs) specified under section 143 (10) of
the Act. Our responsibilities under those standards are
further described in the auditor''s responsibilities for the
audit of the Standalone financial statements section
of our report. We are independent of the Company
in accordance with the code of ethics issued by the
Institute of Chartered Accountants of India (“ICAI”)
together with the ethical requirements that are relevant
to our audit of the Standalone financial statements under
the provisions of the Act and the Rules thereunder,
and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the ICAI''s
code of ethics. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a
basis for our opinion.

Material Uncertainty Related to Going Concern

The Company has no operations during the financial
year. The Company has incurred huge losses during the
period under consideration and also during the earlier
periods/ years, due to which the Company''s net worth
is negative. The Company has not met its operating
liabilities, including employee dues due to negative
cashflows. The Company''s ability to continue as a going
concern depends on the possible decisions that may be
taken on OTS/ CIRP [as more fully explained in the Para
(a) and (b) of the basis for qualification section of this
report] and further inflow of funds for the working capital
requirements of the Company. All the above matters
materially depend on future events.

The above factors cast significant doubt on the
Company''s ability to continue as a going concern.
However, pending resolution of the above uncertainties,
the Company has prepared the aforesaid Statement on
a going concern basis.

Key audit matters

Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the financial statements of the current period.
These matters were addressed in the context of our
audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a
separate opinion on these matters.

In our opinion and based on the information and
explanations given to us, we have determined that
matters described below, to be the key audit matters
over and above those described in the Basis for Qualified
Opinion and in the Material Uncertainty Related to Going
Concern sections our report on the Standalone financial
statements to be communicated in our report:

Presentation and disclosure of additional information
pursuant to the amendments to Schedule III to the
Companies Act, 2013

With a view to facilitate enhanced disclosures and
transparency in operations by companies in India, the
Ministry of Corporate Affairs (MCA) has issued a batch
of amendments to the Schedule III to the Companies
Act, 2013 relating to presentation and disclosures in
the financial statements. The Company has evaluated
the requirements and made the relevant disclosures,
including restatement of the disclosures made in the
comparative period.

Principal Audit Procedures

• We assessed the Company''s process to
identify, assess, and respond to risks of material
misstatement in the disclosure requirements
pursuant to the aforesaid amendments to Schedule
III to the Companies Act, 2013.

• As part of the evaluation of whether sufficient
appropriate audit evidence has been obtained,
we have evaluated the appropriateness of our
initial risk assessments and revised previous risk
assessments in for certain financial statement
areas like claims and final settlement of financial
and operating creditors, carrying amount of
property, plant and equipment, capital work in
progress, intangible assets comprisingof, including
related disclosure requirements under the Act and
respective Indian Accounting Standards.

• We have designed, performed additional
procedures, including verification of the source and
completeness of data used by the management for
making proper disclosures as required by the Act.

• We have considered the basis of management
judgment in making the disclosures taking into
consideration the date of the financial statements,
the facts and circumstances pertaining to the entity,
and the conditions that existed at, or arose after, that
date. We have considered all subsequent events
and transactions to substantiate our conclusions on
the appropriateness of management''s disclosures
in accordance with the requirements of the
amendments.

• We have audited the management''s estimates
required in the standalone financial statements,
including but not limited to estimates related to
expected credit loss, fair value of various assets
taken over and liabilities assumed, inventory
obsolescence, impairment of non-financial assets
etc. by checking the reasonableness of underlying
assumptions in making those key estimates.

• We have carried out a detailed analysis of data
and performed additional analytical procedures for
validating the management''s disclosures.

Information other than the financial statements and
auditors'' report thereon

The Company''s board of directors is responsible for
the preparation of the other information. The other
information comprises the information included in the
Management Discussion and Analysis, Board''s Report
including Annexures to Board''s Report, Business
Responsibility Report, Corporate Governance and
Shareholder''s Information, but does not include the
financial statements and our auditor''s report thereon.

Our opinion on the Standalone financial statementsdoes
not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the Standalone financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with the
Standalone financial statements or our knowledge
obtained during the course of our audit or otherwise
appears to be materially misstated.

If, based on the work we have performed, we conclude
that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report in this regard as the other information
is not made available to us by the Company.

Management''s responsibility for the financial
statements

The Company''s board of directors is responsible
for the matters stated in section 134 (5) of 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 including
other comprehensive income, cash flows and changes

in equity of the Company in accordance with the Indian
Accounting Standards (Ind AS), except Ind AS 19
“Employee Benefits” as more fully described in clause
(e) of Basis for Qualified Opinion section of the report,
prescribed under section 133,of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015,
as amended from time to time, 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 of 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 financial statements
that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

In preparing the Standalone financial statements,
management is responsible for assessing the Company''s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and
using the going concern basis of accounting unless
management either intends to liquidate the Company or
to cease operations, or has no realistic alternative but
to do so.

The board of directors are also responsible for
overseeing the Company''s financial reporting process.

Auditors'' responsibilities for the audit of the
standalone financial statements

Our objectives are to obtain reasonable assurance
about whether the Standalone financial statements as
a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor''s report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit
conducted in accordance with SAs will always detect a
material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of
users taken on the basis of these Standalone financial
statements.

As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional
skepticism throughout the audit. We also:

• Identify and assess the risks of material
misstatement of the financial statements, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate

to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from
fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal controls relevant
to the audit in order to design audit procedures
that are appropriate in the circumstances. Under
section 143(3)(i) of the Companies Act, 2013, we
are also responsible for expressing our opinion
on whether the company has adequate internal
financial controls system in place and the operating
effectiveness of such controls

• Evaluate the appropriateness of accounting
policies used and the reasonableness of accounting
estimates and related disclosures made by
management.

• Conclude on the appropriateness of management''s
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether
a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Company''s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor''s report
to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor''s
report. However, future events or conditions may
cause the Company to cease to continue as a going
concern.

• Evaluate the overall presentation, structure and
content of the financial statements, including the
disclosures, and whether the financial statements
represent the underlying transactions and events in
a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the
Standalone financial statements that, individually or
in aggregate, makes it probable that the economic
decisions of a reasonably knowledgeable user of the
financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (i)
planning the scope of our audit work and in evaluating
the results of our work; and (ii) to evaluate the effect of
any identified misstatements in the financial statements.

We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal control
that we identify during our audit.

We also provide those charged with governance
with a statement that we have complied with relevant
ethical requirements regarding independence, and
to communicate with them all relationships and other

matters that may reasonably be thought to bear on
our independence, and where applicable, related
safeguards.

From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the financial
statements of the current period and are therefore the
key audit matters. We describe these matters in our
auditor''s report unless law or regulation precludes
public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should
not be communicated in our report because the adverse
consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such
communication.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor''s Report)
Order, 2020 (“the Order”), issued by the Central
Government of India in terms of sub-section (11) of
section 143 of the Companies Act, 2013, we give in
Annexure “A” a statement on the matters specified in
clauses 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, except for the matters
referred to in the basis for qualified opinion
section of this report;

b) In our opinion, 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, except for the matters referred to
in the basis for qualified opinion section of this
report;

c) The balance sheet, the statement of profit and
loss including other comprehensive income,
statement of changes in equity and the statement
of cash flow dealt with by this report are in
agreement with the books of account, except for
the matters referred to in the basis for qualified
opinion section of this report;

d) In our opinion, the aforesaid financial statements
comply with the Indian Accounting Standards
specified under Section 133 of the Act, except for
the matters referred to in the basis for qualified
opinion section of this report;

e) We have not received any written representations
from the directors as on March 31, 2023 and
minutes of the meeting in which it was taken on
record by the Board of Directors. We have also
observed that the Director Identification Number
(DIN) of certain directors of the Company have

been deactivated by the Ministry of Corporate
Affairs as on the date of our report. We could
not merely rely on the certificate issued by a
practising company secretary in respect of the
above compliance, in the absence sufficient
appropriate audit evidence to corroborate with
the aforesaid certificate. Accordingly, we could
not comment on whether any of the directors
of the Company is disqualified as on March 31,
2023 from being appointed as a director in terms
of Section 164 (2) of the Act.;

f) 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”. Our report expresses a
modified opinion on the adequacy and operating
effectiveness of the Company''s internal financial
controls over financial reporting;

g) With respect to the other matters to be included
in the Auditor''s Report in accordance with the
requirements of section 197 (16) of the Act, as
amended, in our opinion and to the best of our
information and according to the explanations
given to us, the remuneration paid by the
Company to its directors during the year is in
accordance with the provisions of section 197 of
the Act; and

h) 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 40 to the
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 management has represented that, to the
best of its knowledge and belief, other than
as disclosed in the notes to the accounts;

a. no funds have been advanced or loaned
or invested (either from borrowed funds
or share premium or any other sources or
kind of funds) by the company to or in any
other person(s) or entity(ies), including
foreign entities ''Intermediaries'', with

the understanding, whether recorded in
writing or otherwise, that the Intermediary
shall, whether, directly or indirectly lend or
invest in other persons or entities identified
in any manner whatsoever by or on behalf
of the company ''Ultimate Beneficiaries'' or
provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries;
and

b. no funds have been received by
the company from any person(s) or
entity(ies), including foreign entities
''Funding Parties'', with the understanding,
whether recorded in writing or otherwise,
that the company shall, whether, directly
or indirectly, lend or invest in other
persons or entities identified in any
manner whatsoever by or on behalf of the
Funding Party ''Ultimate Beneficiaries'' or
provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries.

c. Based on audit procedures carried out by
us, that we have considered reasonable
and appropriate in the circumstances,
nothing has come to our notice that has
causedus believe that the representations
under sub-clause (a) and (b) contain any
material misstatement.

v. The Company has not declared or paid any
dividends during the year and accordingly
reporting on the compliance with section 123
of the Companies Act, 2013 is not applicable
for the year under consideration.

For Srivatsan & Associates
Chartered Accountants

Firm Registration Number 014921S

N Srivatsan

Partner

Place: Chennai Membership Number 230195

Date: May 27, 2023 UDIN: 23230195BGUNMT6462

---

Mar 31, 2018

Report on the Financial Statements

We have audited the accompanying financial statements of Dharani Sugars and Chemicals Limited, (“the Company”), which comprise of the Balance Sheet as at March 31, 2018, and 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 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 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) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) 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 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. 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 and the Order issued under section 143 (11) of the Act.

We conducted our audit of the 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 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. 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 obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 March 31, 2018, and its profit, total comprehensive income, the changes in equity and its cash flows for the year ended as on that date.

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 in terms of Section 143 (11) of the Act, we give in Annexure “A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act, based on our audit 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, 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) the balance sheet, the statement of profit and loss including other comprehensive income, statement of changes in equity and the statement of cash flow dealt with by this report are in agreement with the books of account;

d) in our opinion, the aforesaid financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act;

e) on the basis of the written representations received from the directors of the Company as on March 31, 2018 taken on record by the board of directors, none of the directors are disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

f) 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”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting; and

g) with respect to the other matters to be included in the auditors’ 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 financial statements - refer note 40 to the financial statements;

ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; and

iii. There has been no delay in transferring amounts, required to be transferred, to the investor education and protection fund by the Company.

Other matters

The financial statements of the Company for the year ended March 31, 2017 prepared in accordance with the (Indian Accounting Standards) Rules,2015, as amended, and other accounting principles generally accepted in India, were audited by another firm of chartered accountants under the Companies Act, 2013 who, vide their report dated May29, 2017 expressed an unmodified opinion on those financial statements.

ANNEXURE A TO INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report to the members of Dharani Sugars and Chemicals Limited of even date)

1. In respect of the Company’s fixed assets:

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

(b) The Company has a program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the management during the year. According to the information and explanations given to us and according to the records examined by us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us, the records examined by us and based on the examination of the conveyance deeds provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date.

2. The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

3. In our opinion and according to the information and explanations given to us, the company has not granted any loan, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register required under section 189 of the Companies Act, 2013. Accordingly, paragraph 3 (iii) of the order is not applicable.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits during the year and does not have any unclaimed deposits as at March 31, 2018 and therefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company.

6. In our opinion and according to the information and explanations given to us, pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

7. In our opinion and according to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including provident fund, employees’ state insurance, income tax, sales tax, service tax, value added tax, goods and services tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities except non-deduction and remittance of tax deducted at source amounting to Rs.41.37 Lakhs

(b) There were no undisputed amounts payable in respect of provident fund, employees’ state Insurance, income tax, sales tax, service tax, value added tax, goods and services tax, customs duty, excise duty, cess and other material statutory dues in arrears as at March 31, 2018 for a period of more than six months from the date they became payable; and

(c) The details of dues of income tax, sales tax, service tax, excise duty and value added tax which have not been deposited as at March 31, 2018 on account of dispute are given below:

Name of the Statute	Nature of dues	Amount (Rs. in lakhs)	Period to which the amount relates	Forum where the dispute is pending
Central Excise Act, 1944	Cenvat credit on Capital goods	85.37	September 2008 to February 2010	CESTAT - Chennai
Finance Act, 1994	Service Tax on Goods Transport Agency	87.95	April 2008 to April 2013	CESTAT - Chennai

*Net of payments made under protest

8 According to the information and explanation given to us and records examined by us, the Company has defaulted in repayment of dues to financial institutions and government which are as follows:

Bank/ Financial Institution	Nature of the dues	Rs. in lakhs	Due date	Actual date of Payment
Indian Renewable Energy Development Agency	Principal and interest	400.89 378.61 357.96 389.36	30-06-2017 30-09-2017 31-12-2017 31-03-2018	Rs.297.89 Lakhs paid on 07-11-2017 and Rs.103 Lakhs paid on 01-02-2018 22-03-2018 Unpaid Unpaid
Sugar Development Fund	Principal and interest	2635.29 249.51 249.74 417.06	Various dates till last year * 06-06-2017 05-12-2017 05-03-2018	Unpaid Unpaid Unpaid Unpaid
Indian Bank	Principal	346.38	31-03-2018	Unpaid
State Bank of India	Principal	187.07	31-03-2018	Unpaid
Central Bank of India	Principal	52.75	31-03-2018	Unpaid
The South Indian Bank	Principal	24.41	31-03-2018	Unpaid
IDBI	Principal	14.55	31-03-2018	Unpaid
Bank of India	Principal	83.80	31-03-2018	Unpaid
Union Bank of India	Principal	66.80	31-03-2018	Unpaid
Indian Overseas Bank	Principal	44.41	31-03-2018	Unpaid

9 In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year.

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

11 In our opinion and according to the information and explanations given to us, the Company is in the process of obtaining the requisite approvals from secured lenders as stipulated by the Companies Act 2013. Pending such approvals, the Company has not accrued/ paid any remuneration to the Chairman of the Company.

12 The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company.

13 According to the information and explanations given to us and based on our examination of the records of the company, transactions with the related parties are in compliance with section 177 and 188 of the Act. Where applicable, the details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14 According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the order is not applicable.

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 them. Accordingly, paragraph 3(xv) of the order is not applicable.

16 According to the information and explanations given to us and based on our examination of the records of the company, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

ANNEXURE B TO INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 2 (f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report to the Members of Dharani Sugars and Chemicals Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting 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 Dharani Sugars and Chemicals Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the financial statements of the Company 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 issued by the Institute of Chartered Accountants of India. 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, 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 internal financial controls over financial reporting of the Company 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”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, 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 judgement, including the assessment of the risks of material misstatement in 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 control 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 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 financial statements.

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 of 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 control system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 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 on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For CNGSN & Associates LLP

Chartered Accountants

Firm Registration No.004915S/ S200036

(CHINNSAMY GANESAN)

Place : Chennai - 34 Partner

Date : May 28, 2018 Membership No. 027501

---

Mar 31, 2016

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of DHARANI SUGARS AND CHEMICALS LIMITED (“the Company") which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements 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 and presentation 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 Rules made thereunder.

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 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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. Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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:

a) in the case of the balance sheet, of the state of affairs of the Company as at 31st March 2016;

b) in the case of the statement of profit and loss, of the loss of the Company 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, 2016, (“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.

2) As required by Section 143(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 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, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) on the basis of the written representations received from the directors as on 31st March 2016, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March 2016 from being appointed as a director in terms of Section 164(2) of the Act; and

f) 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

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 explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 25.2 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 25.4.18 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.

The Annexure referred to in our Independent Auditor’s Report to the members of the Company on the standalone financial statements for the year ended 31^st March, 2016, 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 programme of physical verification of fixed assets by which fixed assets are verified in a phased manner every year. In accordance with this programme, fixed assets were verified during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. In our opinion, the discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has not granted any loans, secured or unsecured to any companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 (“the Act”) during the year under consideration.

(iv) In our opinion and according to the information provided and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to the loans and investments made.

(v) In our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 of the Act or any other relevant provisions of the Act, 2013 and the rules framed there under, to the extent applicable, have been complied with. However, the Company has not accepted any deposits during the year. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) We have broadly reviewed the accounts and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148(1) 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 determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Service Tax, Duty of Customs, Excise Duty, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Service Tax, Duty of Customs, Excise Duty, Cess and other material statutory dues were in arrears as at 31st March 2016 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 material dues of Sales Tax and Duty of Custom which have not been deposited with the appropriate authorities on account of any dispute. However, according to the information and explanations given to us, the following dues of Income Tax, Excise Duty and Service Tax have not been deposited by the Company on account of disputes:

Name of the Statute	Nature of dues	Period to which the amount relates	Status	Amount (Rs. in lakhs)
Income Tax Act, 1961	Income Tax	Assessment Year 2013-14	Commissioner of Income-tax (Appeals)	-
Income Tax Act, 1961	Dueslncome Tax	Assessment Year 2012-13	Commissioner of Income-tax (Appeals)	11.08
Income Tax Act, 1961	DuesIncome Tax Dues	Assessment Year 2011-12	Commissioner of Income-tax (Appeals)	-
Finance Act, 1994	Service Tax on Goods Transport Agency	April 2008 to April 2013	CESTAT - Chennai	39.94
Ta m i l n a d u Ta x o n Consumption or Sale of Electricity Act 2003	Power Generation Tax	June 2003 to Sep 2008 and April 2011 to March 2015	Supreme Court	312.80
Ta m i l n a d u Ta x o n Consumption or Sale of Electricity Act 2003	Power Tariff revision	August''12 to September 2013	Supreme Court	*67.42
Central Excise Act, 1944	Cenvat credit on Capital goods	Sep 2008 to Feb 2010	CESTAT - Chennai.	*41.71

* net of amount paid under protest.

(viii) According to information and explanation given to us and as per the books and records examined by us, the Company has defaulted in repayment of dues to financial institution and government which are as follows:

Bank/ Financial Institution	Nature of dues		Rs. in lacs	Due date	Date of Payment
Sugar Development Fund	Repayment of	Loan	194.03	01-Mar-15	11-Mar-16
Sugar Development Fund	Repayment of	Loan	139.63	03-0ct-14	—
Sugar Development Fund	Repayment of	Loan	142.54	19-Jan-15	—
Sugar Development Fund	Repayment of	Loan	236.58	05-Dec-14	—
Sugar Development Fund	Repayment of	Loan	236.58	06-Jun-15	—
Sugar Development Fund	Repayment of	Loan	139.63	03-Apr-15	—
Sugar Development Fund	Repayment of	Loan	139.63	03-0ct-15	—
Sugar Development Fund	Repayment of	Loan	142.54	19-Jul-15	—
Sugar Development Fund	Repayment of	Loan	142.54	19-Jan-16	—
Sugar Development Fund	Repayment o	Loan	194.03	01-Mar-16	—
Sugar Development Fund	Repayment of	Interest	29.09	03-0ct-14	—
Sugar Development Fund	Repayment of	Interest	11.50	19-Jan-15	—
Sugar Development Fund	Repayment of	Interest	37.96	05-Dec-14	—
Sugar Development Fund	Repayment of	Interest	33.03	06-Jun-15	—
Sugar Development Fund	Repayment of	Interest	29.29	03-Apr-15	—
Sugar Development Fund	Repayment of	Interest	32.64	03-0ct-15	—
Sugar Development Fund	Repayment of	Interest	8.49	19-Jul-15	—
Sugar Development Fund	Repayment of	Interest	5.75	19-Jan-16	—
Sugar Development Fund	Repayment of	Interest	69.96	01-Mar-16	—
Sugar Development Fund	Repayment of	Interest	28.60	29-Feb-16	—

Bank/ Financial Institution	Nature of dues	Rs. in lakhs	Due date	Date of Payment
Sugar Development Fund	Repayment of Interest	77.65	01-Mar-15	11-Mar-16
India Renewable Energy Development Agency	Repayment of Interest	68.17	31-Mar-16	—
India Renewable Energy Development Agency	Repayment of Interest	69.32	31-Mar-15	21-Jul-15
India Renewable Energy Development Agency	Repayment of Interest	71.15	30-Jun-15	22-Sep-15
India Renewable Energy Development Agency	Repayment of Interest	69.11	30-Sep-15	29-Dec-15
India Renewable Energy Development Agency	Repayment of Interest	73.97	31-Dec-15	12-Feb-16

The Company has not issued Debentures till 31^st March, 2016. Hence, the question of reporting on default in repayment of dues to Debenture holders does not arise.

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were prima facie applied during the period for the purposes for which the loans were obtained.

(x) 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.

(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details of such transactions have been disclosed in the Financial Statements as required by the applicable accounting standards;

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) 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 any non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

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

SRINIVASAN & SHANKAR

Chartered Accountants

(Firm Registration No.: 005093S)

per R MANIKANDAN

Place: Chennai Partner

Dated: 26th May 2016 Membership No.216063

---

Mar 31, 2015

Report on the Financial Statement

We have audited the accompanying standalone financial statements of DHARANI SUGARS AND CHEMICALS LIMITED ("the Company") which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the 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 and presentation 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 Rules 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 Statement 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 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 Rules made thereunder.

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 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 statement, 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 the in the 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 whether the Company has in place an adequate internal financial controls systems over financial reporting and the operative effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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:

a) in the case of the balance sheet, of the state of affairs of the Company as at 31st March 2015;

b) in the case of the statement of profit and loss, of the loss of the Company 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, 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 statement on the matters specified in paragraphs 3 and 4 of the Order to the extent as applicable.

2) As required by Section 143(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 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, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rules 7 of the Companies ( Accounts) Rules, 2014.

e) on the basis of the written representations received from the directors as on 31st March 2015, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March 2015 from being appointed as a director in terms of sub section 1(g) of Section 164(2) of the Act; and

f) 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 explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements; and

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; and

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

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in our Independent Auditor's Report to the members of the Company on the standalone financial statements for the year ended 31st March, 2015, 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 programme of physical verification of fixed assets by which fixed assets are verified in a phased manner every year. In accordance with this programme, fixed assets were verified during the year and no material discrepancies were noticed on such verification.

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

(b) The procedures of physical verification of inventories followed by 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.

(iii) The Company has granted loans to a body corporate covered in the register maintained under section 189 of the Companies Act, 2013.

(a) In the case of loans granted to a body corporate listed in the register maintained under Section 189 of the Act, the borrower has been regular in payment of interest as stipulated. In terms of the arrangement, the loan granted is repayable on demand.

(b) There are no overdue amounts of more than rupees one lakh in respect of the loans granted to the body corporate listed in the register maintained under Section 189 of the Accordingly, paragraph 3(iii) (b) of the Order is not applicable to the Company in respect of repayment of the principal amount.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods. The activities of the Company do not involve sale of services. During the course of our audit, no major weaknesses has been noticed in the internal control system.

(v) In our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 of the Act or any other relevant provisions of the Act, 2013 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) We have broadly reviewed the accounts and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148(1) 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 determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues have been regularly deposited during the year by the Company.

There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues were in arrears as at 31st March 2015 for a period of more than six months from the date they became payable.

(b) There are no material dues of Sales Tax, Wealth Tax, Customs Duty and Cess which have not been deposited with the appropriate authorities on account of any dispute. However according to the information and explanations given to us, the following dues of Income Tax, Excise Duty and Service Tax have not been deposited by the Company on account of dispute :

Period to Name of the Statute Nature of dues which the amount relates

Income Tax Act, 1961 Income Tax Dues AY 12-13

Income Tax Act, 1961 Income Tax Dues AY 11-12

Central Excise Act, 1944 Cenvat credit reversal April 2008 to on Power sales April 2013

Finance Act, 1994 Service Tax on Goods April 2008 to Transport Agency April 2013

Tamilnadu Tax on Power Generation Tax June 2003 to Sep 2008 Consumption of Sale of and April 2011 to Electricity Act 2003 March 2015

Tamilnadu Tax on Power Tariff revision August'12 to Consumption or Sale of September 2013 Electricity Act 2003

Central Excise Act, 1944 Cenvat credit on Sep 2008 to Feb 2010 Capital goods

Name of the Statute Amount Status (Rs. in lakhs)

Income Tax Act, 1961 The matter is pending 11.08 with the CIT (A)

Income Tax Act, 1961 The matter is pending - with the CIT (A)

Central Excise Act, 1944 The matter is pending 47.91 with CESTAT, Chennai.

Finance Act, 1994 The matter is pending in 23.84 CESTAT, Chennai.

Tamilnadu Tax on Consumption of Sale of Electricity Act 2003 This matter is pending 281.20 with Supreme Court

Tamilnadu Tax on Consumption of Sale of Electricity Act 2003 # 67.42 This matter is pending with Supreme Court

Central Excise Act, 1944 The matter is pending in 51.73 CESTAT, Chennai.

# net of amount paid under protest.

(c) According to the information and explanations given to us there are no amounts which were required to be transferred to the Investor education and protection fund in accordance with the relevant provision of the Companies Act, 1956 and rules there under.

(viii) The accumulated losses of the company have exceeded fifty per cent of its net worth at the end of the financial year. The Company has incurred cash losses during the current year and also in the immediately preceding financial year.

(ix) According to information and explanation given to us and as per the books and records examined by us, the Company has defaulted in repayment of dues to financial institution and banks which are as follows:

Bank/ Financial Institution Nature of dues Rs. in lacs

Bank of India Repayment of Loan 214.29

Indian Bank Repayment of Loan 60.00

Sugar Development Fund Payment of Interest 31.33

Union Bank of India Payment of Interest 26.28

Indian Overseas Bank Payment of Interest 18.40

Bank of India Payment of Interest 32.43

Indian Bank Payment of Interest 2.88

Indian Bank Payment of Interest 2.65

Indian Bank Payment of Interest 65.53

Union Bank of India Payment of Interest 24.96

Bank of India Payment of Interest 32.04

Indian Bank Payment of Interest 25.15

Sugar Development Fund Repayment of Loan 236.58

Indian Renewable Energy

Development Agency Repayment of Loan 187.30

Union Bank of India Repayment of Loan 142.85

Indian Bank Repayment of Loan 60.00

Indian Overseas Bank Repayment of Loan 90.00

State Bank of India Repayment of Loan 65.19

Union Bank of India Payment of Interest 26.07

Bank of India Payment of Interest 33.13

Indian Bank Payment of Interest 24.12

Indian Bank Payment of Interest 63.72

Sugar Development Fund Payment of Interest 42.47

Indian Renewable Energy Payment of Interest 138.41

Development Agency Payment of Interest 25.25

Indian Overseas Bank Payment of Interest 18.32

Sugar Development Fund Repayment of Loan 194.03

Sugar Development Fund Repayment of Loan 236.58

Sugar Development Fund Repayment of Loan 139.63

Sugar Development Fund Repayment of Loan 142.54

Sugar Development Fund Payment of Interest 77.65

Sugar Development Fund Payment of Interest 37.96

Sugar Development Fund Payment of Interest 11.50

Sugar Development Fund Payment of Interest 29.09

Indian Renewable Energy Development Agency Payment of Interest 70.37

Sugar Development Fund Repayment of Loan 236.58

Sugar Development Fund Repayment of Loan 139.63

Sugar Development Fund Repayment of Loan 142.54

Sugar Development Fund Payment of Interest 42.47

Sugar Development Fund Payment of Interest 31.33

Sugar Development Fund Payment of Interest 14.14

Indian Renewable Energy Development Agency Payment of Interest 69.11

Sugar Development Fund Repayment of Loan 139.63

Bank/Financial Institution Due date Date of Payment

Bank of India 30-Apr-14 25-Jun-14

Indian Bank 31-May-14 30-Jul-14

Sugar Development Fund 03-Apr-14 31-May-14

Union Bank of India 25-Apr-14 23-Jun-14

Indian Overseas Bank 31-May-14 24-Jun-14

Bank of Inida 30-Apr-14 25-Jun-14

Indian Bank 31-May-14 03-Jul-14

Indian Bank 30-Jun-14 03-Jul-14

Indian Bank 30-Jun-14 15-Jul-14

Union Bank of India 25-May-14 23-Jul-14

Bank of India 31-May-14 23-Jul-14

Indian Bank 31-May-14 11-Jun-14

Sugar Development Fund 06-Jun-14 12-Sep-14

Indian Renewable Energy Development Agency 30-Jun-14 22-Aug-14

Union Bank of India 25-Jun-14 05-Sep-14

Indian Bank 30-Jun-14 14-Oct-14

Indian Overseas Bank 30-Jun-14 23-Sep-14

State Bank of India 30-Jun-14 02-Sep-14

Union Bank of India 25-Jun-14 05-Sep-14

Bank of India 30-Jun-14 12-Sep-14

Indian Bank 30-Jun-14 31-Jul-14

Indian Bank 30-Jun-14 31-Aug-14

Sugar Development Fund 06-Jun-14 12-Sep-14

Indian Renewable Energy Development Agency 30-Jun-14 20-Sep-14

Indian Overseas Bank 30-Jun-14 12-Sep-14

Sugar Development Fund 01-Mar-15 -

Sugar Development Fund 05-Dec-14 -

Sugar Development Fund 03-Oct-14 -

Sugar Development Fund 19-Jan-15 -

Sugar Development Fund 01-Mar-15 -

Sugar Development Fund 05-Dec-14 -

Sugar Development Fund 19-Jan-15 -

Sugar Development Fund 03-Oct-14 -

Indian Renewabel Energy Development Agency 31-Mar-15 -

Sugar Development Fund 06-Jun-14 12-Sep-14

Sugar Development Fund 03-Apr-14 30-May-14

Sugar Development Fund 19-Jul-14 18-Sep-14

Sugar Development Fund 06-Jun-14 12-Sep-14

Sugar Development Fund 03-Apr-14 30-May-14

Sugar Development Fund 19-Jul-14 18-Sep-14

Indian Renewable Energy Development Agency 31-Dec-14 25-Feb-15

Sugar Development Fund 03-Apr-14 31-May-14

The Company has not issued Debentures till 31st March, 2015. Hence, the question of reporting on default in repayment of dues to Debenture holders does not arise.

(x) 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.

(xi) To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were, prima facie applied during the period for the purposes for which the loans were obtained.

(xii) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

SRINIVASAN & SHANKAR

Chartered Accountants

(Firm Registration No.: 005093S)

Place: Chennai Per R MANIKANDAN Partner

Dated : 27th May 2015 Membership No.216063

---

Mar 31, 2014

We have audited the accompanying financial statements of DHARANI SUGARS AND CHEMICALS LIMITED ("the Company") which comprise the balance sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

The Company''s 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") (which continues to be applicable in respect of Section 133 of the Act , 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Company Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the Financial Statement 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 auditors'' judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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 31st March 2014;

b) in the case of the statement of profit and loss, of the loss of the Company 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 As required by the Companies (Auditor''s Report) Order, 2003, as amended, ("the Order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we have annexed hereto a statement on the matters specified in paragraphs 4 and 5 of the Order.

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 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, 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 dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act, read with the General Circular 15/2013 dated 13th September 2013 of Ministry of Corporate Affairs in respect of Section 133 of the Act, 2013; and

e) On the basis of the written representations received from the directors as on 31st March 2014, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2014 from being appointed as a director in terms of sub section 1(g) of Section 274 of the Act.

ANNEXURE TO THE INDEPENDANT AUDITORS'' REPORT

With reference to our Auditor''s Report to the Shareholders of Dharani Sugars and Chemicals Limited, we report that, in our opinion and to the best of our knowledge and belief and as per the information and explanations furnished to us and the books and records examined by us in the normal course of audit;

1. In terms of its fixed assets

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

b) The fixed assets of the Company have been physically verified during the period by the management in accordance with a programme of verification, the frequency whereof is reasonable. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

2. In respect of its inventories

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

b) The procedures of physical verification of inventories followed by 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 taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act, 1956. Accordingly, paragraphs 4(iii)(e) 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

In respect of loans, secured or unsecured granted by the Company to companies, firms, or other parties covered in the Register maintained under Section 301 of the Act, 1956, we state the following:

a) During the period, the Company has granted loans to a body corporate covered in the register maintained under Section 301 of the Act, 1956 ("the Act"). The maximum amount outstanding during the year was Rs. 1255.24 lakhs and the year-end balance of such loan amounted to Rs. 1255.24 lakhs. Other than the above, the Company has not granted any loans, secured or unsecured, to firms or parties covered in the register maintained under section 301 of the Act.

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the loans had been granted to the body corporate listed in the register maintained under section 301 of the Act were not, prima facie, prejudicial to the interest of the Company.

c) The loan granted is repayable on demand. Loan and interest has not fallen due for payment during the relevant year. Hence clause 4 (iii) (d) of the Order is not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

5. In respect of transactions entered in the register maintained in pursuance of Section 301 of the Act 1956.

a) To the best of our knowledge and belief and according to the information and explanations given to us, the particulars of contracts or arrangement referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanations given to us, there are no transactions of purchase of inventory and fixed assets exceeding Rs.5 lakhs in respect of each party. In respect of transactions on the basis of contracts or arrangements referred to in section 301 of the Act and other transactions exceeding Rs. 5 lakhs in respect of each party, the transactions have been made at prices, which are prima facie, 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, directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Act, 1956 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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 accounts and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the 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. According to the information and explanations given to us, in respect of statutory dues.

a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities during the period. Therewere no undisputed amounts payable in respect of Provident Fund, Employee State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax customs duty, excise duty, cess and other material statutory dues were in arrears as at 31st March 2014 for a period of more than six months from the date they became payable.

b) There are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, which have not been deposited by the Company on account of any disputes other than the following:

Name of the Nature of dues Amount period to Statute (Rs.in which the lakhs) amount related

Central Excise Act, 1994 Bagasse, Bio 443.57 Aprial compost sales reversal 2008 to against Cenvat Credit March rule 6(3) and Central 2013 Excise Act Section 2(d)

Central Excise Act, Cenvat credit reversal 47.92 January 1994 on Power sales 2011 to February 2011

Central Excise Act, Cenvat credit availment 1331.57 February 1994 on Non-excisable 2009 to commodity and Non-duty March 2013 payment on captive consumption

Finance Act, 1994 Service Tax on Goods 25.84 April 2008 Transport Agency to March 2013

Tamilnadu Tax on Power generation tax 252.98 June 2003 Consumption or Sale of to Sep Electricity Act 2003 2008 and April 2011 to March 2014

Tamilnadu Tax on Power Tariff revision @ 74.89 August''12 Consumption or Sale of to Electricity Act 2003 September 2013

Name of the Forum where dispute is pending Statute Central Excise Act, CESTAT, Chennai Central Excise Act, CESTAT, Chennai 1994

Central Excise Act, CESTAT, Chennai 1994 Finance Act, 1994 CESTAT, Chennai

Tamilnadu Tax on Supreme Court Consumption or Sale of Electricity Act 2003 Tamilnadu Tax on Supreme Court Consumption or Sale of Electricity Act 2003 net off amount paid under protest.

10. The Company does not have accumulated losses at the end of the financial year. The Company has incurred cash losses during the financial year covered by the audit and not in the immediately preceding financial year.

11. According to information and explanation given to us and as per the books and records examined by us, the Company has defaulted in repayment of dues to financial institution and banks which are as follows:

Name of Bank / Nature of Dues Amount in Rs. Financial Institution

Sugar Development Repayment of Loan 194,02,880 Fund, Govt of India

Union Bank of India Repayment of Loan 45,62,000

Indian Overseas Bank Repayment of Loan 90,00,000

Indian Renewable Repayment of Loan 1,50,00,000 Energy Development 37,30,000 Agency Ltd

Sugar Development Payment of Interest 46,60,944 Fund, Govt of India

Union Bank of India Payment of Interest 23,79,753

Indian Bank Payment of Interest 26,01,515

Indian Renewable Payment of Interest 1,67,56,513 Energy Development 16,52,712 Agency Ltd

State Bank of India Payment of Interest 12,57,636

Bank of India Payment of Interest 23,82,683

Name of Bank / Due date of Date of Financial Institution repayment repayment

Sugar Development March 1, 2014 April 3, 2014 Fund, Govt of India

Union Bank of India March 25,2014 April 19,2014

Indian Overseas Bank March 31,2014 May 3, 2014

Indian Renewable March 31, 2014 April 3, 2014 Energy Development March 31, 2014 April 2, 2014 Agency Ltd

Sugar Development March 1, 2014 April 7, 2014 Fund, Govt of India

Union Bank of India March 31, 2014 April 19, 2014

Indian Bank March 31, 2014 April 30, 2014

Indian Renewable March 31, 2014 April 3, 2014 Energy Development March 31, 2014 April 2, 2014 Agency Ltd

State Bank of India March 31, 2014 April 30, 2014

Bank of India March 31, 2014 April 3, 2014

The Company has not issued any debentures.

12. Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

16. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were, prima facie applied during the period for the purposes for which the loans were obtained.

17. To the best of our knowledge and according to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report that the Company has not used funds raised on short-term basis for long-term investment.

18. The Company has not made any preferential allotment of shares to parties or to a Company covered in the register maintained under Section 301 of the Act, 1956

19. According to the information and explanations given to us, the Company has not issued any debentures.

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

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

SRINIVASAN & SHANKAR Chartered Accountants (Firm Registration No.: 005093S)

per P SRINIVASAN Place : Chennai Partner Date: 29th May 2014 Membership No.025416

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of DHARANI SUGARS AND CHEMICALS LIMITED, which comprise the Balance Sheet as at 31st March 2013, the Statement of Profit and Loss account and Cash Flow Statement for the year ended on that date and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s management is responsible for the preparation of these Financial Statements that give a true & fair view of the Financial position, Financial performance 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 Statement that gives the true and fair view and is free from material statement, 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free from material misstatement.

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

Report on other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we have annexed hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

In terms of and further to our comments in the Annexure referred to 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 it appears from our examination of the said books and records;

c) The Balance Sheet, Profit & Loss account and Cash Flow Statement referred to in this report are in agreement with the said books of account;

d) In our opinion, the Balance Sheet, Profit & Loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the Directors as on 31st March 2013, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2013 from being appointed as a director in terms of sub section 1(g) of Section 274 of the Companies Act, 1956

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements 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 31st March, 2013;

b) in the case of the Statement of Profit & Loss Account, of the Profit of the Company 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 TO THE AUDIT REPORT

With reference to our Auditor''s Report to the Shareholders of Dharani Sugars and Chemicals Limited, we report that, in our opinion and to the best of our knowledge and belief and as per the information and explanations furnished to us and the books and records examined by us in the normal course of audit;

1. In terms of its fixed assets

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

b) The fixed assets of the Company have been physically verified during the period by the management in accordance with a programme of verification, the frequency whereof is reasonable. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any substantial part of the fixed assets.

2. In respect of its inventories

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

b) The procedures of physical verification of inventories followed by 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 taken/granted any loans, secured or unsecured during the year from/to companies, firms or parties covered in the Register maintained under Section 301. In respect of loans, secured or unsecured taken by the Company from companies, firms, or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, we state the following:

a) During the period, the Company has repaid loans taken from a party during the previous years covered in the register maintained under Section 301 of the Companies Act, 1956. The outstanding amount in respect of such loans is Rs. Nil as at the end of the year.

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the loans have been taken from the Company, are not prima facie prejudicial to the interest of the Company. The amounts are repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal system.

5. In respect of transactions entered in the register 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 need to be entered into the register maintained under Section 301 have been so entered.

b) According to the information and explanations given to us, there are no transactions of purchase of inventory and fixed assets exceeding Rs.5 lakhs in respect of each party. In respect of other transactions exceeding Rs. 5 lakhs in respect of each party, the transactions have been made at prices, which are prima facie, 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, directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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 accounts and records maintained by 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. According to the information and explanations given to us, in respect of statutory dues and other dues.

a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the period.

b) As confirmed by the Management, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess on account of any dispute other than the following:

Amount Forum where dispute Name of the Statute Nature of dues (Rs. in lakhs) is pending

Central Excise Act 1994 Bagasse, Bio compost sales 168.26 Commissioner of Central reversal against Cenvat Credit Excise - Tirunelveli rule 6(3) and Central Excise Act Section 2(d)

Central Excise Act 1994 Bagasse, Bio compost sales 19.56 Commissioner of Central reversal against Cenvat Credit Excise - Tirunelveli rule 6(3) and Central Excise Act Section 2(d)

Central Excise Act 1994 Bagasse, Bio compost sales Commissioner of Central 83.14 reversal against Cenvat Credit Excise - Tirunelveli rule 6(3) and Central Excise Act Section 2(d)

Finance Act, 1994 Service Tax on Goods 6.30 Central Excise and Service Transport Agency Tax Appeal Commissioner

Tamil Nadu Tax on Electricity Consumption Tax 209.00 Supreme Court consumption or sale of electricity act 2003

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. According to information and explanation given to us and as per the books and records examined by us, the Company has not defaulted in repayment of dues to financial institution or bank. The Company has not issued any debentures.

12. Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

16. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were, prima facie applied by the Company during the period for the purposes for which the loans were obtained.

17. To the best of our knowledge and according to the information given to us, funds raised on short-term basis have, prima facie not been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties or to a company covered in the register maintained under Section 301 of the Companies Act, 1956

19. According to the information and explanations given to us, the Company has not issued any debentures.

20. The Company has not raised any monies by way of public issues during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



SRINIVASAN & SHANKAR

Chartered Accountants

(Firm Registration No.: 005093S)

per P SRINIVASAN

Partner

Place: Chennai Membership

No.025416

Date: 30th May 2013

---

Mar 31, 2012

We have audited the attached Balance Sheet of DHARANI SUGARS AND CHEMICALS LIMITED as at 31st March 2012, the Statement of Profit and Loss and 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.

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

As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we have annexed hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

In terms of and further to our comments in the Annexure referred to 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 it appears from our examination of the said books and records;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement referred to in this report are in agreement with the said books of account;

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

e) On the basis of the written representations received from the Directors as on 31st March 2012, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2012 from being appointed as a director in terms of sub section 1(g) of Section 274 of the Companies Act, 1956

In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read in conjunction with Notes attached thereto, 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 31st March, 2012;

b) in the case of the Statement of Profit and Loss, of the Profit of the Company 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 TO THE AUDIT REPORT

With reference to our Auditor's Report to the Shareholders of Dharani Sugars and Chemicals Limited, we report that, in our opinion and to the best of our knowledge and belief and as per the information and explanations furnished to us and the books and records examined by us in the normal course of audit;

1. In terms of its fixed assets

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

b) The fixed assets of the Company have been physically verified during the period by the management in accordance with a programme of verification, the frequency whereof is reasonable. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any substantial part of the fixed assets.

2. In respect of its inventories

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

b) The procedures of physical verification of inventories followed by 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 any loans, secured or unsecured during the year to companies, firms or parties covered in the Register maintained under Section 301. In respect of loans, secured or unsecured taken by the Company from companies, firms, or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, we state the following:

a) During the period, the Company has taken loan of Rs.283 lakhs, from a party covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding at any time during the year is Rs. 633 lakhs and the year- end balance is Rs.633 lakhs.

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the loans have been taken by the Company, are not prima facie prejudicial to the interest of the Company. The amounts are repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal system.

5. In respect of transactions entered in the register 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 need to be entered into the register maintained under Section 301 have been so entered.

b) According to the information and explanations given to us, there are no transactions of purchase of inventory and fixed assets and sale of goods exceeding Rs.5 lakhs in respect of each party. In respect of other transactions exceeding Rs. 5 lakhs in respect of each party, the transactions have been made at prices, which are prima facie, 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, directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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 accounts and records maintained by 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. According to the information and explanations given to us, in respect of statutory dues and other dues.

a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the period.

b) As confirmed by the Management, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, on account of any dispute other than the following:

Name of the Amount Forum where Statute Nature of dues (Rs. in lakhs) dispute is pending

Central Excise Bagasse, bio compost Commissioner of Act 1944 sales reversal against 168.26 Cenvat Credit rule 6(3) and Central Excise Act Central Excise Section 2(d) Thirunelveli

Bagasse, bio compost Commissioner of Central Excise sales reversal against 19.56 Central Excise - Act 1944 Cenvat Credit rule 6(3) Thirunelveli and Central Excise Act Section 2(d)

Central Excise Bagasse, bio compost Commissioner of Act 1944 sales reversal against 83.14 Central Excise - Cenvat Credit rule 6(3) Thirunelveli and Central Excise Act Section 2(d)

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. According to information and explanation given to us and as per the books and records examined by us, the Company has not defaulted in repayment of dues to financial institution or bank. The Company has not issued any debentures.

12. Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

16. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were, prima facie applied by the Company during the period for the purposes for which the loans were obtained.

17. To the best of our knowledge and according to the information given to us, funds raised on short-term basis have, prima facie not been used for long-term investment.

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

19. According to the information and explanations given to us, the Company has not issued any debentures.

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

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit. SRINIVASAN & SHANKAR

Chartered Accountants

(Firm Registration No.: 005093S)

per P SRINIVASAN

Partner

Membership No.025416

Place: Chennai

Date: 23rd May 2012

---

Mar 31, 2011

We have audited the attached Balance Sheet of DHARANI SUGARS AND CHEMICALS LIMITED, as at 31st March 2011, the Profit and Loss account and Cash Flow Statement for the year ended on that date annexed the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements. An audit also includes assessing the accounting principles used and significand 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.

As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Governmentt of India in terms of Section 227(4A) of the Companies Act, 1956, we have annexed hereto a statement on the matters specifies in paragraphs 4 and 5 of the said Order.

In terms of an further to our comments in the Annexure referred to above, we report that:

(a) we have obtained all the information and explanations which, to the best of our knowledge and belief, were neccessary 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 it appears from our examination of the said books and records;

(c) The Balance Sheet, Profit & Loss account and Cash flow statement referred to in this report are in agreement with the said books of account;

(d) In our opinion, the Balance Sheet, Profit & Loss account and Cash flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act! 1956;

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

In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read in conjunction with Notes and Schedules attached thereto, 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 31st March 2011;

(b) in the case of the Profit & Loss Account, of the Profit of the Company for of 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 TO THE AUDITORS'REPORT

With reference to our Auditor's Report to the Shareholders of Dharani Sugars and Chemicals Limited, we report that, in our opinion and to the best of our knowledge and belief and as per the information and explanations furnished to us and the books and records examined by us in the normal course of audit;

1. In terms of its fixed assets

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

b) The fixed assets of the Company have been physically verified during the period by the management in accordance with a programme of verification, the frequency whereof is reasonable. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any substantial part of the fixed assets.

2. In respect of its inventories

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

b) The procedures of physical verification of inventories followed by 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 any loans, secured or unsecured during the year to companies, firms or parties covered in the Register maintained under Section 301. In respect of loans, secured or unsecured taken by the Company from companies, firms, or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, we state the following:

a) During the period, the Company has taken loans from a party covered in the register maintained under Section 301 of the Companies Act, 1956. The outstanding amount in respect of the loans taken during the year is Rs. 350 lakhs as at the 0end of the year.

b) ln our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the loans has been taken from the Company, are not prima facie prejudicial to the interest of the Company The amounts are repayable on demand

4. In our opinion and according to the explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal system.

5. In respect of transactions entered in the register 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 need to be entered into the register maintained under Section 301 have been so entered.

b) According to the information and explanations given to us, there are no transactions of purchase of inventory and fixed assets and sale of goods exceeding Rs.5 lakhs in respect of each party. In respect of other transactions exceeding Rs. 5 lakhs in respect of each party, the transactions have been made at prices, which are prima facie, 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, directives issued by the Resen/e Bank of India and the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any CourtoranyotherTribunal.

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 accounts and records maintained by 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. According to the information and explanations given to us, in respect of statutory dues and other dues.

a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the period.

b) As confirmed by the Management, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, on account of any dispute other than the following:

Name of the Nature of dues Amount Forum where Statute (Rs. in lakhs) Dispute is pending

Finance Act, Service Tax on 580.01 Central Excise and 1994 Manpower and Service Tax Recruipment Appellate Tribunal Supply Agency Service

Finance Act, Service Tax on 14.92 Central Excise and 1994 Goods Transport Service Tax Agency Appellate Tribunal

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. According to information and explanation given to us and as per the books and records examined by us, the Company has not defaulted in repayment of dues to financial institution or bank. The Company has not issued any debentures.

12. Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

16. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were, prima facie applied by the Company during the period for the purposes for which the loans were obtained.

17.TO the best of our knowledge and according to the information given to us, funds raised on short-term basis have, prima facie not been used for long-term investment.

18. The Company has made preferential allotment of shares to parties and to a company covered in the register maintained under Section 301 of the Act.

19. According to the information and explanations given to us, the Company has not issued any debentures.

20. The Company has not raised any monies by way of public issues during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

SRINIVASAN&SHANKAR Chartered Accountants (Firm Registration No. : 005093S)

per P SRINIVASAN Partner Membership No.025416 Place : Chennai Dated :24th May 2011

---

Mar 31, 2010

We have audited the attached Balance Sheet of DHARANI SUGARS AND CHEMICALS LIMITED, as at 31st March 2010 and the related Profit and Loss account and Cash flow statement for the year ended on that date Annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we have annexed hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

In terms of and further to our comments in the Annexure referred to 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 ouraudit

{b) In our opinion, proper books of account as required by law, have been kept by the Company so far as it appears from our examination of the said books and w records

(c) The Balance Sheet, Profit & Loss account and Cash flow statement referred to in this report, are in agreement with the said books and records

(d) In our opinion, the Balance Sheet, Profit & Loss account and Cash flow statement dealt with by this report comply with the accounting standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956.

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

In our opinion and to the best of our information and according to the explanations given to us, the saidfinancial - statements, read in conjunction with Notes and Schedules attached thereto, give the information required by the Companies Act, 1956 in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India.

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31sMarch 2010

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

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

ANNEXURE TO THE AUDITORS REPORT

With reference to our Auditors Report to the Shareholders of Dharani Sugars and Chemicals Limited, we report that, in our opinion and to the best of our knowledge and belief and as per the information and explanations furnished to us and the books and records examined by us in the normal course of audit .

1. In terms of its fixed assets.

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

b)The fixed assets of the Company have been physically verified during the period by the management in accordance with a programme of verification, the frequency whereof is reasonable. According to the information and explanations given to us, nd material discrepancies were noticed on such verification.

c)During the year, the Company has not disposed off any substantial part of the fixed assets.

2. In respect of its inventories

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

b) The procedures of physical verification of inventories followed by 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 any loans, secured or unsecured during the year to companies, firms or parties covered in the Register maintained under Section 301. In respect of loans, secured or unsecured taken by the Company from companies, firms, or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, we state the following:

a) During the period, the Company has not taken any loans from parties covered in the register maintained under Section 301 of the Companies Act, 1956. However, the outstanding amount in respect of the loans taken in the earlier years is Rs. 150 lakhs as at the end of the year.

b) ln our opinion the rate of interest and other terms and conditions on which the loans has been taken from companies, firms or other parties listed in the registers maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. The repayment of Principal and Interest are regular.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system 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 and services. During the course of our audit, no major weakness has been noticed in the internal system.

5. In respect of transactions entered in the register 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 need to be entered into the register maintained under Section 301 have been so entered.

b) According to the information and explanations given to us, there are no transactions of purchase of inventory and fixed assets and sale of goods exceeding Rs.5 lakhs in respect of each party. In respect of other transactions exceeding Rs. 5 lakhs in respect of each party, the transactions have been made at prices, which are prima facie, 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, directives issued by the Reserve Bank of India and the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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 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 beep 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. According to the information and explanations given to us, in respect of statutory dues and other dues.

a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the period.

b) As confirmed by the Management, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, on account of any dispute other than the following:

Name of the Amount Forum where Statute Nature oraues (Rs.in lakhs) dispute is pending Tamil Nadu Sales 227.68

Tax Act and Central Purchase Tax on (Rs227.68lacs Supreme Court Sales Act, 1961 Cane Kurcnase- paid under protest)

Tamil Nadu Sales Tax Act and Central Purchase Tax on 745.68 Madurai High court Sales Act, 1961 Cane Purchase.

Service Tax on. Central, Exrise and Service Tax Act, Manpower and - Service Tax Recruitment Supply 464.72 Appellate Tribunal

Service Tax on. Service Tax Act, Goods TransDort 12.92 Commissioner 1994 Agency AppealsMadurai



10. The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

11. According to information and explanation given to us and as per the books and records examined by us, the Company has not defaulted in repayment of dues to financial institution or bank. The Company has not issued any debentures.

12. Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

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

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

16. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were, prima facie applied by the Company during the period for the purposes for which the loans were obtained, other than temporary deployment pending application.

17.To the best of our knowledge and according to the information given to us, funds raised on short- term basis have, prima facie not been used for long- term investment.

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. According to the information and explanations given to us, the Company has not issued any debentures.

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

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

SRINIVASAN & SHANKAR

Chartered Accountants Firm Registration. No. 005093S

per P SRINIVASAN

Place: Chennai Partner

Dated : 25th May 2010 Membership No. 025416