Auditor Report of Thiru Arooran Sugars Ltd.

Mar 31, 2016

To

The Members of

Thiru Arooran Sugars Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of THIRU AROORAN SUGARS LIMITED ("the Company"), which comprise the Balance Sheet as at 31^st March, 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.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position and financial performance 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 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 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 standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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:

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31^st March, 2016;

ii) In the case of the Statement of Profit and Loss of its LOSS 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 that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2016, ("the Order"), as amended, 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 the paragraph 3 and 4 of the Order, to the extent applicable.

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

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

b) 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 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 31^st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2016 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".

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

(i) The Company has disclosed the impact of pending litigations in the Financial Statements. Refer Note No.27 and 32 of the Notes 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.

"ANNEXURE A" TO THE INDEPENDENT AUDITORS'' REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF THIRU AROORAN SUGARS LIMITED

Referred to in paragraph 1 under the heading ''report on Other Legal & Regulatory Requirement'' of our report of even date to the financial statements of the Company for the year ended 31^st March 2016:

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

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification.

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

(ii) The Management has conducted physical verification of inventories at reasonable intervals and on the basis of information and explanations given to us and the records produced to us, no material discrepancies were noticed on such verification.

(iii) The Company has not granted any loans, secured or unsecured to Companies, Firms, Limited Liability Partnership or other parties covered in the Register maintained under Section 189 of the Companies Act 2013.

(iv) In our opinion and according to the information and explanations give to us, in respect of investments made by the Company and the provision of guarantee for loans taken by the subsidiary company and the Associate Company, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013, as applicable.

(v) The Company has not accepted any deposits from the public during the year.

(vi) The Central Government has prescribed the maintenance of cost records under sub-section (1) of Section 148 of the Companies Act, 2013 and such records and accounts have been made and maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, Employees'' State Insurance, Income-Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and other statutory dues with the appropriate authorities, though there has been delay in the remittance of cane cess, value added tax, excise duty during the year. The details of statutory dues outstanding as at the last day of the financial year for a period of more than six months from the date they became payable is as under:

Details	Amount outstanding for a period of more than six months from the date they became payable
Cane Cess	Rs. 54,64,862

(b) There are no dues of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax or cess that have not been deposited on account of any dispute except the following:

Name of the Statute	Nature of the dues	Amount Rs.	Forum where dispute is pending
Central Excise Act, 1944	Cenvat on materials and penalty	17,86,537	CESTAT
Finance Act, 1994	Service tax on goods transport	3,63,998	Supreme Court
Finance Act, 1994	Service tax on goods transport	2,42,904	Supreme Court
Tamilnadu General Sales Tax Act, 1959	Waiver of purchase tax on cane	10,25,97,189	High Court of Judicature at Madras
Tamilnadu General Sales tax Act, 1959	Purchase tax on cane	8,43,950	Deputy Commissioner, Commercial Taxes, (Appeals)
Income tax Act, 1961	Income tax	33,291	Commissioner of Income tax (Appeals)
Finance Act, 1994	Service tax on Cane harvesting charges	10,47,14,986	CESTAT
Income tax Act, 1961	Tax and interest for assessment year 2010-11	7,95,96,970	ITAT
Income tax Act, 1961	Tax and interest for assessment year 2012-13	1,46.02,070	Commissioner of Income Tax (Appeals)
Income tax Act, 1961	Tax and interest for assessment year 2013-14	2,50,15,710	Commissioner of Income Tax ( Appeals)
Finance Act, 1994	Service tax on cane transport	25,19,555	CESTAT

(viii) The Company has not defaulted in the repayment of loans or borrowings from banks and financial institutions. However, delays had been noticed in payment of interest and repayment of principal.

(ix) The Company has not raised moneys by way of initial public offer or further public offer. The term Loans were applied for the purpose for which those were availed.

(x) According to the information and explanations given to us, no frauds by the Company or its officers or employees have been noticed or reported during the year.

(xi) As explained to us, the Company has not paid/ provided any remuneration to its Managing Director except Sitting Fees to the Directors.

(xii) The Company is not a Nidhi Company. Therefore, the provisions of Clause 3 (xii) of the Order are not applicable to the Company.

(xiii) In our opinion, all transactions with the related parties are in compliance with Section 177 and 188 of

Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) Based upon the audit procedures performed and the information and explanations given to us by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) Based upon the audit procedures performed and the information and explanations given to us by the management, the company has not entered into any non-cash transactions with director or persons connected with him.

(xvi) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934.

"Annexure B" to the Independent Auditor''s Report of even date on the Standalone Financial Statements of THIRU AROORAN SUGARS LIMITED

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

We have audited the internal financial controls over financial reporting of THIRU AROORAN SUGARS LIMITED ("the Company") as of 31^st March 2016 in conjunction with our audit of the standalone financial statements of the company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

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

Auditors'' Responsibility

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

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls system 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 procedure selected depend on the auditor''s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error.

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

Meaning of Internal Financial Controls Over Financial Reporting

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

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our Opinion, the company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial Controls over financial reporting were operating effectively as at March 31, 2016, 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 S N S Associates

Chartered Accountants

Firm Registration No. 006297S

S Nagarajan

Partner

Membership No. 20899

Chennai : June 14, 2016

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Mar 31, 2015

We have audited the accompanying standalone financial statements of THIRU AROORAN SUGARS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss for the year then ended, 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 Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position and financial performance 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 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 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 standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made 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 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 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:

i) In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2015:

ii) In the case of the Statement of Profit and Loss of the Loss 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' 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 the paragraph 3 and 4 of the Order, to the extent applicable.

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

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

b) 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 and, the Statement of Profit and Loss 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, 2015 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 Section 164 (2) of the Act.

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 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. Please refer Note Nos.27 and 31 of the Notes forming part of 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.

ANNEXURE TO THE INDEPENDENT AUDITORS' REOPRT

As required by the Companies (Auditors' Report) Order, 2015 ("the Order"), we report that:

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

(b) The Fixed Assets have been physically verified by the Management during the year and no material discrepancies were noticed on such verification.

(ii) (a) The inventories of the Company at all its locations have been physically verified by the management during the year.

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

(c) The Company has maintained proper records of inventories and the discrepancies between the physical inventories, which have been properly dealt with in the books of account, were not material.

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

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid system of internal control.

(v) In respect of the deposits accepted from the public in the earlier years and repaid during the year on their maturity, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Companies Act and the rules framed thereunder.

(vi) On the basis of the records produced, we are of the opinion, that prima facie, the cost records prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(vii) (a) The Company been generally regular in depositing undisputed statutory dues including provident fund,employees' state insurance, income-tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory duties with the appropriate authorities though there has been occasional delays in the remittance of cane cess, cane purchase tax, service tax, Excise duty in a few cases. The details of statutory dues outstanding as at the last day of the financial for a period of more than six months from the date they became payable is as under:

Details Amount outstanding for a period of more than six months from the date they became payable

Cane Cess Rs. 29,32,630

(b) There are no dues of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax or cess that have not been deposited on account of any dispute except as follows:

Name Nature Amount of the Statute of the dues Rs.

Central Excise Cenvat on materials 17,86,537 Act, 1944 and penalty

Finance Act, 1994 Service tax on goods 3,63,998 transport

Finance Act, 1994 Service tax on goods 2,42,904 transport

Tamilnadu General Waiver of purchase 10,25,97,189 Sales Tax Act, 1959 tax on cane

Central Excise Duty on captive 25,44,74,573 Act, 1944 consumption

Tamilnadu General Purchase tax 8,43,950 Sales tax Act, 1959 on cane

Income tax Act, Income tax 33,291 1961

Finance Act, 1994 Service tax on Cane 10,47,14,986 harvesting charges

Income tax Income tax 1,46,35,361 Act, 1961

Name Forum where of the Statute dispute is pending

Central Excise CESTAT Act, 1944

Finance Act, 1994 Supreme Court

Finance Act, 1994 Supreme Court

Tamilnadu General High Court of Sales Tax Act, 1959 Judicature at Madras

Central Excise High Court of Act, 1944 Madras, CESTAT and Commissioner of Central Excise, Trichy

Tamilnadu General Deputy Sales tax Act, 1959 Commissioner, Commercial Taxes, Appeals

Income tax Act, Commissioner of 1961 Income tax (Appeals)

Finance Act, 1994 CESTAT

Income tax Deputy Act, 1961 Commissioner of Income tax

(c) There are no amounts which are required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and the rules thereunder.

(viii) The Company does not have accumulated losses at the end of the financial year exceeding fifty percent of its net worth. However it has incurred cash losses in the current financial year as well as in the immediately preceding financial year.

(ix) The Company has not defaulted in the repayment of dues to any financial institution, bank or debenture holders, though occasional delays were noticed in the repayment of the dues.

(x) In our opinion and according to the information and explanations given to us, the terms and conditions in respect of guarantees given by the Company for the loans taken by its Subsidiary, Terra Energy Limited and Associate Company, Shree Ambika Sugars Limited, are not, prima facie, prejudicial to the interests of the Company.

(xi) The term loans availed by the Company have been applied for the purposes for which they were availed.

(xii) During the course of our examination of the books of account carried out in accordance with generally accepted auditing principles in India, we have not come across any instance of fraud on or by the company, nor have we been informed by the Management of any such instance being noticed or reported during the year.

For S N S Associates Chartered Accountants Firm Registration No. 006297S

S Nagarajan Partner Membership No. 20899 Chennai : May 29, 2015

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Mar 31, 2014

We have audited the accompanying Financial statements of THIRU AROORAN SUGARS LIMITED, which comprise the Balance Sheet as at 31st March 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial 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 Section 211(3C) of the Companies Act,1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with 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 auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting estimates 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.

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:

(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 of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

As required by Section 227(3) of the Companies Act,1956, we report that:

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

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

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

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

v) On the basis of the written representations received from the Directors as at 31st March 2014 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March 2014 from being appointed as a Director in terms of Section 274(1)(g) of the Companies Act,1956.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REOPRT

(Referred to in our Report of even date)

As required by the Companies (Auditors'' Report) Order 2003, as amended by the Companies (Auditor''s Report) Order 2004, issued by the Central Government in terms of section 227(4A) of the Companies Act,1956, we report that:

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

(b) The Fixed Assets of the Company have been physically verified during the year by the Management and no material discrepancies between the book records and the physical inventory have been noticed.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the Fixed Assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) (a) The inventories of the Company at all its locations have been physically verified by the Management during the year.

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

(c) The Company has maintained proper records of inventories and the discrepancies between the physical inventories and book records which have been properly dealt with in the books of account were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act,1956.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act,1956.

(iv) In our opinion, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for the purchase of inventories, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid system of internal control.

(v) (a) In our opinion, the transactions that need to be entered in the register maintained under Section 301 of the Companies Act,1956, have been so entered.

(b) In our opinion, the aforesaid transactions have been made at prices which are reasonable having regard to the prevailing market price. However the steam supplied by the Subsidiary Company, Terra Energy Limited has been accounted for at cost as billed by the Subsidiary Company.

(vi) In respect of the deposits accepted from the public, the Company has complied with the directives of Reserve Bank of India and the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act,1956 and the rules framed thereunder.

(vii) In our opinion, the Company''s present internal audit system is commensurate with its size and nature of its business.

(viii) On the basis of records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the Government of India under Section 209(1)(d) of the Companies Act,1956 have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(ix) (a) The Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities though there has been occasional delays in the remittance of Cane Cess and Sales Tax in a few cases. The provisions of Employees State Insurance Act are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income-tax, Wealth tax, Service tax, Sales tax, Customs Duty, Excise Duty, Cess and other statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(c) At the end of the financial year there were no dues of Sales tax, Income tax, Wealth tax, Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute except as follows:

Name of Nature of Amount Forum where the Statute the dues Rs. dispute is pending

Central Excise Cenvat on 17,86,537 Central Excise and Service Act,1944 materials tax Appellate Tribunal and penalty

Finance Service tax 3,63,998 Supreme Court Act,1994 on goods Transport

Finance Service tax 2,42,904 Supreme Court Act,1994 on goods Transport Tamil Nadu Waiver of 10,25,97,189 High Court of Genarl Sales Purchase Madras Tax Act,195 Tax on Sugarcane

Central Excise Cenvat on 17,33,481 Deputy Act,1944 inputs Commissioner Central Excise, Cuddalore

Central Excise Excise duty 22,60,15,228 High Court of Act,1944 on captive Madras and Central consumption Excise and Service of molasses Tax Appellate Tribunal Tamil Nadu Purchase tax 8,43,950 Deputy General Sales on Sugarcane Commissioner, Tax Act,1959 Commercial Tax (Appeals)

Income Tax Income tax 33,291 Commissioner of Act,1961 Income tax (Appeals)

Finance Act,1994 Service tax 10,47,14,986 Central Excise and Service tax Appellate Tribunal

Income Tax Income tax 3,90,81,000 Deputy Act, 1961 and Interest Commissioner of Income tax

(x) The Company does not have any accumulated losses at the end of the financial year exceeding fifty percent of its net worth. It has incurred cash losses either in the financial year under report while there was no cash loss in the immediately preceding financial year.

(xi) According to the records produced, the Company has not defaulted in the repayment of its dues to any Financial Institution or Bank during the year.

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

(xiii) In our opinion, the terms and conditions in respect of guarantees given by the Company for loans taken by its subsidiary, Terra Energy Limited and its Associate Company, Shree Ambika Sugars Limited are not prima facie prejudicial to the interests of the Company.

(xiv) On the basis of review of utilization of funds on an overall basis, in our opinion, the Term Loans taken by the Company were applied for the purposes for which the loans were obtained.

(xv) On the basis of review of utilization of funds on an overall basis, the funds raised on short term basis have not been used for long term investment or vice versa during the year.

(xvi) The Company has not made any preferential allotment of shares to parties and / or companies covered in the register maintained under section 301 of the Companies Act,1956.

(xvii) The Company has not issued any debentures.

(xviii) During the course of our examination of the books of account carried out in accordance with generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the Management of any such instance being noticed or reported during the year.

(xix) Clauses (xiii), (xiv) and (xx) of the aforesaid Order are not applicable to the Company.



For S N S Associates Chartered Accountants Firm Registration No. 006297S

S Nagarajan Partner Membership No. 20899 Chennai : May 9, 2014

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of THIRU AROORAN SUGARS LIMITED, which comprise the Balance Sheet as at 31st March 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

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 Section 211(3C) of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material mis-statement.

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 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 the accounting policies used and the reasonableness of the accounting estimates 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.

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:

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

(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 of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements As required by the Companies (Auditor''s Report) Order, 2003("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure 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: 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.

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.

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

In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

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, none of the directors is disqualified as on 31st March 2013 from being appointed as a director in terms of Section 274(1) (g) of the Act.

As required by the Companies (Auditors'' Report) Order 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order 2004, issued by the Central Government in terms of section 227(4A) of the Companies Act, 1956, we report that:

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

(b) The Fixed Assets of the Company have been physically verified during the year by the management and no material discrepancies between the book records and the physical inventory have been noticed.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) (a) The inventories of the Company at all its locations have been physically verified by the management during the year.

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

(c) The Company has maintained proper records of inventories and the discrepancies between the physical inventories and book records which have been properly dealt with in the books of account were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for purchase of inventories, fixed assets and for the sale of goods. Further on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion, the transactions that need to be entered in the register maintained under section

301 of the Companies Act, 1956, have been so entered.

(b) In our opinion, the aforesaid transactions have been made at prices which are reasonable having regard to the prevailing market prices. However the steam supplied by the subsidiary company, Terra Energy Limited has been accounted for at cost as billed by the subsidiary company.

(vi) In respect of the deposits accepted from the public, the Company has complied with the directives of Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder.

(vii) In our opinion, the Company''s present internal audit system is commensurate with its size and nature of its business.

(viii) On the basis of records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the Government of India under Section 209(1)(d) of the Companies Act, 1956 have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(ix) (a) The Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India. The provisions of Employees State Insurance Act are not applicable to the Company.

(x) The Company does not have any accumulated losses exceeding 50% of its net worth. It has not incurred cash losses either in the current financial year or in the immediately preceding financial year.

(xi) According to the records produced, the Company has not defaulted in repayment of its dues to any financial institution or bank or debenture holder during the year.

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

(xiii) In our opinion, the terms and conditions in respect of guarantees given by the Company for loans taken by its subsidiary, Terra Energy Limited and Associate Company, Shree Ambika Sugars Limited are not prima facie prejudicial to the interests of the Company.

(xiv) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the Company were applied for the purposes for which the loans were obtained.

(xv) On the basis of review of utilization of funds on an overall basis, in our opinion, the funds raised on short term basis have not been used for long term investment or vice versa during the year.

(xvi) The Company has not made preferential allotment of shares to parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xvii) The Company has not issued nor has any outstanding debentures.

(xviii) During the course of our examination of the books of account carried out in accordance with generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the management of any such instance being noticed or reported during the year.

(xix) Clauses (xiii), (xiv) and (xx) of the aforesaid Order are not applicable to the Company.

For S N S Associates

Chartered Accountants

Firm Registration No. 006297S

S Nagarajan

Partner Membership No. 20899

Chennai : May 29, 2013

---

Mar 31, 2012

We have audited attached Balance Sheet of THIRU AROORAN SUGARS LIMITED as at 31st March 2012 and also the Profit and Loss Account and the Cash Flow Statement for the period ended that date annexed thereto and report that:

1. These statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. 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.

4. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books.

5. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

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

7. On the basis of 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 at 31st March 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

8. In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 Profit and Loss Account, of the PROFIT for the period ended on that date; and

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

9. As required by the Companies (Auditors' Report) Order 2003, as amended by the Companies (Auditor's Report) (Amendment) Order 2004, issued by the Central Government in terms of section 227(4A) of the Companies Act, 1956, we report that:

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

(b) The Fixed Assets of the Company have been physically verified during the year by the management and no material discrepancies between the book records and the physical inventory have been noticed.

(c) No substantial part of the fixed assets of the Company has been disposed off during the year.

(ii) (a) The inventories of the Company at all its locations have been physically verified by the management during the year.

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

(c) The Company has maintained proper records of inventories and the discrepancies between the physical inventories and book records which have been properly dealt with in the books of account were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for purchase of inventories, fixed assets and for the sale of goods. Further on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion, the transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion, the aforesaid transactions have been made at prices which are reasonable having regard to the prevailing market prices. However the steam supplied by the subsidiary company, Terra Energy Limited has been accounted for at cost as billed by the subsidiary company.

(vi) In respect of the deposits accepted from the public, the Company has complied with the directives of Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there-under.

(vii) In our opinion, the Company's present internal audit system is commensurate with its size and nature of its business.

(viii) On the basis of records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the Government of India under section 209(1 )(d) of the Companies Act, 1956 have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(ix) (a) The Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India. The provisions of Employees State Insurance Act are not applicable to the Company.

(b) At the end of the financial year there were no dues of Sales tax, Income tax, Customs Duty, Excise Duty, Wealth tax, Service tax and Cess which have not been deposited on account of any dispute except as follows:

Name Nature Amount Forum where the of the Statute of the dues Rs. dispute is pending

Central Excise Act, Cenvaton Central Excise 1944 materials 17,86,537 and Service Tax and other Appellate goods and Tribunal penalty

Service tax Service tax 3,63,998 Supreme Court on Goods Transport Operators

Service tax Service tax 2,42,904 Supreme Court on Goods Transport Operators

Tamil Nadu General Purchase tax 1,025,97,189 High Court of Sales Tax Act, 1959 Madras

Central Excise Act, Cenvaton 17,33,481 High Court of 1944 inputs Madras

Central Excise Act, Cenvat 15,33,22,661 High Court of 1944 benefit on Madras captive consum -ption

Central Excise Act, Cenvat 4,66,148 High Court of 1944 credit on Madras capital goods

Tamil Nadu General Purchase tax 8,43,950 Joint Sales Tax Act, 1959 onunregist- Commissioner ered (CT) (Appeals) Sugarcane

Income tax Act, Income tax 33,291 Commissioner of 1961 Income tax (Appeals)

Income tax Act, Income tax 16,77,05,900 Commissioner of 1961 Income tax (Appeals)

Service tax Service tax 10,47,14,986 Central Excise and in respect of Service tax recruitment/ Appellate supply cane Tribunal harvesting labour

(x) The Company does not have any accumulated losses exceeding 50% of its net worth. It has not incurred cash losses either in the current financial year or in the immediately preceding financial year.

(xi) According to the records produced, the Company has not defaulted in repayment of its dues to any financial institution or bank or debenture holder during the year.

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

(xiii) In our opinion, the terms and conditions in respect of guarantees given by the Company for loans taken by its subsidiary, Terra Energy Limited, and Associate Company, Shree Ambika Sugars Limited, are not prima facie prejudicial to the interests of the Company.

(xiv) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the Company were applied for the purposes for which the loans were obtained.

(xv) On the basis of review of utilization of funds on an overall basis, in our opinion, the funds raised on short term basis have not been used for long term investment or vice versa during the year.

(xvi) The Company has not made preferential allotment of shares to parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(xvii)The Company has not issued nor has any outstanding debentures.

(xviii)During the course of our examination of the books of account carried out in accordance with generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the management of any such instance being noticed or reported during the year.

(xix) Clauses (xiii), (xiv) and (xx) of the aforesaid Order are not applicable to the Company.

For S N S Associates

Chartered Accountants

Firm Registration No. 006297S

S Nagarajan

Partner

Membership No. 20899

Chennai: May 12, 2012

---

Dec 31, 2010

We have audited attached Balance Sheet of THIRU AROORAN SUGARS LIMITED as at 31st December 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended that date annexed thereto and report that:

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

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

3. 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.

4. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books.

5. Tire Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

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

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

8. In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 December 2010;

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

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

9. As required by the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors Report) (Amendment) Order 2004, issued by the Central Government in terms of section 227(4A) of the Companies Act, 1956, we report that:

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

(b) The fixed assets of the Company have been physically verified during the year by the management and no material discrepancies between the book records and the physical inventory have been noticed.

(c) No substantial part of the fixed assets of the Company has been disposed off during the year.

(ii) (a) The inventories of the Company at all its locations have been physically verified by the management during the year.

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

(c) The Company has maintained proper records of inventories and the discrepancies between the physical inventories and book records which have been properly dealt with in the books of account were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for purchase of inventories, fixed assets and for the sale of goods. Further on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion, the transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion, the aforesaid transactions have been made at prices which are reasonable having regard to the prevailing market prices. However the steam supplied by the subsidiary company, Terra Energy Limited has been accounted for at cost as billed by the subsidiary company.

(vi) In respect of the deposits accepted from the public, the Company has complied with the directives of Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there- under.

(vii)In our opinion, the Companys present internal audit system is commensurate with its size and nature of its business.

(viii) On the basis of records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the Government of India under section 209 (1) (d) of the Companies Act, 1956 have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(ix) (a) The Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India except income tax for the assessment year 2010-11 amounting to Rs. 12,64,92,229/- which has however been remitted subsequently. The provisions of Employees State Insurance are not applicable to the Company.

(b) At the end of the financial year there were no dues of Sales tax, Income tax, Customs Duty, Excise Duty, Wealth tax, Service tax and Cess which have not been deposited on account of any dispute except as follows:

Name Nature Amount Forum where the of the Statute of the dues Rs. dispute is pending

Central Excise Act, Cenvation 17,86,537 Central Excise 1944 materials and Service Tax and other Appellate goods and Tribunal penalty

Service tax Service tax 3,63,998 Supreme Court on Goods Transport Operators

Service tax Service tax 2,42,904 Supreme Court on Goods Transport Operators

Tamil Nadu General Purchase tax 1,36,04,840 Supreme Court Sales Tax Act, 1959

Tamil Nadu General Purchase tax 13,25,97,189 Matter remanded Sales Tax Act, 1959 to SIPCOT by Supreme Court

Central Excise Act, Cenvat on 17,33,481 Central Excise and 1944 inputs and Service Tax Appellate Tribunal

Central Excise Act, Cenvat 15,33,22,261 Honble High 1944 benefit on Court of Madras captive consumption

Central Excise Act, Cenvat 4,66,148 Commissioner of 1944 credit on Central Excise capital (Appeals) goods

Central Excise Act, Cenvat 18,31,225 Commissioner of 1944 credit on Central Excise capital (Appeals) goods

Tamil Nadu General Purchase tax 8,43,950 Joint Sales Tax Act, 1959 on unregist- Commissioner ered (CT) (Appeals) Sugarcane

Income tax Act, Incometax 18,31,225 Commissioner of 1961 credit on Incometax (Appeals)

(x) The Company does not have any accumulated losses at the end of the financial year exceeding 50% of its net worth and has not incurred cash losses during the current financial year under report or in the immediately preceding financial year.

(xi) According to the records produced, the Company has not defaulted in repayment of its dues to any financial institution or bank or debenture holder during the year.

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

(xiii) In our opinion, the terms and conditions in respect of guarantees given by the Company for loans taken by its subsidiary, Terra Energy Limited, and Associate Company, Shree Ambika Sugars Limited, are not prima facie prejudicial to the interests of the Company.

(xiv) On the basis of re view of utilization of funds on an overall basis, in our opinion, the term loans taken by the Company were applied for the purposes for which the loans were obtained.

(xv) On the basis of review of utilization of funds on an overall basis, in our opinion, the funds raised on short term basis have not been used for long term investment or vice versa during the year.

(xvi) The Company has not made preferential allotment of shares to parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(xvii) The Company has not issued nor has any outstanding debentures.

(xviii) During the course of our examination of the books of account carried out in accordance with generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the management of any such instance being noticed or reported during the year.

(xix) Clauses (xiii), (xiv) and (xx) of the aforesaid Order are not applicable to the Company.

For S N S Associates

Chartered Accountants

Firm Registration No. 006297S

S Nagarajan

Partner

Membership No. 20899

Chennai: March 07, 2011

---

Dec 31, 2009

We have audited attached Balance Sheet of THIRU AROORAN SUGARS LIMITED as at 31 st December 2009 and also the Profit and Loss Account and the Cash Flow Statement for the period ended that date annexed thereto and report that:

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

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

3. 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.

4. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books.

5. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

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

7. On the basis of written representations received from the Directors, as on 31st December 2009, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as at 31st December 2009 from being appointed as a Director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956.

8. In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 December 2009; and

b) In the case of the Profit and Loss Account, of the PROFIT for the period ended on that date.

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

9. As required by the Companies (AuditorsReport) Order 2003, as amended by the Companies (Auditors Report) (Amendment) Order 2004, issued by the Central Government in terms of section 227(4A) of the Companies Act, 1956, we report that:

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

(b) The fixed assets of the Company have been physically verified during the year by the management and no material discrepancies between the book records and the physical inventory have been noticed.

(c) No substantial part of the fixed assets of the Company has been disposed off during the year.

(ii) (a) The inventories of the Company at all its locations have been physically verified by the management during the year.

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

(c) The Company has maintained proper records of inventories and the discrepancies between the physical inventories and book records which have been properly dealt with in the books of account were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for purchase of inventories, fixed assets and for the sale of goods. Further on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion, the transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion, the aforesaid transactions have been made at prices which are reasonable having regard to the prevailing market prices. However the steam supplied by the subsidiary company, Terra Energy Limited has been accounted for at cost as billed by the subsidiary company.

(vi) In respect of the deposits accepted from the public, the Company has complied with the directives of Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder.

(vii) In our opinion, the Companys present internal audit system is commensurate with its size and nature of its business.

(viii) On the basis of records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the Government of India under section 209(1 )(d) of the Companies Act, 1956 have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(ix) (a) The Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India. The provisions of Employees State Insurance are not applicable to the Company.

(b) At the end of the financial year there were no dues of Sales tax, Income tax, Customs Duty, Excise Duty, Wealth tax, Service tax and Cess which have not been deposited on account of any dispute except as follows:

Name Nature Amount Forum where the of the Statute of the dues Rs. dispute is pending

Central Excise Act, Cenvaton 17,86,537 Central Excise 1944 materials and Service Tax and other Appellate goods and Tribunal penalty

Service tax Service tax 3,63,998 Supreme Court on Goods Transport Operators

Service tax Service tax 2,42,904 Supreme Court on Goods Transport Operators

Tamil Nadu General Purchase tax 1,36,04,840 Supreme Court Sales Tax Act, 1959

Tamil Nadu General Purchase tax 13,25,97,189 Matter temanded Sales Tax Act, 1959 to SIPCOT

Central Excise Act, Cenvaton 17,33,481 Assistant 1944 inputs Commissioner, Central Excise

Central Excise Act, Cenvat 15,33,22,661 Central Excise and 1944 benefit on Service Tax captive Appellate Tribunal consumption and Commissionet of Central Excise

Central Excise Act, Cenvat 4,66,148 Commissioner of 1944 credit on Central Excise capital (Appeals) goods

Central Excise Act, Cenvat 18,31,225 Commissioner of 1944 credit on Central Excise capital (Appeals) goods

Central Excise Act, Service tax 3,34,710 Commissioner of 1944 on transport Central Excise services (Appeals)

Tamil Nadu General Purchase tax 10,48,066 High Court of Sales Tax Act, 1959 on cane cess Madras

Tamil Nadu General Purchase tax 8,43,950 Joint Sales Tax Act, on untegist- Commissioner 1959 ered (CT) (Appeals) Sugarcane

(x) The Company does not have any accumulated losses at the end of the financial year exceeding 50% of its net worth and has not incurred cash losses during the current financial year under report or in the immediately preceding financial year.

(xi) According to the records produced, the Company has not defaulted in repayment of its dues to any financial institution or bank or debenture holder during the year.

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

(xiii) In our opinion, the terms and conditions in respect of guarantees given by the Company for loans taken by its subsidiary, Terra Energy Limited, and Associate Company, Shree Ambika Sugars Limited, are not prima facie prejudicial to the interests of the Company.

(xiv) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the Company were applied for the purposes for which the loans were obtained.

(xv) On the basis of review of utilization of funds on an overall basis, in our opinion, the funds raised on short term basis have not been used for long term investment or vice versa during the year.

(xvi) The Company has not made preferential allotment of shares to parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(xvii) The Company has not issued nor has any outstanding debentures.

(xviii) During the course of our examination of the books of account carried out in accordance with generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the management of any such instance being noticed or reported during the year.

(xix) Clauses (xiii), (xiv) and (xx) of the aforesaid Order are not applicable to the Company.

For S N S Associates Chartered Accountants

S Nagarajan

Partner

Membership No. 20899

Chennai: January 27, 2010