Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

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

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

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

Basis for Qualified Opinion

In our opinion, the qualification is material, but not pervasive to the financial statements.

As stated in Note No. 42, the Company has accepted deposits amounting to Rs. 637.08 lac without complying the provisions of Section 58A of the Act.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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 profit for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of 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.

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

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

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

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 Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards notified under the Companies Act, 1956 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;

e) On the basis of written representations received from the directors, as on 31st March, 2014 and taken on record by the Board of Directors, two of the directors are disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

Annexure to Independent Auditor's Report

Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

(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. As explained to us no discrepancies were noticed on such verification.

(c) The Company has not disposed off any fixed assets and hence this clause of paragraph 4 of the Order is not applicable.

(ii)

(a) The inventories have been physically verified 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 size of the Company and the nature of its business;

(c) The Company is maintaining proper records of inventories. No material discrepancy was noticed between physical verification of stocks and book records.

(iii)

(a) During the year, the Company has not granted any loans, secured or unsecured, to the companies, firms or other parties listed in the Register maintained under section 301 of the Companies Act, 1956 and hence clauses (iii.a) to (iii.d) of paragraph 4 of the Order are not applicable.

(b) During the year, the Company has taken interest free unsecured loan from one party listed in the register maintained under Section 301 of the Companies Act, 1956 amounting to Rs. 67.42lac. The year end balance of such loan was Rs. 855.32 lac. (Maximum amount outstanding during the year was Rs. 925.32 lac). The year end balance of unsecured loans taken earlier from three parties listed in the Register maintained under section 301 of the Companies Act, 1956 was Rs. 676.09 lac. (Maximum amount outstanding during the year was Rs. 717.72 lac).

(c) Since the unsecured loans taken are interest free, the same are not prima-facie prejudicial to the interest of the Company.

(d) Since the unsecured loans taken are interest free, there is no payment of interest. No stipulations have been made regarding repayment of the principal amount.

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

(v)

(a) According to the information and explanations given to us, the contracts that need to be entered into the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) Where each of such transaction is in excess of Rs. 5 lac in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has not complied with the provisions of section 58A and 58AA of the Act and Companies (Acceptance of Deposits) Rules, 1975 with regard to the acceptance/renewal/repayment of the deposits accepted from the public, maintenance of liquid assets, advertisements, statement in lieu of advertisement and filing its Annual Return of Deposits.

(vii) The Company did not have an internal audit system commensurate with its size and nature of its business. The Company did not have any independent internal auditor.

(viii) According to the information and explanations given to us, the Central Government has prescribed maintenance of cost records u/s.209(1)(d) of the Companies Act, 1956. However, the Company has not maintained the cost records during the year.

(ix)

(a) According to the information and explanations given to us and the records of the Company examined by us the Company has not been regular in depositing with the appropriate authorities undisputed dues, including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable to it.

(b) According to the information and explanations given to us by the management and the records of the Company examined by us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable except sales tax amounting to Rs. 338.69 lac, provident fund amounting to Rs. 64.16 lac, income tax amounting to Rs. 20.07 lac,staff profession tax amounting to Rs. 0.58 lac, excise/service tax amounting to Rs. 16.92 lac and employees' state insurance amounting to Rs. 13.91 lac.

(c) According to the information and explanations given to us and the records of the Company examined by us, disputed amounts in respect of the aforesaid dues which have not been deposited as at 31st March 2014 are given below.

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

Income Tax Act,      Income Tax         469,000/-    A.Y 1997-98
1961

Income Tax Act,      Income Tax       25,15,770/-    A.Y 2005 -06
1961                 (penalty     
                     u/s271(i)(C)

Bombay Sales Tax     BST/CST          9,134,000/-    F.Y 2004-05
Act,                 
1959/ Central Sales
Tax
Act, 1956

Profession Tax       Profession Tax    8,72,555/-    F.Y 2005-06 to
Act, 1975                                            2009-10

Name of Statute        Forum where
                       dispute is pending

Income Tax Act, Delhi High Court 1961

Income Tax Act,        Income Tax
1961                   Appellate Tribunal

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

Profession Tax         Joint Commissioner
Act, 1975              of Profession Tax
                       (Appeal)

(xi) The Company has defaulted in repayment of dues to bank/financial institutions. The amount of default towards principal is Rs. 124.15 lac for the period 2007-08 to 2013-14 and interest is Rs. 343.28 lac for the period 2007-08 to 2013-14. The Company does not have any debenture holders.

(xii) As per the books and records of the Company examined by us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) During the year the Company had not dealt in or traded in shares, securities, debentures or other investments. All shares, debentures and other investments have been held by the Company in its own name.

(xv) According to the information and explanations given to us, the Company has given corporate guarantee for loans taken from ICICI Bank by Himachal Polyolefins Ltd. However, terms and conditions thereof are not prejudicial to the interest of the Company.

(xvi) On the basis of our review and related information and explanation as made available to us the Company has not taken any term loans during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis amounting to Rs. 2,394.92 lac have been used for long term investments.

(xviii) The Company has not made any preferential allotment of shares during the year and hence, clause (xviii) of paragraph 4 of the Order is not applicable.

(xix) The Company has neither issued any debentures during the year nor has any outstanding debenture as at year end and hence, clause (xix) of paragraph 4 of the Order is not applicable.

(xx) The Company has not raised any money by way of public issue during the year and hence, clause (xx) of paragraph 4 of the Order is not applicable.

(xxi) According to the information to and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of the audit.

For A. N. Damania & Co. Chartered Accountants Firm Reg. No.102077W

Ashvin Damania Proprietor M. No. 040166

Date: 30th May, 2014 Place: Mumbai