Graphite India

1.  We have audited the attached Balance Sheet of Graphite India
 Limited as at 31st March, 2009 and the related Profit and Loss Account
 and the Cash Flow Statement for the year ended on that date annexed
 thereto, which we have signed under reference to this report. These
 financial statements are the 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. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor’s Report) Order, 2003 as
 amended by the Companies (Auditor’s Report)(Amendment) Order, 2004
 (together ‘the Order’), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of
 India (the ‘Act’) and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we report that:
 
 i) (a) The Company has maintained proper records to show full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) The fixed assets of the Company have been physically verified by
 the management during the year and no material discrepancies between
 the book records and the physical inventory have been noticed. In our
 opinion the frequency of verification is reasonable.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has not disposed of a substantial part of its
 fixed assets during the year.
 
 ii) (a) The inventory of the Company has been physically verified by
 the management during the year. In our opinion, the frequency of
 verification is reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) On the basis of our examination of the inventory records, in our
 opinion, the Company has maintained proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records 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 Act.
 
 (b) The Company has not taken any loans, secured or unsecured from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. 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 we been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 v) (a) In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in Section 301 of the Act have been entered in the register required to
 be maintained under the Section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of rupees five lakhs in respect of
 each party during the year, have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA or any other relevant provision of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. According to the information and
 explanations given to us, no order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 Court or any other Tribunal on the Company in respect of the aforesaid
 deposits.
 
 vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 viii) We have broadly reviewed the books of account maintained by the
 Company in respect of generation of power and manufacture of steel
 where, pursuant to the Rules made by the Central Government of India,
 the maintenance of cost records has been prescribed under Clause (d) of
 sub-section (1) of Section 209 of the Act and are of the opinion, that,
 prima facie, the prescribed accounts and records have been made and
 maintained. We have not, however, made a detailed examination of the
 records with a view to determine whether they are accurate or complete.
 
 ix) (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 has been regular in depositing during the year undisputed statutory
 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, with the appropriate authorities.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us as at 31st March, 2009, there
 were no dues of Wealth Tax, Income Tax and Cess which have not been
 deposited on account of any dispute other than certain disputed Customs
 Duty, Sales Tax, Service Tax and Excise Duty dues, in respect of which
 amounts involved and forums at which dispute is pending have been
 indicated in Note 11 on Schedule 31 to the Accounts.
 
 x) The Company has no accumulated losses as at 31st March, 2009, and it
 has not incurred any cash losses in the financial year ended on that
 date and in the immediately preceding financial year.
 
 xi) According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or to
 debenture holders 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) The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 xiv) In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 xv) In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 xvi) In our opinion and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained other than a part of
 unutilised proceeds of Convertible Bonds, issued in earlier year, lying
 in bank accounts.
 
 xvii) On the basis of an overall examination of the Balance Sheet of
 the Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on short-term basis
 which have been used for long-term investment.
 
 xviii) The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 xix) The Company has created security or charge in respect of
 debentures issued and outstanding at the year-end.
 
 xx) The management has disclosed the end use of money raised by public
 issue vide Note 12 on Schedule 31 to the Accounts and the same has been
 verified by us.
 
 xxi) During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
 4.  Further to our comments in paragraph 3 above, we report that:
 
 (i) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (ii) In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 (iii) The Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 applicable accounting standards referred to in sub-section (3C) of
 Section 211 of the Act;
 
 (v) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, none of the directors is
 disqualified as on 31st March, 2009 from being appointed as a director
 in terms of clause (g) of sub-section (1) of Section 274 of the Act;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act and give a true and fair
 view in conformity with the accounting principles generally accepted in
 India:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 (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.
 
                                                         S. K. Deb
                                                           Partner
                                              Membership No. 13390
                                              For and on behalf of
 Kolkata                                          PRICE WATERHOUSE
 30th June, 2009                             Chartered Accountants