Indo Rama Synthetics (India)

We have audited the attached Balance Sheet of Indo Rama Synthetics
 (India) Limited (the Company), as at 31 March 2009 and the Profit and
 Loss Account and the Cash Flow Statement for the year ended on that
 date, annexed thereto. These financial statements are the
 responsibility of the Companys management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 We conducted our audit in accordance with 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.
 
 As required by the Companies (Auditors Report) Order, 2003 (Order)
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order, to the extent applicable.
 
 Further to our comments in the Annexure referred to 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, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) in our opinion, the Balance Sheet, Profit and Loss Account and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub-section (3C) of section 211 of
 the Companies Act, 1956;
 
 (v) on the basis of the written representations received from the
 directors, as on 31 March 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 (vi) Without qualifying our opinion, we draw attention to note 3 of
 schedule 20 to the financial statements where based on the notification
 no. GSR 225 (E) dated 31 March 2009 of Ministry of Corporate Affairs
 the Company has adopted the option for treatment of exchange difference
 arising on reporting of long term foreign currency monetary items as
 prescribed by Accounting Standard (AS-11) on Effects of Changes in
 Foreign Exchange Rates.
 
 We further report had the Accounting Standard (AS-11) on Effects of
 Changes in Foreign Exchange Rates notified in the Companies
 (Accounting Standards) Rules 2006 been considered in previous year,
 profit after tax for the previous year would have reduced by Rs.
 238,666 thousand.
 
 (vii) Without qualifying our opinion, we draw attention to note 5 of
 schedule 20 to the financial statements where based on the Institute of
 Chartered Accountants of Indias announcement dated 28 March 2008, the
 Company has during the quarter ended 31 March 2009 changed its
 accounting policy to recognize mark to market loss on outstanding
 derivative instruments.
 
 We further report had the above observation made by us been considered
 in previous year, loss after tax for the year ended 31 March 2009 would
 have been lower by Rs. 117,447 thousand.
 
 (viii) 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 31 March 2009;
 
 b in the case of the Profit and Loss Account, of the loss for the year
 ended on that date; and
 
 c in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure to the Auditors Report
 
 (Referred to in 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 Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified on a phased
 programme over a period of three years which is reasonable having
 regard to the size of the Company and the nature of its assets. As
 informed to us no material discrepancies were observed on such
 verification.
 
 (c) Fixed assets disposed off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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) The Company is maintaining proper records of inventory and as
 informed to us, no material discrepancies were noticed on physical
 verification.
 
 (iii) (a) As informed, 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.
 Therefore, the provisions of clause 4 (iii) of the Order are not
 applicable to the Company.
 
 (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. We
 have not observed any major weakness in the internal control system
 during the course of our audit.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements that need to be entered into the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding the value of Rupees five lacs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted / accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Employees State Insurance,
 Income-tax, Sales-tax, Wealth-tax, Service tax, Customs duty, Investor
 Education and Protection Fund and other material statutory dues have
 been regularly deposited during the year by the Company with the
 appropriate authorities.
 
 There were no dues on account of cess under Section 441A of the
 Companies Act, 1956 since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, sales- tax, customs duty, excise duty and
 other undisputed statutory dues were outstanding, at the year end, for
 a period of more than six months from the date they became payable.
 
 According to the records of the Company, the dues outstanding of
 income-tax, wealth-tax, service tax, sales- tax, customs duty and
 excise duty on account of any dispute, are as follows:
 
 Name of Statue            Nature of Dues                    Amount
 
 The Central Excise        Excise duty demand                557,271
 
 Act, 1944                 including fine and penalty
 Bombay Sales Tax Act,      Sales tax demand                   5,824
 1959/Central Sales Tax      
 Act, 1956                              
 Customs Act, 1962          Custom duty demand                 1,500
 
 
 period                         Forum disputespending
 
 February 1995 to           Honble Supreme Court -       Rs. 12,169
 September 2008             Mumbai High Court (Nagpur bench)
 
                                                        - Rs. 45,000
                            Customs, Excise  Service Tax
                            Appellate Tribunal - Rs. 474,026
                            Commissioner Appeal - Rs. 25,083
                            Assistant Commissioner - Rs. 284
                            Deputy Commissioner - Rs. 710
 
 1998-1999, 1999-2000       Deputy Commissioner Sales
                            Tax (Appeals), Nagpur
 
 1999-2000                  Customs, Excise  Service Tax
 
 Appellate Tribunal
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 (xi) (a) Based on our audit procedures and as per the information and
 explanations given by the management, the Company has defaulted in
 repayment of dues to banks, financial institutions and a debenture
 holder. Details of which are given below:
 
 
 Nature of Dues  Amount (RS in 000)
 Banks
 Principal         90,289
 Principal        129,942
 Principal        425,021
 Principal         33,464
 Principal        706,967
 Principal        159,388
 Principal        714,306
 Principal        125,563
 Principal        126,428
 Principal        134,503
 Principal        42,365
 Principal         51,900
 Principal         50,000
 Principal         85,000
 Principal         97,500
 Principal         20,000
 Interest           3,907
 Interest             495
 Interest           7,792
 interest           3,607
 Interest          82,901
 Interest          46,664
 Interest           4,905
 Interest           3,043
 Interest           7,340
 Interest           7,358
 Interest           2,245
 Interest           8,467
 Interest              37
 Interest          21,357
 Interest           1,229
 Interest             402
 
 Financial institutions
 
 Principal        26,806
 Principal        50,000
 Principal        50,000
 Interest          5,343
 Interest            135
 Interest            131
 Interest          2,630
 Interest          2,71
 Interest          2,630
 Interest            929
 Interest             77
 Interest            919
 Interest             27
 Interest            507
 Interest             89
 Interest            250 
 Debentures
 Principal        16,042
 Interest          3,754
 Interest             79
 Interest             78
 
 Due Date                Date of Payment
 15.11.07                 12.06.08
 15.05.08                 25.06.08
 77.7 7.08                03.02.09
 14.11.07                 04.06.08
 15.10.07                 10.06.08
 15.04.08                 02.07.08
 15.10.08                 16.04.09
 28.03.08                 25.06.08
 30.09.08                 12.02.09
 30.03.08                 28.04.09
 15.10.07                 06.06.08
 15.10.08                 19.02.09
 02.10.07                 04.06.08
 31.03.08                 23.06.08
 30.09.08                 27.12.08
 30.09.08                 30.12.08
 15.11.07                 15.05.08
 15.05.08                 14.11.08
 14.11.07                 15.05.08
 15.10.07                 05.05.08
 15.04.08                 30.05.08
 15.10.08                 12.12.08
 15.04.08                 20.08.08
 15.10.08                 16.01.09
 15.10.08                 15.04.09
 30.09.08                 12.12.08
 30.09.08                 23.07.09
 30.03.09                 08.04.09
 30.03.09                 12.05.09
 15.10.08                 15.12.08
 16.10.07                 16.01.09
 30.09.08                 15.12.08
 30.09.08                 09.12.08
 01.07.08                 22.01.09
 01.01.09                 21.04.09
 30.09.08                 09.12.08
 09.12.08                 31.12.08
 09.12.08                 31.03.09
 30.09.08                 11.12.08
 31.10.08                 11.12.08
 30.11.08                 11.12.08
 01.07.07                 16.01.09
 03.06.08                 16.01.09
 01.01.08                 16.01.09
 17.12.08                 16.01.09
 01.07.08                 16.01.09
 10.12.08                 16.01.09
 01.01.09                 14.05.09
 30.09.08                 09.12.08
 30.09.08                 09.12.08
 09.12.08                 31.12.08
 09.12.08                 31.03.09
 
 (b) Based on our audit procedures and as per the information and
 explanations given by the management, following defaults have been
 rescheduled by the bank, financial institution and debenture holder.
 
 
 
 Nature of Dues     Amount (RS in 000) 
 
 Bank 
 Principal              195,000
 Principal               40,000
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi / mutual benefit
 fund / society.
 
 (xiv) In respect of dealing / trading in shares, securities and other
 investments, in our opinion and according to the information and
 explanations given to us, proper records have been maintained of the
 transactions and contracts and timely entries have been made therein.
 The shares, securities and other investments have been held by the
 Company, in its own name.  In our opinion and according to the
 information and explanations given to us the Company has not dealt in
 debentures.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institution.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 overall examination of the balance sheet and cash flow statement of the
 Company, we report that the Company has used short term funds to the
 extent of Rs. 3,392,751 thousand for long-term investments.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) The Company has created adequate security or charge in respect of
 privately placed debentures issued in the earlier years.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 year.
 
 
                                          For B S R and Associates
                                             Chartered Accountants
                                                      Akhil Bansal
 Place: New Delhi                                          Partner
 Date : 19 May 2009                         Membership No.: 090906