Jain Irrigation Systems

We have audited the attached Balance Sheet of Jain Irrigation Systems
 Limited as at 31st March, 2009, the annexed Proft and Loss Account for
 the year ended on that date, and also the Cash Flow Statement for the
 year ended on that date. 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.
 
 1) We conducted our audit in accordance with the 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 from any 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 presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 2) As required by the Companies (Auditor’s Report) Order, 2003 and 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 annex hereto a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 3) Further to our comments in the Annexure referred to in paragraph 2
 above, we report that:
 
 a) We have obtained all the information and explanations, which, to the
 best of our knowledge and belief, were necessary for the purposes of
 our audit;
 
 b) In our opinion, proper books of account as required by law have been
 kept by the Company so far as appears from our examination of the books
 of the Company;
 
 c) The Balance Sheet, Proft and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account of
 the Company;
 
 d) In our opinion, the Balance Sheet, Proft 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;
 
 e) Based on the representations made by the Directors as on 31st March,
 2009 and taken on record by the Board of Directors of the Company and
 the information and explanations given to us, none of the Directors is,
 as at 31st March, 2009, prima-facie disqualified from being appointed
 as a director in terms of clause (g) of sub-section (1) of Section 274
 of the Companies Act, 1956;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements, read with
 the notes thereon, give the information required by the Companies Act,
 1956, in the manner so required and present 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, 2009;
 
 ii) in the case of the Proft and Loss Account, of the Proft for the
 year ended on that date; and
 
 iii) in the case of the Cash Flow Statement, of the cash fows for the
 year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITOR’S REPORT OF EVEN
 DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2009 OF
 JAIN IRRIGATION SYSTEMS LIMITED
 
 On the basis of such checks as we considered appropriate and in terms
 of the information and explanations given to us, we state that:
 
 1) a) The Company has generally maintained proper records showing
 particulars, including quantitative details and situation of
 
 fixed assets;
 
 b) As explained to us, the fixed assets have been physically verified
 by the management at reasonable intervals, according to a phased
 verification programme, which, in our opinion, is reasonable, looking
 to the size of the Company and the nature of its assets. According to
 the information and explanations given to us, discrepancies noticed on
 physical verification have been properly dealt with in the books of
 account;
 
 c) During the year, the Company has not disposed off any substantial
 part of its fixed assets so as to affect its going concern;
 
 2) a) As explained to us, inventories have been physically verified
 during the year by the management. Inventories lying with outside
 parties have been confirmed by them at the close of the year;
 
 b) The procedures explained to us, which are followed by the management
 for physical verification of inventories, are, in our opinion,
 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 of the
 Company, we are of the opinion that, the Company is maintaining proper
 records of its inventory. Discrepancies which were noticed on physical
 verification of inventory as compared to book records, have been
 properly dealt with in the books of account;
 
 3) According to the information and explanations given to us, the
 Company has not granted / taken any loan, secured or unsecured, to /
 from companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act 1956;
 
 4) In our opinion and according to the information and explanations
 given to us, there are generally adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory and fixed assets and for
 sale of goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control;
 
 5) (a) On the basis of the audit procedures performed by us, and
 according to the information, explanations and representations given to
 us, the particulars of all transactions in which directors were
 interested, as contemplated under Section 297 and Section 299 of the
 Companies Act, 1956, and which were required to be entered in the
 register maintained under Section 301 of the said Act, have been so
 entered;
 
 (b) According to the information and explanations given to us, there
 were no transactions exceeding the value of rupees five lacs in respect
 of any party during the year, which need to be entered in the register
 maintained under Section 301 of the Companies Act, 1956;
 
 6) The Company has not accepted any deposits from the public;
 
 7) On the basis of the internal audit reports broadly reviewed by us,
 we are of the opinion that, the coverage of internal audit functions is
 commensurate with the size of the Company and the nature of its
 business;
 
 8) (a) According to the records of the Company, it has generally been
 regular in depositing undisputed statutory dues including
 
 Provident Fund, Investor Education and Protection Fund, Employees’
 State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom
 Duty, Excise Duty, Cess and other material statutory dues with the
 appropriate authorities;
 
 (b) On the basis of our examination of the documents and records, and
 explanations and information given to us, there were no disputed dues
 in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax and Cess.
 The following disputed dues on account of Custom Duty and Excise Duty
 have not been deposited with the appropriate authorities:
 
 (Rs.in Million)
 
                                     Forum before whom pending
 Particulars
                    Commissioner    Tribunal     High Court     Total
                    Appeals
 
 Custom & Excise 
 Duty                3.49            9.80          55.19        68.49
 
 9) The Company has neither accumulated losses at the end of the
 financial year nor has it incurred cash losses, both, in the financial
 year under report and the immediately preceding financial year;
 
 10) On the basis of the records examined by us and the information and
 explanations given to us, the Company has not defaulted in repayment of
 dues to Financial Institutions, Banks and Debenture holders;
 
 11) As explained to us, the Company has not granted any loans or
 advances on the basis of security by way of pledge of shares,
 debentures or any other securities;
 
 12) In respect of shares, securities, debentures and other investments
 dealt or traded by the Company, proper records have been maintained in
 respect of the transactions and contracts and timely entries have been
 made therein. All the investments are held by the Company in its own
 name;
 
 13) According to the information and explanations given to us, and the
 representations made by the management, the Company has given
 guarantees for loans taken by its subsidiaries from Banks. The terms
 and conditions of such guarantees are, prima-facie, not prejudicial to
 the interests of the Company;
 
 14) On the basis of the records examined by us, we have to state that,
 the Company has, prima facie, applied the term loans for the purposes
 for which they were obtained.
 
 15) According to the information and explanations given to us and on an
 overall examination of the Financial Statements of the Company, we are
 of the opinion that, prima facie, short term funds have not been used
 for long term investment;
 
 16) The Company has, during the year, not made any preferential
 allotment of shares to parties and companies covered in the register
 maintained under Section 301 of the Companies Act, 1956;
 
 17) According to the information and explanations given to us, the
 Company has not issued any debenture during the period covered under
 this report;
 
 18) The Company has not raised any money by way of public issue during
 the year;
 
 19) According to the information and explanations given to us, and to
 the best of our knowledge and belief, no significant fraud on or by the
 Company, has been noticed or reported by the Company during the year;
 
 Looking to the nature of activities being carried on, at present, by
 the Company and also considering the nature of the matters referred to
 in the various clauses of the Companies (Auditors’ Report) Order, 2003,
 and the Companies (Auditor’s Report) (Amendment) Order, 2004, Clauses
 (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g), (viii) and (xiii) of
 paragraph 4 of the aforesaid Order, are, in our opinion, not applicable
 to the Company.
 
                                                  For and on behalf of
                                                          Dalal & Shah
                                                 Chartered Accountants
                                                         Shishir Dalal
                                                               Partner
 Jalgaon, 25th August, 2009                       Membership No: 37310