JBF Industries

1.  We have audited the attached Balance Sheet of JBF INDUSTRIES
 LIMITED (the Company) as at 31 st March 2009, the Profit and Loss
 Account and also the Cash Flow Statement of the Company 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.
 
 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 misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by the 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 (Auditors Report) Order 2003 (the
 Order), issued by the Central Government of India in terms of
 Sub-section (4A) of Section 227 of the Companies Act, 1956, we give in
 the Annexure hereto, a statementon the matters specified in paragraphs
 4 and 5 of the said Order.
 
 4.  Attention is drawn to the:
 
 Note No. 29 (c) of the Schedule P regarding the non-provision of
 marked to market losses of derivative contracts amounting to Rs.82.66
 crores as on 31st March 2009 on account of reasons as explained in the
 aforesaid note. Had the same been provided the profit after tax for the
 year ended 31st March 2009 and Reserves as at 31st March 2009 would
 have been Rs. 21.71 Crores and Rs.  522.83 Crores respectively as
 against the reported figures of Rs. 76.27 Crores & Rs. 577.39 Crores
 respectively
 
 5.  Subject to our comment in paragraph 4 above, we report that:
 
 a) We have obtained al! 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
 such books;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) In our opinion the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the mandatory
 Accounting Standards referred to in Sub-section (3C) of Section 211 of
 the Companies Act, 1956;
 
 e) On the basis of the written representations received from the
 directors as on 31st March, 2009 and taken on records by the Board of
 Directors, we report that 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 Companies Act 1956. As
 regards to the Directors nominated by Financial Institution, they are
 exempted from the provisions of Section 274 (1) (g) in view of general
 circular issued by the Department of Company Affairs.
 
 5. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 significant accounting policies and other notes thereon, 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: -
 
 (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 Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) In the case of Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO AUDITORS REPORT
 
 (Referred to in paragraph 3 of our report of even date to the members
 of JBF Industries Limited on the accounts for the year ended 31st
 March, 2009)
 
 (i) In respect of its fixed assets:
 
 (a) The Company has maintained proper records, showing full
 particulars, including quantitative details and situation of fixed
 assets on the basis of available information.
 
 (b) As explained to us, all the fixed assets have been physically
 verified by the management in accordance with the programme of
 verification, which in our opinion is reasonable, considering the size
 of the Company and nature of its assets. No material discrepancies were
 noticed on such physical verification as compared with the available
 records,
 
 (c) In our opinion and according to the information & explanations
 given to us, the Company has not disposed off substantial part of fixed
 assets during the year and the going concern status of the Company is
 not affected.
 
 (ii) In respect of its inventories: -
 
 (a) Inventories have been physically verified during the year by the
 management.  In our opinion the programme of verification is
 reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) According to the information and explanations given to us and on
 the basis of our examination of inventory records, we are of the
 opinion that the Company is maintaining proper records of inventory. As
 explained to us, discrepancies noticed on physical verification of the
 inventories and book records were not material, having regard to the
 size of the operations of the Company, and the same have been properly
 dealt with in the books of account.
 
 (iii) In respect of loans, secured or unsecured, granted or taken by
 the Company to / from companies, firm or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956: -
 
 (a) The Company has given a loan to a subsidiary Company. In respect of
 the said loan, the maximum amount outstanding at any time during the
 year is Rs. 13.67 Crores and the year end balance is Rs. 3.33 Crores.
 
 (b) In our opinion and according to the information and explanations
 given to us, the aforesaid loan is interest free and other terms &
 conditions, are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The above loan which is free of interest is not due for repayment
 as on the Balance Sheet date.
 
 (d) As the above loan is not due for repayment the question of overdue
 amounts does not arise.
 
 (e) The Company has not taken any loan during the year from companies,
 firms or other parties covered in the Register maintained under section
 301 of the Companies Act, 1956. Consequently, the provisions of sub
 clauses (f) and (g) of clause (iii) of paragraph 4 of the said Order
 are not applicable to the Company.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed assets and also for the sale of goods. The
 Company has not sold any services during the year. During the course of
 audit we have not observed any continuing failure to correct, major
 weaknesses in the aforesaid internal control system.
 
 (v) In respect of transactions entered in the register maintained in
 pursuance of Section 301 of the Companies Act, 1956:
 
 (a) To the best of our knowledge & belief and according to the
 information and explanations given to us, transactions that need to be
 entered in the register have been so entered.
 
 (b) According to the information and explanations given to us, the
 transactions made during the year in pursuance of such contracts or
 arrangements exceeding value of Rupees five lacs for each party, have
 been made at prices which are prima facie reasonable having regard to
 the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public and
 accordingly, the provisions of clause (vi) cf paragraph 4 of the said
 Order are not applicable to the Company.
 
 (vii) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have been informed by the management, that the Central
 Government has prescribed the maintenance of Cost Records pursuant to
 clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956
 in respect of its manufacturing activities. We have broadly reviewed
 the accounts and records of the Company in this connection 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 and complete.
 
 (ix) According to the records of the Company in respect of statutory
 and other dues:
 
 (a) The Company has generally been regular in depositing undisputed
 statutory dues, including Provident Fund, Investor Education &
 Protection Fund, and 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
 during the year. According to the information and explanations given to
 us, no undisputed amounts payable in respect of the aforesaid statutory
 dues were outstanding as at 31st March, 2009 for a period of more than
 six months from the date they became payable.
 
 (b) According to the information and explanations given to us, the
 disputed statutory dues aggregating to Rs. 3.02 crores , that have not
 been deposited on account of matters pending before appropriate
 authorities, are as under:
 
 Name of the     Nature of     Amount      Period to which   Forum where
 statute         the dues  (Rs. in crores) the amount        dispute is
                                           relates           pending
 
 Central Excise  Excise Duty    1.35       2005-06           CESTAT
 Act, 1944
                                0.16       2000-01           CESTAT
                                0.02       2003-04        Commissioner
                                                            (Appeals)
 Service Tax                    1.45       2006-08            CESTAT
                                0.02       2005-08        Commissioner
                                                            (Appeals)
 Service Tax    Service Tax                2006-07        Commissioner
 Act,1994                                                   (Appeals)
 Totai                          3.02
 
 (x) The Company does not have accumulated losses at the end of the
 financial year. It has not incurred any cash losses in the current
 financial year and in the immediately preceding financial year.
 
 (xi) Based on our audit procedures and accordingly to the information
 and explanations given to us by the management, we are of the opinion
 that the Company has not defaulted in the repayment of dues to
 financial institutions, banks or debenture holders.
 
 (xii) In our opinion and according to the explanations given to us and
 based on the information available, no loans and advances have been
 granted by the Company 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 the provisions clause (xiii) of paragraph
 4 of the said Order are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of transactions
 and contracts in respect of dealing in shares and other securities and
 timely entries have been made therein. All shares and other investments
 have been held by the Company in its own name except certain
 investments which are made through portfolio manager and held by them
 in a fiduciary capacity on behalf of the Company.
 
 (xv) The Company has given guarantees in connection with the Credit
 facilities extended by banks to its subsidiary Company. According to
 the information and explanations given to us. we are of the opinion
 that the terms and conditions thereof are not prima facie prejudicial
 to the interest of the Company.
 
 (xvi) To the best pf our knowledge & belief and according to the
 information & explanations given to us, the term loans raised during
 the year and those, which were outstanding at the beginning of the
 year, were prima facie been applied for the purposes for which they
 were raised.
 
 (xvii) On the basis of review of utilization of funds, which is based
 on overall examination of the Balance Sheet of the Company as at 31st
 March 2009 related information as made available to us and as
 represented to us by the management, we are of the opinion that the
 funds raised on short term basis have not prima facie been, utilized
 for long term purposes.
 
 (xviii) During the year, the Company has not made any preferential
 allotment of shares to the parties and companies covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 (xix) The Company has not issued any Debentures during the year and
 hence the provisions of clauses (xix) of paragraph 4 of the said Order
 are not applicable to the Company.
 
 (xxj The Company has not raised any money by way of Public issue during
 the year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given to us by the management, we
 report that no fraud on or by the Company has been noticed or reported
 during the course of our audit.
 
 
                                                 For CHATURVEDI & SHAH
                                                 Chartered Accountants
 
                                                              R. KORIA
                                                               Partner
                                                  Membership No. 35629
 
 Place: Mumbai
 Dated: 29th June 2009