Jubilant Organosys

1.  We have audited the attached Balance Sheet of JUBILANT ORGANOSYS
 LIMITED as at 31st March, 2009 the related Profit and Loss Account for
 the year ended on that date annexed thereto, and the Cash Flow
 Statement of the Company for the period ended on that date, 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 (Auditors’ Report) Order, 2003 issued
 by the Central Government in terms of Section 227 (4A) of the Companies
 Act, 1956, and on the basis of such checks as considered appropriate
 and according to the information and explanation given to us during the
 course of our audit, we enclose in the Annexure hereto a statement on
 the matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments mentioned in the Annexure referred to in
 above paragraph 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, Profit and Loss Account and the Cash Flow
 Statement dealt with by the report are in agreement with the books of
 account of the Company.
 
 d) In our opinion, the Profit & Loss Account, Balance Sheet and Cash
 Flow Statement comply with the mandatory Accounting Standards referred
 to in sub-section 3 (c) of Section 211 of the Companies Act, 1956.
 
 e) According to the information and explanation given to us and on the
 basis of written representations received from the directors as on 31st
 March, 2009 of the Company and taken on record 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.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts, and read together with
 the notes and Significant Accounting Policies there on 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 the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) In the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO THE AUDITORS’ REPORT
 
 Re: Jubilant Organosys Limited
 
 Referred to in paragraph 3 of our report of even date on the accounts
 of the year ended 31st March, 2009.
 
 i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) In our opinion, physical verification of fixed assets has been
 carried out in terms of the phased programme of verification of its
 fixed assets adopted by the Company and no material discrepancies were
 noticed on such verification. In our opinion the frequency of
 verification is reasonable, having regard to the size of the Company
 and nature of its assets.
 
 (c) During the year the Company has not disposed off any substantial /
 major part of fixed assets.
 
 ii) (a) The inventories have been physically verified during the year
 by the management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, 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. In our
 opinion, discrepancies noticed on physical verification of stocks were
 not material in relation to the operations of the Company.
 
 iii) (a) There were only four companies covered in the register
 maintained under Section 301 of the Companies Act, 1956 to which the
 Company has granted loan. The maximum amount involved during the year
 was Rs. 1,421.19 million (including the opening balance) and the year
 end total balances of loans granted to such parties was Rs. 1,083.80
 million.
 
 (b) In our opinion the rate of interest and other terms and condition
 on which loan were granted to the said Companies listed in register
 maintained under Section 301 of the Companies Act, 1956 are not prima
 facie, prejudicial to the interest of the Company.
 
 (c) The said parties have repaid principal amounts on demand and all
 parties were regular in the payment of interest.
 
 (d) There is no overdue amount of loan granted to the said Company.
 
 (e) The Company had not taken any loan from any Company covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, paragraph 4 (iii) (e), (f) & (g) of the Order are not
 applicable.
 
 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 with regard
 to purchase of inventory and fixed assets and for the sale of goods and
 services. During the course of our audit, we have not observed any
 continuing failure to correct major weakness in internal control
 system.
 
 v) (a) Based on the audit procedures applied by us and according to the
 information and explanations provided by the management, we are of the
 opinion that the transactions that need to be entered into the register
 maintained under Section 301 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in
 
 pursuance of contracts or arrangements entered in the register under
 Section 301 have been made at prices which are reasonable having regard
 to prevailing market prices, wherever comparable prices are available,
 at the relevant time.
 
 vi) In the case of public deposits received by the Company, the
 directives issued by the Reserve Bank of India and the provisions of
 Section 58A, 58AA or any other relevant provisions of the Companies
 Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 have
 been complied with. 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.
 
 vii) In our opinion, the Company has an internal audit system
 commensurate with the size of the Company and the nature of its
 business.
 
 viii) The Central Government has prescribed maintenance of the Cost
 Records under Section 209(1)(d) of the Companies Act, 1956 in respect
 to the companies’ certain products. We have broadly reviewed the books
 of account maintained by the Company pursuant to the Order made by the
 Central Government for the maintenance of the cost records for certain
 products of the Company and are of the opinion that prima facie the
 prescribed accounts and records have been maintained. We are, however,
 not required to and have not carried out any detailed examination of
 such accounts and records.
 
 ix) (a) According to the records examined by us, the Company is regular
 in depositing with appropriate authorities undisputed statutory dues
 including provident fund, investors education and protection fund,
 employees state insurance, income tax, sales-tax, wealth tax, service
 tax, custom duty, excise duty, cess and other statutory dues wherever
 applicable. According to the information and explanations given to us,
 no undisputed arrears of 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 records of the Company, the dues of sales tax,
 income-tax, customs, wealth-tax, service tax, excise duty, cess which
 have not been deposited on account of disputes and the forum where the
 dispute is pending are as under:
 
 Name of the Statute       Nature of                        Amount 
                           the Dues                     Rs/million
 
 1. Central Excise Act, 
                  1944    Excise Duty                         1.26
                          Excise Duty                         3.70
                          Excise Duty                         1.51
                          Excise Duty                         0.66
                          Excise Duty                         1.27
                          Excise Duty                         5.10
                           CENVAT                             1.77
                          Excise Penalty                      0.01
                           CENVAT                             4.38
                          Excise - EOU                        0.31
 
 2. Customs Act, 1962     Custom Penalty                     10.66
                          Custom Penalty                     92.84
                          Custom Penalty                     82.26
  
 3. Service Tax,          Service Tax                         0.35
 Finance Act, 1994
 
 4. Central Sales Tax, 
                  Act,    Sales Tax Demand                    0.24
 1956 and Sales Tax       Sales Tax Demand                    0.97
 
 Acts of Various States   Sales Tax Demand                   31.57
 on SSP
                          Sales Tax Demand                    1.69
                          on PU Adhesive
                          Sales Tax Demand                    5.02
                          Sales Tax Demand                    0.92
                          Sales Tax Demand                    1.78
 
 Period to which                                 Forum Where
 the amount relates                              dispute is pending
 
 April 2001- March 2002                     Joint Commissioner, Pune
 
 April 2004 to July 2005                    Additional Commissioner, 
                                            Pune
 
 April 2003 to March 2007                   Commissioner (Appeal), Meerut
 
 March, 1997                                Commissioner (Appeal), Meerut
 
 February 2003 to September 2004            Commissioner, Meerut
 
 May 2007 to Feb. 2008                      Commissioner, Meerut
 
 April, 2003 to March 2005                  Jt. Commissioner, Meerut
 
 April, 2006                                Govt. of India
 
 March 2003 to March, 2007                  Commissioner (Appeal)
                                            Vadodara
 
 April, 2007 to November 2007               Deputy Commissioner Hapur
 
 August, 2005                               Commissioner Custom,
                                            Ahmedabad
 
 July, 1999 to Feb., 2003                   Commissioner Custom (Appeal)
                                            , Chennai
 
 April, 2002 to March, 2004                 A. C. Custom ICD Tuglakabad
 
 April, 2003 to March, 2004                 Asstt. Commissioner, Hapur
 
 1983-1984                                  Supreme Court
 
 1996-2001                                  Cuttack Tribunal
 
 2002-08                                    Allahabad High Court &
                                            Jt. Commissioner (Appeal), 
                                            Moradabad
 
 2007-08 & 2008-09                          Jt. Commissioner (Appeal)
                                            Moradabad
 
 2005-07 & 2008-09                          Jt. Commissioner (Appeal), 
                                            Moradabad
 
 2002 to 2009                               Kolkata Tribunal
 
 2004-05, 2005-06 & 2006-07                 Appeal at Savli & Hyderabad
 
 x) There are no accumulated losses of the Company as on 31st March,
 2009. The Company has not incurred any cash losses during the financial
 year covered by our audit and in the immediately preceding financial
 year.
 
 xi) Based on our audit procedures and the information given by the
 management, we are of the opinion that the Company has not defaulted in
 repayment of dues to any financial institution, bank or debenture
 holders.
 
 xii) Based on our examination of the records and the information and
 explanations given to us, the Company has not granted any loans and/ or
 advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 xiii) The provisions of any special statute as specified under
 paragraph (xiii) of the Order are not applicable to the Company.
 
 xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures, and other investments.  Accordingly,
 the provisions of Clause 4 (xiv) of the Companies (Auditor’s Report)
 Order, 2003 are not applicable to the Company. However, all investments
 have been held by it, in its own name or nominees.
 
 xv) According to the information and explanations given to us, Company
 has given guarantees for loans taken by others (by the step down
 subsidiary companies) from Banks and the terms of such guarantees are
 not prejudicial to the interest of the Company.
 
 xvi) According to the information and explanations given to us, the
 term loans raised during the year have been applied (including for
 investments) for the purpose for which they were raised.
 
 xvii) According to the information & explanation given to us and on an
 overall examination of the balance sheet of the Company, we report that
 no funds raised on short-term basis have been used for long term
 investment.
 
 xviii) The Company has not made any preferential allotment of shares
 during the year to parties/companies covered in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 xix) During the year covered by our audit report the Company has not
 issued secured debentures.
 
 xx) The Company has not raised any money by Public Issue during the
 year.
 
 xxi) Based upon the audit procedures performed 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 K. N. Gutgutia & Company Chartered Accountants
 
                        B. R. Goyal 
 Place:Noida            Partner
 Date :28th April, 2009 Membership No. 12172