We have audited the attached Balance Sheet of Emami Paper Mills Limited
as at 31st March 2010, the Profit & Loss Account and the Cash Flow
Statement for the year ended on that date annexed thereto in which are
incorporated the accounts of Gulmohar unit audited by Branch Auditors.
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. 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
We further report that:
a) The Report on the accounts of Gulmohar Unit audited by Branch
Auditors have been received and properly dealt with in preparing our
b) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
c) In our opinion proper books of accounts as required by law have been
kept by the Company so far as appears from our examination of such
d) The Balance Sheet, the Profit & Loss Account & the Cash Flow
Statement referred to in this report are in agreement with the books of
accounts and comply with the accounting standards referred to in
Section 21 1 (3C) of the Companies Act, 1956 to the extent applicable.
e) On the basis of written representations received from the Directors
and taken on record by the Board of Directors, we report that none of
the Directors is disqualified as on 31st March 2010 from being
appointed as a director in terms of Section 274(1 )(g) of the Companies
f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read with the notes on
accounts as per Schedule 17 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
i) In the case of the Balance Sheet, of the State of Affairs of the
Company as on 31 st March, 2010; ii) In the case of the Profit & Loss
Account, of the Profit for the year ended on that date; and iii) In the
case of the Cash Flow Statement, of the cash flows for the year ended
on that date.
As required by the Companies (Auditors Report) order, 2003 issued by
the Central Government of India in terms of sub-section (4A) of Section
227 of the Companies Act, 1956 and on the basis of such checks as we
considered appropriate and according to the information and
explanations given to us, we further report that:
1. a. The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b. The fixed assets were physically verified during the year by the
management in accordance with a program of verification, covering all
fixed assets over a period of three years, which in our opinion
provides for physical verification of all major items of fixed assets
at reasonable intervals.
c. Fixed assets disposed of during the year were not substantial, and
therefore, do not affect the going concern assumption.
2. a. The inventories have been physically verified during the year
by the management. In our opinion, the frequency of verification is
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 are reasonable and adequate in relation to
the size of the Company and nature of its business.
c. In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its inventory
and no material discrepancies were noticed on physical verification.
3. a. The Company has given unsecured loan to a company listed in the
register maintained under Section 301 of the Companies Act, 1956
against whom the maximum amount outstanding during the year was Rs 272
lacs and the year end balance of such loan amounted to Rs. 272 lacs.
The rate of interest and other terms and conditions of the loan are not
prima facie prejudicial to the interest of the Company. The principal
amounts and interest are repayable on demand, therefore the question of
overdue amounts does not arise.
b. The Company has not taken any loans, secured or unsecured, from
companies listed* 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 adequate internal control systems 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.
5. In respect of contracts or arrangements referred in Section 301 of
the Companies Act, 1956:
a. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that need to be entered in 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 referred to above and exceeding the value
of Rs. 5 lacs with any party during the year have been made at prices
which are reasonable having regard to the prevailing market prices.
6. The Company has not accepted any deposits from the public during
7. In our opinion, the Company has an adequate internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
company pursuant to the rules prescribed by the Central Government
under clause (d) of sub-section (1) of Section 209 of the Companies
Act, 1956 for the maintenance of cost records and are of the opinion
that prima facie the prescribed accounts and records have been made and
9. According to the information and explanations given to us in
respect of statutory and other dues:
a. The Company has been regular in depositing undisputed statutory
dues, including Provident Fund, Employees State Insurance, Income Tax,
Service Tax, Sales Tax, VAT, Wealth Tax, Custom Duty, Excise Duty, Cess
and other statutory dues 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 dues were
outstanding as at 31 st March, 2010 for a period of more than six
months from the date of becoming payable.
b. According to the information and explanations given to us, details
of dues of Excise Duty, Sales Taxes and Employees State Insurance which
have not been deposited as on 31st March, 2010 on account of dispute
are given below:
Particular Financial Year to which Forum where matter Amount (Rs.
the matter pertains is pending
Excise Duty 1994-95 ACCE 0.87
CST 1993-94 Tribunal 16.26
2004-05 Tribunal 0.53
2005-06 Addl. Comm. 238.52
2006-07 Addl. Comm. 3.83
2007-08 Addl. Comm. 4.06
VAT(Orissa) 2005-06 Addl. Comm. 1.68
2006-07 Addl. Comm. 0.59
2007-08 Addl. Comm 0.79
Entry Tax (Orissa) 2006-07 Addl. Comm. 1.30
2007-08 Addl. Comm. 0.11
OST 1989-90 High Court 0.79
ESIC 1996-97 ESICourt 0.22
10. The Company does not have accumulated losses as at the end of the
year and the Company has not incurred cash losses during the current
year and in the immediately preceding financial year.
11. Based on our audit procedures and on the basis of information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in the repayment of dues to financial
institution and banks.
12. According to the information and explanations given 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.
13. According to the information & explanations given to us, the
Company is not dealing in shares, securities debentures and other
14. According to information given to us, the Company has not given
any guarantee for loans taken by others from banks or financial
15. To the best of our knowledge and belief and according to the
information and explanations given to us, term loans availed by the
company were applied for the purpose for which the loans were obtained.
16. According to the Cash Flow Statement and other records examined by
us and the information and explanations given to us on an overall
basis, we report that funds raised on short term basis have, prima
facie, not been used for long term investments.
17. The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under section
301 of the Companies Act 1956, during the year and hence the question
of whether the price at which shares have been issued is prejudicial to
the interest of the Company does not arise.
18. The Company has not raised money by public issues during the year
and hence the question of disclosure and verification of end use of
such money does not arise.
19. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
was noticed or reported during the year.
For S. K. AGRAWAL & COMPANY
Registration No- 306033E
S. K. AGRAWAL
Membership No: 9067
Dated: May 05, 2010