ఆడిటర్ నివేదిక NEPC Agro Foods Ltd.

Mar 31, 2014

We have audited the attached Balance Sheet of NEPC AGRO FOODS LIMITED as on 31st March, 2014 and also the Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. 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 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2. 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. we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said order to the extent applicable.

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 our knowledge and belief, were necessary for the purposes of our audit:

b. In our opinion, the company has kept proper books of accounts as required by law so far as appears from our examination of the books.

c. The Balance Sheet, the Profit and Loss account. Cash flow statement dealt with by this report are in agreement with the Books of account.

d. In our opinion, the Balance Sheet, the Profit and Loss account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section 3 (C) of Section 211 of the Companies Act, 1956 to the extent made mandatory, subject to what is stated in para vi(e). vi(i) below.

e. Based on the written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31s1 March 2014 from being appointed as directors in terms of clause (g) of sub-section I of Section 274 of the Companies Act 1956.

4. Attention of the members is invited to the following notes which have been explained in Note 10 - Significant Accounting Policies and Notes on Accounts.

a) Note II.2 & 2.1 - regarding pending confirmation and reconciliations, if any, in respect of secured and unsecured loans, sundry debtors, loans and advances, certain book balances, deposits and current liabilities;

b) Note No.11.4 - regarding non-recognition of permanent diminution in the book value of investments, amount unascertainable, in the absence of value indicators in respect of the said investments;

c) Note No.II.5.1 - regarding non-provision in the accounts towards certain debtors considered doubtful of recovery amounting to Rs. 131.61 lacs - Gross (Previous year 131.61 lacs) since the management is hopeful of their full recovery;

d) Note No.II.5.2 - regarding non-provision in the accounts towards certain loans & Advances considered doubtful of recovery amounting to Rs. 1664.91 lacs (previous year - Rs. 1682.92 lacs) since the management is hopeful of their full recovery;

e) Note No.11.8 - regarding non-provision of retirement benefits in the financial statements on accrual basis which is in contravention with the provisions stipulated in Accounting Standard 15 - Accounting for retirement benefits - amount unascertainable (Previous year - amount unascertainable);

f) Note No.11.9-regarding non-disclosure of the requirements stipulated in Accounting Standard 17 - Segmental reporting issued by the Institute of Chartered Accountants of India;

g) Note No. II. 10 - regarding provision of depreciation on the fixed assets of the Company;

h) Note No.II. 11 - regarding non-provision of Interest, penal interest etc on Secured and Unsecured Loans resulting in under statement of expenses for the year and the Secured and Unsecured Loans -Amount unascertainable (Previous year - amount unascertainable);

i) Note No.II. 13 - regarding non recognition of Impairment of Assets even though the conditions of the same exists which is in contravention with the provisions stipulated in Accounting Standard 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India, resulting in over statement of Fixed Assets and over statement of Profits for the year-Amount unascertainable;

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to what is stated in paragraph 4 above having consequential impact (presently unascertainable) on the profit for the year, accumulated losses, investments, fixed assets, loans and net current assets of the Company and read together with other Significant Accounting Policies and other Notes thereon given in Note 19. give the information as 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 31s1 March 2014;

b) in case of the Profit & Loss Account, of the Profit of the Company for the year ended on 31st March 2014;

c) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditor''s Report (as referred to in Paragraph 3 of the Auditor''s Report of even date)

In terms of the information and explanation given to us and the books and records examined by us and on the basis of such checks, as we considered appropriate, we further report as under:-

1. In respect of its fixed assets:

a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) In our opinion, the company has not disposed off substantial part of fixed assets during the year,

2. In respect of inventories

a) As there is no Stock , hence this clause is not applicable.

3. (i) As per the records verified by us, the Company has not taken interest-free loans Secured or Unsecured from the parties covered in the register maintained under section 301 of the Companies Act, 1956.

(ii) The Company has not granted interest-free advances to any of the related parties covered in the register maintained under Section 301 of the Companies Act 1956.

b) The Terms & Conditions of such loans / advances are, in our opinion, prima facie, not prejudicial to the interest of the Company.

c) In the absence of schedule for the repayment of the said advances, the regularity of the repayment of the same cannot be commented upon.

d) Based on the information / explanation given to us, there were no transactions involving purchase or sale of goods or provision of services during the year which aggregate to Rs.5 lakhs or above, entered into with parties listed in the register maintained under Section 301 of the Companies Act 1956 during the year under review.

4. In our opinion and according to the information and explanations given to us. there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and for sale of goods. During the course of audit, we have not observed any continuing failure to correct major weakness in internal control.

5. The company has not accepted any deposits from the public.

6. In our opinion, internal audit system of the company is commensurate with its size and nature of business.

7. We have carried out a limited review of the books of accounts and cost records maintained by the company, pursuant to the rules made by the Central government for maintenance of cost records under Section 209 (1) (d) of the Companies Act 1956 and we are of the opinion that prima facie the prescribed accounts and records were maintained. We have not made a detailed examination of the same.

8. According to the information and explanations given to us there are undisputed statutory dues payable in respect of Provident Fund. Employees State Insurance. Customs duty. Excise duty. Income tax. Sales tax. Wealth Tax. Cess which are outstanding for a period of more than 6 months from the date they became payable.

Following are the details of disputed statutory dues which have not been deposited on account of desputes as listed below: AMOUNT Name of the Statue Nature (IN LAKHS) Period

Provident Fund Act Provident Fund 163.37 Various Period

TNGST Sales Tax 4.00 Various Period

Gratuity Gratuity 146.00 Various Period

Income Tax Income Tax 242.76 Various Period

9. The Company has accumulated losses as on 31st March 2014 which are not more than fifty percent of the net worth.

10. The Company has defaulted in repayment of dues to financial institutions and Banks.

The overdue amounts as per the books of accounts produced before us and the year of default as per the details made available to us by the Company are as follows:

a) Financial Institutions : 4058.87 Lakhs Ranging from 4 to 10 years

11. The company has not granted loans and advances on the basis of securities by way of pledge of shares and other securities.

12. The company is not a chit fund or a nidhi/mutual benefit fund society. Therefore the provisions of clause 4 (xiii) of the Order are not applicable to the company.

13. The company is not dealing in or trading in shares and securities and other investments. Accordingly the provisions of Clause 4 (xiv) of the Order are not applicable to the company.

14. According to the information given to us, the company has not given guarantees for loans taken by others from Banks and other Financial Institutions.

15. The company has not raised any new term loans during the year.

16. According to the information and explanations given to us, no funds raised on short-term basis have been used for long-term investments or vice-versa during the year.

17. The company has not made preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Companies Act 1956.

18. The company has not issued any debentures and hence the provisions of Clause 4 (xix)of the Order are not applicable to the company.

19. The company has not raised any money by public issues during the year.

20. 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 has been noticed or reported during the course of our audit.

For M.Dinesh Kumar & Co., Chartered Accountant

M.Dinesh Kumar Membership No: 222084

Place : Chennai Date : 30-07-2014

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Mar 31, 2010

We have audited the attached Balance sheet of NEPC Agro Foods Limited As on 31st March 2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial based on our audit

1. 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 amount 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.

2. 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, we annex hereto a statement on the matters specified in Para 4 & 5 of the said Order to the extent applicable to the Company during the period.

3. Further to our comments in the Annexure referred to in Para 2 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 purpose of our audit;

ii) In our opinion, proper books of account as required by law have been maintained by the Company in respect of all material transactions 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 the cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act 1956 to the extent made mandatory, subject to what is stated in para vi (e), vi (i) below;

v) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of directors is disqualified as on 31st March, 2009 from being appointed as director in terms of clause (g) of sub section (1) of section 274 of the Companies Act 1956;

vi) Attention of the members is invited to the following notes which have been explained in Schedule 19 - Significant Accounting Policies and Notes on Accounts.

a) Note II.2.1 & 2.2: regarding pending confirmation and reconciliations, if any, in respect of secured and unsecured loans, sundry debtors, loans and advances, certain bank balances, deposits and current liabilities;

b) Note No.II.4 regarding non-recognition of permanent diminution in the book value of investments, amount unascertainable, in the absence of value indicators in respect of the said investments,

c) Note No.II.5.1 regarding non-provision in the accounts towards certain debtors considered doubtful of recovery amounting to Rs. 131.61 Lacs (Gross) (Previous Year 131.61 Lacs) since the management is hopeful of their lull recovery,

d) Note No.II.5.2 regarding non-provision in the accounts towards certain Loans & Advances considered doubtful of recovery amounting to Rs. 1683.18 Lacs (Previous Year 1683.17 Lacs) since the management is hopeful of their full recovery,

e) Note II.8: regarding non-provision of retirement benefits in the financial statements on accrual basis which is in contravention with the provisions stipulated in Accounting Standard 15 - Accounting for Retirement Benefits - Amount unascertainable (Previous year Amount unascertainable);

f) Note II.9: regarding non disclosure of the requirements stipulated in Accounting Standard 17 - Segmental Reporting issued by the Institute of Chartered Accountants of India;

g) Note II. 10 regarding provision of depreciation on the fixed assets of the company.

h) Note n. 11: regarding non-provision of Interest, Penal interest etc. on Secured and Unsecured Loans resulting in understatement of loss for the year and the Secured & Unsecured Loans Amount unascertainable (Previous year - Amount unascertainable);

i) Note II. 14: regarding non recognition of Impairment of Assets even though the conditions for the same exists which is in contravention with the provisions stipulated in Accounting Standard 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India resulting in over statement of Fixed Assets and over statement of Profits for the year- Amount Unascertainable;

vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to what is stated in paragraph 3 (vi) above having consequential impact (presently unascertainable) on the profit for the year, accumulated losses, investments, fixed assets, loans and net current assets of the Company and read together with other Significant Accounting Policies and other Notes thereon given in Schedule 19. give the information as 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 case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2010;

b) in case of the Profit and Loss Account, of the Loss of the Company 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.

In terms of the information and explanation given to us and the books and records examined by us and on the basis of such checks, as we considered appropriate, we further report as under:

(i) Fixed Assets

a)The Company is in the process of updating its records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b)During the year, the fixed assets have been physically verified by the management in accordance with the phased programme of verification adopted by the management, which in our opinion is reasonable. Discrepancies, if any, will be adjusted on updating of the said records. (Refer Note 11.7 in Schedule 19)

(ii) Inventories

a) During the year the management has conducted physical verification of inventories at regular intervals.

b) The procedures of physical verification of Inventories followed by the management, in our opinion, are reasonable and adequate in relation to the size of the Company and nature of its business.

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on its physical verification. (Refer Note No. 11.18 in Schedule 19).

(iii)Loans & Advances either granted or taken

(a) (i)i As per the records verified by us, the Company has taken interest-free advances or unsecured of the parties covered in the register maintained under section 301 of the Companies Act, 1956, with maximum balance during the year of Rs 311989895/- and closing balance of Rs. 311989895/-. ''

(b) In our opinion, the other terms and conditions of the above advances are not prima facie prejudicial to the Company''s interests.

(c) In the absence of schedule for the repayment of the said loan/advances the regularity of the repayment of the same cannot be commented upon.

d) Based on the representations received from the management, we are of the opinion that the Company has taken reasonable steps for the recovery of the above advances.

(iv) Internal Controls

Based on the information and explanations given to us, we are of the opinion that the internal control procedures prevailing in the Company need to be strengthened further to make them commensurate with its size and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) Transactions covered by Section 301:

a) During the year the transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered by the Company;

b) Based on information and explanations given to us, we are of the opinion that, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time;

(vi) Public Deposits

The Company has not accepted any deposits from the public within the purview of Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under.

(vii) Internal Audit

Internal audits system was introduced in the company during the year under review. This needs to be strengthened.

(viii) Cost Records

The Central Government has prescribed for maintenance of cost records under section 209(1)

(d) of the Companies Act, 1956 for the product of the Company. We have broadly reviewed 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.

(ix) Statutory Dues

(a)Based on the records verified by us and as certified by the management, the Company has been generally regular in depositing undisputed statutory dues arising to the Company in respect of the Investor Education and Protection Fund, Employees State Insurance, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service Tax, Cess and any other Statutory Dues during the year to the appropriate authorities. As at 31st March 2010 except what is reported below, there were no undisputed dues which were outstanding for a period of more than six months from the date they became payable:

Amount in Rs.

Sr. Name of the Nature of Amount Period to Due Date No statue the dues in Rs. which the amount relates

1. Income Tax Tax Deducted 167275 Before A. Y. 7th of the month Act, 1961 at Source 2004-05 and following respective A.y 2006-07 months

2. Provident Provident Fund 104548 Provision for 15th of the month Fund Act, 1985 Contribution 2007-2008 following respective months

2384428 Current year 15th of the month 2008-2009 following respective months

With respect to the Company''s dispute with the P/F authority regarding arrears of Provident Fund for the earlier years, the Company has obtained a Court Order so as to adjust excess payment by a Group Company of P/F amounts lying with the PF authority towards the provident fund dues pertaining to this Company. However during the year under consideration no adjustment has been made.

b. Following are the details of disputed statutory dues, which have not been deposited on account of disputes as listed below:

Sl. Nature of dues & Assessment No. period Amount Name of the Forum under (in Rs.) which dispute is pending

1 Sales Tax (including interest and 75000 Appellate Assistant Penalty, wherever applicable) Commissioner

2 Income Tax (including interest and 71548642 Income Tax Appellate Penalty, wherever applicable) Tribunal

(x) Accumulated Losses

The Company''s accumulated losses, as on 31st March 2010 are more than fifty percent of its net worth. The Company has incurred cash loss in the current year.

(xi) Dues to Financial Institutions/Banks

The Company has defaulted in repayment of dues to Financial Institutions and Banks. The overdue amounts as per books of accounts Produced before us and the year of default as per the details made available to us by the Company are as follows:

Nature of the Party Due Amount (Rs. lakhs) Period of default

Banks/ Financial 2693.00 Ranging from 4 to 10 Institutions years

(Also Refer Note No. II - 11 in Schedule 19)

(xii) Loans against pledge of Securities

During the year under review, 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 to any party.

(xiii) Applicability of special statue

The Provisions of any special statute applicable to Chit Fund, Nidhi and Mutual Benefit Society are not applicable to the Company during the year under review.

(xiv) Dealing/trading in shares or Security

As per the records verified, the company has not dealt with or traded in shares, securities, etc., during the year under review.

(xv) Application of Funds raised

a)During the year, the Company has not raised any new Term Loans.

b)Based on our verification of the books of accounts, the information and explanations given to us, in this regard and on the overall examination of the balance sheet of the Company we are of the view that the funds raised on short term basis by the Company have not been utilized for long term purposes and vice versa.

(xvi) Preferential allotment

During the year under review, the Company has not made any preferential allotment of equity shares to any party/concern listed in the Register maintained under Section 301 of the Companies Act, 19S6.

(xvii)Security against Debentures

The Company has not issued any debentures during the year under review.

(xviii)End use of Public Issue Money

During the year the Company has not raised any money by Public Issue.

(xix) Frauds

Based on our verification of the books of account and other relevant records and based on the information and explanations given to us, we have not noticed or reported any fraud on or by the Company during the year under review.

For B.Y. Srinivasan & Associates

Chartered Accountants

T.S.R. Sivasubramanian

Partner

Membership No. 22713

Firm Regn. No. 113917W

Chennai, 30th July 2010

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Mar 31, 2009

We have audited the attached Balance sheet of NEPC Agro Foods Limited as on 31 st March 2009 and also the Profit and Loss Account and 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.

1. 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 amount 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.

2. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub section 4 A of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in Para 4 & 5 of the said Order to the extent applicable to the Company during the period.

3. Further to our comments in the Annexure referred to in Para 2 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 purpose of our audit;

ii) In our opinion, proper books of account as required by law have been maintained by the Company in respect of all material transactions 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 the cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent made mandatory, subject to what is stated in para vi (e), vi (i) below;

v) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of directors is disqualified as on 31" March 2008 from being appointed as director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956;

vi) Attention of the members is invited to the following notes which have been explained in Schedule 19 - Significant Accounting Policies and Notes on Accounts.

a) Note II.2.1 & 2.2: regarding pending confirmation and reconciliations, if any, in respect of secured and unsecured loans, sundry debtors, loans and advances, certain bank balances, deposits and current liabilities;

b) Note No.II.4 regarding non-recognition of permanent diminution in the book value of investments, amount unascertainable, in the absence of value indicators in respect of the said investments,

c) Note No.II.5.1 regarding non-provision in the accounts towards certain debtors considered doubtful of recovery amounting to Rs.l 14.05 Lacs (Gross) (Previous Year 103.42 Lacs) since the management is hopeful of their full recovery,

d) Note No.II.5.2 regarding non-provision in the accounts towards certain Loans & Advances considered doubtful of recovery amounting to Rs.1400.23 Lacs (Previous Year 1388.58 Lacs) since the management is hopeful of their full recovery,

e) Note II.8: regarding non-provision of retirement benefits in the financial statements on accrual basis which is in contravention with the provisions stipulated in Accounting Standard 15 - Accounting for Retirement Benefits - Amount unascertainable (Previous year Amount unascertainable);

f) Note II.9: regarding non disclosure of the requirements stipulated in Accounting Standard 17 - Segmental Reporting issued by the Institute of Chartered Accountants of India;

g) Note 11.10 regarding provision of depreciation in the fixed assets of the company.

h) Note 11.11: regarding non-provision of Interest, Penal interest etc. on Secured and Unsecured Loans resulting in over statement of profit for the Period and the Secured & Unsecured Loans - Amount unascertainable (Previous year - Amount unascertainable);

i) Note II. 14: regarding non recognition of Impairment of Assets even though the conditions for the same exists which is in contravention with the provisions stipulated in Accounting Standard 28 — Impairment of Assets issued by the Institute of Chartered Accountants of India resulting in over statement of Fixed Assets and over statement of Profits for the year - Amount Unascertainable;

vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to what is stated in paragraph 3 (vi) above having consequential impact (presently unascertainable) on the profit for the year, accumulated losses, investments, fixed assets, loans and net current assets of the Company and read together with other Significant Accounting Policies and other Notes thereon given in Schedule 19. give the information as 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 case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2009;

b) in case of the Profit and Loss Account, of the Profit of the Company 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 (as referred to in Paragraph 3 of the Auditors Report of even date)

In terms of the information and explanation given to us and the books and records examined by us and on the basis of such checks, as we considered appropriate, we further report as under:

(i) Fixed Assets

a)The Company is in the process of updating its records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b)During the year, the fixed assets have been physically verified by the management in accordance with the phased programme of verification adopted by the management, which in our opinion is reasonable. Discrepancies, if any, will be adjusted on updation of the said records. (Refer Note II.7 in Schedule 19)

(ii) Inventories

a) During the year the management has conducted physical verification of inventories at regular intervals.

b) The procedures of physical verification of Inventories followed by the management, in our opinion, are reasonable and adequate in relation to the size of the Company and nature of its business.

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on its physical verification. (Refer Note No. 11.18 in Schedule 19).

(iii) Loans & Advances either granted or taken

(a) (i) As per the records verified by us, the Company has taken interest-free advances Secured or unsecured from one of the parties covered in the register maintained under section 301 of the Companies Act, 1956, with maximum balance during the year of Rs. 3 22056142/- and closing balance of Rs. 302472875/-.

(b) In our opinion, the other terms and conditions of the above advances are not prima facie prejudicial to the Companys interests.

(c) In the absence of schedule for the repayment of the said loan/advances the regularity of the repayment of the same cannot be commented upon.

d) Based on the representations received from the management, we are of the opinion that the Company has taken reasonable steps for the recovery of the above advances.

(iv) Internal Controls

Based on the information and explanations given to us, we are of the opinion that the internal control procedures prevailing in the Company need to be strengthened further to make them commensurate with its size and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) Transactions covered by Section 301:

a) During the year the transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered by the Company;

b) Based on information and explanations given to us, we are of the opinion that, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time;

(vi) Public Deposits

The Company has not accepted any deposits from the public within the purview of Reserve Bank of India and the provisions of sections 58A and 58AAof the Act and the rules framed there under.

(vii) Internal Audit

Internal audits system was introduced in the company during the year under review. This neds to be strengthened.

(viii) Cost Records

The Central Government has prescribed for maintenance of cost records under section 209( 1) (d) of the Companies Act, 1956 for the product of the Company. We have broadly reviewed 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.

(ix) Statutory Dues

(a)Based on the records verified by us and as certified by the management, the Company has been generally regular in depositing undisputed statutory dues arising to the Company in respect of the Investor Education and Protection Fund, Employees State Insurance, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service Tax, Cess and any other Statutory Dues during the year to the appropriate authorities. As at 31 st March 2009 except what is reported below, there were no undisputed dues which were outstanding for a period of more than six months from the date they became payable:

Amount in Rs.

Sr. Name of the Nature of Amount Period to Due Date

No. statue the dues in Rs. which the amount relates

1. Income Tax Tax Deducted 167275 Before A. Y. 7th of the month

Act, 1961 at Source 2004-05 and following respe ctive

A.y 2006-07 months

2. Provident Provident Fund 104548 Provision for 15th of the month

Fund Act, 1985 Contribution 2007-2008 following respec tive

months

2384428 Current year 15th of the month

2008-2009 following respec tive

months

With respect to the Companys dispute with the P/F authority regarding arrears of Provident Fund for the earlier years, the Company has obtained a Court Order so as to adjust excess payment by a Group Company of P/F amounts lying with the PF authority towards the provident fund dues pertaining to this Compnay.

5. Following are the details of disputed statutory dues, which have not been deposited on account of disputes as listed below:

Sr. Nature of dues & Assessment period Amount Name of the Forum under

No (in Rs.) which dispute is pending

1 Sales Tax (including interest and 75000 Appellate Assistant Penalty, wherever applicable) Commissioner

2 Income Tax (including interest and 71548642 Income Tax Appellate Penalty, wherever applicable) Tribunal

(x) Accumulated Losses

The Companys accumulated losses, as on 31st March 2009 are more than fifty percent of its net worth. The Company has incurred cash profit in the current year.

xi) Dues to Financial Institutions/Banks

The Company has defaulted in repayment of dues to Financial Institutions and Banks. The overdue amounts as per books of accounts produced before us and the year of default as per the details made available to us by the Company are as follows:

Nature of the Party Due Amount (Rs.) Period of default

Banks 248805532 Ranging from 4 to 10 years

Financial Institution 20494000

(Also Refer Note No. II - 11 in Schedule 19)

(xii) Loans against pledge of Securities

During the year under review, 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 to any party.

(xiii)Applicability of special statue

The Provisions of any special statute applicable to Chit Fund, Nidhi and Mutual Benefit Society are not applicable to the Company during the year under review.

(xiv) Dealing/trading in shares or Security

As per the records verified, the company has not dealt with or traded in shares, securities, etc., during the year under review.

(xv) Application of Funds raised

a)During the year, the Company has not raised any new Term Loans.

b)Based on our verification of the books of accounts, the information and explanations given to us, in this regard and on the overall examination of the balance sheet of the Company we are of the view that the funds raised on short-term basis by the Company have not been utilized for long term purposes and vice versa.

(xvi) Preferential allotment

During the year under review, the Company has not made any preferential allotment of equity shares to any party/concern listed in the Register maintained under Section 301 of the Companies Act, 1956.

(xvii)Security against Debentures

The Company has not issued any debentures during the year under review. (xviii)End use of Public Issue Money

During the year the Company has not raised any money by Public Issue.

(xix) Frauds

Based on our verification of the books of account and other relevant records and based on the information and explanations given to us, we have not noticed or reported any fraud on or by the Company during the year under review.

For B.Y. Srinivasan & Associates

Chartered Accountants

T.S.R. Sivasubramanian

Partner

Membership No: 22713

Chennai, 30th July, 2009

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Oct 31, 2001

We have audited the attached Balance Sheet of NEPC AGRO FOODS LIMITED as at 31st October 2001 and the Profit and Loss Account for the year ended on that date, and report that

1. As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragarph (1) above:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) 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 books.

c) The attached Balance Sheet and the Profit and Loss Account referred to in this Report are in agreement with the books of account;

d) In our opinion and to the best of our information and according to the explanation given to us, the said Profit and Loss Accounts and Balance Sheet comply with the accounting standards refers to in subsection (3c) of Section 211 of the Companies Act 1956.

e) Based on the representation made by all the Directors of the Company and the information and explanation as made available, Directors of the Company do not prima facie have any disqualification as referred to in 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 explanation 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:

a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st October, 2001 and

b) in the case of Profit and Loss Account of the Profit / (Loss) of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph (1) of the Auditors Report of even date.

(i) The Company has maintained proper records showing full particulars including quantative details and situation of Fixed Assets. The Fixed Assets were physically verified by the Management during the year and no material discrepanices were notified on such verification.

(ii) There has been no revaluation of Fixed Assets during the year.

(iii) The Stocks of Finished Goods, Stores, Spare Parts and Raw Materials including components have been physically verified during the year and at the year end by the Management.

(iv) The procedure of physical verification of stocks followed by the Management are in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(v) The discrepancies noticed on such verification were not significant as compared to book records and the same have been properly dealt with in the books of accounts.

(vi) The valuation of stocks is fair and proper and in accordance with the normally accepted accounting principles and is on the same basis as in earlier years.

(vii) The Company has not taken any loans secured or unsecured, from Companies, firms or other parties listed in the reigster maintained under Section 301 of the Companies Act, or from Companies under the same management within the meaning of Section 370 (1-B) of the Companies Act, 1956.

(viii) The Company has not granted any loans secured or unsecured to Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act 1956 or to Companies under the same management within the meaning of Section 370 (1-B) of the Companies Act, 1956.

(ix) In respect of loans and advances in the nature of loans given to employees and others, the principal amounts and interest thereon, wherever applicable have been repaid as stipulated.

(x) In our opinion and according to the information and explanation given to us, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business, for purchase of stores, raw materials including components, plant and machinery, equipment and other assets and for sale of goods.

(xi) In our opinion, the transactions of purchase of goods and raw materials and sale of goods and materials and services made in pursuance of contracts or arrangements entered with the parties listed in the Registers maintained under Section 301 of the

Companies Act, 1956 and aggregating during the year to Rs. 50,000/- or more in respect of each party has been made at prices which are resonable having regard to the prevailing market price at which the transactions for similar goods or services have been made with other parties.

(xii) As explained to us, the Company has regular procedure for determining unserviceable or damaged stores and adequate provisions for loss has been made in the accounts.

(xiii) The Company has not accepted any Fixed Deposits from the Public during the year.

(xiv) In our opinion, the Company has maintained reasonable records for the sale and disposal of scraps.

(xv) The Company has an Internal Audit System commensurate with the size and nature of the business of the Company.

(xvi) The Central Government has not prescribed the maintenance of any cost records under Section 209 (1) (d) of the Companies Act, 1956.

(xvii) According to the records of the Company, Provident Fund and Employees State Insurance dues are being deposited during the year with instances of delay with the appropriate authorities.

(xviii) According to the information and explanations given to us, no undisputed amount payable in respect of income Tax, Wealth Tax, Sales Tax, Customs duties and Excise duties wherever applicable were outstanding as on 31st October 2000 for a period of more than six months from the date it is payable.

(xix) According to the informations and explanations given to us no personal expenses of employees or Directors have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice.

(xx) The Company is not a Sick Industrial Company within the meaning of clause (O) of Sub- Section 1 of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

(xxi) In respect of goods traded in by the Company as explained to us, damaged goods have been determined and adequate provision has been made therefor.

for T.G. RAMANATHAN & CO. CHARTERED ACCOUNTANTS

T.G. RAMANATHAN Proprietor

Place: CHENNAI Date : 22-03-2002