Auditor Report of BK Duplex Board Ltd.

Mar 31, 2011

1. We have audited the attached Balance Sheet of B.K. Duplex Board Limited as at 31.03.2011 and also Profit & Loss Account for 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.

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 amount 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.

3. As required by the Companies (Auditor's Report) Order,2003 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, and on basis of such checks of the books and records of the company, as we considered appropriate, we enclose in the Annexure, a statement on the matters specified in the said Order.

4. Further to our comments in the annexure referred to in paragraph (1) 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 kept by the Company so far as appears from our examination of such books.

(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the Books of Account.

(iv)Inour opinion and to the best of our information and according to the explanations give to us, the said accounts, read together with Significant Accounting Polices and Notes on Accounts thereon, comply with accounting standards referred to in section 211(3C) of Companies Act, 1956 and give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view. (

v) On the basis of the written representation received from the directors and taken on record by the company, we report that none of the directors is disqualified, as on the balance sheet date, from being appointed as a director in terms of section 274 (I) (g) of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanation give to us, the said statement of accounts, read together with notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give true & fair view: -

a) In the case of the Balance Sheet of the state of affairs of the Company as at 31.03.2011 and

b) In the case of the Profit & Loss Account of the Company for the year ended on that date.

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

ANNEXURE TO AUDITOR'S REPORT (REFER TO PARA ONE OF OUR REPORT OF EVEN DATE)

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

(b) According to the information and explanation give to us, the Management has not verified the fixed assets during the year under review. Therefore we are unable to comment whether there is any serious discrepancies in fixed assets during the year under review.

(c) In our opinion and according to the information and explanations given to us, the company has not made any substantial disposals during the year.

2. According to information and explanations given to us, the inventories have not been physically verified during the year by the management. Therefore we are unable to comment whether there was any material discrepancies during the year under review.

3. (a) According to the information and explanation provided to us and on basis of examination of the books of the account, the company has granted unsecured loan of Rs.91.72 Lacs as on 31.03.2011 to a company covered in the register maintained under section 301 of the Act.

(b) According to the information and explanation provided to us and on the basis of examination of the books of account , the company has not taken any unsecured loan from parties covered in the register maintained under section 301 of the Act during the period under review.

(c) According to information and explanation given to us and on the basis of examination of the books of the account , we are of the opinion that the terms and conditions of such loans granted are not prima facie prejudicial to the interest of the company.

(d) There is no overdue amount in respect of loan granted by the company.

4. In our opinion and according to the information and explanations give to us, there were adequate internal control procedures commensurate with the size of the company and the nature of its business for purchase of inventory and fixed assets and also for the sale of goods.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, the transactions that need to be entered into a register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to information and explanation given to us, the transactions made in pursuance of such contracts or arrangements entered in the register exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at relevant time.

6. The company has not accepted any deposits as defined under section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) rules 1975.

7. In our opinion, the company has an internal audit system commensurate with its size and nature of the business.

8. We have broadly reviewed the books of accounts relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central government for the maintance of cost records under section 209 (I) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. (a) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax , sales tax, custom duty , excise duty and cess were outstanding as on 31.03.2011 for a period of more than six months from the date these became payable.

(b) According to the information and explanations given to us there are no dues in respect of P.F. , E.S.I., Income Tax, Sales Tax , Wealth Tax , Custom Duty, Excise Duty, Cess and other statutory dues that have not been deposited on account of any dispute.

10. The company has been registered for a period of not less than five years; its accumulated losses are Rs.34.92 lacs which are less than fifty percent of its net worth at the end of the financial year under review. The company has incurred cash losses of Rs.0.44 Lacs during the current year. However the company has not incurred any cash losses during the immediate preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has defaulted in the repayment of loan taken from Director of Industries, Chandigarh amounting to Rs.25.37 Lacs.

12. According to information and explanations given to us, the company has not given any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not a chit fund or a nidhi / mutual benefit/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to this company.

14. According to the explanations given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

15. According to the explanations given to us, the company has given corporate guarantee for credit facilities availed by M/s B.K.Krafts Limited, M/s B.K. Coated Board Ltd and M/s. A.S.T. Paper Mills Ltd from State Bank of India. On the basis of information provided to us we are of the opinion that the term and conditions of such guarantees are not prejudicial to the interest of the company.

16. On the basis of our examinations of records and as per the explanations given to us, the company has not availed any fresh term loan during the year under review.

17. According to records examined by us and information and explanations given to us, on an overall basis, funds raised on short term basis have, prime facie, not been used during the year for long term investment (fixed assets etc.) and vice versa.

18. According to the information and explanations given to us, the company has not made any preferential allotment to parties and companies covered in the register maintained under section 301 of the Companies Act, during the year.

19. No debenture has been issued / outstanding during the year hence the provision of clause (xix) of the said order is not applicable.

20. According to the information and explanations given to us, the company has not made any allotment of shares during the year under review.

21. 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 SUMAT GUPTA & CO.

CHARTERED ACCOUNTANTS

FIRM REG.NO.010288N



DATED: 28.05.2011 SUMAT GUPTA

PLACE: LUDHIANA PARTNER

(M.NO.086000)