Auditor Report of Garodia Chemicals Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Garodia Chemicals Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements :

2. The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Companies Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility:

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. We have taken into account the provisions of the Companies Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Companies Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Companies Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements

7. Basis for Qualified Opinion:

7.1 Attention is drawn to Note No. 20 of Notes on Financial Statements which is reproduced :

"In view of heavy accumulated losses and suspension of the manufacturing activities no provision has been made for the interest payable on term loan 'facilities granted by IDBI and now taken over by Aaskha Holdings Pvt Ltd. The estimated amount of interest payable till 31st March, 2015 works out to Rs.16,56,66,039/- (previous year Rs.144830392/-). The company is pursuing the matter for one time settlement including waiver of interest. Balances of loans and interest payable are subject to confirmation."

7.2 The non-provision of interest of Rs. 16,56,66,039 referred to in para 7.1 the loss for the year is understated by Rs. .16,56,66,039/- and similarly the liability is understated by Rs. 16,56,66,039/- 7.3 Attention is drawn to Note No. 21 of Notes on Financial Statements which is reproduced:

"Financial statements have been prepared in accordance with the fundamental accounting assumption that the company is a going concern."

The above being intention of the management for continuation of the business and the technicalities involved therein, we are unable to express any opinion on the above.

Opinion:

8. .In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in para 7- the basis for Qualified Opinion paragraph, the aforesaid financial statements give the information required by the Companies Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

9. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

10. As required by section 143(3) of the Companies Act, we report that:

a. We have sought and 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 it appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. Except for the/possible effects of the matters described in para 7- the basis for Qualified Opinion paragraph ,in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Companies Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Companies Act.

f. With respect to the other matters in terms of Rule 11 of Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial position.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the company.

Re. : Garodia Chemicals Limited

Annexure to the Independent Auditors' Report

(Referred to in Paragraph 9 of Our Report of Even Date)

(i) (a) The Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets. Attention is drawn to note no. 18 of the Notes on Financial Statements.

(b) As per the information and explanations given to us, these fixed assets have not been physically verified by the management. In view of the same, we do not offer any comment on any material discrepancy which may be noticed on physical verification.

(ii) (a)to(c) As per the information and explanations given to us, the company has made full provision for the diminution in the value of inventory. Hence no further comments are given in relation to the same.

(iii) (a),(b) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act;

As the company has not granted any Loans, the clauses iii(a) and iii(b) of Para 3 of the Order are not applicable to the company;

(iv) The Company has not made any transactions relating to purchase of inventories, fixed assets and sale of goods and services during the year under reference. Hence, clause (iv) of Para 3 of the Order is not applicable to the company.

(v) The Company has not accepted any deposits from the public. Hence, clause (v) of Para 3 of the Order is not applicable to the company.

(vi) In view of the suspension of the manufacturing operations, the cost records specified by the Central Government under sub-section (1) of section 148 of the Companies Act, have not been made and maintained by the company.

vii) a) According to the records of the company, the company is regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service-tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities whichever is applicable. According to the information and explanations given to us, there were no undisputed statutory dues which have remained outstanding as at 31st March, 2015 for a period more than six months from the date they became payable;

b) There are no dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess payable by the company which have not been deposited on account of any dispute pending before any authorities;

c) As per the records of the company, there is no amount which is required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 ( 1 of 1956) and rules made there under.

viii) According to the information and explanations given to us, the accumulated losses as at 31st March, 2015 are exceeding the net worth of the company and it has incurred cash losses during the year under reference and in the immediately preceding financial year.

ix) As per the information and explanations given to us, the company has defaulted in repayment of dues to the financial institutions / banks. Attention is drawn to Note No. 20 of "Notes on Financial Statements".

(x) As per the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions. Hence, clause (x) of Para 3 of the Order is not applicable to the company.

(xi) As per the information and explanations given to us, the company has not raised any term loans during the year. Hence, clause (xi) of Para 3 of the Order is not applicable to the company.

(xii) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year under reference.

For M.K. MEHTA & CO,

CHARTERED ACCOUNTANTS,

(Registration No. 129664W)

Sd/-

(M.K. MEHTA)

PROPRIETOR

MEMBERSHIP NO.47739

PLACE: MUMBAI

DATE: 30th May, 2015

---

Mar 31, 2014

Report on the Financial Statements:

1. We have audited the accompanying financial statements of Garodia Chemicals Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements :

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion:

6.1 Attention is drawn to Note No. 20 of Notes on Financial Statements which is reproduced :

In view of heavy accumulated losses and suspension of the manufacturing activities, no provision has been made for the estimated amount of interest of Rs.4,40,52,899/- payable till 31st March 2014 (previous year Rs. 3,69,54,833/-) on different credit facilities granted by Central Bank of India as reflected in Note No. 5 of Notes on Accounts, The balances of loans and interest payable to Central Bank of India are subject to confirmation.

6.2 Attention is drawn to Note No. 21 of Notes on Financial Statements which is reproduced :

In view of heavy accumulated losses and suspension of the manufacturing activities, no provision has been made for the estimated amount of interest payable till 31st March, 2014 of Rs.14,48,30,392/- (previous year Rs. 12,62,27,136/-) on term loan facilities granted by IDBI and now taken over by Aaskha Holdings Pvt Ltd as reflected in Note No. 4 of Notes on Financial Statements. The The company is pursuing the matter for waiver of interest. The balances of loans and interest payable are subject to confirmation.

6.3 The non-provision of interest of Rs. 18,88,83,291(4,40,52,899 14,48,30,392) refered to in para 6.1 and 6.2 above, the loss for the year is understated by Rs. .18,88,83,291/- and similarly the liability is understated by Rs. . 18,88,83,291/-.

6.4 Attention is drawn to Note No. 22 of Notes on Financial Statements which is reproduced :

The liabilities to Central Bank of India for the various credit facilities granted as shown in Note No. 5 of Notes on Financial Statements have been taken over by Phoenix Arc Pvt. Ltd. as per the agreement entered into by and between Central Bank of India and Phoenix Arc Pvt. Ltd. Phoenix Arc Pvt. Ltd. has served notice to company for recovery of dues of Rs.715.50 Lacs. The Company has disputed the agreement and has obtained a stay of recovery from DRT. Phoenix Arc Pvt. Ltd. has taken the symbolic possession of mortgaged premises i.e. 2nd charge on factory and 1st charge on 1000 sq. ft. of office premise. The matter is pending with DRT for final hearing and disposal.

In view of the above, the impact on the financial statements cannot be quantified.

6.5 Attention is drawn to Note No. 24 of Notes on Financial Statements which is reproduced :

Financial statements have been prepared in accordance with the fundamental accounting assumption that the company is a going concern.

The above being intention of the management for continuation of the business and the technicalities involved therein, we are unable to express any opinion on the above.

Opinion :

7 In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matters described in para 6- the basis for Qualified Opinion paragraph, the financial statements give the information required by the Act 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 March 31,2014;

(b) in the case of Statement of Profit and Loss, of the loss for the year ended on that date; and,

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

Report on Other Legal and Regulatory Requirements :

8 The Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

9 As required by section 227(3) of the Act, 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 those books;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. except for the effects/possible effects of the matters described in para 6- the basis for Qualified Opinion paragraph , in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Act;

e. on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act;

Annexure to the Independent Auditors'' Report

(Referred to in Paragraph 8 of Our Report of Even Date)

(i)

(a) The Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets. Attention is drawn to note no. 18 of the Notes on Financial Statements.

(b) As per the information and explanations given to us, these fixed assets have not been physically verified by the management. In view of the same, we do not offer any comment on any material discrepancy which may be noticed on physical verification.

(c) As per the information and explanations given to us, the Company has not disposed off substantial part of fixed assets during the year.

(ii) (a)to(c) As per the information and explanations given to us, the company has made full provision for the diminution in the value of inventory. Hence no further comments are given in relation to the same.

(iii) (a)to(d) The company has not granted loans to companies, firms or other parties covered in register maintained u/s.301 of the Companies Act, 1956. Hence, sub clauses (iii)(a), (iii)(b), (iii)(c) and (iii) (d) are not applicable to the company.

(e) The company has taken unsecured loans from one company, two directors and two other parties covered in the register maintained u/s. 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1,69,06,363/-. Such loans are interest free loans.

(f) In our opinion the terms and conditions on which loans have been taken are not prejudicial to the interest of the company.

(g) There is no stipulation for repayment of loans and hence, we do not offer further comments thereon.

(iv) The Company has not made any transactions relating to purchase of inventories, fixed assets and sale of goods and services during the year under reference. Hence, clause 4(iv) of the order is not applicable to the company.

(v) (a) According to the information and explanations given to us, the company has not entered in any contract and arrangement that need to be entered into the register maintained u/s.301 of the Companies Act, 1956 during the year under reference. Hence, clause 4(v)(a) of the order is not applicable to the company.

(b) As per the information and explanations given to us, the company has not made any transactions in pursuance of contracts or arrangements entered in the register maintained u/s.301 of the Companies Act, 1956 exceeding the value of Rs.5 lakhs in respect of any party during the year and hence the clause 4(v)(b) of the Order is not applicable to the company.

(vi) The Company has not accepted any deposits from the public. Therefore, the clause 4(vi) of the Order is not applicable to the company.

(vii) As per the information and explanations given to us, the Company has suspended its manufacturing activities and in view of the same, the company does not have Internal Audit system commensurate with the size and nature of its business.

(viii) In view of the suspension of the manufacturing operations, the cost records and accounts prescribed by the Central govt. u/s.209(1)(d) of the Companies Act, 1956 have not been made and maintained by the company.

(ix)

(a) In view of the suspension of the manufacturing operations for last number of years, according to the records of the Company, the Company is not liable to make any deposits of statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise Duty, Cess and other statutory dues with appropriate authorities whichever is applicable.

(b) According to the information and explanations given to us, there are no disputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise Duty, Cess and other statutory dues which have remained outstanding as at 31st March, 2014;

(x) According to the information and explanations given to us, the accumulated losses as at 31st March, 2014 are exceeding the net worth of the company and it has incurred cash losses during the year under reference and in the immediately preceding financial year.

(xi) As per the information and explanations given to us, the company has defaulted in repayment of dues to the financial institutions / banks. Attention is drawn to Note No. 20 and 21 of Notes on Financial Statements.

(xii) The Company has not granted loans and advances 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 benefit mutual fund / society. Therefore, the clause 4(xiii) of the Order is not applicable to the company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures & other investments. Accordingly, the clause 4(xiv) of the Order is not applicable to the company.

(xv) As per the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions. Therefore, the clause 4(xv) of the Order is not applicable to the company.

(xvi) As per the information and explanations given to us, the company has not raised any term loans during the year. Hence, the clause 4(xvi) of the Order is not applicable to the company.

(xvii) The company has not used funds raised on short term basis for long term investment.

(xviii) According to the information and explanations given to us, the company has not made preference share allotment of shares to parties and companies covered in the register maintained u/s.301 of the Act.

(xix) According to the information and explanations given to us, during the year under reference, the company has not issued debentures. Hence, the clause 4(xix) of the Order is not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised

money by public issues during the year under reference. Hence, the clause 4(xx) of the Order is not applicable to the company.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year under reference.

For M.K. MEHTA & CO, CHARTERED ACCOUNTANTS, (Registration No. 129664W)

(M.K. MEHTA) PROPRIETOR MEMBERSHIP NO.47739

PLACE OF SIGNATURE: MUMBAI. DATE : 30th May, 2014.

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Mar 31, 2012

1) We have audited the attached Balance-Sheet of Garodia Chemicals Ltd. as at 31st Mach, 2012, the Statement of Profit and Loss and also Cash Flow statement 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.

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 also 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3) The Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 (together “the Order”) issued by the Central Government of India in terms of Sub section (4A) of Section 227 of the Companies Act, 1956(“the Act”) we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order..

4) Further to our comments in the Annexure referred to in para 3 above, 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 those books except short provision of interest expense on loans and borrowings taken from Central Bank of India and Aashka Holdings Pvt. Ltd.(Originally borrowed from IDBI) as stated in Note No.2.24 & 2.25 respectively.

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act..

(e) On the basis of written representations received from the directors as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) Attention is also invited to the following notes:

i) Note No.2.21, relating to transfer of rights of IDBI to Aashka Holdings Pvt. Ltd ;

ii) Note No.2.22, non-maintenance of proper records relating to Fixed Assets and no physical verification of fixed assets :

iii) Note No.2.24, relating to shortfall of Rs.3,07,82,601/- in provision made for interest payable to Central Bank of India ;

iv) Note No.2.25, shortfall of Rs.10,96,17,086/- in provision made for interest payable to Aashka Holdings Pvt. Ltd, (Originally borrowed from IDBI);

v) Note No. 2.26, relating to rights of Central Bank of India takenover by Phoenix Arc Pvt. Ltd and disputed by the company before Debt Recovery Tribunal (DRT);

vi) Note No.2.28, regarding assumption of going concern. However, under the facts and in the circumstances, we are unable to express our opinion on the same.

(g) Subject to what is stated in para 4(b) & 4(f) above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act, in a 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 March 31,2012.

and

(ii) In the case of Statement of Profit and Loss, of the loss for the year ended on that date.

And

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

Annexure

REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

i) a) The Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As per the information and explanation given to us, these fixed assets have not been physically verified by the management. In view of the same, we do not offer any comment on any material discrepancy which may be noticed on physical verification.

i) As per the information and explanation given to us, Company has not disposed off substantial part of fixed assets during the year.

ii) (a) to (c) As per the information and explanations given to us, the company has made full provision for the diminution in the value of inventory. Hence no further comments are given in relation to the same.

(iii)(a) to (d) The company has not granted loans to companies, firms or other parties covered in register maintained u/s. 301 of the Companies Act, 1956. Hence, sub-clauses (iii) (a), (iii) (b) and (iii) (d) are not applicable to the Company.

(e) The company has taken unsecured loans from one company, two directors and two other parties covered in the register maintained u/s. 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.1,56,17,863/- Such loans are interest free.

(f) In our opinion the terms and conditions on which loans have been taken are not prejudicial to the interest of the company.

(g) There is no stipulation for repayment of loans and hence, we do not offer further comments thereon.

(iv)The Company has not made any transactions relating to purchase of inventories, fixed assets and sale of goods and services during the year under reference. Hence, clause 4(iv) of the order is not applicable to the company.

(v) (a) According to the information and explanations given to us, the company has not entered in any contract and arrangement that need to be entered into the register maintained u/s. 301 of the Companies Act, 1956

during the year under reference. Hence, clause 4(v) (a) of the order is not applicable to the company.

(b) As per the information and explanations given to us, the company has not made any transactions in pursuance of contracts or arrangements entered in the register maintained u/s. 301 of the Companies Act, 1956 exceeding the valued of Rs.5 lakhs in respect of any party during the year and hence the clause 4(v) (b) of the Order is not applicable to the company.

(vi)The Company has not accepted and deposits from the public. Therefore, the clause 4(vi) of the Order is not applicable to the company.

(vii)As per the information and explanations given to us, the Company has suspended its manufacturing activities and in view of the same, the company does not have internal audit system commensurate with the size and nature of its business.

(viii) In view of the suspension of the manufacturing operations, the cost records and accounts prescribed by the Central Governments. u/s. 209(1) (d) of the Companies Act, 1956 have not been made and maintained by the company.

(ix) (a) In view of the suspension of the manufacturing operations for last so many years, according to the records of the Company, the Company is no liable to make any deposits of statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurances, Income-Tax, Sales-Tax, Wealth - Tax, Service-Tax, Customs Duty, Excise Duty, Cess and other statutory dues with appropriate whichever is applicable.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2012 for a period more than six months from the ate they became payable.

(x) According to the information and explanations given to us, the accumulated losses as at 31st March, 2012 are exceeding the net worth of the company and it has incurred cash losses during the year covered by our audit and into the immediately preceding financial year.

(xi) As per the information and explanations given to us, the company has defaulted in repayment of dues to the financial institutions / banks. Attention is drawn to Note No. 2.24 & 2.25..

(xii) The Company has not granted loans and advances 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 benefit mutual fund / society. Therefore, the clause 4(xiii) of the Order is not applicable to the company.

(xiv) In our opinion, the Company is not dealing in our trading in shares, securities, debentures & other investments. Accordingly, the clause 4 (xiv) of the Order is not applicable to the company.

(xv) As per the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions. Therefore, the clause 4(xv) of the Order is not applicable to the company.

(xvi) As per the information and explanations given to us, the company has not raised any short term funds during the year. Therefore, the clause 4 (xvii) of the Order is not applicable to the company.

(xvii) According to the information and explanations given to us, the company has not made preference share allotment of shares to parties and companies covered in the register maintained u/s. 301 of the Act.

(xviii) According to the information and explanations given to us, during the period covered under audit the company has not issued debentures. Hence, the clause 4(xix) of the Order is not applicable to the company. (According to the information and explanations given to us, the company has not raised money by public issues. Hence, the clause 4(xix) of the Order is not applicable to the company.

(xix) According to the information and explanations given to us, the company has not raised money by public issues. Hence, the clause 4(xx) of the Order is not applicable to the company.

(xx) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year covered by our audit report.

For MILIND MEHTA & CO, CHARTERED ACCOUNTANTS, (Registration No.l29664W)

Sd/-

(MILIND K MEHTA)

PROPRIETOR MEMBERSHIP NO.47739

PLACE: MUMBAI DATE : 30 MAY 2012

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Mar 31, 2011

1) We have audited the attached Balance-Sheet of Garodia Chemicals Ltd. as at 31st Mach, 2011, the Profit & Loss Account and also Cash Flow statement 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.

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 also 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 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 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 paragraphs 4 and 5 of the said order.

4) Further to our comments in the Annexure referred to above, 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 except nondisclosure of information and inadequate documents in respect of investments as stated in Note No.13 of Schedule 15;

(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 those books except short provision of interest expense on loans and borrowings taken from Central Bank of India and Aashka Holdings Pvt. Ltd.(Originally borrowed from IDBI) as stated in Note No.10 & 11 of Schedule 15 ;

(c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable except AS-2 valuation of inventories.

(e) In absence of adequate information, we are unable to state whether any of the directors is disqualified as on 31st March, 2011 from being appointed as director of the Company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) Attention is also invited to the following notes in Schedule 15 :

i) Note No.2, relating to transfer of rights of IDBI to Aashka Holdings Pvt. Ltd ; ii) Note No.8, non-maintenance of proper records relating to Fixed Assets and no physical verification of fixed assets:

iii) Note No.10, relating to shortfall of Rs.2,54,15,443/- in provision made for interest payable to Central Bank of India;

iv) Note No.ll shortfall of Rs.9,47,86,684/- in provision made for interest payable to Aashka Holdings Pvt. Ltd, (Originally borrowed from IDBI);

v) Note No.13, inadequate documents in respect of investments ;

vi) Note No.14, relating to non provision for unrealizable value of inventories of Rs.39,33,400/-;

vii) Not No.15, unconfirmed debtors and creditors balances and non provision of debts considered doubtful;

viii) Note No.16, relating to inadequate documents in respect of advances and deposits ;

ix) Note No.19, regarding assumption of going concern. However, under the facts and in the circumstances, we are unable to express our opinion on the same.

(g) Subject to what is stated in para 4(a), 4(b), 4(d) & 4(f) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with 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, 2011;

ii) In case of the Profit and Loss Account, of the Loss for the year ended on that date.

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

REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

i) a) The Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As per the information and explanation given to us, these fixed assets have not been physically verified by the management. In view of the same, we do not offer any comment on any material discrepancy which may be noticed on physical verification.

c) As per the information and explanation given to us, Company has not disposed off substantial part of fixed assets during the year.

ii) (a) As per the information and explanations given to us, no physical verification of inventories has been conducted by the management.

(b) As per the information and explanation given to us, the inventories as reflected in Schedule 7 have no realizable value, the proper procedure of physical verification of inventories has not been followed by the management.

(c) As per the information and explanation given to us, the company is not Maintaining any records of inventories and hence, no further comments are Offered on the material discrepancy.

iii) (a) to (d) The company has not granted loans to companies, firms or other parties covered in register maintained u/s. 301 of the Companies Act, 1956. Hence, sub-clauses (iii) (a), (iii) (b) and (iii) (d) are not applicable to the Company.

(e) The company has taken unsecured loans from one company, two directors and two other parties covered in the register maintained u/s. 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.1,22,73,737/- Such loans are interest free loans.

(f) In our opinion the terms and conditions on which loans have been taken are not prejudicial to the interest of the company.

(g) There is no stipulation for repayment of loans and hence, we do not offer further comments thereon.

iv) The Company has not made any transactions relating to purchase of inventories, fixed assets and sale of goods and services during the year under reference. Hence, clause 4(iv) of the order is not applicable to the company.

v) (a) According to the information and explanations given to us, the company has not entered in any contract and arrangement that need to be entered into the register maintained u/s. 301 of the Companies Act, 1956 during the year under reference. Hence, clause 4(v) (a) of the order is not applicable to the company.

(b) As per the information and explanations given to us, the company has not made any transactions in pursuance of contracts or arrangements entered in the register maintained u/s. 301 of the Companies Act, 1956 exceeding the valued of Rs.5 lakhs in respect of any party during the year and hence the clause 4(v) (b) of the Order is not applicable to the company.

vi) The Company has not accepted and deposits from the public. Therefore, the clause 4(vi) of the Order is not applicable to the company.

vii) As per the information and explanations given to us, the Company has suspended its manufacturing activities and in view of the same, the company does not have Internal audit system commensurate with the size and nature of its business.

viii) In view of the suspension of the manufacturing operations, the cost records and accounts prescribed by the Central Governments, u/s. 209(1) (d) of the Companies Act, 1956 have not been made and maintained by the company.

ix) (a) In view of the suspension of the manufacturing operations for last number of years, according to the records of the Company, the Company is no liable to make any deposits of statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurances, Income-Tax, Sales-Tax, Wealth -Tax, Service-Tax, Customs Duty, Excise Duty, Cess and other statutory dues with appropriate whichever is applicable.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2011 for a period more than six months from the ate they became payable.

x) According to the information and explanations given to us, the accumulated losses as at 31st March, 2011 are exceeding the net worth of the company and it has incurred cash losses during the year covered by our audit and in the immediately preceding financial year.

xi) As per the information and explanations given to us, the company has defaulted in repayment of dues to the financial institutions / banks. Attention is drawn to Not No. 9 & 10 of Schedule 15.

xii) The Company has not granted loans and advances 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 benefit mutual fund / society. Therefore, the clause 4(xiii) of the Order is not applicable to the company.

xiv) In our opinion, the Company is not dealing in our trading in shares, securities, debentures & other investments. Accordingly, the clause 4 (xiv) of the Order is not applicable to the company.

xv) As per the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions. Therefore, the clause 4(xv) of the Order is not applicable to the company.

xvi) As per the information and explanations given to us, the company has not raised any short term funds during the year. Therefore, the clause 4 (xvii) of the Order is not applicable to the company.

xvii) According to the information and explanations given to us, the company has not made preference share allotment of shares to parties and companies covered in the register maintained u/s. 301 of the Act.

xviii) According to the information and explanations given to us, during the period covered under audit the company has not issued debentures. Hence, the clause 4(xix) of the Order is not applicable to the company. According to the information and explanations given to us, the company has not raised money by public issues. Hence, the clause 4(xix) of the Order is not applicable to the company.

xix) According to the information and explanations given to us, the company has not raised money by public issues. Hence, the clause 4(xx) of the Order is not applicable to the company.

xx) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year covered by our audit report.

For MILINDMEHTA & CO,

CHARTERED ACCOUNTANTS,

(Registration No.l29664W)

(MILIND KMEHTA)

PROPRIETOR

MEMBERSHIP N0.47739

PLACE OF SIGNATURE : MUMBAI

DATE : 2nd September, 2011.

---

Mar 31, 2010

1) We have audited the attached Balance-Sheet of Garodia Chemicals Ltd. as at 31st March, 2010, the Profit & Loss Account and also Cash Flow statement 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.

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 (Auditor's 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 paragraphs 4 and 5 of the said Order.

4) Further to our comments in the Annexure referred to above, 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 except nondisclosure of information and ¦ inadequate documents in respect of investments as stated in Note No. 13 of Schedule 14;

(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 those books except short provision of interest expense on loans and borrowings taken from Central Bank of India and Aashka Holdings Pvt. Ltd.(Originally borrowed from IDBI) as stated in Note No. 10 & 11 of Schedule 14;

(c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable except AS- 2 valuation of inventories.

(e) In absence of adequate information, we are unable to state whether any of the directors is disqualified as on 31st March, 2010 from being appointed as director of the Company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) Attention is also invited to the following notes in Schedule 14 :

i) Note No.2, relating to transfer of rights of IDBI to Aashka Holdings Pvt. Ltd.;

ii) Note No.8, non-maintenance of proper records relating to Fixed Assets and no physical verification of fixed assets;

Compiled by : Dion Global Solutions Limited

iii) Note No. 10, relating to shortfall of Rs. 2,15,81,759/- in provision made for interest payable to Central Bank Of India;

iv) Note No. II,short fall of Rs. 8,15,45,255/- in provision made for interest payable to Aashka Holdings Pvt. Ltd. J Originally borrowed from IDBI);

vj Note No. 13, inadequate documents in respect of investments;

vi) Note No. 14, relating to non provision for unrealizable value of inventories of Rs.39,33,400;

vii) Note No. 15, unconfirmed debtors and creditors balances and non provision of debts considered doubtful;

viii) Note No. 16, relating to inadequate documents in respect of advances and deposits

ix) Note no. 19, regarding assumption of going concern. However, under the facts and in the circumstances, we are unable to express our opinion on the same.

(g) Subject to what is stated in para 4(a), 4(b), 4(d) & 4(f) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with 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, 2010;

ii) in the case of the Profit and Loss Account, of the Loss for the year ended on that date.

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

REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

(i) (a) The Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As per the information and explanations given to us, these fixed assets have not been physically verified by the management. In view of the same, we do not offer any comment on any material discrepancy which may be noticed on physical verification.

(c) As per the information and explanations given to us, the Company has not disposed off substantial part of fixed assets during the year.

(ii) (a) As per the information and explanations given to us no physical verification of inventories has been conducted by the management.

(b) As per the information and explanations given to us, the inventories as reflected in Schedule 7 have no realisable value the proper procedure of physical verification of inventories has not been followed by the management.

(c) As per the information and explanations given to us, the company is not maintaining any records of inventories and hence, no further comments are offered on the material discrepancy.

(iii) (a)to(d) The company has not granted loans to companies, firms or other parties covered in register maintained u/s.301 of the Companies Act, 1956. Hence, sub clauses (iii)(a), (iii)(b), (iii)(c) and (iii)(d) are not applicable to the company.

(e) The company has taken unsecured loans from one company, two directors and two other parties covered in the register maintained u/s. 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.1,20,97,663/-. Such loans are interest free loans.

(f) In our opinion the terms and conditions on which loans have been taken are not prejudicial to the interest of the company.

(g) There is no stipulation for repayment of loans and hence, we do not offer further comments thereon.

(iv) The Company has not made any transactions relating to purchase of inventories, fixed assets and sale of goods and services during the year under reference. Hence, clause 4(iv) of the order is not applicable to the company.

(v) (a) According to the information and explanations given to us, the company has not entered in any contract and arrangement that need to be entered into the register maintained u/s.301 of the Companies Act, 1956 during the year under reference. Hence, clause 4(v)(a) of the order is not applicable to the company.

(b) As per the information and explanations given to us, the company has not made any transactions in pursuance of contracts or arrangements entered in the register maintained u/s.301 of the Companies Act, 1956 exceeding the value of Rs.5 lakhs in respect of any party during the year and hence the clause 4(v)(b) of the Order is not applicable to the company.

(vi) The Company has not accepted any deposits from the public. Therefore, the clause 4(vi) of the Order is not applicable to the company.

(vii)As per the information and explanations given to us, the Company has suspended its manufacturing activities and in view of the same, the company does not have Internal audit system commensurate with the size and nature of its business.

(viii) In view of the suspension of the manufacturing operations, the cost records and accounts prescribed by the Central govt. u/s.209(l)(d) of the Companies Act, 1956 have not been made and maintained by the company.

(ix)(a) In view of the suspension of the manufacturing operations for last number of years, according

to the records of the Company, the Company is not liable to make any deposits of statutory < dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise Duty, Cess and other statutory dues with appropriate authorities whichever is applicable. (b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2010 for a period more than six months from the date they became payable;

(x) According to the information and explanations given to us, the accumulated losses as at 31st March, 2010 are exceeding the net worth of the company and it has incurred cash losses during the year covered by our audit and in the immediately preceding financial year.

(xi) As per the information and explanations given to us, the company has defaulted in repayment of dues to the financial institutions / banks. Attention is drawn to Note No. 9 & 10 of Schedule 14.

(xii)The Company has not granted loans and advances 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 benefit mutual fund / society. Therefore, the clause 4(xiii) of the Order is not applicable to the company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures & other investments. Accordingly, the clause 4(xiv) of the Order is not applicable to the company.

(xv)As per the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions. Therefore, the clause 4(xv) of the Order is not applicable to the company.

(xvi) As per the information and explanations given to us, the company has not raised any term loans during the year. Hence, the clause 4(xvi) of the Order is not applicable to the company.

(xvii)As per the information and explanations given to us, the company has not raised any short term funds during the year. Therefore, the clause 4(xvii) of the Order is not applicable to the company.

(xviii) According to the information and explanations given to us, the company has not made ' preference share allotment of shares to parties and companies covered in the register maintained u/s.301 of the Act.

(xix) According to the information and explanations given to us, during the period covered under audit the company has not issued debentures. Hence, the clause 4

(xix) of the Order is not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised money by public issues. Hence, the clause 4(xx) of the Order is not applicable to the company.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year covered by our audit report.



For MIL1ND MEHTA & CO,

CHARTERED ACCOUNTANTS,

(Registration No.129664W)

Sd/-

(MILiND K. MEHTA)

PROPRIETOR

MEMBERSHIP N0.47739

PLACE: MUMBAI.

DATE : 3rd September, 2010