Auditor Report of Hindusthan Udyog Ltd.

Mar 31, 2014

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

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 flow 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

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.

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 entity''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 entity''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.

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

Opinion

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 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 31st, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit 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.

Emphasis of Matter

Without qualifying our opinion, we draw attention to:

Note no. 11 of the financial statements which states that Provision for amortisation of long term leasehold land at Durgapur has not been made.

Report on Other Legal and Regulatory Requirements

1. As required by 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, save as the matters specified in clauses (vi), (viii), (xii), (xiii), (xiv), (xv), (xix) & (xx) of paragraph 4 which are not applicable to the company.

2. As required by Sec 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 purpose 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. In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and

e. On the basis of written representations received from the directors as on March 31 st, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31 st, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

(Referred to in our report of even date attached)

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The fixed assets of the Company have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

(c) The Company has sold certain Fixed Assets of small value during the year.The value of assets so disposed off, being negligible, and such disposal does not affect the going concern status of the company.

ii. (a) As explained to us the inventories of Finished Goods, Raw Materials and Stores and Spares have

been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In accordance with the information and explanations given to us, the procedures of physical verification of inventory followed by the management appear to be reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared with book records were not material considering the size of the company and the nature of its business and the same have been properly adjusted in the accounts.

iii. (a) The Company has granted loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. The no. of parties being one, the amount involved in this regard is Rs. 1142 lacs (including interest) which have been fully recovered by the Company during the year.

(b) The Company has not taken any loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of sub-clause b of sub-Para (iii) are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. We have not observed any major weaknesses in the internal control system.

v. Based on the audit procedures applied by us and according to the information and explanations given to us, the transactions that need to be entered in the Register required to be maintained under Section 301 of Companies Act, 1956 have been so entered and these transactions have been made at prices which are reasonable having regard to the prevailing market prices during the year under audit.

vi. According to information and explanations given to us, the Company has not accepted any deposits from the Public. Hence, the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 are not applicable to the Company.

vii. The Company does not have any Internal Audit System commensurate with its size and nature of business.

viii. The Central Government has not prescribed maintenance of cost records under section 209(I)(d) of the Companies Act, 1956.

ix. (a) According to the records of the Company and information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid statutory dues were in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable.

(c) According to the records of the Company and the information and explanations given to us, the Following are the details of disputed dues in respect of Sales Tax as on 31st March, 2014 as shown in Enclosure-I.

x. According to the information and explanation provided to us, the Company has accumulated losses of Rs. 20,22,24,392/- as at 31st March, 2014 and it has not incurred any cash losses in the financial year ended on that date or in the immediate preceding financial year.

xi. Based on our audit procedures and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank. Moreover, the Company has not issued debentures.

xii. Based on our examination of records, we are of the opinion that the Company has not granted any 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/nidhi/mutual benefit fund/society.

xiv. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. According to information and explanations given to us, the term loans have, prima facie, been applied for the purpose for which the loans were obtained.

xvii. On an overall examination of the Balance Sheet of the Company and information and explanations given to us, we are of the opinion that the funds raised by the Company on short term basis have not been used for long term investment.

xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. The Company has not issued any debentures. Hence, this clause is not applicable to the Company.

xx. The Company has not raised any money during the year covered by audit by way of public issue.

xxi. 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 S. GHOSE & CO. Chartered Accountants Registration No. 302184E

Chandan Chattopadhyay Place: Kolkata Partner Date : 30th May, 2014 Membership No. 051254

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Mar 31, 2012

1.0 We have audited the attached Balance Sheet of Hindusthan Udyog Limited as at 31st March, 2012 and also the Profit and Loss Account and the Cash Flow statement for the year ended on that date annexed thereto. Those 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.

2.0 We have 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.

3.0 As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4.0 Further to our comments in the Annexure referred to above, we report that :

4.1 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;

4.2 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;

4.3 The Balance Sheet, Profit and loss account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4.4 In our opinion, the Balance Sheet, Profit and loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in section 211(3C) of the Companies Act, 1956;

4.5 On the basis of written representations received from the directors, as on 31st March, 2012, and taken on record by Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

4.6 The Company, in the absence of any notification, as stated in the Note No. B-5 of Notes on Accounts (Schedule-P), has neither paid any cess payable under section 441A of the Companies Act, 1956 nor provided for the same in the accounts;

4.7 In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit and Loss Account read together with the Accounting Policies, Notes on Accounts and Other Schedules (From A to P) attached thereto 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;

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2012 ; and

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

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

ANNEXURE TO THE AUDITORS' REPORT

TO THE MEMBERS OF HINDUSTHAN UDYOG LIMITED (Referred to in paragraph 3.0 of our report of even date)

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

(b) The fixed assets of the Company have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

(c) The Company has not disposed off any part of fixed assets during the year.

2. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to information and explanation given to us, the procedure of physical verification of inventories followed by the management is 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 discrepancies found in physical verification have been properly dealt with in the accounts.

3. As per information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in Internal Control System.

5. According to the information and explanations given to us, there is no contract or agreement during the year, the particulars of which are required to be entered in the register maintained under section 301 of the Companies Act, 1956. Consequently, clause (v)(b) of paragraph 4 of the Order is not applicable.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public in terms of section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder.

7. The Company does not have any internal audit system commensurate with its size and nature of its business.

8. The Central Government has not prescribed maintenance of cost records under section 209 (I)(d) of the Companies Act, 1956.

9. (a) In our opinion and according to the information and explanations given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, custom duty, excise duty, service tax, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no disputed dues in respect of income tax, custom duty, wealth tax, excise duty, service tax and cess. However, the details of sales tax liabilities which have not been deposited by the Company on account of dispute are shown in Enclosure-I.

10. The Company has no accumulated losses as on 31st March, 2012, and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

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

13. The Provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion and according to information and explanations given to us, the Company has not taken any term loan during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no short term funds have been used for long term purposes.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debenture.

20. The Company has not raised any fund by public issue.

21. 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.

STATEMENT OF DISPUTED LIABILITIES FOR SALES TAX

Sl. No. Name of Statue Nature of Dues Amount (Rs.)

1. West Bengal Assessed Dues 414,263.00 Sales Tax Act 1994

2. Central Sales Assessed Dues 1,81,067.00 Tax Act 1956

3. West Bengal Assessed Dues 1,25,993.00 Vat Tax Act 2003

4. Central Sales Assessed Dues 47,29,101.00 Tax Act 1956

5. Central Sales Assessed Dues 40,83,957.00 Tax Act 1956

6. Central Sales Assessed Dues 10,03,200.00 Tax Act 1956

7. Central Sales Assessed Dues 54,969.00 Tax Act 1956

8. Central Sales Assessed Dues 16,34,285.00 Tax Act 1956

9. Central Sales Assessed Dues 59,26,481.00 Tax Act 1956

10. Bombay Sales Assessed Dues 10,44,631.00 Tax Act 1959

11. Central Sales Assessed Dues 13,89,004.00 Tax Act 1956

12. Central Sales Assessed Dues 12,02,194.00 Tax Act 1956

13. Bombay Sales Assessed Dues 9,49,067.00 Tax Act 1959

14. Central Sales Assessed Dues 3,90,538.00 Tax Act 1956

2,31,28,750.00



Name of Statue Period of which Where the amount Dispute is relates pending

West Bengal Sales Tax Act 1994 2004-2005 WBCT (A/R) Board

Central Sales Tax Act 1956 2004-2005 WBCT (A/R) Board

West Bengal Vat Tax Act 2003 2005-2006 WBCT (A/R) Board

Central Sales Tax Act 1956 2005-2006 WBCT (A/R) Board

Central Sales Tax Act 1956 2006-2007 WBCT (A/R) Board

Central Sales Tax Act 1956 2008-2009 Additional Commissioner

Central Sales Tax Act 1956 2008-2009 Additional Commissioner

Central Sales Tax Act 1956 1998-1999 Registrar Maharashtra Sales Tax Tribunal, Mumbai

Central Sales Tax Act 1956 1999-2000 Deputy Commissioner of Sales Tax (Appeal), Nagpur

Bombay Sales Tax Act 1956 2000-2001 Deputy Commissioner of Sales Tax (Appeal), Nagpur

Central Sales Tax Act 1956 2000-2001 Deputy Commissioner of Sales Tax (Appeal), Nagpur

Central Sales Tax Act 1956 2001-2002 Registrar Maharashtra Sales Tax Tribunal, Mumbai

Bombay Sales Tax Act 1956 2002-2003 Deputy Commissioner of Sales Tax (Appeal), Nagpur

Central Sales Tax Act 1956 2002-2003 Deputy Commissioner of Sales Tax (Appeal), Nagpur



For S. GHOSE & CO. Chartered Accountants Registration No. 302184E



Chandan Chattopadhyay Place: Kolkata Partner Date : 29th May, 2012 Membership No. 051254

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Mar 31, 2011

1.0 We have audited the attached Balance Sheet of Hindusthan Udyog Limited as at 31st March, 2011 and also the Profit and Loss Account and the Cash Flow statement for the year ended on that date annexed thereto. Those 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.

2.0 We have 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.

3.0 As required by the Companies (Auditor’s Report) Order, 2003 as amended by Companies (Auditor’s Report) (Amendment) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4.0 Further to our comments in the Annexure referred to above, we report that :

4.1 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;

4.2 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;

4.3 The Balance Sheet, Profit and loss account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4.4 In our opinion, the Balance Sheet, Profit and loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in section 211(3C) of the Companies Act, 1956 ;

4.5 On the basis of written representations received from the directors, as on 31st March, 2011, and taken on record by Board of Directors, we report that none of the directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 ;

4.6 The Company, in the absence of any notification, as stated in the Note No. B-5 of Notes on Accounts (Schedule-P), has neither paid any cess payable under section 441A of the Companies Act, 1956 nor provided for the same in the accounts ;

4.7 In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit and Loss Account read together with the Accounting Policies, Notes on Accounts and Other Schedules (From A to P) attached thereto 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 ;

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2011 ; and

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

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

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

(b) The fixed assets of the Company have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

(c) The Company has not disposed off any part of fixed assets during the year.

2. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to information and explanation given to us, the procedure of physical verification of inventories followed by the management is 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 discrepancies found in physical verification have been properly dealt with in the accounts.

3. As per information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in Internal Control System.

5. According to the information and explanations given to us, there is no contract or arrangement during the year, the particulars of which are required to be entered in the register maintained under section 301 of the Companies Act, 1956. Consequently, clause (v)(b) of paragraph 4 of the Order is not applicable.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public in terms of section 58A and 58AA of the Companies Act, 1956 and the rules framed there under.

7. The Company does not have any internal audit system commensurate with its size and nature of its business.

8. The Central Government has not prescribed maintenance of cost records under section 209 (I)(d) of the Companies Act, 1956.

9. (a) In our opinion and according to the information and explanations given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales tax, custom duty, excise duty, service tax, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no disputed dues in respect of income tax, custom duty, wealth tax, excise duty, service tax and cess. However, the details of sales tax liabilities which have not been deposited by the Company on account of dispute are shown in Enclosure-I.

10. The Company has accumulated losses as on 31st March, 2011, and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

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

13. The Provisions of any special statute applicable to chit fund/ nidhi / mutual benefit fund/societies are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion and according to information and explanations given to us, the Company has not taken any term loan during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no short term funds have been used for long term purposes.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debenture.

20. The Company has not raised any fund by public issue.

21. 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 S. GHOSE & CO.

Chartered Accountants

Registration No. 302184E

Chandan Chattopadhyay

Place: Kolkata Partner

Date : 30th May, 2011 Membership No. 051254

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Mar 31, 2010

1.0 We have audited the attached Balance Sheet of Hindusthan Udyog Limited as at 31st March, 2010 and also the Profit and Loss Account and the Cash Flow statement for the year ended on that date annexed thereto. Those financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2.0 We have 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.

3.0 As required by the Companies (Auditors Report) Order, 2003 as amended by Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4.0 Further to our comments in the Annexure referred to above, we report that :

4.1 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;

4.2 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.

4.3 The Balance Sheet, Profit and loss account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

4.4 In our opinion, the Balance Sheet, Profit and loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in section 211(3C) of the Companies Act, 1956;

4.5 On the basis of written representations received from the directors, as on 31st March, 2010, and taken on record by Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

4.6 The Company, in the absence of any notification, as stated in the Note No. B-5 of Notes on Accounts (Schedule-P), has neither paid any cess payable under section 441A of the Companies Act, 1956 nor provided for the same in the accounts.

4.7 In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit and Loss Account read together with the Accounting Policies, Notes on Accounts and Other Schedules (From A to O) attached thereto 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;

(a) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2010 ; and

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

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



ANNEXURE TO THE AUDITORS REPORT

TO THE MEMBERS OF HINDUSTHAN UDYOG LIMITED (Referred to in paragraph 3.0 of our report of even date)

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

(b) The fixed assets of the Company have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

(c) The Company has not disposed off any part of fixed assets during the year.

2. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to information and explanation given to us, the procedure of physical verification of inventories followed by the management is 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 discrepancies found in physical verification have been properly dealt with in the accounts.

3. As per information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in Internal Control System.

5. According to the information and explanations given to us, there is no contract or arrangement during the year, the particulars of which are required to be entered in the register maintained under section 301 of the Companies Act, 1956. Consequently, clause (v)(b) of paragraph 4 of the Order is not applicable.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public in terms of section 58A and 58 AA of the Companies Act, 1956 and the rules framed thereunder.

7. The Company does not have any internal audit system commensurate with its size and nature of its business.

8. The Central Government has not prescribed maintenance of cost records under section 209 (l)(d) of the Companies Act, 1956.

9. (a) In our opinion and according to the information and explanations given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, custom duty, excise duty, service tax, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no disputed dues in respect of income tax, custom duty, wealth tax, excise duty, service tax and cess. However, the details of sales tax liabilities which have not been deposited by the Company on account of dispute are shown in Enclosure-I

10. The Company has accumulated losses as on 31 st March, 2010, and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

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

13. The Provisions of any special statute applicable to chit fund/ nidhi / mutual benefit fund/societies are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion and according to information and explanations given to us, the Company has not taken any term loan during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no short term funds have been used for long term purposes.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debenture.

20. The Company has not raised any fund by public issue.

21. 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 S. GHOSE & CO.

Chartered Accountants

Chandan Chattopadhyay

Place: Kolkata Partner

Date : 31st May, 2010 Membership No. 051254