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Auditor Report of Integra Engineering India Ltd.

Dec 31, 2013

We have audited the accompanying financial statements of INTEGRA ENGINEERING INDIA LIMITED ("the Company"), which comprise the Balance Sheet as at 31st December, 2013, the Statement of Profit and Loss and the 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

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 notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. 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 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 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 qualified audit opinion.

Basis for Qualified Opinion

Attention is invited to note 13 forming part of the Financial Statements ("Notes") regarding recognition of Deferred Tax Asset of Rs. 23,208 thousands on unabsorbed depreciation and carry forward of losses. In our opinion this treatment is not in accordance with generally accepted accounting standards prevalent in India and ought not to have been recognized.

In view of above, Reserves and Surplus and Deferred Tax Assets are overstated by Rs. 23,208 thousands.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in 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 December 31, 2013;

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

(c) i n 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

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.

2. 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 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 accounts;

d. Except for the effects of the matter described in 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 notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

e. on the basis of written representations received from the directors as on December 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 2013, from being appointed as a director in terms of Clause (g) of sub-Section (1) of Section 274 of the Companies Act, 1956.

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

(b) The Company has a regular program of physical verification of fixed assets which, in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial part of its fixed assets during the year and therefore, do not affect the going concern assumption.

ii. (a) The inventories have been physically verified by the management. In our opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are 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 records of inventory and according to the information and explanations given to us, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material in relation to the operations of the Company and the same have been properly dealt within the books of account.

iii. According to the information and explanations given to us, the Company has not granted/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 and therefore, the provisions of Clause

(iii) of the Order 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 nature of its business with regard to purchase of inventories and fixed assets and sale of goods and services. Further on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in the aforesaid internal control system.

v. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5 Lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi. The Company has not accepted any deposits during the year from the public within the meaning of provisions of Section 58A and 58AA of the Companies Act,1956 and the rules framed there under and therefore, the provisions of Clause

(vi) of the Order are not applicable to the Company.

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

viii. We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956. We are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix. (a) The Company has been regular in depositing with appropriate authorities undisputed statutory dues, including provident fund, investor education and protection fund, employee''s state insurance, income-tax, sales tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it. According to information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were in arrears, as at 31st December,2013 for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no disputed dues in respect of wealth tax , custom duty which have not been deposited. The followings are the particulars of income tax, Sales Tax, Service tax, Excise duty and cess as at 31st December, 2013 which have not been deposited on account of dispute:

Nature of Dues Amount Period to which the Forum where the

( Rs,000) amount relates dispute is pending

Sales Tax 291 A.Y. 1989-90 Asst. Commissioner of Sales tax

191 A.Y. 1993-94 Asst. Commissioner of Sales tax

869 A.Y. 1999 Asst. Commissioner of Sales tax

Income Tax 2169 A.Y. 2007-08 Income Tax Appellate Commissioner

372 A.Y. 2008-09 Income Tax Appellate Commissioner

965 A.Y. 2002-03 High court of Gujarat

1047 A.Y. 2005-06 Income tax Appellate Tribunal

430 A.Y. 2005-06 CIT Appeal (I)-Baroda

232 A.Y. 2007-08 CIT Appeal

Central Excise 3696 A.Y.2012-13 Tribunal Central Excise and Custom

Service Tax 644 April ,2012 to Additional Commissioner of Central Excise December, 2012 and Customs

521 F.Y.2008-09 to Assistant Commissioner of Central Excise F.Y.2011-12 and Customs

365 January, 2013 to Assistant Commissioner of Central Excise August,2013 and Customs

x. In our opinion and according to the information and explanations given to us, the company''s accumulated losses are not less than fifty percent of its net worth and it has incurred a cash loss during the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not borrowed from financial institutions and has not issued any debentures.

xii. According to the information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and therefore, the provisions of Clause

(xii) of the Order are not applicable to the Company.

xiii. In our opinion and according to information and explanations given to us, the company is not a chit fund or a nidhi / mutual benefit fund society and therefore, the provisions of Clause

(xiii) of the Order are not applicable to the Company.

xiv. According to the information and explanations given to us, the Company is not dealing in shares, securities, debentures and other investments and therefore, the provisions of Clause

(xiv) of the Order are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has given Corporate bank guarantee for loan taken by its Associate, the terms and conditions whereof in our opinion are prima facie not prejudicial to the interest of the company. There is no outstanding corporate bank guarantee at the end of the year.

xvi. According to the information and explanations given to us, the Company has obtained term loan during the year, disbursement of which is pending and therefore, the provisions of Clause

(xvi) of the Order are not applicable to the Company.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the funds raised on short term basis have not been used for long term investment.

xviii. According to the information and explanations given to us during the period covered by our audit report, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 and therefore, the provisions of Clause

(xviii) of the Order are not applicable to the Company.

xix. According to the information and explanations given to us, during the period of audit the Company has not issued any secured debentures and therefore, the provisions of Clause

(xix) of the Order are not applicable to the Company.

xx. The Company has not raised any money by public issues during the year and therefore, the provisions of Clause

(xx) of the Order are not applicable the Company.

xxi. According to 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 K. C. Mehta & Co.

Chartered Accountants

Firm''s Registration No. 106237W



Vishal P. Doshi

Partner

Membership No. 101533



Place: Vadodara

Date: February 28, 2014


Dec 31, 2012

1. We have audited the attached Balance Sheet of Integra Engineering India Limited as at 31st December 2012 and also the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 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 purpose of our audit;

b. in our opinion, proper books of account as required by the law have been kept by the company so far as appears from our examination of the 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. in our opinion, the Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this report are in compliance with Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable;

e. Without qualifying our report, attention is invited to the following:

(i) Non provision for possible doubtful debts due from Joint Venture Entity of erstwhile transferor company amounting to Rs. 280.00 lacs.

(ii) Recognition of deferred tax assets amounting to Rs. 131.71 lacs on carried forward losses and unabsorbed depreciation.

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

g. in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read together with the 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 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 December, 2012;

ii. in the case of the Statement of Profit and Loss, of the Loss of the Company for the year ended on that date; and

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

(ANNEXURE TO THE AUDITORS'' REPORT)

(referred to in paragraph (3) thereof)

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

(b) The Company has a regular program of physical verification of fixed assets which, in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial part of its fixed assets during the year and therefore, do not affect the going concern assumption.

ii. (a) As explained to us, during the year, the inventories have been physically verified by the management. In our opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are 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 records of inventory and according to the information and explanations given to us, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material.

iii. The Company has not granted/taken unsecured/secured loan to/from a company, a firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and therefore, the provisions of Clause (iii) (a) to (g) of the Order 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 nature of its business with regard to purchase of inventories and fixed assets and sale of goods and services. Further on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in the aforesaid internal control system.

v. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5 Lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi. The Company has not accepted any deposits during the year from the public within the meaning of provisions of section 58A and 58AA of the Companies Act,1956 and the rules framed thereunder and therefore, the provisions of clause (vi) of the Order are not applicable to the Company.

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

viii. We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956. We are. of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whetherthey are accurate or complete.

ix. (a) In our opinion and according to the information and explanation given to us, undisputed statutory dues in respect of investor education and protection fund, employees state insurance, sales tax, custom duty, service tax, excise duty, cess and other material statutory dues applicable to it as and when payable, have been regularly deposited with the appropriate authorities. There are no undisputed amounts payable in respect of aforesaid dues outstanding for a period of more than six months from the date they become payable as at 31st December, 2012.

(b) According to the information and explanations given to us, details of income tax, Sales Tax which have not been deposited on account of any dispute as at 31st December, 2012 are as follows:

Nature of Dues Amount Assessment years to Forum where the (Rs. ''000) which the dues relate dispute is pending

Sales Tax 291 1989-90 Asst. Commissioner of Sales tax

191 1993-94 Asst. Commissioner of Sales tax

869 1999 Asst. Commissioner of Sales tax

Income Tax 2169 2007-08 Income Tax Appellate Commissioner

372 2008-09 Income Tax Appellate Commissioner

965 2002-03 High court of Gujarat

1047 2005-06 Income tax Appellate Tribunal

232 2007-08 CIT Appeal

x. In our opinion and according to information and explanations given to us, the Company does not have accumulated loss at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit, however, the Company has not incurred cash losses in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not borrowed from financial institutions and has not issued any debentures. xii. According to the information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and therefore, the provisions of clause (xii) of the Order are not applicable to the Company.

xiii. In our opinion and according to information and explanations given to us, the company is not a chit fund or a nidhi / mutual benefit fund society and therefore, the provisions of clause (xiii) of the Order are not applicable to the Company.

xiv. According to the information and explanations given to us, the Company is not dealing in shares, securities, debentures and other investments and therefore, the provisions of clause (xiv) of the Order are not applicable to the Company.

xv. Accordingto the information and explanations given to us the Company hasgiven Corporate bankguarantee for loan taken by its Associate, the terms and conditions whereof in our opinion are prima facie not prejudicial to the interest of the company. There is no outstanding corporate bank guarantee at the end of the year.

xvi. According to the information and explanations given to us, the Company has not obtained any term loans during the year and therefore, the provisions of clause (xvi)ofthe Order are not applicable to the Company.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, the company has not used funds raised on short term basis for long term investment.

xviii. The company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under section 301 of the Companies Act, 1956 and therefore, the provisions of clause (xviii) of the Order are not applicable to the Company.

xix. According to the information and explanations given to us, during the period of audit the Company has not issued any secured debentures and therefore, the provisions of clause (xix) of the Order are not applicable to the Company.

xx. The Company has not raised any money by public issues during the year and therefore, the provisions of clause (xx) of the Order are not applicable the Company.

xxi. According to 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 K. C. Mehta & Co.

Chartered Accountants

Firm''s Registration No. 106237W

Vishal P. Doshi

Partner

Membership No. 101533

Date: 31st January, 2013

Place: Vadodara


Dec 31, 2010

We have audited the attached Balance Sheet of SCHLAFHORST ENGINEERING (INDIA) LIMITED, as at 31st December, 2010, the Profit & Loss Account & Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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.

As required by the Companies (Auditors Report) Order, 2003, including Companies (Auditors Report) (Amendment) Order, 2004, issued by the Government Of India in terms of sub-section (4A) of Section 227 of the Companies Act 1956, we enclose Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

(ii) In our opinion, proper books of account as required by law have beep kept by the company so far as appears from our examination of those books.

(iii) The Balance sheet and Profit & Loss Account dealt with-by this report are in agreement with the books of account.

(iv) In our opinion the Balance Sheet and Profit & Loss Account dealt with by the report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

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

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the significant accounting policies and 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;

(a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st December, 2010,

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

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

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date on the accounts of SCHLAFHORST ENGINEERING (INDIA) LTD., Halol for the year ended on 31st December 2010)

(i) (a) The company-has maintained proper records to show full particulars, including quantitative details and situation of its fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodic manner, which in our opinion, is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) The company has not disposed of substantial part of fixed assets during the year.

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

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in. relation to the size of the Company and the nature of the business.

(c) In our opinion and according to the information and explanations given to us, the Compahy has maintained proper records of its inventories. The discrepancies noticed on such physical verification between physical stock and book records were not material.

(iii) According to the information and explanation given to us, the company has neither taken nor granted any loans or advances in the nature of loans to parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence question of reporting whether the terms and condition of such loans are prejudicial to the interest of the Company, and regularity on payment of principal amount and interest does not arise.

(iv) In our opinion and according to the information and explanations given to us, there is 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 sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangement entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) During the year, the company has not accepted deposits from the public.

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

(viii) The Central Government has not prescribed the maintenance of cost records by the company under section 209 (1) (d) of the act for any of its products.

(ix) (a) The company is regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom duties, Service Tax, Excise duty, Cess and any other statutory dues with the appropriate authorities.

(b) According to the information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess were in arrears, as at 31st December 2010 for the period of more than six month from the date they became payable.

(c) According to the information and explanations given to us, there are no disputed dues which are not deposited of sales tax / Income Tax / Wealth Tax / Custom Duty / Excise Duty or cess except as stated below:

Name of Nature Amount Period to which Forum where Statute of Dues (Rs in Lacs) Amount relates Dispute is pending Sale Sales Tax 13.51 89-90 - 2.91 Asstt Tax Act 93-94-1.91 Commissioner 1999 - 8.69

Income Income Tax 31.03 2007-08-26.20 Tax Act 2008-09 - 4.83 Income Tax Appeals - Add). Commissioner.

Labour Act Contract labour 21.56 2010 Mamlatdar, Godhara Labour Halol

Court Ord er on Lab our Contr actor in 2007 not paid. Hen ce notice to Princi pal in 2010.

(x) The Companys accumulated losses at the end of the financial year are more than fifty percent of its net worth and the company has not incurred cash losses in such financial year & in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanation given to us, the company has not defaulted in repayment of dues to a Financial Institution, Bank or Debenture holders.

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

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

(xiv) According to the information and explanations given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the company.

(xv) As per the information & explanations given to us, the Company has not given guarantees for loans taken by others from Banks or Financial Institutions.

(xvi) The company has not obtained any term loans during the year. Accordingly the provision of clause (xvi) of the Order is not applicable to the company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, in our opinion, there are no funds raised on short-term, basis have been used for long-term investment.

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

(xix) During the period covered by our audit report, the company has not issued debenture.

(xx) During the year, the Company has not made any public issues of shares.

(xxi) To the best of our knowledge and belief and accprding 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 SHAH & SHAH ASSOCIATES.

Chartered Accountants.

Place : Halol PARTNER.

Dated : 27/01/2011 (MUKESH B. BANKER)

M. No. 30367

Firm Regn.No. 109458W


Dec 31, 2009

We have audited the attached Balance Sheet of SCHLAFHORST ENGINEERING (INDIA) LIMITED, as at 31st December, 2009, the Profit & Loss Account & Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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.

As required by the Companies (Auditors Report) Order, 2003, including Companies (Auditors Report) (Amendment) Order, 2004, issued by the Government Of India in terms of sub-section (4A) of Section 227 of the Companies Act 1956, we enclose Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

(iii) The Balance sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

(iv) In our opinion subject to Note No.6 of Schedule - 16 regarding non provision of obsolete / Slow Moving / Non Moving Inventory the Balance Sheet and Profit & Loss Account dealt with by the report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

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

(vi) Attention of the members is drawn to the following In Schedule -16 Note No.6 regarding non-provision of Slow moving /Non Moving inventory aggregating to Rs.4689(in 000).

We further report that by considering the above, the profit for the your (after tax) would have been Rs.5532 (in 000) as against the reported profit of Rs.10221 (in 000), the accumulated losses would have been Rs.200851 (in 000) as against the reported figure of Rs. 196162 (in 000).

Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the significant accounting policies and 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;

(a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st December, 2009,

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

and

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

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date on the accounts of SCHLAFHORST ENGINEERING (INDIA) LTD., Halol for the year ended on 31st December 2009)

(i) (a) The company has maintained proper records to show full particulars, including quantitative details and situation of its fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodic manner, which in our opinion, is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) The company has not disposed of substantial part of fixed assets during the year.

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

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of the business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on such physical verification between physical stock and book records were not material.

(iii) According to the information and explanation given to us, the company has neither taken nor granted any loans or advances in the nature of loans to parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence question of reporting whether the terms and condition of such loans are prejudicial to the interest of the Company, and regularity on payment of principal amount and interest does not arise.

(iv) In our opinion and according to the information and explanations given to us, there is 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 sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangement entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) During the year, the company has not accepted cteposffs from the public.

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

(viii) The Central Government has not prescribed the maintenance of cost records by the company under section 209 (1) (d) of the act for any of its products.

(ix) (a) The company is regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom duties, Service Tax, Excise duty, Cess and any other statutory dues with the appropriate authorities.

(b) According to the information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess were in arrears, as at 31st December 2009 for the period of more than six month from the date they became payable.

(c) According to the information and explanations given to us, there are no disputed dues which are not deposited of sales tax / Income Tax / Wealth Tax / Custom Duty / Excise Duty or cess except as stated below:

Name of Nature Amount Period to which Statute of Dues (Rs In Lacs) Amount relates

Sale Sales Tax 13.51 89-90 - 2.91 TaxAct 93-94 - 1.91

1999 - 8.69

Income Income Tax 26.20 2007-2008 Tax Act



Name of Statue Forum where Dispute is pending

Sales Tax Act Asstt Commissioner

Income tax Act Income Tax Appeals - Addl. Commissinor.

(x) The Companys accumulated losses at the end of the financial year are more than fifty percent of its net worth and the company has not incurred cash losses in such financial year & in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanation given to us, the company has not defaulted in repayment of dues to a Financial Institution, Bank or Debenture holders.

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

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

(xiv) According to the information and explanations given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the company.

(xv) As per the information & explanations given to us, the Company has not given guarantees for loans taken by others from Banks or Financial Institutions.

(xvi) The company has not obtained any term loans during the year. Accordingly the provision of clause (xvi) of the Order are not applicable to the company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, in our opinion, there are no funds raised on short-term basis have been used for long-term investment.

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

(xix) During the period covered by our audit report, the company has not issued debenture.

(xx) During the year, the Company has not made any public issues of shares.

(xxi)To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For SHAH & SHAH ASSOCIATES. Chartered Accountants.

Place: Mumbai. PARTNER.

Dated: 30/04/2010 (MUKESH B. BANKER)

M. NO. 30367

 
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