Auditor Report of Kanco Enterprises Ltd.

Sep 30, 2014

We have audited the accompanying financial statements of Kanco Enterprises Limited (the "Company"), which comprise the Balance Sheet as at September 30, 2014, and the Statement of Profit and Loss and Cash How Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

The Company''s 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 of India (the "Act") read with the General Circular 15/ 2013 dated September 13, 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.

Auditors''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 auditors''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 auditors consider 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. 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.

Qualified Opinion

We report the following observations:

(a) As referred to in note no. 24(2) (a) (I) (b) of financial statements, during the year ended September 30, 2012, the Company has not accounted for Foreign Exchange loss oft 11,78,81,338/- arising out of Cancellation of Forward Contract and disclosed the same as contingent liability On account of this, accumulated loss as at September 30, 2014 is lower by the said amount. The loss above does not include interest, if any.

(b) Interest on Loan accounts with State Bank of India has been debited in the accounts as per last agreed rate. We have been explained that the Company has no information about any change in the rate of interest, so impact, if any, of the same in statement of profit and loss and Reserve and Surplus is not determinable.

Subject to Above,

In our opinion, and to the best of our information and according to the explanations given to us, the accompanying 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 September 30, 2014;

b in the case of the 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.

Emphasis of Matter

We draw attention to Note 24 (2) (j) in the financial statements which indicates that the Company incurred a net loss of Rs. 76,31,01,034/- as on year ended September 30, 2014. These conditions, along with other matters as set forth in

Note 24 (2) (), indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern.

Report on Other Legal and Regulatory Requirements

As required by ''the Companies (Auditor''s Report) Order, 2003'', as amended by ''the Companies (Auditor''s Report) (Amendment) Order, 2004'', issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act (hereinafter referred to as the "Order"), 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 give in the Annexurea statement on the matters specified in paragraphs 4 and 5 of the Order.

TO THE MEMBERS OF KANCO ENTERPRISES LIMITED

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

(b) lifssfontoner Vote Taccol as required by law have been kept by the Company so far as appears

(c) The and Loss and Cash Flow Statement dealt with by this Report are in

ANNEXURE TO AUDITORS''REPORT

Referred to in Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory Eaterprises non -financial

i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and

(c) In TurllptnK and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

ii. (a) The inventory has been physically verified by the Management during the year. In our opinion, the frequency

(b) In our''opfnion, ''fh^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.

iii. (a) Companias To granted any loans, secured or unsecured, to companies, firms or other parties covered he Acl cosequen Clause ,Nil b)''(iii) ,c) and ™,d)

(c) She rate of interest and other terms and conditions of such loans are not primafacie prejudicial

(d) In replace ofhe afoSsaifflns, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of interest, wherever applicable. records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal

v. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements and exceeding the value of Rs. Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time

vi. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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 maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that, prima-facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including investor education and protection fund, employees'' state insurance, income-tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the appropriate authorities. According to the information and explanations given to us, there are no statutory dues outstanding as at September 30, 2014 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income-tax, sales tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

x. The Company''s accumulated losses at the end of the year are more than fifty percent of its net worth. The Company has incurred cash losses during the current year and in the immediately preceding financial year.

xi. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or debenture holders as at the balance sheet date. However, Company has defaulted in repayment of dues to bank as detailed below:_

Particulars Outstanding Period of Default Amount of as on September 30, Default Since 2014 (In days) Loan (Rs.)

IDBI - Rupee Loan Oct-11 1,096 54,00,000

Jan-12 1,004 54,00,000

Apr-12 913 54,00,000

Jul-12 822 54,00,000

Oct-12 730 54,00,000

Jan-13 638 54,00,000

Apr-13 548 68,02,500

Jul-13 457 68,02,500

Oct-13 365 68,02,500

Jan-14 273 68,02,500

Apr-14 183 68,02,500

Jul-14 92 68,02,500

SBI - Rupee Loan Sep-11 1,097 26,50,000

Dec-11 1,005 37,50,000

Mar-12 914 37,50,000

Jun-12 823 42,50,000

Sep-12 731 42,50,000

Dec-12 639 42,50,000

Mar-13 549 42,50,000

Jun-13 458 45,00,000

Sep-13 366 45,00,000

Dec-13 274 45,00,000

Mar-14 184 45,00,000

Jun-14 93 50,00,000

Sep-14 1 50,00,000

S.B.I. Corporate Sep-11 1,097 30,00,000

Loan Dec-11 1,005 30,00,000

Mar-12 914 30,00,000

Jun-12 823 30,00,000

Sep-12 731 30,00,000

Dec-12 639 30.00.000

Mar-13 549 30,00,000

S.B.I.-Rupee Sep-12 731 15,00,000

Loan (FITL) Dec-12 639 20,00,000

Mar-13 549 20,00,000

Jun-13 458 20,00,000

Sep-13 366 20,00,000

Dec-13 274 20,00,000

Mar-14 184 20,00,000

Jun-14 93 22,50,000

Sep-14 1 22,50,000

I.D.B.I. Line Of Aug-11 1,157 50,00,000 Credit Sep-11 1,126 50,00,000

I.D.B.I. Rupee Term Loan Aug-11 1,157 16,70,000 Wctl Sep-11 1,126 16,10,000



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

xiv. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. xv. 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 during the year.

xvi. The Company has not received any term loans during the year.

xvii. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have 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 Act during the year.

xix. The Company has not issued debentures during the year.

xx. The Company has not raised any money by public issues during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For B.R. SHAH & ASSOCIATES Firm Registration No. 129053W Chartered Accountants

DEVAL R. DESAI Place : Ahmedabad Partner Date : November 29, 2014 Membership No. 132426

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Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Kanco Enterprises Limited ("the Company"), which comprise the Balance Sheet as at September 30, 2013, and the Statement of Profit and Loss and Cash How Statement for the year ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

The Company''s 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 of India ("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.

Auditors''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 auditors''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 auditors consider 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. 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.

Qualified Opinion

We report the following observations:

(a) As referred to in note no. 24(2) (a)(i) (b)of financial statements, during the year ended September 30, 2012, the Company has not accounted for Foreign Exchange loss on 1178,81338/ arising out of Cancellation of Forward Contract and disclosed the same as contingent liability On account of this, accumulated loss as at September 30, 2013 is lower by the said amount. The loss above does not include interest, if any.

(b) Interest on Loan accounts with State Bank of India has been debited in the accounts as per last agreed rate. We have been explained that the Company has no information about any change in the rate of interest, so impact, if any, of the same in Statement of Profit and Loss and Reserve and Surplus is not determinable.

Subject to Above,

In our opinion, and to the best of our information and according to the explanations given to us, the accompanying 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 September 30, 2013;

b in the case of the 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.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 24 (2) (j) in the financial statements which indicates that the Company incurred a net loss of Rs. 66,45,49,107/ as on year ended September 30, 2013. These conditions, along with other matters as set forth in Note 24 (2) (j , indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern. Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub section (4A) of Section 227 of the Act (hereinafter referred to as "the Order"), 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 give in the Annexurea statement on the matters specified in paragraphs 4 and 5 of the Order.



TO THE MEMBERS OF KANCO ENTERPRISES LIMITED

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

(b) As required by law have been kept by the Company so far as appears

(c) Cash Flow Statement dealt with by this Report are in

Referred to in Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date to the members of Kanco Enterprises Limited on the financial statements as of and for the year ended September 30,2013

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items at regular intervals which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

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

(b) In our opinion, 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 inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Consequently, Clause (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the order are not applicable.

(b) The Company has taken unsecured loan from a Company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year end balance amounts to Rs.4,71,62,990/ and Rs. 4,34,34,766/ respectively.

(c) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of interest, wherever applicable.

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 Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

v. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements and exceeding the value of Rs. Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time

vi. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under

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 maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub section (1) of Section 209 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including investor education and protection fund, employees'' state insurance, income tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the appropriate authorities. According to the information and explanations given to us, there are no statutory dues outstanding as at September 30, 2013 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

x. The Company''s accumulated losses at the end of the year are more than fifty percent of its net worth. The Company has not incurred cash losses during the current year but has incurred cash loss in the immediately preceding financial period.

xi. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or debenture holders as at the balance sheet date. However Company has defaulted in repayment of dues to bank as detailed below :

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

xiv. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. xv. 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 during the year.

xvi. The Company has not received any term loans during the year.

xvii. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short term basis which have 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 Act during the year.

xix. The Company has not issued debentures during the year.

xx. The Company has not raised any money by public issues during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management. For B.R. SHAH & ASSOCIATES

Firm Registration No. 129053W

Chartered Accountants

DEVAL R. DESAI

Place :Ahmedabad Partner

Date : November 27, 2013 Membership No. 132426

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Sep 30, 2012

1. We have audited the attached Balance Sheet of KANCO ENTERPRISES LIMITED (‘the Company'') as at September 30, 2012 and the Statement of Profit and Loss and the 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 (as amended) 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. Without qualifying our opinion, we draw attention to Note 24 (2) (j) in the financial statements which indicates that the Company incurred a net loss off 65,34,55,528/- as on year ended September 30, 2012. These conditions, along with other matters as set forth in Note 24 (2) (j), indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern.

5. 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv. 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 Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on September 30, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on September 30, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the CompaniesAct, 1956.

vi. As referred to in note no. 24(2) (k) of financial statements, during the year ended September 30, 2012, the Company has not accounted for Foreign Exchange loss off 11,78,81,338/-, arising out of Cancellation of Forward Contract. On account of this loss, for the year, stated in attached Statement of Profit and Loss is lowerbyf 11,78,81,338/-. Ifthis Foreign Exchange loss wouldhave been accounted then losses pershare forthe yearwould have been higherbyf 6.57. The loss above does notinclude interest, ifany.

vii. Interest on Loan accounts with State Bank of India has been debited in the accounts as per last agreed rate. We have been explained that the Company has no information about any changes in rate of Interest so impact ofthe same on StatementofProfitand Loss and Reserve and Surplus is notdeterminable.

viii. In our opinion and to the best of our information and according to the explanations given to us, and subject to matters referred in paragraph 4, 5(vi) and 5(vii) above, the said accounts 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 September 30, 2012;

b) in the case of the Statement of Profit and Loss, of the loss 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 AUDITORS'' REPORT

Referred to in paragraph 3 of the Auditors'' Report of even date to the members of Kanco Enterprises Limited on the financial statements for the year ended September 30, 2012

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items at regular intervals which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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 inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Consequently, Clause (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the order are not applicable.

(b) The Company has taken unsecured loan from companies covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance amounts to f 4,83,29,308/- and f 4,71,62,990/- respectively.

(c) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of interest, wherever 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 for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements and exceeding the value of Rs. Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8. We have broadly reviewed the Books of Account 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, in respect of its products to which the said rules are made applicable, and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including investor education and protection fund, employees'' state insurance, income-tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the appropriate authorities. According to the information and explanations given to us, there are no statutory dues outstanding as at September 30, 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income-tax, sales tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

10. The Company''s accumulated losses at the end of the year are more than fifty percent of its net worth. The Company has incurred cash losses during the current year as well as in the immediately preceding financial period.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or debenture holders as at the Balance Sheet date. However, Company has defaulted in repayment of dues to bank as detailed below :

Particulars Outstanding Period of Default as on September 30, Amount of Default - Since 2012(Indays) Loan Rupees

IDBI-RupeeLoan Oct-11 366 54,00,000

Jan-12 274 54,00,000

Apr-12 183 54,00,000

Jul-12 92 54,00,000

SBI - Rupee Loan Sep-11 367 26,50,000

Dec-11 275 37,50,000

Mar-12 184 37,50,000

Jun-12 93 42,50,000

Sep-12 1 42,50,000

S.B.I. Corporate Loan Sep-11 367 30,00,000

Dec-11 275 30,00,000

Mar-12 184 30,00,000

Jun-12 93 30,00,000

Sep-12 1 30,00,000

S.B.I. - Rupee Loan (FITL) Sep-12 1 15,00,000

I.D.B.I. Line Of Credit Aug-11 427 50,00,000

Sep-11 396 50,00,000

I.D.B.I. Rupee TermLoan (WCTL) Aug-11 427 16,70,000

Sep-11 396 16,10,000

12. 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. Inour opinion, the Company is not a dealer or trader 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 during the year.

16. The Company has not received any term loans during the year.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued debentures during the year.

20. The Company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For B. R. SHAH & ASSOCIATES

Firm Registration No. 129053W

Chartered Accountants

BHARAT SHAH

Place : Ahmedabad Partner

Date : 29th

day of November, 2012 Membership No. 5806

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of KANCO ENTERPRISES LIMITED (the "Company") as at March 31, 2011, and the related Profit & Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. 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.

2. We conducted our audit in accordance with the 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 (Auditors Report) Order, 2003 as amended by the Companies (Auditors 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 of India ("the Act") 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 give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the 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;

(b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books;

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

(d) In our opinion, the Balance Sheet, Profit & Loss Account 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, 2011, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2011 from being appointed as a director in terms of Clause (g) of Sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with notes thereon and attached thereto give in the prescribed manner the information required by the Act and also 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, 2011;

ii) In the case of the Profit & Loss Account, of the profit 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 of Auditors Report of even date to the Members of Kanco Enterprises Limited on the Financial Statements for the year ended March 31,2011

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items at regular intervals which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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 inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Consequently, Clause (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Order are not applicable.

(b) The Company has taken unsecured loan from a company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance amounts to Rs 3,00,00,000/-.

(c) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of interest, wherever 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 for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements as defined under Section 297 and 299 of the Act.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8. We have broadly reviewed the Books of Account 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, in respect of its products to which the said rules are made applicable, and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including investor education and protection fund, employees state insurance, income-tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the appropriate authorities. According to the information and explanations given to us, there are no statutory dues outstanding as at March 31, 2011 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income-tax, sales tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

10. The Companys accumulated losses at the end of the year are more than fifty percent of its net worth. The Company has not incurred cash losses during the year however it has incurred cash loss in the immediate preceding financial year.

11. According to the records of the Company examined by us and 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 as at the balance sheet date.

12. 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 a dealer or trader 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 during the year.

16. The Company has applied the money received as term loans during the year for the purposes for which the loans were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For B. R. SHAH & ASSOCIATES Firm Registration No. 129053W Chartered Accountants

BHARAT SHAH Proprietor Membership No. 5806

Place : Ahmedabad Date : May 13, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of KANCO ENTERPRISES LIMITED (the "Company") as at March 31, 2010, and the related Profit & Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. 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.

2. We conducted our audit in accordance with the 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 check 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 (Auditors Report) Order, 2003 as amended by the Companies (Auditors 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 of India ("the Act") 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 give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company.

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;

(b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as appears from our examination of those books;

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

(d) In our opinion, the Balance Sheet, Profit & Loss Account 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, 2010, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2010 from being appointed as a director under Clause (g) of Sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with notes thereon and attached thereto give in the prescribed manner the information required by the Act and also give a true and fair view in conformity with the accounting principles generally accepted in India :

i) In the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2010.

ii) In the case of Profit & Loss Account, of the Loss of the Company for the year ended March 31, 2010.

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 of Auditors Report of even date to the Members of Kanco Enterprises Limited on the Financial Statements for the year ended March 31,2010]

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

(b) As explained to us, fixed assets, according to the practice of the Company are physically verified by the Management at reasonable intervals, in a phased verification programme, which, in our opinion, is reasonable, looking to the size of the Company and the nature of its business. According to the information and explanations given to us, no material discrepancies have been noticed on physical verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the period.

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

(b) In our opinion, 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 inventory records, in our opinion, the Company is maintaining proper records of inventory. No discrepancies were noticed on our physical verification of inventory as compared to book records.

3. (i) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Consequently, Clause (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the order are not applicable.

(ii) The Company has taken unsecured loan from a Company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year end balance amounts to Rs. 1,00,00,000/-

(iii) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(iv) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of interest, wherever applicable.

4. In our opinion and according to the information and explanations given to us, there are generally adequate internal checks to commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal checks of the Company.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or

arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements and exceeding the value of Rs. Five Lakhs in respect of any party during the year are of specialised nature for which alternate quotations are not available and therefore comparison with prevalent market prices is not possible.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8. We have broadly reviewed the Books of Account 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, in respect of its products to which the said rules are made applicable, and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate.

9. (a) According to the information and explanations given to us and the records of the Company examined by us,

in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, income-tax and other material statutory dues as applicable with the appropriate authorities. (b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income-tax, sales tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

10. The Companys accumulated losses at the end of the year are more than fifty percent of its net worth. The Company has incurred cash losses during the year and in the immediate preceding financial year.

11. On the basis of the records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. 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 a dealer or trader 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 during the year.

16. The Company has applied the money received as term loans during the year for the purposes for which the loans were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the

F information and explanations given to us, there are no funds raised on short term basis which have been used

for long-term investment. ^ 18. The Company has not made any preferential allotment of shares to parties and companies covered in the register I maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For B. R. SHAH & ASSOCIATES Firm Registration No. 129053W Chartered Accountants

B. R. SHAH Proprietor Membership No. 05806

Place: Ahmedabad

Date : 21st day of June, 2010

---

Mar 31, 2009

We have audited the attached Balance Sheet of KANCO ENTERPRISES LIMITED as at 31st March, 2009, as well as the annexed Profit & Loss Account and the Cash Flow Statement for the year ended 31st March, 2009, in which are incorporated the accounts of the Textile Division, as audited by another firm of Chartered Accountants. 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 check 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 as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, (the Act) 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 give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company. 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;

(b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as appears from our examination of those books;

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

(d) In our opinion, the Balance Sheet, Profit & Loss Account 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 31st March, 2009, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director under Clause (g) of Sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2009.

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

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

ANNEXURE TO THE AUDITORSREPORT

Referred to in Paragraph 1 of our Report of even date :

(1) The provisions of clauses xiii & xviii of paragraph 4 of the Companies (Auditors Report) Order, 2003 are not applicable for the current year.

(2) In respect of Fixed Assets

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

(b) The fixed assets have been physically verified during the year by the management in accordance with a program of verification, the frequency whereof is reasonable. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The Company has not disposed of any substantial part of its fixed assets so as to affect its going concern.

(3) In respect of Inventories

(a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedure 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 its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verifications.

(4) In respect of loans, secured or unsecured, granted or taken by the Company to or from other companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us :

(a) The Company has not granted any loans to any party during the year;

(b) During the year the Company has taken interest free unsecured loan of Rs.8.00 lacs from one party and N the amount outstanding at the close is Rs. 4.50 lacs. The maximum amount involved during the year was Rs.32 lacs and year end balances of loans taken from such party was Rs. 4.50 lacs;

(c) The rate of interest and other terms and conditions of such loan are, in our opinion, not prejudicial to the interest of the Company;

(d) The Company is regular in payment of principal amount and interest.

(5) In our opinion and according to the information and explanations given to us during the course of audit, there are adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of stores and spare parts, raw materials, plant and machinery, equipment and other assets and with regard to sale of goods and services. During the course of our previous assessment, no major weakness in internal control, had come to our notice.

(6) To the best of our knowledge and belief and according to the information and explanations given to us, there were no particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, that were required to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956.

(7) The Company has accepted deposits from the public within the meaning of Sections 58A and Section 58AA of the Act and have complied with the rules framed thereunder.

(8) The Company has an adequate internal audit system commensurate with the size of the Company and nature of its business.

(9) We have broadly reviewed the Books of Account 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, and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(10) According to the information and explanations given to us, in respect of statutory dues and other dues the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Sales Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities where applicable. There are no arrears of aforesaid statutory dues as at the last day of the financial year outstanding for a period of six months from the date they became payable.

(11) The Companys accumulated losses at the end of the year are not more than fifty percent of its net worth. The Company has incurred cash losses during the year and in the immediate preceding financial year.

(12) Based on our audit procedure and on the information and explanations given by the management, the Company has not defaulted in repayment of principal and interest, due to the financial institutions and banks except in cases mentioned below :

Sl No. Institution Installment Amount (Rs.) Due Date Payment Date

1. State Bank of India, Term Loan-I 18,00,000 30.09.2008 26.12.2008

18,00,000 31.12.2008 31.03.2009

18,00,000 31.03.2009 Not Paid

2. State Bank of India, Term Loan-ll 23,75,000 30.09.2008 26.12.2008

23,75,000 31.12.2008 31.03.2009

23,75,000 31.03.2009 Not Paid

(13) As informed to us the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other investments.

(14) To the best of our knowledge and belief and according to the information and explanations given to us the Company has maintained proper records of the transactions for dealing in shares, securities and other investments and timely entries have been made therein, the shares, securities and other investments have been held by the Company in its own name.

(15) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

(16) The Company has applied the money received as term loans during the year for the purposes for which the loans were obtained.

(17) The Funds raised by the Company on short term basis have not been used during the year for long term investment.

(18) The Company has not issued any debentures during the year and it has created proper security in respect of outstanding debentures.

(19) The Company has not raised any money through public issues during the year.

(20) To the best of our knowledge and belief, and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For JAIN & CO. Chartered Accountants

P-21/22, Radhabazar Street M.K.JAIN

Kolkata-700 001 Partner

Dated the 9th day of May, 2009 Membership No. 55048