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Auditor Report of Kratos Energy & Infrastructure Ltd.

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Kratos Energy & Infrastructure Limited, which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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 ofmaterial 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

Attention is invited to the following :

i) Point no.7 of Note "19" regarding non payment of Turnover fee and interest thereon to SEBI.

ii) Implication on profitability if any, due to unreconciled transactions of sundry creditors and Advances & Deposits recoverable at the end of the year, as considerable part of these are remained unreconciled since long period.

iii) The effect of issues as referred in (b) could not be quantified and hence the effect on accounts of the same could not be ascertained.

In our opinion and to the best of our information and according to the explanations given to us, subject to our above comments and its consequential effect on profitability and financial statement , the said financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Profit and Loss Account, of the profit/ 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

N.A.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") 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 ofaccount.

d) in "our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 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.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of Kratos Energy & Infrastructure Limited on the accounts of the company for the year ended 31st March, 2013.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

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

(b) Inventory register has not been maintained by the management, but as informed and certified by the management there is no stock lying in the hand at the year end. Policy is to value inventory at cost or realizable value whichever is less.

3. According to the information and explanations given to us,'' the company has granted unsecured loans to below mentioned companies /firms or other parties covered in the Register maintained under Section 301 of the Companies Act,1956 and as informed by the management though it is advanced free of interest, its not prejudicial to the interest of the Company as its advanced out of interest free available fund.

i) Amoha Traders P.Ltd.- Rs.2,68,16,768 (Closing balance as on 31/03/2013) ii) Arma Financial Services Ltd.- Rs.12.5 lacs (Closing balance as on 31/03/2013) iii) Canos Trading P.Ltd. - Rs.17 lacs (Clasing balance as on 31/03/2013) iv)Kratos Pharmaceuticals Ltd. - (Subsidiary Company) - Rs.55010/- (Closing balance as on 31/03/2013)

According to the information and explanations given to us,'' the company had taken unsecured loans of Rs. 635000/- from "El Dorado Investments Co.P. Ltd. which is the opening balance of the previous year. It is covered in the Register maintained under Section 301 of the Companies Act, 1956 . In our opinion, the terms & conditions of such unsecured loans are not prima facie prejudicial to the interest of the company.

4. In "-our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, 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) As per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arises.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. As per information & explanations given by the management, the Company is not having any formal internal audit system during the year under review.

8. As per information & explanation given by the management, maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 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, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

10. The Company has accumulated loss which is less than 50% of its net worth as at 31st March 2013. The Company has not incurred cash losses during the current financial year as well as in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not borrowed any amount from financial institution, banks or debenture holders during the year under audit.

12. 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.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company has not entered into any type of transactions and contracts of dealing in securities during the year and therefore there are no changes incorporated in the existing records. & further investments specified are held in their own name.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has no outstanding debentures during the period under audit.

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

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management. For Sadhana D.Shah & Co.

Chartered Accpants FRN: 12473HW

Sadhana

Place: Mumbai (Proprietor)

Date: 30/05/2013 Mebership No. :107275


Mar 31, 2010

We have audited the attached Balance Sheet of Dil Vikas Finance Ltd., as at 31ST March 2010 and the Profit and Loss Account and the Cash flow Statement for the year ended on that date annexed thereto. Theses financial statements are the responsibility of the Companys manage- ment. Our responisibility 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. We report as follows:

1. As required by the Companies (Auditors Report) Order, 2003 as amended by Companies (Auditors Report)(Amendment) Order 2004 issued by the Central Government of India, in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order .

2. Further to our comments in the Annexure referred to in paragraph 1 above.

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 the books.

c) The Balance Sheet, Profit and 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 and 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 Companies Act, 1956;

e) On the basis of the written representations received from the Directors as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2009 from being appointed as Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act 1956;

f) Attention is invited to the following:

a) Note no.6 of schedule" J" regarding non payment of Turnover fee and interest thereon to SEBI

b) Implication on profitability if any, due to unreconciled transactions of sundry Creditors and Advances & Deposits recoverable at the end of the year, as considerable part of these are remained unreconciled since long period.

The effect of issues as referred in (b) could not be quantified and hence the effect on accounts of the same could not be ascertained.

g) In our opinion and to the best of our information and according to the explanations given to us, subject to our comments in Para f (aj and its consiquential effect

on profitability and financial statement and our comments in Para f(b} above, the said statement of accounts, read together with the Companys Accounting Policies and the Notes on Accounts thereon as defined in Schedule "L", give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(i) in the case of the Balance Sheet, of the State of Affairs of the Company as at 311 March 2010 and

[ii] in the case of Prof it and Loss Account, of the Loss of the Company for the year ended on that date

(iii) in the case of Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 1 of our report of even date

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

b) Fixed assets have not been physically verified by the management during the year,

c) During the year, the Company has not disposed of any fixed assets.

2 According to the information and explanations given to us, the company has neither granted nor taken any loans secured or unsecured to/ from the companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and as such Clause 3i (a) to iii (g) are not applicable.

3 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to the purchase of fixed assets and for sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weakness in internal controls.

4 According to the information and explanations given to us, there are no transactions made in pursuance of the contracts or arrangements that need to be entered in the Register maintained under Section 301 of the Companies Act 1956.

5 The Company has not accepted any deposits from the public and consequently the provisions of Section 58A & 58AA of the Companies Act, 1956 and rules framed there under and directions issued by the Reserve Bank of India, are not applicable.

6 The company is not having any formal internal audit system during the year under review.

7 According to the information and explanations given to us Central Government has not prescribed maintenance of cost records under Section 209(l)(d) of the Companies Act. 1956.

8 i) The Company has been regular in depositing undisputed statutory dues including

Income- Tax dues with the appropriate authorities and there were no arrears under the above head as on the balance sheet date except -1) that in the matter of Audit fees provision ,TDS is not dedcuted & therefore not paid before the due date.

ii) Keeping in view the present operations of the company the statutes relating to Sales

Tax, Wealth-Tax, Customs Duty, Excise Duty, Investors Education and Protection Func and Cess are not applicable to the Company.

iii) There are no dues of Provident Fund, Employees State Insurance, Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have been disputed and lying pending as at the close of the year.

9 The Company has accumulated loss which is less than 50% of its net worth as at 31st March 2010. The Company has not incurred cash losses during the current financial year but there were cash losses in the immediately preceding financial year.

10 In our opinion and according to the explanations given to us the Company has not borrowed any amounts from banks, financial institutions or from debentures holders during the year under Audit.

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

12 In our opirnon the Company is not a Chit Fund, Nidhi or Mutual Benefit Fund/Society. Therefore Clause 4{xili) of the Companies (Auditors Report) Order 2003 is not applicable to the Company.

13 Based on the records examined and according to the information and explanations given to us, we are of the opinion that the Company has not entered into any type of transactions and contracts of dealing in securities during the year and therefore there are no changes incorporated in the existing records.

14 Other clauses are not applicable to the company.

Sadhana D.Shah & Co.

Chartered Accountants

Place: Mumbai

Date :30/06/2010 Sadhana D..Shah

Proprietor

M.No.107275



 
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