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Auditor Report of LN Industries India Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of LN INDUSTRIES INDIA LIMITED, which comprise the Balance Sheet as at March 31, 2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters that are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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 financial control relevant to the Company's preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, 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.

Our comments on the accounts are as under:

(a) Reference in invited to Note No.23.4 under Notes to Accounts regarding confirmation and / or reconciliation of balances.

(b) According to the information and the explanations given to us, the Company does not have any over – dues to SSI units and hence o provision for interest is made in accounts.

(c) The Credit facilities of the Company are categorized as Non Performing Asses (NPA) by State Bank of Hyderabad (SBH) during the year and Bank has recalled the Loan sanctioned to the Company. The same has impact on the ability of the Company to carry out its business.

Opinion

Subject to our comments in the above paragraphs we report that. In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order, to the extent applicable.

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

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

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

f) With respect to the other matters included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit & Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us;

i. The Company does not have any pending litigations which would impact its financial position in its financial statements for the year ended March 31, 2015.

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

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

Re: LN INDUSTRIES INDIA LIMITED ("the Company")

(Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars including Quantitative details and situation of Fixed Assets. However the Company have to update the records to the disposal of various assets made during the period. (b) The Company has not conducted physical verification of the fixed assets at its manufacturing location.

(ii) (a) As explained to us, the inventories have been physically verified at reasonable interval by the management. In our opinion, the frequency of such verification is not reasonable.

(b) According to the information and explanations provided to us, the inventories are quantified and the value estimated and certified by the respective manufacturing locations in charges. In our opinion, considering the period since which inventories are held as non-moving, we are unable to comment on the reliability of value of inventory.

(c) The Company is not maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, the Company has not granted unsecured loans to Companies or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly the provision of clause 3(iii)(a) to (b) of the order are not applicable to the Company.

(a) The Company has outstanding loans from a party. The maximum amount outstanding during the year in relation to the loans taken aggregate to Rs.882.35 Lakhs.

(b) In our opinion and according to the information and explanations given to us, no rates of interests are specified for the loans taken. The other terms and conditions for these loans are not prima facie prejudicial to the interest of the Company.

(c ) The loan taken from Director (one party) are interest free and subordinate to the debts of the Financial Institutions so as to the repayment of principal.

(d) The loan taken by the Company from JMF ARC has been restructured and no dues are for repayment during the year. There are no other overdue amounts in respect of loans taken by the Company and also in relation to the loans given by the Company.

(iv) In our opinion and according to the information and explanations given to us, the internal control procedures in the Company needs to be strengthened so as to be commensurate with the size of the Company and the nature of its business with regard to Purchases of Inventory, Fixed Assets and with regard to the Sale of Goods.

(v) According to the information and explanations given to us, the Company has not accepted any deposits during the year from public within the meaning of the provisions of Section 73 to 76 or any relevant provisions of the Companies Act, 2013 and rules made there under.

(vi) 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 sub-section (1) of section 148 of the Companies Act, 2013 in respect of the manufacturing activities and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) According to the information and explanations given to us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees' state insurance, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March ' 2015, for a period of more than six months from the date they became payable, excepting the following.

S. No. Particulars Amount Remarks

1. Deferred Sales Tax 118.63 Which has become due on account of the Unit being shifted from Andhra Pradesh

2 Sales Tax 9.44 Assessment Tax of Vapi Sales Tax

Tax Deducted At Source:: 3.96

(c ) According to the information and explanation given to us, there are no dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute except the following.

Sl. No. Particulars Amount Remarks (Rs. in Lacs)

1. Income Tax – A.Y.2011–2012 – 272.96 Appeal filed with CIT Appeals – V, Hyderabad, Demand raised by the Department pending disposal.

(viii) The Company has no accumulated losses as on 31st March ' 2015 and Company has incurred Cash Loss during the year and the immediate preceding year.

(ix) According to the records of the Company examined by us and the information and explanation given to us, the company has defaulted in repayment of dues to financial institution or bank as at the Balance Sheet date and the amount of default could not be quantified. The Credit facilities of the Company with State Bank of Hyderabad are declared as Non Performing Assets (NPA) during the year. Further during the year the company has not issued any debentures, so there is no question of repayment of dues to debenture holders.

(x) As per the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks for financial institutions. Accordingly, the provisions of clause 3(x) of the Order are not applicable to the Company.

(xi) According to the information and explanations given to us and in our opinion, no new term loans have been availed by the Company during the year.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per the information and explanations given by the management, we report that no material fraud on or by the Company has been noticed or reported during the course of our audit, nor have we been informed of such cases by the management.

For M/S.KUMAR & GIRI.

CHARTERED ACCOUNTANTS.

FRN 01584 S



Place: Hyderabad. J.BHADRA KUMAR

Date: 15th May ' 2015. Partner.

M.No.025480


Mar 31, 2014

We have audited the accompanying financial statements of LN INDUSTRIES INDIA LIMITED, which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 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. 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.

Our comments on the accounts are as under:

(a) Reference in invited to Note No.24.4 under Notes to Accounts regarding confirmation and / or reconciliation of balances.

(b) According to the information and the explanations given to us, the Company does not have any over - dues to SSI units and hence o provision for interest is made in accounts.

(c) During the year the Company has provided for the impairment in the value of the factory building situated at Patancheru, Vapi & Silvassa there on incurring a loss of Rs.6,06,66,011/-

Opinion

Subject to our comments in the above paragraphs we report that. In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

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

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

Report on Other Legal and Regulatory Requirements

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 account;

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in 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, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE REFERRED TO IN PARAGRAPH (1) OF THE REPORT OF EVEN DATE:

(i) (a) The Company is compiling the Fixed Assets Register consequent to the relocation and merging of the facilities at the new locations.

(b) The Company has conducted physical verification of the fixed assets at one of its two manufacturing locations. The Company has detailed a plan of physical verification of the fixed asset in relation to the assets at the second manufacturing location.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected, excepting the factory buildings situated at Patancheru, Vapi & Silvassa there on incurring a loss of Rs.6,06,66,011/-.

(ii) (a) The stocks of raw materials, consumables, stores, work in progress and finished goods have been

physically verified during the year by the management of the Company.

(b) The procedure of the physical verification of the Inventories followed by the management are to be strengthened so as to be reasonable and commensurate with the size of the Company and the nature of its business.

(c) The discrepancies noticed on verification of inventories as compared to the books were not material and it has been property dealt with in the books of account of the Company.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) The Company has outstanding loans from three parties. The maximum amount outstanding during the year in relation to the loans taken aggregate to Rs.1,056.02 Lakhs.

(b) In our opinion and according to the information and explanations given to us, no rates of interests are specified for the loans taken. The other terms and conditions for these loans are not prima facie prejudicial to the interest of the Company.

(c) The loan taken from Directors (three parties) are interest free and subordinate to the debts of the Financial Institutions so as to the repayment of principal.

(d) The loan taken by the Company from JMF ARC amounting to Rs.9,11,74,420/- as on 31st March '' 2014 has been restructured and no dues are for repayment during the year. There are no other overdue amounts in respect of loans taken by the Company and also in relation to the loans given by the Company.

(iv) In our opinion and according to the information and explanations given to us, the internal control procedures in the Company needs to be strengthened so as to be commensurate with the size of the Company and the nature of its business with regard to Purchases of Inventory, Fixed Assets and with regard to the Sale of Goods.

(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 transaction made in pursuance of contract or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees 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 the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provision of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted form the public excepting loans taken from others.

(vii) The Company has no internal audit system during the year.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost 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 we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory

dues including provident fund, investor education protection fund, employees'' state insurance, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March '' 2014, for a period of more than six months from the date they became payable, excepting the following.

Particulars Amount

Deferred Sales Tax 118.63

Provident Fund 4.29

Tax Deducted At Source:: 2.29

On Rent 0.68

On Interest Others 1.20

On Consultancy 0.41

Remarks

Which has become due on account of the Unit being shifted from Andhra Pradesh

(c ) According to the information and explanation given to us, there are no dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute except the following.

Particulars Amount Remarks (Rs.in Lacs)

Income Tax - A.Y.2011-2012 272.96 Appeal filed with CIT Appeals Demand raised by the Department V, Hyderabad, pending disposal.

(x) The Company has incurred a cash loss of Rs.813.01 lacs- for the financial year 2013 - 14 and a cash profit of Rs.122.53 lacs for financial year 2012 - 13 and the accumulated loss as on 31st March '' 2014 was Rs.2655.40 Lacs.

(xi) According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of dues to financial institution or bank as at the Balance Sheet date and the amount of default could not be quantified.

(xii) In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore clause 4(xiii) of the Companies (Auditor''s Report) Order''2003 is not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us the Company is not dealing in shares and securities. In the case of investments held by the Company in shares the same are in the name of the Company.

(xv) In our opinion and according to the information and explanations given to us the Company has not given guarantees for the loans taken by others from Banks or Financial Institutions.

(xvi) No new loan was sanctioned to the Company during the year.

(xvii) According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the Company has not utilized any amount out of short terms sources for long term uses and vice versa.

(xviii) No new allotments were made by the Company during the year.

(xix) The Clause 4(xix) of the Companies (Audit Report) Order ''2003 relating to the creation of security for the Debentures is not applicable to the Company as no debentures are raised by the Company.

(xx) The Company has not raised any money by way of public issue during the year excepting the balance monies to be received against the yet to allot Fully Convertible Equity Warrants.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year that caused the financial statements to be materially misstated.

For M/s.KUMAR & GIRI Chartered Accountants FRN 01584 S

J.BHADRA KUMAR Place: Hyderabad Partner Date: 29th May '' 2014. M.No.025480


Mar 31, 2012

We have audited the attached Balance Sheet of LN Industries India Limited, Hyderabad as on 31st March ' 2012, and also the Profit and Loss Account for the Year Ended on that date annexed thereto and Cash Flow Statement for the period ended on that date. 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.

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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the over all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we consider appropriate and according to the information and explanations given to us. We give in the annexure a statement on the matters specified in paragraph 4 and 5 of the said Order.

2. Our comments on the accounts are as under:

a) Reference is invited to Note No.26.4 under Notes to Accounts regarding confirmation and / or reconciliation of balances.

b) According to the information and the explanations given to us, the Company does not have any over - dues to SSI units and hence no provision for interest is made in accounts.

c) The Company has not provided for the impairment in the value of the factory building situated at Patancheru, Hyderabad consequent to shifting of the manufacturing facilities from there to the present location at Silvassa and Vapi in Gurajat. In the absence of any engineering estimate on the utility and value of the asset we are unable to quantify the impact of the value of the impairment of the Building on the financial statements for the period.

3. Subject to our observations in the annexure referred to in paragraph (1) and our comments in paragraph

(2) 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 law have been kept by the Company so far as it appears from our examination of such books.

c) The Balance Sheet and Profit and Loss Account referred to in this report are in agreement with the Books of Account.

d) In our opinion the Balance sheet and Profit and Loss Account are in compliance with the Accounting Standards referred to in Sec. 211 (3C) of the Companies Act, 1956, excepting in relation to Accounting Standard 22 on Accounting for Taxes on Income and reference is invited to Note No.26.8 under Notes to Accounts.

e) In our opinion, and based on the information and explanations given to us, none of the Directors of the Company are disqualified as on 31st March ' 2012, from being appointed as a Director under clause (g) of sub - section (1) of Section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit and Loss Account read together with the significant accounting polices and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

i) In so far as it relates to the Balance sheet, of the state of affairs of the Company as on 31st March 1 2012 and

ii) In so far as it related to the Profit and Loss Account, of the Profit of the Company for the period ended on that date.

iii) In the case of Cash Flow Statement, of the Cash Flows for the period ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH (1) OF THE REPORT OF EVEN DATE:

(i) (a) The Company is compiling the Fixed Assets Register consequent to the relocation and merging of the facilities at the new locations.

(b) The Company has conducted physical verification of the fixed assets at one of its two manufacturing locations. The Company has detailed a plan of physical verification of the fixed asset in relation to the assets at the second manufacturing location.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected. Reference is invited to Clause C of our comments on the Main Audit Report.

(ii) (a) The stocks of raw materials, consumables, stores, work in progress and finished goods have been physically verified during the year by the management of the Company.

(b) The procedure of the physical verification of the Inventories followed by the management are to be strengthened so as to be reasonable and commensurate with the size of the Company and the nature of its business.

(c) The discrepancies noticed on verification of inventories as compared to the books were not material and it has been property dealt with in the books of account of the Company.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) The Company has outstanding loans from three parties. The maximum amount outstanding during the year in relation to the loans taken aggregate to Rs.613.34 Lakhs.

(b) In our opinion and according to the information and explanations given to us, no rates of interests are specified for the loans taken. The other terms and conditions for these loans are not prima facie prejudicial to the interest of the Company.

(c) The loan taken from Directors (three parties) are interest free and subordinate to the debts of the Financial Institutions so as to the repayment of principal.

(d) The loan taken by the Company from JMF ARC has fallen due for repayment during the year and the amount of the same is outstanding . There are no other overdue amounts in respect of loans taken by the Company and also in relation to the loans given by the Company.

(iv) In our opinion and according to the information and explanations given to us, the internal control procedures in the Company needs to be strengthened so as to be commensurate with the size of the Company and the nature of its business with regard to Purchases of Inventory, Fixed Assets and with regard to the Sale of Goods.

(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 transaction made in pursuance of contract or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees 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 the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provision of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted form the public excepting loans taken from others.

(vii) The Company has an internal audit system. Keeping in view the growth in the business and future expansions, the scope of the internal audit needs to be enlarged and strengthened so as to be commensurate with the size of the Company and nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost 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 we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory due including provident fund, investor education protection fund, employees' state insurance, sales tax wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March 2012, for a period of more than six months from the date they became payable, excepting the following

S.No. Particulars Amount Remarks

1. Deferred Sales Tax 118.63 Which has become due on account of the Unit being shifted from Andhra Pradesh

2 Provident Fund 1.60

3 Tax Deducted At Source:: 21.33

On Rent 0.75

On Contractors 1.53

On Interest Others 0.39

On Interest (M/s.JMFARC) 17.46

On Consultancy 0.58

On Commission 0.62

(c) According to the information and explanation given to us, there are no dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

(x) The Company has no accumulated losses as on 31st March'2012.

(xi) According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank as at the Balance Sheet date.

(xii) In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore clause 4(xiii) of the Companies (Auditor's Report) Order'2003 is not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us the Company is not dealing in shares and securities. In the case of investments held by the Company in shares the same are in the name of the Company.

(xv) In our opinion and according to the information and explanations given to us the Company has not given guarantees for the loans taken by others from Banks or Financial Institutions.

(xvi) The Company has not raised any new term loans during the year.

(xvii) According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the Company has not utilized any amount out of short terms sources for long term uses and vice versa.

(xviii) As at 31st March'2012 the Company has yet to allot 1,24,27,950 Fully Convertible Warrants.

(xix) The Clause 4(xix) of the Companies (Audit Report) Order '2003 relating to the creation of security for the Debentures is not applicable to the Company as no debentures are raised by the Company.

(xx) The Company has not raised any money by way of public issue during the year excepting the balance monies to be received against the yet to allot Fully Convertible Equity Warrants.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year that caused the financial statements to be materially misstated.

for M/S. KUMAR &GIRI.

CHARTERED ACCOUNTANTS.

FRN 01584 S

Place: Hyderabad. J.BHADRA KUMAR

Date: 30th May ' 2012. Partner.

M.No.025480.







 
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