Auditor Report of Krishna Filament Industries Ltd.

Mar 31, 2015

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

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Management 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 tire 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.

AUDITORS' 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 which 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 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. 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 on financial statements.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the afore-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, 2015;

{b} In the case of the Statement of Profit and Loss, of the Loss of 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

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

a. We have sought and 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 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, the 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 aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. There is nothing to disclose which is having adverse effect on the functioning of the company.

f. On the basis of written representations received from the directors as on 31 March, 2015, taken on

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

g . With respect to the other matters included in the Auditor's Report and to our best of our information and according to the explanations given to us :

1. The Company does not have any pending litigations which would impact its financial position.

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

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

The Annexure referred to in our report to the members of MAVI INDUSTRIES LIMITED for the year ended 31st March, 2015.

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

(b) We are informed that fixed assets have not been physicaliy verified by the management and thus We are unable to comment on discrepancies and consequential adjustments, if any, in absence of such verification.

(c) We are informed that during the year, the Company has not disposed off major part of fixed assets.

2. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company doesn't have inventories during the year. Thus, Sub clauses (a), (b) and (c) are not applicable to the company.

3. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 189 of the Companies Act during the current audit period but the outstanding of previous loan take is Rs.61.13 lacs as on 31st March, 2015. The terms and conditions are prime facie, not prejudicial to the interest of the company and there is no stipulation with respect to its repayment.

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. In our opinion and according to the information and explanations given to us company hasn't accepted any deposits, from the directives issued by the Reserve Bank of India and as per the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act

6. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 148 of the Act are not applicable to the company. Therefore this clause regarding to maintenance of cost record are not applicable to the company.

7. (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 except sales tax payable amounting to Rs.3.21 lacs which has been outstanding for more than 6 month.

(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.

(c) In our opinion company was not required to transfer any amount to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder within time.

8. The Company has accumulated losses exceeding fifty percent of the net worth at the end of financial year as at 31st March, 2015. It has incurred cash loss during the year and during the immediately preceding Financial Year.

9. 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 defaulted in repayment of dues to a financial institution, bank or debenture holders.

10 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.

11 In our opinion Terms Loans if any were applied for the purpose for which loans were . obtained,

12 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 B. N. KEDIA & CO. Chartered Accountants (FRN No. 01652N)



CA. K K Kedia (Partner) Membership No.: 052461

Place: Mumbai Date:29/05/2015

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Mar 31, 2014

We have audited the accompanying financial statements of MAVI INDUSTRIES LTD ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss 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 Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the Company in accordance with the Accounting Standards notified under the Companies Act,1956(the Act) read with the General Circular 15/2013 dated 13th September,2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act,2013 and in accordance with the accounting principles generally accepted in India. 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.

Opinion

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

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

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

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 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, comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September,2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act,2013.

e. On the basis of the written representations received from the directors as on March 31,2014, 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 Section 274(l)(g) of the Act.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITOR''S REPORT TO THE MEMBERS OF MAVI INDUSTRIES LTD ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2014

Fixed Assets:

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

2. We are informed that fixed assets have not been physically verified by the management as the same have been taken over by the Hon''ble Court Receiver. We are unable to comment on discrepancies and consequential adjustments, if any, in absence of such verification.

3. We are informed that during the year, the Company has not disposed off major part of fixed assets. Related party transactions:

4. The company has granted any loans or advances in the nature of loans to companies. Firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

5. The Company has not taken any interest free loan from the Company listed in the register maintained under section 301 of the Companies Act, 1956 during the current audit period but the outstanding of previous loan taken is Rs. 61.13 lacs as on 31st March, 2014. The terms and conditions are prime facie, not prejudicial to the interest of the company and there is no stipulation with respect to its repayment.

6. In our opinion and according to the information and explanations given to us, the transactions for services made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

7. We are informed that the company has not given guarantee for loan, if any, taken by others from bank.

8. Based on the information and explanation and verification of records, we are of the opinion mat there is adequate internal control system considering the size of the Company and nature of its business.

9. The Company does not have an internal audit system but its financial and other internal checks ensures proper recording of financial transactions.

Deposits:

10. The Company has not accepted any deposit from ''public'' to which the provisions of section 58A and section 58AA of the Companies Act, 1956, and the rules framed there under apply. No orders have been passed by the Company Law Board, National Company Law Tribunal, Reserve Bank of India or any court or any other tribunal against the company.

Taxation:

11. The Company has been generally regular in depositing the undisputed statutory dues including Provident Fund. ESIC dues, Income Tax, Investor Education and Protection Fund, Sales tax, Wealth tax, Excise Duty and other material statutory dues applicable.

12. According to the information and explanations given to us and based on the management''s representation, there were no disputed dues of income tax, wealth tax, custom duty, excise duty and sales tax.

Miscellaneous:

13. We are informed that the Central Government has not prescribed maintenance of cost records by the Company under section 209(1) (d) of the Companies Act, 1956.

14. The Company has no accumulated losses exceeding net worth as at 31st March, 2014 and it has not incurred cash losses in the year under audit but it incurred cash losses in the immediately preceding year.

15. Based on our audit procedures and on the information and explanation given to us by the management, we are of the opinion that the company has not defaulted in repayment of dues to various financial institutions and banks

16. Based on our examination of documents and records, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

17. The Company has not dealt or traded in shares, debentures, or other investments during the year.

18. Based on our examination of the balance sheet of the company on an overall basis and as per the information given to us, we find that no funds raised on short term basis were utilized for long term purpose.

19. During the year, the Company has not taken any term loans.

20. Base upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

21. Clauses 4 (ii) & (iii) (c) (d) (g), (v) (b), 4(xviii), 4(xix), 4(xx) of Companies (Auditor''s report) Order 2003 are not applicable to the Company and hence, not reported upon.

For B. N. KEDIA & CO. Chartered Accountants FRN: 001652N

K. K. Kedia (Partner) Place: Mumbai Date: 30/05/2014

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of MAVI INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss 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 presentations of the financial statements that gives 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.

Opinion

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

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

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

Report on Other Legal and Regulatory Requirements

We report as under:

1. as required by the Companies (Auditors'' Report) Order, 2003 as amended, issued by the Central Government of India 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 we considered appropriate and according to the information and explanations given to us by the management, we annex hereto a statement on the matters specified in paragraph in paragraphs 4 and 5 of the said 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 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 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 31st March, 2013 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2013 from being appointed as a director in terms of clause (g) of sub clause (1) of section 274 of the Companies Act 1956;

Fixed Assets:

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

2. We are informed that fixed assets have not been physically verified by the management as the same have been taken over by the Hon''ble Court Receiver. We are unable to comment on discrepancies and consequential adjustments, if any, in absence of such verification.

3. We are informed that during the year, the Company has not disposed off major part of fixed assets.

Related party transactions:

4. The company has granted any loans or advances in the nature of loans to companies. Firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

5. The Company has not taken any interest free loan from the Company listed in the register maintained under section 301 of the Companies Act, 1956 during the current audit period but the outstanding of previous loan taken is Rs. 65.93 lacs as on 31st March, 2013. The terms and conditions are prime facie, not prejudicial to the interest of the company and there is no stipulation with respect to its repayment.

6. In our opinion and according to the information and explanations given to us, the transactions for services made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

7. We are informed that the company has not given guarantee for loan, if any, taken by others from bank.

8. Based on the information and explanation and verification of records, we are of the opinion that there is adequate internal control system considering the size of the Company and nature of its business.

9. The Company does not have an internal audit system but its financial and other internal checks ensures proper recording of financial transactions.

Deposits:

10. The Company has not accepted any deposit from ''public'' to which the provisions of section 58A and section 58AA of the Companies Act, 1956, and the rules framed there under apply. No orders have been passed by the Company Law Board, National Company Law Tribunal, Reserve Bank of India or any court or any other tribunal against the company.

Taxation: .

11. The Company has been generally regular in depositing the undisputed statutory dues including Provident Fund. ESIC dues, Income Tax, Investor Education and Protection Fund, Sales tax, Wealth tax, Excise Duty and other material statutory dues applicable and no dues has been outstanding for more than 6 months.

12. According to the information and explanations given to us and based on the management''s representation, there were no disputed dues of income tax, wealth tax, custom duty, excise duty and sales tax except the following:

Name of the statute Nature of the Amount (Rs) Forum where dues dispute is pending

Income tax Block Asst. Income Tax 1,06,50,61,820 Settlement commission

Income Tax A Y 1999-00 Income Tax 57,37,80,044 Settlement commission

Income Tax A Y 2002-2003 Income Tax 30,50,844 CIT (Appeals)

Income Tax A Y 2003-2004 Income Tax 26,02,006 CIT (Appeals)

Miscellaneous:

13. We are informed that the Central Government has not prescribed maintenance of cost records by the Company under section 209(l)(d) of the Companies Act,1956.

14. The Company has accumulated losses exceeding net worth as at 31st March, 2013 and it has incurred cash losses in the year under audit as well as in the immediately preceding year.

15. Based on our audit procedures and on the information and explanation given to us by the management, we are of the opinion that the company has not defaulted in repayment of dues to various financial institutions and banks

16. Based on our examination of documents and records, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

17. The Company has not dealt or traded in shares, debentures, or other investments during the year.

18. Based on our examination of the balance sheet of the company on an overall basis and as per the information given to us, we find that no funds raised on short term basis were utilized for long term purpose.

19. During the year, the Company has not taken any term loans.

20. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

21. Clauses 4 (ii) & (iii) (c) (d) (g), (v) (b), 4(xviii), 4(xix), 4(xx) of Companies (Auditor''s report) Order 2003 are not applicable to the Company and hence, not reported upon.

For B. N. KEDIA & CO

Chartered Accountants

FRN: 001652N



K K Kedia

(Partner)

ICAI M No: 052461

Date: 20/05/2013

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Mar 31, 2011

We have audited the attached Balance Sheet of MAVI INDUSTRIES LIMITED ( Formerly Known as KRISHNA FILAMENTS LIMITED) as at 31st March, 2011 and the Profit & Loss account and also Cash Flow statement of the Company of 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.

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 abut whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts 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 under:

1) as required by the Companies (Auditors' Report) Order, 2003 as amended, issued by the Central Government of India 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 we considered appropriate and according to the information and explanations given to us by the management, we annex hereto a statement on the matters specified in paragraph in paragraphs 4 and 5 of the said Order.

2) Further to our comments in the Annexure referred to in paragraph I 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 such 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, the Profit and loss account and the Cash Flow Statement comply with the Accounting Standards (AS) as referred to in section 211(3C) of the Companies Act, 1956, to the extent .applicable to the Company, except the following:-

The company has not complied with AS 5 with respect to secured loan liability w/back on settlement of secured loans, amounting to Rs. 3.56 crores, which should have routed through profit & Loss Account instead of directly crediting to General Reserve.

e) In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report, read together with the Notes thereon, give the information required by the Companies Act, 1956 in the manner so required.

f) In our opinion and according to the information and explanations given to us, none of the Directors of the Company as on 31st March 2011 are disqualified from being appointed as Directors as per the provisions of Section 274(1 )(g) of the Companies Act, 1956.

g) The net worth of the Company is fully eroded due to heavy losses and financial institutions and Bankers of the Company had already recalled the credit facilities extended to the Company. Further, the value of its assets would not be adequate to meet its liabilities. In view of all these, the Company does not appear to be a 'Going Concern'.

h) We are unable to comment on the resulting effect of our observation in paragraph (d), above on relevant assets, liabilities and on loss for the year. Subject to this, the said accounts read together with the notes thereon, gives a true and fair view in conformity with the accounting principles generally accepted in India:

i) in case of the Balance Sheet. Of the state of affairs of the Company as at 31st March, 2011.

ii) in case of the Profit & Loss Account, of the profit of the Company for the year ended on that date and

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

ANNEXURE REFFERERED TO IN PARGRAPH OF OUR REPOT OF EVEN DATE TO THE MEMBERS OF MAVI INDUSTRIES LTD FOR THE YEAR ENDED 31st March 2011

Fixed Assets:

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

2. We are informed that fixed assets have not been physically verified by the management as the same have been taken over by the Hon'ble Court Receiver. We are unable to comment on discrepancies and consequential adjustments, if any, in absence of such verification.

3. We are informed that during the year, the Company has not disposed off major part of fixed assets.

Inventories:

4. We are informed that the physical verification of inventory has not been carried out by the management at regular intervals.

5. We are unable to comment on the procedures for the physical verification in absence of such verification.

6. On the basis of our examination of the records of the company, we are of the opinion that the company has maintained proper records of inventory. We are unable to comment o the discrepancies in absence of such physical verification.

Related party transactions:

7. The company has granted any loans or advances in the nature of loans to companies. Firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

8. The Company has taken interest free loan amounting to Rs.7.50 lacs from the Company listed in the register maintained under section 301 of the Companies Act, 1956 and outstanding balance at year end is Rs. 86.93 lacs. The terms and conditions are prime facie, not prejudicial to the interest of the company and there is no stipulation with respect to its repayment.

9. In our opinion and according to the information and explanations given to us, the transactions for services made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

10. We are informed that the company has not given guarantee for loan, if any, taken by others from bank.

11. Based on the information and explanation and verification of records, we are of the opinion that there is adequate internal control system considering the size of the Company and nature of its business.

12. The Company does not have an internal audit system but its financial and other internal checks ensures proper recording of financial transactions.

Deposits:

13. The Company has not accepted any deposit from 'public' to which the provisions of section 58A and section 58AA of the Companies Act, 1956, and the rules framed there under apply. No orders have been passed by the Company Law Board, National Company Law Tribunal, Reserve Bank of India or any court or any other tribunal against the company.

Taxation:

14. The Company has been generally regular in depositing the undisputed statutory dues including Provident Fund. ESIC dues, Income Tax, Investor Education and Protection Fund, Sales tax, Wealth tax, Excise Duty and other material statutory dues applicable to its except sale tax payable amounting to Rs.3.21 Lacs which has been outstanding for more than 6 months.

15. According to the information and explanations given to us and based on the management's representation, there were no disputed dues of income tax, wealth tax, custom duty, excise duty and sales tax except the following:

Name of the statute Nature of the Amount (Rs) Forum where dues dispute is pending

Income tax Block Asst. Income Tax 1,06,50,61,820 Settlement commission

Income Tax A Y 1999-00 Income Tax 57,37,80,044 Settlement commission

Income Tax A Y 2002-2003 Income Tax 30,50,844 CIT (Appeals)

Income Tax A y 2003-2004 Income Tax 26,02,006 CIT (Appeals)



Miscellaneous:

16. We are informed that the Central Government has ot prescribed maintenance of cost records by the Company under section 209(1 )(d) of the Companies Act, 1956.

17. The Company has accumulated lasses exceeding net worth as at 31st March, 2011 and it has incurred cash losses in the year under audit as well as in the immediately preceding year.

18. Based on our audit procedures and on the information and explanation given to us by the management, we are of the opinion that the company has not defaulted in repayment of dues to various financial institutions and banks ( PY default Rs 4.40 crores).

19. Based on our examination of documents and records, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

20. The Company has not dealt or traded in shares, debentures, or other investments during the year.

21. Based on our examination of the balance sheet of the company on an overall basis and as per the information given to us, we find that no funds raised on short term basis were utilized fro long term purpose.

22. During the year, the Company has not taken any term loans.

23. Base upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

24. Clauses 4(iii) © (d) (g) (v)(b), 4(xviii), 4(xix), 4(xx) are not applicable to the Company and hence, not reported upon.

ForB N KEDIA & CO

Chartered Accountants

Firm Registration No: 001652N

K K Kedia

(Partner)

ICAI M No: 052461

Date: 30.05.2011