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Auditor Report of Minal Industries Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Minal Industries Limited. ("the Company") which comprise the Balance Sheet as at March 31, 2014, 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") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 qualified audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid 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 Loss for the year ended on that date; and

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

We invite the attention of the members to the following material matters:

a) With regard to Note No. 22, relating to Provision for diminution in value of investment no provision is made for diminution in value of non trade investments amounting to Rs. 3,53,000/- which is not as per AS-13- Accounting for Investments. The amount of such deviation is not ascetainable.

b) With regard to Note No. 23, Gratuity and leave encashment is accounted on cash basis, which is not as per AS-15 Employee Benefits. The amount is not ascertained in absence of actuarial valuation.

c) With regard to Note no.25 relating to Trade Receivables, it has been observed that an amount of Rs.395,61,66,909/- is outstanding for more than three years. The management of the Company is confident of recovery of the full amount and therefore no provision has been made.

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 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

e) On the basis of written representations received from the directors as on 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 to Independent Auditor's Report

Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date.

1. (a) The Company has maintained memorandum of records showing details of fixed assets (except furniture and fittings and electrical installation). However, comprehensive fixed assets register is being complied.

(b) The fixed assets of the Company have been physically verified by the management during the year; no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanations given to us, no Fixed Assets has been disposed of by Company during the year.

2. (a) According to the information and explanations given to us, inventories have been physically verified by the management at reasonable intervals during the year.

(b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanations given to us, the Company is maintaining proper records of its inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

3. (a) According to the information and explanations given to us, the Company has granted unsecured loan to two Companies covered in the register maintained under Section 301 of the Companies Act, 1956. The details of loan are as under:

Name of the Company Relationship Maximum Year end Balance Amount involved

Minal International FZE Subsidiary Company 2,07,18,932/- 2,07,18,932/-

C Mahendra Infojewels Associate Company 18,42,61,568/- 18,14,36,122/- Limited

(b) The Company has granted interest bearing loan of Rs.2,07,18,932/- (net of exchange difference) to its subsidiary company which the company has made provision of interest income and the loan given to associate company is interest free. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which loans have been granted to the above Companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie prejudicial to the interest of the Company.

(c) We are informed that the loans granted to the Companies, do not have any stipulation for the payment of principal and interest.

(d) In view of sub clause (c) above, there are no overdue amount and hence the provision of sub-clause (d) of clause 4(iii) of the Order are not applicable to the Company.

(e) The Company has taken loan from Director covered in the register maintained under Section 301 of the Act. The details of loan are as under:

No of Directors Maximum Amount outstanding Amount outstanding during the year at the year end

1 Rs.35,00,000/- Rs.35,00,000/-

(f) No interest is paid and other terms and conditions on which loan has been taken from Directors listed in register maintained under section 301 are prima facie not prejudicial for the interest of the Company.

(g) The loan taken does not have any stipulation for the payment of principal.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, carried out accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems.

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

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

7. As per the information and explanation given to us by the management, the Company's internal control procedures together with the internal checks conducted by the management staff during the year can be considered as an internal audit system commensurate with the size and nature of its business.

8. According to the information and explanations given to us, The Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Act, in respect of activities carried on by the company. Hence the provisions of clause 4(viii) of the Order is not applicable to the Company.

9. (a) According to the information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employee's state insurance, income tax, sales tax, service tax, wealth tax, custom duty, excise duty, cess, and other statutory dues applicable with the appropriate authorities except for Profession Tax amounting to Rs. 18,775/-, which remain in arrears as at March 31, 2014 for a period exceeding six months from the date they became payable.

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

10. The Company has no accumulated losses as at March 31, 2014 after considering the balance in Reserve and Surplus account as at that date. Further the company has incurred cash losses of Rs. 16,69,655/- in the financial year ended on that date and has not incurred any cash losses 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 defaulted in repayment of dues to a financial institution, banks. There are no debenture holders.

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

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. It has invested in shares of wholly owned foreign subsidiary and few other companies for which proper records have been maintained and timely entries have been made therein. Said investment are held in Company's own name.

15. According to the records of the company and the information and explanations provided by the management, the company has given guarantee for loans taken by its associated company from banks, the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest to the Company.

16. According to the records of the company, the company has not obtained any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment by the company.

18. According to the records of the company and the information and explanations provided by the management, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act 1956.

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

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

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

FOR R. H. MODI & CO.,

CHARTERED ACCOUNTANTS

(Registration No : 106486W)

R. H. MODI

PLACE : MUMBAI PROPRIETOR

DATE : 30/05/2014 Membership No. 37643


Mar 31, 2013

We have audited the accompanying financial statements of Minal Industries Limited, ("the Company") which comprise the Balance Sheet as at March 31, 2013, 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 principles accepted in India including 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit, We conducted our audit in accordance with the Standards on Auditing issued by the institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 qualified audit opinion.

Basis for Qualified Opinion:

(a) Gratuity and leave encashment is accounted on cash basis, which is not as per AS-J5 Employee Benefits. The amount is not ascertained in absence of actuarial valuation.

The impact on profit for the year, reserves and surplus as at 31 March 2013, if any, due to the above deviations is not ascertainable.

(b) No Provision for diminution in value of investment made in non trade investments as required as per AS-13- Accounting for Investments, amount Rs.3,53,000/- resulting into overstatement of the profit of Rs. 3,53,000/- for the current year and reserves and surplus by Rs. 3.53,000/-.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid 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 Account, of the Profit 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 dealt herewith 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.

Annexure to Independent Auditor''s Report

Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date.

1. (a) The Company has maintained memorandum of records showing details of fixed assets (except furniture and fittings and electrical installation). However. comprehensive fixed assets register is being complied.

(b) The fixed assets of the Company have been physically verified by the management during the year; no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanations given to us, no Fixed Assets has been disposed of by Company during the year.

2. (a) According to the information and explanations given to us, inventories have been physically verified by the management at reasonable intervals during the year.

(b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanations given to us. the Company is maintaining proper records of its inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

3. (a) According to the information and explanations given to us, the Company has granted unsecured loan to two Companies covered in the register maintained under Section 301 of the Companies Act, 1956. The details of loan are as under: ,

Name of the Relationship Maximum Yearend Balance Company Amount involved

Minal Subsidiary 1,89,10.467/- 1,89,10,467/- International Company FZE

CMahendra Associate 18,61,41,166/- 18,42,61,568/- Infojewels Company Limited

(b) The Company has granted interest bearing loan of Rs.20.31,72.034/- (net of exchange difference) to its subsidiary- company which the company has made provision of interest income and the loan given to associate company is interest free. In our opinion and according to the information and explanations given to us. the rate of interest and other terms and conditions on which loans have been granted to the above Companies listed in the register maintained under section 301 of the Companies Act 1956 are not prima facie prejudicial to the interest of the Company.

(c) The receipt of the principal amount is regular.

(d) There are no overdue amount and hence the provision of sub-clause (d) of clause 4{iii) of the Order are not applicable to the Company.

(e) The Company has taken loan from Director covered in the register maintained under Section 301 of the Act. The details of loan are as under:

No of Directors Maximum Amount outstanding Amount outstanding during the year at the year end

1 Rs.35,00,000/- Rs.35,00,OO0/-

(f) No interest is paid and other terms and conditions on which loan has been taken from Directors listed in register maintained under section 301 are prima facie not prejudicial for the interest of the Company.

(g) The Company is regular in repaying the principal amount where stipulated.

4. In our opinion and according to the information and explanations given to us. there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the, basis of our examination of the books and records of the Company, carried out accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems.

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

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

7. As per the information and explanation given to us by the management, the Company''s internal control procedures together with the internal checks conducted by the management staff during the year can be considered as an internal audit system commensurate with the size and nature of its business.

8. According to the information and explanations given to us. The Central Government has not prescribed maintenance of cost records under Section 209(1 )(d) of the Act, in respect of activities carried on by the company. Hence the provisions of clause 4(viii) of the Order is not applicable to the Company.

9. (a) According to the information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employee''s state insurance, income tax, sales tax. service tax. wealth tax. custom duty, excise duty, cess, and other statutory dues applicable with the appropriate authorities during the year, and there were no such outstanding dues as at March 31, 2013 for a period exceeding six months from the date they became payable.

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

10. The Company has no accumulated losses as at March 31. 2013 after considering the balance in Reserve and Surplus account as at that date and has also not incurred any cash losses in the financial year ended on that date or 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 defaulted in repayment of dues to a financial institution, banks. There are no debenture holders.

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

13. In our opinion and according to the information and explanations given to us, the nature of activities of die Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.

14. In our opinion, use Company has maintained proper records of transactions and contracts relating to dealing or trading in securities during the year and timely entries have been made therein. Further, such securities have been held by the Company in its own name.

15. According to the records of the company and the information and explanations provided by the management, the company has given guarantee for loans taken by its associated company from banks, the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest to the Company.

16. According to the records of the company, the company has not obtained any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment by the company.

18. According to the records of the company and the information and explanations provided by the management, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act 1956.

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

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

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

FOR R. H. MODI & CO., CHARTERED ACCOUNTANTS

(Registration No : 106486W)

R.H.MODI

PROPRIETOR

Membership No. 37643

Place: MUMBAI

Dated : 28/05/2013


Mar 31, 2011

1. We have audited the attached Balance Sheet of MINAL INDUSTRIES LIMITED, as at March 31. 2011 and the Profit and Loss Account and Cash flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 the management. as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion,

1. As required by the Companies (Auditor's Report) Older, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 237 of the Companies Act, 1556 of India and on the basis of such checks of the books and records of the Company as we considered appropriate and according Id the information and explanations given to us, we give In the Annexure a statement on the matters specified in paragraphs & and 5 of the said Order.

4, We report that;

a. We have obtained all the information and explanation, 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 and Profit and Loss Account dealt with by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub-section (3c) of Section 211 of the Companies Act 1956 except the following

(i) Hon Provision for diminution in value of investment as required by Accounting Standard (A5)-13 ' Accounting for investments' issued by the Institute of Charted Accountants of India for reasons mentioned in note 3 of Schedule '17

(ii) Accounting Standard (AS)-I5 Revised "Accounting for Retirement benefits in the Financial Statements of the Employers" issued by the Institute of Chartered Accountants of India for reasons mentioned in note 4 of Schedule '17 '

e. On the basis of written representations received from the directors, as on March 31. 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31. 2011 from being appointed as a director in terms of clause (9) 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 accounts subject to:

i) In respect of non provision of diminution in value of investment of Rs. 3.53 Lacs (See note 3)

ii) In respect of non determination and non provision of gratuity liability and of liability towards leave encashment upon retirement. (See note 4)

and read with the other notes appearing thereon, give the information required by the Companies Act 1956 in the manner so required and give a true and fair view.

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 11, 2011. and

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

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



ANNEXURE TO AUDITOR'S REPORT

(Referred to in paragraph 3 of the Auditor's Report to the members of MINAL INDUSTRIES LIMITED for the year ended 31st March, 2011)

1. (a) The Company has maintained memorandum of records showing details of fixed assets (except furniture and fittings and electrical installation). However, comprehensive fixed assets register is being complied.

(b) The fixed assets of the Company have been physically verified by the management during the year; no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

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

2. (a) According to the information and explanations given to us, inventories have been physically verified by the management at reasonable intervals during the year.

(b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its Business.

(c) According to the information and explanations given to us, the Company is maintaining proper records of its inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

3. (a) According to the information and explanations given to us. the Company has granted unsecured loan to two Companies covered in the register maintained under Section 301 of the Companies Act, 1956. The details of loan are as under:

Name of the Company Relationship Maximum Amount Year end involved Balance Minal International FZE Subsidiary 1,43,28,930 1,43,28,930 Company (Mahendra Infojewels Limited Associate 6,28,21.563 6,26,96,563 Company

(b) The Company has granted interest bearing loan of Rs. 1,38,55,117/- (net of exchange difference) to its subsidiary company which the company has made provision of interest income and the loan given to associate company is Interest free In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which loans have been granted to the above Companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie prejudicial to the interest of the Company.

(c) The receipt of the principal amount is regular

(d) There are no overdue amount and hence the provision of sub-clause (d) of clause 4(iii) of the Order are not applicable to the Company.

(e) The Company has taken loan from Director covered in the register maintained under Section 301 of the Act. The details of loan are as under:

No of Directors Maximum Amount outstanding Amount outstanding at during the year the year end

1 Rs.6,36,15,000/- Rs,42,40,000/-

(f) No interest is paid and other terms and conditions on which loan has been taken from Directors listed in register maintained under section 301 are Prima facie not prejudicial for the interest of the Company.

(g) The Company is regular in repaying the principal amount as stipulated.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, carried out accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems.

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

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

7. The company has no internal audit system

8. The matter specified in clause (viii) of paragraph 4 of the Order regarding maintenance of cost records under clause (d) of sub- section (1) of section 209 of the Act is not applicable to the Company.

9. (a) According to the information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employee's state insurance, income tax, sales tax, service tax. wealth tax, custom duty, excise duty, cess, and other statutory dues applicable with the appropriate authorities during the year, and there were no such outstanding dues as at March 31, 2011 for a period exceeding six months from the date they became payable.

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

10. The Company has no accumulated losses as at March 31,2011 after considering the balance in Reserve and Surplus account as at that date and has also not incurred any cash losses in the financial year ended on that date or 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 defaulted in repayment of dues to a financial institution, banks. There are no debenture holders.

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

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.

14. In our opinion, the Company is not a dealer or trader in shares, securities debentures and other investment and hence, requirement of paragraph 4(xiv) are not applicable to the Company.

15. According to the records of the company and the information and explanations provided by the management, the company has not given any guarantee For loans taken by others from banks or Financial institutions.

16. According to the records of the company, the company has not obtained any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment by the company.

18. According to the records of the company and the information and explanations provided by the management, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act 1956,

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

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

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

FOR R. H. MODI & CO. CHARTERED ACCOUNTANTS (Registration no. 106486W)

R. H. MODI PROPRIETOR Membership No. 37643

Place : Mumbai Date : 31/05/2010


Mar 31, 2010

1. We have audited the attached Balance Sheet of MINAL INDUSTRIES LIMITED, as at March 31, 2010 and the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 of India and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. We report that:

a. We have obtained all the information and explanation, 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 and Profit and Loss Account dealt with by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 except the following

(i) Non Provision for diminution in value of investment as required by Accounting Standard (AS)-13 Accounting for investments issued by the Institute of Chartered Accountants of India for reasons mentioned in note 3 of Schedule 16

(ii) Accounting Standard (AS)-15 Revised "Accounting for Retirement benefits in the Financial Statements of the Employers" issued by the Institute of Chartered Accountants of India for reasons mentioned in note 4 of Schedule 16

e. On the basis of written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of 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 accounts subject to:

i) In respect of non provision of diminution in value of investment of Rs. 3.53 Lacs (See note 3)

ii) In respect of non determination and non provision of gratuity liability and of liability towards leave encashment upon retirement. (See note 4)

iii) In respect of Trading Division (Jewellery & Consumer Division), the Company has not maintained quantitative records of all the items in which the Company is dealing and in absence of stock statement showing item wise Quantities and value, for the purpose of annual accounts, the inventory of opening stock and closing stock as taken, valued and certified by the directors is relied upon.

and read with the other notes appearing thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view.

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

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

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

ANNEXURE TO AUDITORS REPORT (Referred to in paragraph 3 of the Auditors Report to the members of MINAL INDUSTRIES LIMITED for the year ended 31st March, 2010)

1. (a) The Company has maintained memorandum of records showing details of fixed assets (except furniture and fittings and electrical installation). However, comprehensive fixed assets register is being complied.

(b) The fixed assets of the Company have been physically verified by the management during the year; no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

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

2. (a) According to the information and explanations given to us, inventories have been physically verified by the management at reasonable intervals during the year.

(b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanations given to us, the Company is maintaining proper records of its inventory (except Trading Division (Jewellery and Consumer Division)). The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

3. (a) According to the information and explanations given to us, the Company has granted unsecured loan to two Companies covered in the register maintained under Section 301 of the Companies Act, 1956. The details of loan are as under:

Name of the Company Relationship Maximum Amount involved Year end Balance

Minal Inter national FZE Subsidiary Company 71,88,500 71,88,500

Minal Exim Pvt Ltd Associate Company 1,00,000 1,00,000

(b) In our opinion and according to the information and explanations given to us, the terms and conditions on which loans have been granted to the above Companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie prejudicial to the interest of the Company except that no interest has been charged for the year on these loan.

(c) The receipt of the principal amount is regular

(d) There are no overdue amount and hence the provision of sub-clause (d) of clause 4(iii) of the Order are not applicable to the Company.

(e) The Company has taken loan from Director covered in the register maintained under Section 301 of the Act. The details of loan are as under:

No of Directors Maximum Amount outstanding during the year Amount outstanding at the year end

1 Rs.1,75,000/- Rs.1,75,000/-

(f) No interest is paid and other terms and conditions on which loan has been taken from Directors listed in register maintained under section 301 are Prima facie not prejudicial for the interest of the Company.

(g) The Company is regular in repaying the principal amount as stipulated.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, carried out accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems.

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

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other relevant provi of the Companies Act, 1956 and the rules framed there under.

7. The company does not have an internal audit system.

8. The matter specified in clause (viii) of paragraph 4 of the Order regarding maintenance of cost records under clause (d) of section (1) of section 209 of the Act is not applicable to the Company.

9. (a) According to the information and explanations given to us, the Company is generally regular in depositing undisputed stati dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales service tax, wealth tax, custom duty, excise duty, cess, and other statutory dues applicable with the appropriate author during the year, and there were no such outstanding dues as at March 31, 2010 for a period exceeding six months from the they became payable.

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

10. The Company has no accumulated losses as at March 31, 2010 after considering the balance in Reserve and Surplus account as at ¦ date and has also not incurred any cash losses in the financial year ended on that date or in the immediately preceding finar year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that company has not defaulted in repayment of dues to a financial institution, banks. There are no debenture holders.

12. According to the information and explanations give to us, the Company has not granted any loans and advances on the basi; securities by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.

14. In our opinion, the Company is not a dealer or trader in shares, securities debentures and other investment and hence, requiremi of paragraph 4(xiv) are not applicable to the Company.

15. According to the records of the company and the information and explanations provided by the management, the company has i given any guarantee for loans taken by others from banks or financial institutions.

16. According to the records of the company, the company has not obtained any term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, report that no funds raised on short-term basis have been used for long-term investment by the company.

18. According to the records of the company and the information and explanations provided by the management, the company has n made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of ti Companies Act 1956.

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

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

21. As per the information and explanation given to us by the management, no material fraud on or by the Company has been notice or reported during the year.

FOR R. H. MODI & CO

CHARTERED ACC0UNTANT (Registration no. 106486W

R. H. MODI

Place : Mumbai PROPRIETOR

Date : 31/05/2010 Membership No. 3764

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