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Auditor Report of Murudeshwar Ceramics Ltd.

Mar 31, 2016

Report on the Financial Statements

We have audited the accompanying financial statements of Murudeshwar Ceramics Limited (''the Company'') which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss for the year, the Cash flow statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements :

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone 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 maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting 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 adequate internal financial controls, 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 standalone 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 the 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 controls relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at 31st March, 2016, and its profit and its 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 :

1) 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.

2) 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 those books

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

4) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

5) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

6) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

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

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

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

- There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

The Annexure referred to in our Independent Auditors'' Report to the members of the Company on the financial statements for the year ended 31 March 2016, we report that :

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of immovable properties are held in the name of the company.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals.

(b) The procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account

(iii) The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Act. Accordingly, the provisions of clause 3(III) (a) to (c) of the order are not applicable to the company and hence cannot be commented upon.

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and I86 of the Companies Act, 2013 In respect of loans, investments, guarantees, and security.

(v) The Company has not accepted any deposits from the public and hence the directives issued by Reserve Bank of India and Provisions of Section 73 to 76 or any other relevant provisions of the Act and Companies (Acceptance of Deposit) Rules , 2015 with regard to the deposits accepted from public are not applicable.

(vi) The company does not maintain adequate cost records as prescribed under section 148(1) of the Act as Cost audit is not applicable to the company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues were in arrears as at 31 March ,2016.

(viii) In our opinion and according to the explanation given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions. The company has not issued any debentures.

(ix) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of Initial Public Offer or Further Public Offer including debt instruments and term loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

(x) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

(xi) Based on the audit procedures performed and information and explanation given by the management , the managerial remuneration has been paid or provided in accordance with the requite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) In our opinion, the Company is not a Nidhi company. Therefore, the provisions of clause 4(xii) of the order are not applicable to the company.

(xiii) In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act ,2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) Based upon the audit procedures and the information and explanation given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the company and hence cannot be commented upon.

(xv) Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non - cash transactions with directors or persons connected with him. Accordingly, the provisions of Clause 3 (xv) of the Order are not applicable to the company and hence cannot be commented upon.

(xvi) In our opinion the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3(xvi) of the Order are not applicable to the company and hence cannot be commented upon.

For M.A.NARASIMHAN & CO.,

Chartered Accountants

ICAI FIRM REGN. No : 002347S

(M.A. PARTHA NARAYAN)

Place : Bengaluru Partner

Membership No:028994

Date : 28-05-2016


Mar 31, 2015

We have audited the accompanying financial statements of Murudeshwar Ceramics Limited which comprise The Balance Sheet as at 31st March, 2015, 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 Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and performance. 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 the 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 aforesaid standalone 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, of the state of affairs of the Company as at 31 March 2015 and its profit and its 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, issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Companies Act 2013, we give in the Annexure, a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable. 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, the statement of profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account ;

d. In our opinion, the aforesaid standalone 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. On the basis of written representations received from the directors as on 31 March, 2015, and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2015, from being appointed as a director in terms of section 164(2) of the Companies Act, 2013.

Referred in paragraph (3) 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.

b) Based on the explanation given to us physical verification fixed assets has been conducted by the Management at reasonable intervals with regard to the size of the operations of the company.

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

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

iii. The company has not given loans to parties covered in the register maintained under section 189 of the Companies Act, 2013.

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

v. The company has not accepted any deposits from the public.

vi. Based on the explanation received and certificate provided by the cost auditor to us, the company is not required to maintain cost records as specified by the central government under sub- section(1) of Section 148, of the Companies Act, 2013.

vii. The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employee''s state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

viii. The company has no accumulated losses.

ix. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution and bank.

x. The company has not granted any loans and advances on the basis of the security by way of pledge of shares, debentures and other securities. Further based on the explanation received the company has not given any guarantees for loans taken by others from banks or financial institutions.

xi. The term loans were applied for the purpose for which the term loans were obtained.

xii. According to the information and explanations received, no fraud on or the company has been noticed or reported during the financial year.

For M.A.NARASIMHAN & CO., Chartered Accountants ICAI FIRM REG NO : 002347S

Place : Bengaluru (M.A. PARTHA NARAYAN) Partner Date : 29-05-2015 Membership No:028994


Mar 31, 2014

We have audited the accompanying financial statements of Murudeshwar Ceramics Limited (''the Company'') which comprise the Balance Sheet as at 31 March, 2014, the Statement of Profit and Loss and 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 preparation of these financial statements that give a true and fair view of the financial position, financial performance. 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 the 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:

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

(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date.

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 (''the Order''), as amended, 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 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 sub-section (3C) of Section 211 of the Companies Act, 1956

e. On the basis of written representations received from the directors as on 31 March, 2014, and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Referred in paragraph (3) of our report of even date

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

(b) As explained to us physical verification of major portion of fixed assets as at 31st March 2014 was conducted by the Management during the year. In our opinion, the frequency of physical verification is reasonable. Having regard to the size of the operations of the company and on the basis of explanations received, in our opinion, the net difference found on physical verification were not significant.

(c) During the year the Company has not disposed off any major part of plant and machinery.

II. (a) The inventories except for clay, owing to its nature, have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

III. The company has not granted any loans to any company, firm or other parties covered in the register maintained under Section 301 of the Act.

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

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 transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupee 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 according to the information and explanations given to us, the company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptances of deposits) Rules, 1975, with regard to the deposits accepted from the public. No order has been passed by the Company Law Board in this regard.

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

VIII. We have broadly reviewed the cost records maintained by the company pursuant to Companies (Cost Accounting Records) Rules, 2011 prescribed by the central government under Section 209(1)(d), of the companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

IX. The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no dues outstanding as at the year end for a period or more than six months from the date they became payable in respect of Income tax, Wealth tax, Sales tax, Customs duty, Excise duty and cess.

X. The company has not got any accumulated losses.

XI. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks.

XII. The company has not granted any loans and advances on the basis of the 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, the provisions of Clause 4(xiii) of the companies (Auditors Report) Order, 2003 are not applicable to the company.

XIV. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the companies (Auditors Report) Order, 2003 are not applicable to the company.

XV. The company has not given any guarantees for loans taken by others from banks or financial institutions.

XVI. The term loans were applied for the purpose for which the term loans were obtained.

XVII.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. No long term funds have been used to financé short term assets except permanent working capital.

XVIII.The company has made preferential allotment of Equity Shares pursuant to conversion of warrants into Equity Shares during the year under review to Company covered in the register maintained under Section 301 of the Act as per the SEBI guidelines.

XIX. The company has not issued any debentures.

XX. The company had not raised any money by way of public issue during the year.

XXI. According to the information and explanations given to us, no fraud on or the company has been noticed or reported during the year.

For M.A.NARASIMHAN & CO., Chartered Accountants ICAI FIRM REG NO : 002347S Place : Bangalore (M.A. PARTHANARAYAN) Partner Date : 29-05-2014 Membership No:028994


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Murudeshwar Ceramics Limited (''the Company'') which comprise the Balance Sheet as at 31 March, 2013, the Statement of Profit and Loss and 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 preparation of these financial statements that give a true and fair view of the financial position, financial performance 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 the 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:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2013.

(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date.

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 (''the Order''), as amended, 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 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 sub-section (3C) of Section 211 of the Companies Act, 1956

e. On the basis of written representations received from the directors as on 31 March, 2013, and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Referred in paragraph (3) of our report of even date

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

(b) As explained to us physical verification of major portion of fixed assets as at 31st March 2013 was conducted by the Management during the year. In our opinion, the frequency of physical verification is reasonable. Having regard to the size of the operations of the company and on the basis of explanations received, in our opinion, the net difference found on physical verification were not significant.

(c) During the year the Company has not disposed off any major part of plant and machinery.

II. (a) The inventories except for clay, owing to its nature, have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

III. The company has not granted any loans to any company, firm or other parties covered in the register maintained under Section 301 of the Act.

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

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 transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupee 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 according to the information and explanations given to us, the company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptances of deposits) Rules, 1975, with regard to the deposits accepted from the public. No order has been passed by the Company law Board in this regard.

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

VIII. We have broadly reviewed the cost records maintained by the company pursuant to Companies (Cost Accounting Records) Rules, 2011 prescribed by the central government under Section 209(1)(d), of the companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

IX. The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no dues outstanding as at the year end for a period or more than six months from the date they became payable in respect of Income tax, Wealth tax, Sales tax, Customs duty, Excise duty and cess.

X. The company has not got any accumulated losses.

XI. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks.

XII. The company has not granted any loans and advances on the basis of the 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, the provisions of Clause 4(xiii) of the companies (Auditors Report) Order, 2003 are not applicable to the company.

XIV. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the companies (Auditors Report) Order, 2003 are not applicable to the company.

XV. The company has not given any guarantees for loans taken by others from banks or financial institutions.

XVI. The term loans were applied for the purpose for which the term loans were obtained.

XVII.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. No long term funds have been used to financé short term assets except permanent working capital.

XVIII.The company has made preferential allotment of shares and warrants during the year under review to parties and companies covered in the register maintained under section 301 of the Act as per the SEBI guidelines.

XIX. The company has not issued any debentures.

XX. The company had not raised any money by way of public issue during the year.

XXI. According to the information and explanations given to us, no fraud on or the company has been noticed or reported during the year.



For M.A.NARASIMHAN & CO.,

Chartered Accountants,

ICAI FIRM REG NO:002347S

(M.A.PARTHANARAYAN)

Place :Bangalore Partner

Date :30-05-2013 Membership No. 028994


Mar 31, 2012

We have audited the accompanying financial statements of Murudeshwar Ceramics Limited ('the Company') which comprise the Balance Sheet as at 31 March, 2012, the Statement of Profit and Loss and 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 preparation of these financial statements that give a true and fair view of the financial position, financial performance. 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 the 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:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2012

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

(iii) in the case of the Cash flow statement, of the cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), as amended, 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 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 sub-section (3C) of Section 211 of the Companies Act, 1956.

e. On the basis of written representations received from the directors as on 31 March, 2012, and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2012, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Referred in paragraph (3) of our report of even date

I. (a) The company has maintained proper records showing full particulars including quantitative details and situations

of fixed assets.

(b) As explained to us physical verification of major portion of fixed assets as at 31st March 2012 was conducted by the Management during the year. In our opinion, the frequency of physical verification is reasonable. Having regard to the size of the operations of the company and on the basis of explanations received, in our opinion, the net difference found on physical verification were not significant.

(c) During the year the Company has not disposed off any major part of plant and machinery.

II. (a) The inventories except for clay, owing to its nature, have been physically verified during the year by the

management. In our opinion, the frequency of the verification is reasonable.

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

III. The company has not granted or taken loan from any company, firm or other parties covered in the register maintained under Section 301 of the Act.

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

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 transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupee 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 provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptances of Deposits) Rules, 1975, with regard to the deposits accepted from the public. No order has been passed by the Company Law Board in this regard.

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

VIII. The company has been maintaining cost records as prescribed by the Central Government under Section 209(1)(d) of The Companies Act, 1956.

IX. The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no dues outstanding as at the year end for a period or more than six months from the date they became payable in respect of Income tax, Wealth tax, Sales tax, Customs Duty, Excise duty and cess.

X. According to the records of the company, there are no dues outstanding of Sales tax, Income Tax, Customs Duty, Wealth tax, Excise Duty or cess on account of any dispute.

XI. The company has not got any accumulated losses.

XII. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks.

XIII. The company has not granted any loans and advances on the basis of the security by way of pledge of shares, debentures and other securities.

XIV. In our Opinion, the company is not a chit fund or a nidhi mutual benefit fund/ society. Therefore, the provisions of Clause 4(xiii) of the companies (Auditors Report) Order 2003 are not applicable to the company.

XV. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the companies (Auditors Report) Order, 2003 are not applicable to the company.

XVI. The company has not given any guarantees for loans taken by others from banks or financial institutions.

XVII. In our opinion, the term loans were applied for the purpose for which they were raised.

XVIII. 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. No long term funds have been used to finance short term assets except permanent working capital.

XIX. The company has made any preferential allotment of shares and warrants during the year under review to parties and companies covered in the register maintained under section 301 of the Act as per the SEBI guidelines. The price at which shares have been issued is not prejudicial to the interest of the Company.

XX. The company has not issued any debentures.

XXI. The company had not raised any money by way of public issue during the year.

XXII. According to the information and explanations given to us, no fraud on or the company has been noticed or reported during the year.

For M.A.NARASIMHAN & CO.,

Chartered Accountants,

ICAI FIRM REG NO:002347S

(M.A.PARTHANARAYAN)

Place : Bangalore Partner

Date : 30-07-2012 Membership No. 028994


Mar 31, 2010

We have audited the attached Balance Sheet of MURUDESHWAR CERAMICS LIMITED, as at 31 st March 2010, and also the Profit and Loss Account and the Cash Flow Statement 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.

We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable to the Company.

Further to our comments in the Annexure referred to above, we report that:

(i) 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.

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books

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

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act,. 1956.

Note No 4(c) regarding non-Provision of Excise Duty on finished goods lying in the factory amounting to Rs 184.36 lakhs, which is not in accordance with Accounting Standard -2 issued by the Institute of Chartered Accountants of India. The same has no impact on the Profits for the year under review.

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

• (vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31 st March 2010.

(b) inthe 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.

ANNEXURE TO THE AUDITORS REPORT

Referred in Paragraph (1) of our report of even date

1. In our opinion, the company is in the process of updating records to show full particulars including quantitative details and situation of its Fixed Assets.

2. A part of the fixed assets have been physically verified by the Management during the year, however there exists a programme of verification of the assets over a period. In our opinion, the frequency of verification of the fixedassets by the management is at reasonable intervals having regard to the size of the Company and nature of the assets and no material discrepancies were noticed between the book records and the physical inventory

v in respect of the assets physically verified.

3 The Company has not disposed off substantial part of the fixed assets during the Current Year.

4. The inventories except for clay, owing to its nature, have been physically verified during the year by the management. In our opinion, the frequency of the verification is reasonable.

5. In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the Management were found reasonable and adequate in relation to the size of the Company and the nature of its business. .

The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of accounts.

7. The company has not taken loans, from Companies, firms or other parties covered in the register maintained under section 301 of The Companies Act, 1956, during the year under review.

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

9. 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.

10. In our opinion and according to the information and explanations given to us, transactions exceeding the value of rupees five lakhs with parties listed in the register maintained under section 301 of the Companies Act, 1956 have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

11. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from the public. No order has been passed by the Company Law Board in this regard.

12. An independent firm of Chartered Accountants has conducted internal Audit during the year and it is commensurate with the size of the Company and the nature of its business.

13. The Central Government has not prescribed the maintenance of cost records under section 209{1)(d) of tfie Companies Act, 1956 for the Company.

14. The Company has generally been regular in depositing undisputed dues including Provident Fund, Investor Education and Protection fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues with appropriate authorities. According to the information and explanations given to us, there are no dues outstanding as at the year end for a period of more than six months from the date they became payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs duty, Excise Duty and Cess.

15. According to the records of the Company, there are no dues outstanding of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty or Cess on account of any dispute.

16. In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

17. As per books and records maintained by the Company and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to a financial institution, bank or debenture holders.

18. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

19. The Company has maintained proper records of the transactions and contracts of dealing in investments during the year and timely entries have been made therein. All the investments were held in the name of the Company.

20. The Companyhas given guarantees for loans taken from financial institutions and banks by others. The terms and conditions of which are not prejudicial to the interest of the company

21. In our opinion, the term loans were applied for the purpose for which they were raised.

22 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis including other short term loans from Companies have not been used for long term purposes and vice - versa.

23. Based upon the audit procedures performed by us for expressing our opinion on these financial statements 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. All the other provisions of the Companies (Auditors Report) Order 2003 have been found not applicable to the Company.

For M.A.NARASIMHAN & CO., Chartered Accountants Place : Bangalore (M.A. PARTHANARAYAN) Partner Date : 05-05-2010 Membership No028994

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