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Auditor Report of Rajvir Industries Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Rajvir Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, 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

2. 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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance and Cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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

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

4. 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 rules made there under.

5. 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.

6. 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 control 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, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. 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

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

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, 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, of the state of affairs of the Company as at March 31 2015 and its Loss and its Cash Flows for the year ended on that date.

Emphasis of Matter

9. We draw attention to Notes to accounts of the accompanying financial statement in respect of:

(a) Note no. 2.27(e): contingency related to 'recompense payable in lieu of bank sacrifice' outcome of which is materially uncertain and cannot be determined currently;

(b) Note no. 2.32: the confirmation of balances of trade payable, trade receivable, debit and credit to the parties are subject to reconciliation, review and adjustment thereof

(c) Note no. 2.18.1: interest subsidy under TUFS receivable, towards claim of refund made in earlier years, against eligible machinery, which is pending, for final decision before appropriate authorities. The management expects full realization thereof.

Our opinion is not qualified in respect of above matters.

Report on Other Legal and Regulatory Requirements

10. 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 Act ( hereinafter referred to as the "Order") 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 the paragraph 3 and 4 of the Order, to the extent applicable.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it 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 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 the written representations received from the directors as on March 31, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the other matters 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

i. The Company has disclosed the impact of pending litigations as on March 31, 2015 on its financial position in its financial statements

ii. The Company has made provision, as required under the applicable law or Accounting Standards, for material foreseeable losses, if any, on long term contracts. The Company neither entered into any derivative contract during the year nor have any outstanding derivative contract at the end of the year;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2015

Annexure to the Independent Auditors' Report

Referred to in paragraph 9 of the Independent Auditors' Report of even date to the members of Rajvir Industries Limited on the financial statements as of and for the year ended March 31, 2015

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

(b)The fixed assets are physically verified by the Management during the year and there is regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets

(ii) (a) The inventory has been physically verified by the management during the year. In respect of inventory lying with the parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material

(iii) The Company has not granted any loans secured or unsecured to Companies, firms or other parties covered in the registers maintained under Section 189 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 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 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 system.

(v) In our opinion and according to the information and explanation given to us, the company has complied with the provisions of section 73 to 76 and other relevant provisions of the Companies Act and the Companies (Acceptance of Deposit) Rules, 2014 as applicable, with regards to the deposits accepted from members and the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal with regard to the Deposits

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government of India, the maintenance of cost records specified under sub-section (1) of Section 148 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the Records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us, and on the basis of our examination of the books of account, the company has been regular in depositing with appropriate authorities undisputed statutory dues including wealth tax, sales-tax, customs duty, investor education and protection fund and any other material statutory dues applicable to it except as stated below, where the company is irregular in payment of undisputed statutory dues and which remained unpaid for a period of more than six months as on the date of reporting

Particulars Period Amount (In lakhs)

Employee State October 2013 to 29.19 insurance September 2014

Provident fund March 2014 to 26.71 September 2014

Tax deducted and April 2014 to September 14.42 collected at source 2014

Sales tax deferment Upto 31 st March 2015 187.89

Income Tax For the financial year 98.10 2012-13

(b) According to the information and explanations given to us, there are no disputed statutory dues as at the year end

(c) The amount required to be transferred to Investor Education and Protection Fund has been transferred within the stipulated time in accordance with the provisions of the Companies Act, 1956 and the rules made there under.

(viii) The company has accumulated losses as at the close of the year and are not more than 50% of its net worth. The company has incurred cash losses during the financial year ended on that date and in the immediately preceding financial year.

(ix) According to the records examined by us, the Company has defaulted in repayment of dues to financial institutions/banks and same has been rescheduled under Corporate Debt Restructuring dated 13th August 2014 during the current financial year. There are no over-dues as on 31 st March 2015. In case of bond holder of Rs.41.43 lacs (Pr.year Rs.41.43 lacs), the company has not repaid and has disputed the same pending before High Court. As per information and explanation given to us, the company has deposited by way of fixed deposit a sum of Rs75 lacs(Pr. year Rs.55 lacs ) with the bank against the same.

(x) In our opinion and according to the information and the explanations given to us, the company has not given any guarantees for loans taken by others from banks and financial institutions

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied on an overall basis for the purposes for which they were obtained

(xii) 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 nor have been informed of such case by the Management.

For S Daga & Co.

Chartered Accountants

(ICAI FRN: 000669S)

Sd/-

(Pavan Kumar Bihani)

Place: Hyderabad Partner

Date: 30.05.2015 M. No. 225603


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated September 13, 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Basis of Qualified Opinion

The Company has recognised in ''Other non-operative Income'' towards interest under TUFS receivable amounting to Rs. 1,210.41 lakhs for the period 2006-07 to 2010-11 (refunded in earlier years), in view of the favorable judgment of competent court, which is yet to be determined by appropriate authority and realized and therefore in our opinion the income should not have been recognized being a contingent asset as per Accounting Standard 29. Had the income would not have been recognized during the year ended 31st March, 2014, the loss for the year would be increased by Rs. 1,210.41 lakhs, reserves would be decreased by Rs. 836.39 lakhs, net deferred tax liability would be decreased by Rs. 374.02 lakhs and earnings per share would be decreased by Rs. 27.56 for the year ended.

Qualified 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 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 draw attention to note No. 2.30 to the financial statements, regarding the balance outstanding to the debit or credits in the accounts of the parties are subject to confirmation and review by the management.

Our opinion is not qualified in respect of this matter.

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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us;

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 and with the returns received from branches not visited by us;

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 September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 except AS - 29;

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 Auditors'' Report

(Annexure referred to in Point 1 of Other Legal and Regulatory Requirements of the Report of the Auditors)

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

b) As explained to us, the fixed assets have been physically verified by the management at reasonable intervals, in a phased verification programme, which, in our opinion, is reasonable, looking to the size of the Company and the nature of its business. According to the information and explanations given to us, discrepancies noticed on physical verification have been properly dealt with in the books of account;

c) In our opinion, and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the company during the year.

2. a) The inventory has been physically verified during the year by the management except the stock lying with the third party (consignment agent). 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 nature of its business.

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

3. a) The company had not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) In view of our comment in paragraph 3(a) above, reporting under clause 4(iii) (b), (c) & (d) of the aforesaid order are not applicable to the Company.

c) During the period, the company had taken unsecured loans from eight parties (Previous year: eight parties) covered in the register maintained under section 301 of the companies Act, 1956 and the maximum amount involved during the period was Rs. 181.57 lacs (Pr. Year Rs. 417.73 lacs) and the period end balance is Rs. 117.58 lacs (Pr. Year Rs. 102.43 lacs).

d) In our opinion the rate of interest and other terms and conditions on which loans have been taken from the companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

(e) In our opinion and according to the information given to us, there is no stipulation of repayment has been made for long term loans from the companies, firms and other parties listed in the register maintained under section 301 of the Companies Act 1956 and further interest accrued on the loans remained unpaid.

4. 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 purchase of inventory, fixed assets and with regard to the sale of goods and services. Further, on the basis of our examination of the books and records of the company, 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 procedures.

5. 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 in respect of 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. In our opinion and according to the information and explanations given to us, the company has complied with the provision of Sec 58A and 58AA and other relevant provisions 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 or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

7. On the basis of internal audit reports broadly reviewed by us, we are of the opinion that the internal audit work carried out by an Independent Chartered Accountant appointed by management is commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. a) According to the information and explanations given to us, and on the basis of our examination of the books of account, the company has been regular in depositing with appropriate authorities undisputed statutory dues including wealth tax, service tax, sales-tax, customs duty, investor education and protection fund and any other material statutory dues applicable to it except as stated below, where the company is irregular in payment of undisputed statutory dues and which remained unpaid as on the date of reporting:

Particulars Period Amount (Rs. lakhs)

Employee State insurance November 2013 to March 2014 17.07

Provident fund October 2013 to March 2014 24.00

Tax deducted and collected at source November 2013 to March 2014 41.40

Sales tax deferrement Upto 31st March 2014 242.25

Income Tax For the financial year 2012-13 98.10

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March 2014 for a period of more than six months except income tax of Rs. 98.10 lakhs from the date they became payable.

c) According to the information and explanations given to us, there are no disputed statutory dues as at the year end.

10. The company does not have any accumulated losses at the end of the financial year and has incurred cash losses in the current financial year and not in the immediately preceding financial year.

11. The company has delayed in making payment of dues to banks for a short period of 2-3 months during the year. The balance overdue to the banks at the close of the year towards principal Rs. 436.53 lakhs and interest of Rs. 122.97 lakhs, of which part of principal arrears of Rs. 42.50 lakhs and part of interest of Rs. 12.32 lakhs is unpaid as on date of reporting.

12. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clause 4(xii) of the Companies (Auditor''s Report) Order, 2003 is not applicable.

13. The company is not a chitfund, nidhi, mutual benefit fund or a society. Accordingly, clause 4(xiii) of the Companies (Auditor''s Report) Order,2003 are not applicable.

14. According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable.

15. According to the information and explanations to us, the company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, clause 4(xv) of the order is not applicable.

16. In our opinion, and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the records 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 information and explanation given to us, the company has made preferential allotment of preference shares to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which preference shares have been issued is not prejudicial to the interest of the company.

19. The company has not issued any fresh Debentures during the year. The company has created security in respect of debentures issued.

20. The company has not raised any money by public issues during the year. Accordingly, clause 4(xx) of the order is not applicable.

21. During the course of our examination 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 S. DAGA & CO. Chartered Accountants (F.No.000669S)

Pavan Kumar Bihani Partner Membership No.: 225603

Place: Hyderabad Date : 14.08.2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of RAJVIR INDUSTRIES LTD (the "Company"), which comprise the Balance Sheet as at March 31,2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

(c) in the case of 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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us;

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 and with the returns received from branches not visited by us;

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

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

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

b) As explained to us, the fixed assets have been physically verified by the management at reasonable intervals, in a phased verification programme, which, in our opinion, is reasonable looking to the size of the company and the nature of its business. According to the information and explanations given to us, discrepancies noticed on physical verification have been properly dealt with in the books of account;

c) In our opinion, and to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the company during the year.

2. a) The inventory has been physically verified during the year by the management except the stock lying with the third party (consignment agent). In our opinion, the frequency of verification is reasonable.

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

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

3. a) The Company had not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) In view of our comment in paragraph 3(a) above, reporting under clause 4(iii)(b), (c) & (d) of the aforesaid order are not applicable to the Company.

c) During the period, the company had taken unsecured loans from eight parties (previous year: eight parties) covered in the register maintained under section 301 of Companies Act, 1956 and the maximum amount involved during the period was Rs.417.73 lakhs (Pr. year Rs.1034.38 lakhs) and the period end balance is Rs.102.43 lakhs (Pr. year Rs.353.50 lakhs).

d) In our opinion the rate of interest and other terms and conditions on which loans have been taken from the companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanation 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 purchase of inventory, fixed assets with regard to the sale of goods and services. Further, on the basis of our examination of the books and record of the company, and according to the information and explanations give to us, we have neither come across not have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures.

5. a) According to the information and explanation 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 in respect of 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. In our opinion and according to the information and explanations given to us, the company has complied with the provision of Sec 58A and 58AA and other relevant provisions 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 or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

7. On the basis of internal audit reports broadly reviewed by us, we are of the opinion that the internal audit work carried out by an Independent Chartered Accountant appointed by management is commensurate with the size and nature of business.

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act,1956 and we are of the opinion that the prima facie the prescribed accounts and records have been made and maintained.

9. a) According to the information and explanations given to us, and on the basis of our examination of the books of account, the company has been regular except in few cases in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employee''s State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom duty, Investor Education and Protection Fund and any other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears, as at 31st March 2013 for a period of more than six months from the date they became payable.

c) According to the information and explanations given to us, there are no disputed statutory dues as at the year end.

10. The company does not have any accumulated losses at the end of financial year and has not incurred cash losses in the current financial year and in the immediately preceeding financial year.

11. The company has delayed in making payment of dues to banks for a short period of 2-3 months during the year. The balance overdue to the banks at the close of the year towards principal of Rs.381.53 lakhs and Interest of Rs.125.61 lakhs, of which principal arrears was paid in full and part of interest of Rs.6.19 lakhs is unpaid on the date of reporting.

12. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clause 4(xii) of the Companies (Auditor''s Report) Order, 2003 is not applicable.

13. The company is not a chit fund, nidhi mutual benefit fund or a society. Accordingly, clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable.

14. According to the information and explanations given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, clause 4(xv)of the order is not applicable.

16. In our opinion, and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the records 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 information and explanation given to us, the company has made preferential allotment of preference shares to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which preference shares have been issued is not prejudicial to the interest of the company.

19. The Company has not issued any fresh Debentures during the year. The company has created security in respect of debentures issued.

20. The Company has not raised money by public issues during the year. Accordingly, clause 4(xx) of the order is not applicable.

21. During the course of our examination 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 give to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor we have been informed of such case by the management. We have been informed that the allegation of misrepresentation by management in respect of subsidy under TUFS withdrawn in the preceeding year, which has been disputed by the company, is pending with investigating agency. The company expects no further liability beyond the amount refunded and reported in preceeding financial year.



For S.DAGA & CO.

Chartered Accountants

(F.No.000669S)



T.V. Subba Rao

Partner

Membership No.: 9636



Place: Hyderabad

Date : 30.05.2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of RAJVIR INDUSTRIES LTD. as at 31st March 2012 and also the Statement of Profit and Loss and the Cash Flow Statement 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 conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (and amended by The Companies (Auditor's Report) (Amendment) Order, 2004) issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

a. we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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, Statement of Profit and Loss and Cash Flow Statement referred to in 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 with by this report comply with the accounting standards as 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 31st March 2012, and taken on record by the Board of directors, we report that none of the directors of the Company is disqualified as referred to in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the Significant Accounting Policies and Notes on accounts gives the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:-

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

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

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

1. a) The Company has maintained proper records showing full

particulars including quantitative details and situation of its fixed assets;

b) As explained to us, the fixed assets have been physically verified by the management at reasonable intervals, in a phased verification programme, which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. According to the information and explanations given to us, discrepancies noticed on physical verification have been properly dealt with in the books of account;

c) The Company has not disposed off any substantial fixed assets which effect the going concern status of the Company.

2. a) As explained to us, inventories have been physically verified by management at reasonable intervals during the period. In our opinion, the frequency of such verification is reasonable.

b) As per the information given to us, the procedure of physical verification of inventories followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and nature of its business.

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

3. a) The Company had not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) In view of our comment in paragraph 3(a) above, reporting under clause 4(iii)(b), (c) & (d) of the aforesaid order are not applicable to the Company.

c) During the period, the Company has taken unsecured loans from 8 parties covered in the register maintained under section 301 of Companies Act, 1956 and the maximium amount involved during the period was Rs.1034.38 Lakhs (Previous year Rs.1055.03 Lakhs) and the year end balance is Rs.353.50 Lakhs (Previous year Rs.871.53 Lakhs)

d) In our opinion the rate of interest and other terms and conditions on which loans have been taken from the other parties listed in the register maintained under section 301 of

the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company. The Company is generally regular in payment of principal and interest due thereon as per terms.

4. In our opinion and according to the information and explanation 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 purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. a) According to the information and explanation given to us, we are of the opinion that the transactions that need to be entered in 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 in respect of any party during the period, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provision of Sec 58A and 58AA and other relevant provisions 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 or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

7. On the basis of internal audit reports broadly reviewed by us, we are of the opinion that the internal audit work carried out by an independent Chartered Accountant appointed by management is commensurate with the size of the Company and nature of business.

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act,1956 and we are of the opinion that the prima facie the prescribed accounts and records have been made and maintained .

9. a) 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, Service tax, Custom duty, Excise duty, cess and other material statutory dues applicable to it.

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

10. In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. Further the Company has not incurred cash losses during the current financial year covered by an audit and the immediately preceeding financial year.

11. The Company has delayed in making payment of dues to banks for a short period of 2-3 months during the year. The balance overdue to the banks at the close of the year towards principal of Rs.492.78 lakhs and interest of Rs.148.54 lakhs, which are since paid by the Company.

12. As per the information and explanation given to us the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. 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 (Auditor's Report) Order, 2003 are not applicable to the Company.

14. 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 (Auditor's Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion, and according to the information and explanations given to us, the term loans were applied for the purpose for which the loans were raised.

17. Based on information and explanations given to us and on an overall examination of Balance Sheet of the Company, in our opinion, funds raised on a long term basis have not been used for short term investment.

18. According to the information and explanation given to us, the Company has made preferential allotment of preference shares to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which preference shares have been issued is not prejudicial to the interest of the Company.

19. The Company has not issued any fresh Debentures during the year. The Company has created security in respect of debenture issued.

20. According to the information and explanations given to us, the Company has not raised money by public issues during the period.

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

For S.DAGA & CO.

Chartered Accountants (F.No.000669S)

T.V. Subba Rao

Partner

Membership No.: 9636

Place: Hyderabad Date : 14.08.2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of RAJVIR INDUSTRIES LTD. as at 31st March 2011 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 company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 (and amended by The Companies (Auditor's Report) (Amendment) Order, 2004) issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

a. we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account,

d. in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards as 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 31st March 2011, and taken on record by the Board of directors, we report that none of the directors of the company is disqualified as referred to in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956,

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the Significant Accounting Policies as appearing in schedule 21 and Notes on accounts as appearing in Schedule 22, more particularly Note No 3 with regard to credit balance of Rs. 4.44 Cr (Previous year Rs. 4.44 cr.) and Note No.12 regarding accounting treatment of Export benefits under DEPB Scheme amounting to Rs. 190.60 lakhs ( Previous year 402.25 lakhs) gives the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:-

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

(ii) in the case of the Profit and Loss Account, of the profit of the company for the year ended on that date; and

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

Annexure to Auditors' Report Referred to in Paragraph 3 of our Report of even date:

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

b) As explained to us, the management has physically verified most of the fixed assets during the period and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) The company has not disposed off any substantial fixed assets which effect the going concern status of the Company.

2. a) As explained to us, inventories have been physically verified by management at reasonable intervals during the period. In our opinion, the frequency of such verification is reasonable.

b) As per the information given to us, the procedure of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the company and nature of its business.

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

3. a) The Company had not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) In view of our comment in paragraph 3(a) above, (b), (c) & (d) of the aforesaid order are not applicable to the Company.

c) During the period, the Company had taken unsecured loans from nine parties covered in the register maintained under section 301 of the Companies Act, 1956 and the maximum amount involved during the period was Rs.1076.58 lakhs ( Previous year Rs. 1055.63 Lakhs) and the year end balance is Rs. 991.34 Lakhs ( Previous year Rs. 871.53 Lakhs)

d) In our opinion the rate of interest and other terms and conditions on which loans have been taken from the other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanation 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 purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. a) According to the information and explanation given to us, we are of the opinion that the transactions that need to be entered in 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 in respect of any party during the period, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Sec.58A, 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the Rules made there under.

7. On the basis of internal audit reports broadly reviewed by us, we are of the opinion that the internal audit work carried out by an independent Chartered Accountant appointed by management is commensurate with the size of the company and nature of business.

8. In our opinion and according to the information and explanations given to us, prima facie, the company has made and maintained accounts and records as prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956.

9. a) 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, Service tax, Custom duty, Excise duty, cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears, as at 31st March 2011 for a period of more than six months from the date they became payable.

10. The company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

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

12. As per the information and explanation given to us the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. 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 (Auditor's Report) Order, 2003 are not applicable to the company.

14. 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 (Auditor's Report) Order, 2003 are not applicable to the company.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion, and according to the information and explanations given to us, the term loans were applied for the purpose for which the loans were raised.

17. Based on information and explanations given to us and on an overall examination of Balance Sheet of the Company, in our opinion, funds raised on a long term basis have not been used for short term investment.

18. The company has not made any preferential allotment of shares to parties or 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. According to the information and explanations given to us, the Company has not raised money by public issues during the period.

21. According to the information and explanations given to us, no fraud on or by the company had been noticed or reported during the course of our audit.

For S.DAGA & CO. Chartered Accountants (F.No.000669S)

T.V. Subba Rao Partner Membership No.: 9636

Place: Hyderabad Date : 30.05.2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of RAJVIR INDUSTRIES LTD. as at 31st 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.

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

3. As required by the Companies (Auditors Report) Order; 2003 (and amended by The Companies (Auditors Report) (Amendment) Order, 2004) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

a. we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by

this report comply with the accounting standards as 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 31st March 2010, and taken on record by the Board of Directors, we report that none of the directors of the company is disqualified as referred to in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956,

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the Significant Accounting Policies as appearing in schedule 22 and Notes on accounts as appearing in Schedule 23, more particularly Note No 3 with regard to credit balance of Rs. 4.44 Cr (Previous year Rs. 4.44 cr.), Note No. 8 (iii) regarding Insurance claim pending settlement amounting to Rs. 171.15 lakhs (Previous year Rs. 171.15 lakhs), and Note No 11 regarding accounting treatment of Export benefits under DEPB Scheme amounting to Rs. 402.25 lakhs (Previous year 152.96 lakhs) gives the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

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

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

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

ANNEXURE TO AUDITORS REPORT Referred to in Paragraph 3 of our Report of even date:

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

b) As explained to us, the management has physically verified most of the fixed assets during the period and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) The company has not disposed off any substantial fixed assets which effect the going concern status of the Company.

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

our opinion, the frequency of such verification is reasonable.

b) As per the information given to us, the procedure of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the company and nature of its business.

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

3. a) The Company had not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) in view of our comment in paragraph 3 (a) above, (b), (c) & (d) of the aforesaid order are not applicable to the Company.

c) During the period, the Company had taken unsecured loans from 8 parties covered in the register maintained under section 301 of the Companies Act, 1956 and the maximum amount involved during the period was Rs. 1055.63 lakhs (Previous year Rs 1032.93 Lakhs) and the year end balance is Rs 871.53 lakhs (Previous year Rs 1032.93 Lakhs)

d) in our opinion the rate of interest and other terms and conditions on which loans have been taken from the other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanation 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 purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. a) According to the information and explanation given to us, we are of the opinion that the transactions that need to be

entered in 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 in respect of any party during the period, have been made at prices which are reasonable having regard to the prevailing market, prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Sec. 58A, 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the Rules made there under.

7. On the basis of internal audit reports broadly reviewed by us, we are of the opinion that the internal audit work carried out by an independent Chartered Accountant appointed by management is commensurate with the size of the company and nature of business

8. In our opinion and according to the information and explanations given to us, prima facie, the company has made and maintained accounts and records as prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956.

9. a) The company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund,

Employees State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom duty, Excise duty, cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears, as at 31st March 2010 for a period of more than six months from the date they became payable.

10. The company does not have any accumulated losses and has not incurred cash losses in the current financial year.

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

12. As per the information and explanations given to us the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. 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.

14. 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.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. in our opinion, and according to the information and explanations given to us, the term loans were applied for the purpose for which the loans were raised.

17. Based on information and explanations given to us and on an overall examination of Balance Sheet of the Company, in our opinion, funds raised on a long term basis have not been used for short term investment.

18. The company has not made any preferential allotment of shares to parties or 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. According to the information and explanations given to us, the Company has not raised money by public issues during the period.

21. According to the information and explanations given to us, no fraud on or by the company had been noticed or reported during the courses of our audit.

For S.DAGA & CO., Chartered Accountants (F.No. 000669S)

(T.V.Suba Rao) Partner Membership No : 9636

Place : Hyderabad

Date : 29.05.2010

 
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