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Auditor Report of Rane Engine Valve Ltd.

Mar 31, 2013

Report on the financial statements

1. We have audited the accompanying financial statements of M/s. Rane Engine Valve Limited ("the company") which comprise the Balance Sheet as at 31st March 2013, Statement of Profit and Loss for the year ended on that date, Cash Flow Statement and a summary of significant accounting policies and other explanatory information. 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.

Management''s Responsibility for the Financial Statements

2. 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

3. 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

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

a) in the case of the Balance Sheet, of the State of Affairs of the Company as at March 31, 2013;

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

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

Report on Other Legal and Regulatory Requirements

5. 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.

6. As required by section 227(3) of the Act, we report that:

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

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

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

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement

comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Act;

(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 Act.

1. The provisions of the following clauses of Companies (Auditor''s Report) Order, 2003 are not applicable to the company for the year with respect to:

a) Clause 4 (x) with regard to accumulated losses since the company''s networth is positive and the company has not incurred any cash losses during the current year and in the immediately preceding financial year;

b) Clause 4 (xii) with regard to loans granted against pledge of securities since no loans have been granted by the company during the year;

c) Clause 4 (xiii) with regard to special statutes applicable to Chit funds and Nidhis since the company has not carried on such business;

d) Clause 4 (xiv) with regard to trading in securities since the company did not carry on such activities during the year;

e) Clause 4 (xviii) with regard to preferential allotment of shares to specified parties since no allotment of shares was made during the year;

f) Clause 4 (xix) with regard to creation of security or charge in respect of debentures since no debentures issued during the year; and

g) Clause 4 (xx) with regard to money raised by public issue since no money was raised by public issue during the year.

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

b) The company has a programme of verification of fixed assets whereby all the fixed assets are physically verified by the management over a period of three years in a phased manner which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c) The company has not during the year disposed off a substantial part of the fixed assets which would give rise to the question of impairment of status of the company as a going concern.

3. 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

4. (i) In our opinion and according to the information and explanations given to us, during the year, the company has granted unsecured loan to a public charitable trust covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loan is Rs. 0.75 crores. In our opinion, the terms and conditions of such loan is not prima facie prejudicial to the interest of the company and no amount is due for repayment in respect of above loan as at the balance sheet date.

(ii) a) The company has not taken any loans secured or unsecured to / from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 except fixed deposits accepted from directors and their relatives. These deposits have been accepted from 9 parties aggregating to Rs.1.23 Crores which are outstanding as on 31st March, 2013.

b) In our opinion the rate of interest and other terms and conditions of these deposits are not prima facie prejudicial to the interest of the company.

c) The payment of principal and interest are regular.

5. 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. During the course of our audit, no major weakness has been noticed in the internal controls.

6. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees 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.

7. The company has accepted deposits from the public and has complied with the Directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under where applicable. According to the explanations given to us, 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.

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

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

10. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise-Duty, Cess applicable to it.

12. The company has not defaulted in repayment of dues to financial institutions, or banks. The company has not issued any debentures.

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

14. On the basis of review of utilisation of funds on overall basis the term loans taken by the company were applied for the purposes for which the loans were obtained.

15. According to the information and explanation given to us and on a overall examination of the Balance Sheet of the company, we report that no funds raised on short– term basis have been used for long-term investment by the company.

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

For BRAHMAYYA & CO.,

Chartered Accountants Firm Regn No: 000511S

P.S.KUMAR

Chennai Partner

May 21, 2013 (Membership No. 15590)


Mar 31, 2012

1. We have audited the attached balance sheet of Rane Engine Valve Limited 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 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.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure 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:

(i) 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;

(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, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet, statement of profit and 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;

(v) 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 is disqualified as on 31st 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;

(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 31st March 2012;

(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 the cash flow statement, of the cash flows for the year ended on that date.

1. The provisions of the following clauses of Companies

(Auditor's Report) Order, 2003 are not applicable to the company for the year with respect to:

a) Clause 4 (x) with regard to accumulated losses since the company's networth is positive and the company has not incurred any cash losses during the current year and in the immediately preceding financial year;

b) Clause 4 (xii) with regard to loans granted against pledge of securities since no loans have been granted by the company during the year;

c) Clause 4 (xiii) with regard to special statutes applicable to Chit funds and Nidh is since the company has not carried on such business;

d) Clause 4 (xiv) with regard to trading in securities since the company did not carry on such activities during the year;

e) Clause 4 (xviii) with regard to preferential allotment of shares to specified parties since no allotment of shares was made during the year;

f) Clause 4 (xix) with regard to creation of security or charge in respect of debentures since no debentures issued during the year; and

g) Clause 4 (xx) with regard to money raised by public issue since no money was raised by public issue during the year.

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

b) The company has a programme of verification of fixed assets whereby all the fixed assets are physically verified by the management over a period of three years in a phased manner which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c) The company has not during the year disposed off a substantial part of the fixed assets which would give rise to the question of impairment of status of the company as a going concern.

3. 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

4. (i) In our opinion and according to the information

and explanations given to us, during the year, the company has granted an interest free unsecured loan of Rs0.25 crores to a public charitable trust covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loan is Rs0.75 crores. In our opinion, the terms and conditions of such loan is not prima facie prejudicial to the interest of the company and no amount is due for repayment in respect of above loan as at the balance sheet date.

(ii) a) The company has not taken any loans secured or unsecured to / from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 except fixed deposits accepted from directors and their relatives. These deposits have been accepted from 9 parties aggregating to Rs1.76 Crores which are outstanding as on 31st March, 2012.

b) In our opinion the rate of interest and other terms and conditions of these deposits are not prima facie prejudicial to the interest of the company.

c) The payment of principal and interest are regular.

5. 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. During the course of our audit, no major weakness has been noticed in the internal controls.

6. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees 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.

7. The company has accepted deposits from the public and has complied with the Directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under where applicable. According to the explanations given to us, 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.

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

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

10. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise-Duty, Cess applicable to it.

11. Based on our audit procedures and on the information and explanations given by the Management, there are no dues outstanding in respect of customs duty, wealth tax, and cess on account of any dispute. The details of disputed excise duty, trade tax, income tax, service tax and sales tax that have not been deposited with the appropriate authorities are as follows:

Nature of Dues Amount Forum where (Rs in dispute is Crores) pending

Sales Tax demands 0.07 Deputy Commissioner for the financial year (Appeals) Commercial 2003-2004 Taxes, Ernakulam

Service Tax 0.05 Commissioner of Central Excise (Appeals), Trichy

Service Tax 0.01 Commissioner of Central Excise (Appeals), Chennai

Service Tax - Customs, Excise & Service Tax Appellate Tribunal, Chennai (Rs 29,000)

Excise duty 0.01 Excise Appellate Tribunal, Bengaluru

Trade Tax - Joint Commissioner - Trade Tax, Kanpur (Rs 38,000)

Income Tax for the 0.43 Commissioner of Assessment Year Income Tax (Appeals), 2004-05 and 2005-06 Chennai

12. The company has not defaulted in repayment of dues to financial institutions, or banks. The company has not issued any debentures.

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

14. On the basis of review of utilisation of funds on overall basis the term loans taken by the company were applied for the purposes for which the loans were obtained.

15. According to the information and explanation given to us and on a overall examination of the Balance Sheet of the company, we report that no funds raised on short- term basis have been used for long-term investment by the company.

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

For BRAHMAYYA & CO.,

Chartered Accountants

Firm Regn No: 000511S

P.S.KUMAR

Chennai Partner

May 21, 2012 (Membership No. 15590)


Mar 31, 2011

1. We have audited the attached balance sheet of Rane Engine Valve Limited 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 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 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.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure 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:

(i) 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;

(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 and 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 and 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;

(v) 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 is disqualified as on 31 st March 2011 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 31st March 2011;

(b) in the case of the profit and loss account, of the profit for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

1. The provisions of the following clauses of Companies (Auditors Report) Order, 2003 are not applicable to the company for the year with respect to:

a) Clause 4 (x) with regard to accumulated losses since the companys networth is positive and the company has not incurred any cash losses during the current year and in the immediately preceding financial year;

b) Clause 4 (xii) with regard to loans granted against pledge of securities since no loans have been granted by the company during the year;

c) Clause 4 (xiii) with regard to special statutes applicable to Chit funds and Nidhis since the company has not carried on such business;

d) Clause 4 (xiv) with regard to trading in securities since the company did not carry on such activities during the year;

e) Clause 4 (xviii) with regard to preferential allotment of shares to specified parties since no allotment of shares was made during the year;

f) Clause 4 (xix) with regard to creation of security or charge in respect of debentures since no debentures issued during the year; and

g) Clause 4 (xx) with regard to money raised by public issue since no money was raised by public issue during the year.

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

b) The company has a programme of verification of fixed assets whereby all the fixed assets are physically verified by the management over a period of three years in a phased manner which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c) The company has not during the year disposed off a substantial part of the fixed assets which would give rise to the question of impairment of status of the company as a going concern.

3. 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

4. (i) In our opinion and according to the information and explanations given to us, the company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(ii) a) The company has not taken any loans secured or unsecured to / from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 except fixed deposits accepted from directors and their relatives. These deposits have been accepted from 9 parties aggregating to Rs. 17.58 Million which are outstanding as on 31 st March, 2011.

b) In our opinion the rate of interest and other terms and conditions of these deposits are not prima facie prejudicial to the interest of the company.

c) The payment of principal and interest are regular.

5. 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. During the course of our audit, no major weakness has been noticed in the internal controls.

6. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees 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.

7. The company has accepted deposits from the public and has complied with the Directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under where applicable. According to the explanations given to us, 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.

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

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

10. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise-Duty, Cess applicable to it.

11. Based on our audit procedures and on the information and explanations given by the Management, there are no dues outstanding in respect of customs duty, wealth tax, service tax and cess on account of any dispute. The details of disputed excise duty tax, income tax, and sales tax that have not been deposited with the appropriate authorities are as follows:

Nature of Dues Amount Forum where (Rs. in dispute is thousands) pending

Sales Tax demands 703 Deputy Commissioner for the financial year (Appeals) Commercial 2003-2004 Taxes, Ernakulam

Service Tax 404 Commissioner of Central Excise (Appeals), Trichy

Excise duty 57 Excise Appellate Tribunal, Bangaluru

Trade Tax 38 Joint Commissioner - Trade Tax, Kanpur

Income Tax for the 4,316 Commissioner of Assessment Year Income Tax (Appeals), 2004-05 to 2005-06 Chennai

12. The company has not defaulted in repayment of dues to financial institutions, or banks. The company has not issued any debentures.

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

14. On the basis of review of utilisation of funds on overall basis the term loans taken by the company were applied for the purposes for which the loans were obtained.

15. According to the information and explanation given to us and on a overall examination of the Balance Sheet of the company, we report that no funds raised on short- term basis have been used for long-term investment by the company.

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

For BRAHMAYYA & CO., Chartered Accountants Firm Regn No: 000511S

P.S. KUMAR Partner (Membership No: 15590)

Chennai May 19, 2011


Mar 31, 2010

1. We have audited the attached balance sheet of Rane Engine Valve Limited 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 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.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure 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:

(i) 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;

(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 and 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 and 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;

(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 directors is disqualified as on 31st 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 31st March 2010;

(b) in the case of the profit and loss account, of the profit for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

1. The provisions of the following clauses of Companies (Auditors Report) Order, 2003 are not applicable to the company for the year with respect to:

a) Clause 4 (x) with regard to accumulated losses since the companys networth is positive and the company has not incurred any cash losses during the current year and in the immediately preceding financial year;

b) Clause 4 (xii) with regard to loans granted against pledge of securities since no loans have been granted by the company during the year;

c) Clause 4 (xiii) with regard to special statutes applicable to Chit funds and Nidhis since the company has not carried on such business;

d) Clause 4 (xiv) with regard to trading in securities since the company did not carry on such activities during the year;

e) Clause 4 (xviii) with regard to preferential allotment of shares to specified parties since no allotment of shares was made during the year;

f) Clause 4 (xix) with regard to creation of security or charge in respect of debentures since no debentures issued during the year; and

g) Clause 4 (xx) with regard to money raised by public issue since no money was raised by public issue during the year.

2. (a) The company has maintained proper records

showing full particulars including quantitative details and situation of fixed assets.

b) The company has a programme of verification of fixed assets whereby all the fixed assets are physically verified by the management over a period of three years in a phased manner which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c) The company has not during the year disposed off a substantial part of the fixed assets which would give rise to the question of impairment of status of the company as a going concern.

3. 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

4. (i) In our opinion and according to the information and

explanations given to us, the company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(ii) a) The company has not taken any loans secured or unsecured to / from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 except fixed deposits accepted from directors and their relatives. These deposits have been accepted from 9 parties aggregating to Rs. 12.750 Million which are outstanding as on 31st March, 2010.

b) In our opinion the rate of interest and other terms and conditions of these deposits are not prima facie prejudicial to the interest of the company.

c) The payment of principal and interest are regular.

5. 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. During the course of our audit, no major weakness has been noticed in the internal controls.

6. a) Based on the audit procedures applied by us and

according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees 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.

7. The company has accepted deposits from the public and has complied with the Directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under where applicable. According to the explanations given to us, 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.

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

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

10. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise-Duty, Cess applicable to it.

11. Based on our audit procedures and on the information and explanations given by the Management, there are no dues outstanding in respect of customs duty, wealth tax, service tax and cess on account of any dispute.

The details of disputed excise duty tax, income tax, and sales tax that have not been deposited with the appropriate authorities are as follows:

Nature of Dues Amount Forum where (Rs. in dispute is thousands) pending Sales Tax demands 703 Deputy Commissioner for the financial year (Appeals) Commercial 2003-2004 Taxes, Ernakulam Excise duty 57 ExciseAappellate Authorities Trade Tax 38 Joint Commissioner - Trade Tax Income Tax for the 13,005 Commissioner of Assessment Year Income Tax (Appeals), 2004-05 to 2007-08 Chennai

12. The company has not defaulted in repayment of dues to financial institutions, or banks. The company has not issued any debentures.

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

14. On the basis of review of utilisation of funds on overall basis the term loans taken by the company were applied for the purposes for which the loans were obtained.

15. According to the information and explanation given to us and on a overall examination of the Balance Sheet of the company, we report that no funds raised on short- term basis have been used for long-term investment by the company.

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



For BRAHMAYYA & CO., Chartered Accountants Firm Regn No: 000511S P.S. KUMAR Chennai Partner May 21, 2010 (Membership No: 15590)

 
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