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Auditor Report of Sarang Chemicals Ltd.

Mar 31, 2010

1) We have audited the attached Balance Sheet of M/s. Sarang Chemicals Limited, as at 31st March, 2010 and also the annexed Profit & Loss Account of the company for the year ended on that date and the Cash Flow Statement for the year ended on that date. 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 generally accepted auditing standards in India. These 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, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act), we give in the Annexure attached herewith 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 in paragraph 3 above .and the notes forming part of accounts attached here with, 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 and Profit & Loss Account and cash flow statement dealt with this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet and Profit & Loss Account and cash flow statement dealt with this report comply with the Accounting Standards referred to in Section (3C) of section 211 of The Companies Act, 1956.

e) On the basis of written representations from the directors, as on March 31, 2010, and taken on records by the Board of Directors, We report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of section 274(1) (g) of The Companies Act,-1956.

f) In our opinion and to the best of our information and according to the explanation given to us, the Account subject to and read with the notes thereon and especially Note No. 1.6.1 of Schedule : 12 regarding Investments and Note No.1.6.2 of Schedule : 12 regarding non-provision of interest payable for secured loan and Note No. 2 of Schedule :12 regarding loans & advances), 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:

1. In the case of the Balance Sheet of the states of affairs, of the company as at 31st March, 2010.

2. In the case of Profit & Loss Account of the Profit, for the year ended on that date;

3. In the case of the cash flow statement, of the cash flows of the company for the year ended on that dafe.

Annexure to the Auditors Report Of M/s. Sarang Chemicals Limited for the Year Ended on March, 31st 2010.

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information given to us, we further report that:

(i) The Company do not have any fixed assets and hence the sub clause (a), (b), (c) of the clause (i) is not applicable.

(ii) (a) As explained to us and as verified by us, there are no trading or manufacturing activities in the Company during the year, following matters are not applicable :

(a) Physical verification of inventory.

(b) Procedures of physical Verification of inventories.

(c) Maintenance of proper record of inventories.

(iii) (a) The matter of loans, secured or unsecured, granted or taken by the company to/from, firms or other parties covered in register maintained under section 301,of the companies Act, 1956, is not applicable to the company.

(b) The company has accepted un-secured loans from parties and companies, which are non bearing interest.

(c) The company has granted unsecured loans to the parties as well as companies in earlier year/s and also during the year. (Ref. to note no. 2 of Schedule: 12). As informed to us no terms & conditions have been finalized about the repayment & interest thereon. Not only is that nature of transaction have also not explained, to us. Thus, we are not in a position to comment upon with regard to their purpose (whether they are for the business purpose or not) as well as terms and conditions of repayment of all such sums.

(iv) As per the information and explanations given to us, since there is no trading / manufacturing activity during the year, there is no internal control procedures.

(v) In our opinion and according to the information and explanations given to us, there are no transactions to be made in pursuance of contract or arrangements that need to be entered in to the register in pursuance of Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public in the current year within the meaning of Section 58AA of the Act 1956 and the rules framed there under.

(vii) The company has no internal audit system.

(viii) The central government has not prescribed maintenance of the cost record under section 209(1) of the companies act, 1956

(ix) (a) According to the information and explanation given to us the rules of provident fund, E.S.I.C. etc. arte not applicable to the company.

(b) According to the information and explanation given to us, no undisputed amount is payable in respect of income tax, sales-tax, custom duty, wealth tax, excise duty and cess as at 31st March 2010 for a period more than 6 months from the date they became payable .

(c) According to the information & explanation given to us, there is no dues of income tax, sales tax, wealth tax, custom duty, excise duty & cess which have not been deposited on account of dispute.

(d) During the year the Company has increased the Authorised Share Capital from Rs. 17,50,00,0007- to Rs. 52,50,00,000/-. However the respective form in this regard has not been filed in the office of Registrar of Companies, (Guj.) and as a result neither the fees has been paid in the office of R.O.C. (Guj,), as well as no provision for the same has been made with accounts.

(x) During the year the company has not incurred cash loss during year ended-on March 31, 2010 as well as in the immediate proceeding financial year ended on 31st. March, 2009. However, there is accumulated loss of Rs. 1,98,67,121/- at the end of the financial year.

(xi) According to the records of the company examined by us and the information and explanation given to us, during the year, company has not borrowed any money from financial institution or bank or debenture holders as at the Balance Sheet date.

(xii) The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly clause (xii) of Para 4 of the Companies (Auditor Report) Order 2004 is not applicable to the company for the current year.

(xiii) In our opinion, and according to the information and explanation given to us, the provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the company. Accordingly clause (xiii) of Para 4 of the Companies (Auditors Report) Order. 2004 is not applicable to the company for the current year.

(xiv) In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly clause (xiv) of Para 4 of the Companies (Auditors Report) Order. 2004 not applicable to the company for the current year.

(xv) In our opinion, and 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 during the year. Accordingly clause (xv) of Para 4 of the Companies (Auditors Report) Order. 2003 is not applicable to the company for the current year.

(xvi) Based on our examinations of the records and information and explanations given to us during the year no term loan with repayment period beyond 36 months has been obtained.

(xvii) On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanation given to us, there are no funds raised on a short- term investment, and vice versa.

(xviii) The company has not made any preference allotment of its Equity Shares during the year.

(xix) The Company has not issued any debentures, the matter as per clause (xix) of Para 4 of the Companies (Auditors Report) Order. 2004 is not applicable to the company for the year.

(xx) The company has not raised any money by public issue during the year. Accordingly clause of Para 4 of the Companies (Auditors Report) Order. 2004 is not applicable to the company for the current year.

(xxi) 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, no fraud (i.e. intentional material misstatements resulting from fraudulent financial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the year by the Company.

FOR PRAFUL N.SHAH & CO., Chartered Accountants Sd/- (P. N. SHAH) Ahmedabad Proprietor

Dated : 10th August, 2010 Membership No.:-15591


Mar 31, 2009

1) We have Audited the attached Balance Sheet of M/S. Sarang Chemicals Limited, as at 31st March, 2009 and also the annexed Profit & Loss Account of the company for the year ended on that date and the Cash Flow Statement for the year ended on theta date. 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 generally accepted auditing standards in India. These 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, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act), we give in the Annexure attached herewith 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 in paragraph 1 above .and the notes forming part of accounts attached here with, 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 and Profit & Loss Account and cash flow statement dealt with this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet and Profit & Loss Account and cash flow statement dealt with this report comply with the Accounting Standards referred to in Section (3C) of section 211 of The Companies Act, 1956.

e) On the basis of written representations from the directors, as on March 31, 2009, and taken on records by the Board of Directors, We report that none of the directors is disqualified as on March 31, 2009 from being appointed as a director in terms of section 274 (1) (g) of The Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanation given to us, the Account subject to and read with the notes thereon and especially Note No. 1 (j) 13 of Schedule : 13 regarding Investments (the purpose of which are not known to us and their physical verification not done by us ) and Note No. 2 of Schedule : 13 regarding loans & advances ) , 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:

1. In the case of the Balance Sheet of the states of affairs, of the company as at 31st March, 2009.

2. In the case of Profit & Loss Account of the Profit, for the year ended on that date;

3. In the case of the cash flow statement, of the cash flows of the company for the year ended on that date.

Annexure to the Auditors Report of M/S. Sarang Chemicals Limited for the year ended on March, 31st 2009.

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information given to us, we further report that:

(i) The Company do not have any fixed assets and hence the sub clause (a), (b), (c) of the clause (i) is not applicable.

(ii) (a) As explained to us and as verified by us, there are no trading or manufacturing activities in the Company during the year, following matters are not applicable :

(a) Physical verification of inventory.

(b) Procedures of physical Verification of inventories.

(c) Maintenance of proper record of inventories.

iii) (a) (n respect of loan, secured or unsecured, granted or taken by the company to/from, firms or other parties covered in register maintained under section 301,of the companies Act, 1956.

(b) The company has accepted un-secured loan from a party and 2 companies, not bearing interest.

(c) The company has granted unsecured loans to the parties during the year in addition to loans given in earlier years. (Ref. to note no. 2 of Schedule :13 ). As informed to us no terms & conditions have been finalized about the repayment & interest thereon. Not only is that nature of transaction have also not explained. To us. So we have not commented upon the terms & condition of loans & advances and also as to whether all such sums are good of recovery or not. . Further the confirmation from the parties to whom the loans & advances is given, not provided for verification.

(iv) In our opinion and according to the information and explanations given to us, there is no internal control procedures.

(v) In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contract or arrangements that need to be entered in to the register in pursuance of Section 301 of the Companies Act, 1956 have been so entered.

(vi) The Company has not accepted any deposits from the public in the current year within the meaning of Section 58AA of the Act 1956 and the rules framed there under.

(vii) The company has no internal audit system.

(viii) The central government has not prescribed maintenance of the cost record under section 209(1) of the companies act, 1956

(ix) (a) According to the information and explanation given to us the rules of provident fund, E.S.I.C. etc. arte not applicable to the company.

(b) According to the information and explanation given to us, no undisputed amount is payable in respect of income tax, sales-tax, custom duty, wealth tax, excise duty and cess as at ,31st March 2009 for a period more than 6 months from the date they became payable .

(d) According to the information & explanation given to us, there is no dues of income tax, sales tax,wealth tax, custom duty, excise duty & cess which have not been deposited on account of dispute.

(x) During the year the company has not incurred cash loss during year ended on March 31, 2009 and do not have any the accumulated loss at the end of the financial year.

(xi) According to the records of the company examined by us and the information and explanation given to us, the company has not borrowed any money from financial institution or bank or debenture holders as at the Balance Sheet date.

(xii) The company has not granted any loans and advances on the basis of security by way of pledge pf shares, debentures and other securities. Accordingly clause (xii) pf Para 4 of the Companies (Auditor Report) Order 2004 is not applicable to the company for the current year.

(xiil) In our opinion, and according to the information and explanation given to us, the provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the company. Accordingly clause (xiii) of Para 4 of the Companies (Auditors Report) Order. 2004 is not applicable to the company for the current year.

(xiv) In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly clause (xiv) of Para 4 of the Companies (Auditors Report) Order. 2004 s not applicable to the company for the current year.

During the year though company has not dealt in shares & securities. Stock on hand contains the stock of shares. No quote is available for it. So we are unable to make any comment upon it. Further to that shares and other investment were not produced for verification we are unable to verify whether all shares and other investments have been held by the company in its own name or not.

(xv) In our opinion, and 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 during the year. Accordingly clause (xv) of Para 4 of the Companies (Auditors Report) Order. 2003 is not applicable to the company for the current year.

(xvi) Based on our examinations of the records and information and explanations given to us during the year no term loan with repayment period beyond 36 months has been obtained.

(xvii) On the basis of an Overall examination of the balance sheet of the company, in our opinion and according to the information and explanation given to us, there are no funds raised on a short- term investment, and vice versa.

(xviii) The company has made preference allotment of 10,50,52,000 shares at a premium to parties and companies covered in the register maintained under Section 301 of the Act during the year.

(xix) The Company has not issued any debentures, the matter as per clause (xix) of Para 4 of the Companies (Auditors Report) Order. 2004 is not applicable to the company for the year.

(xx) The company has not raised any money by public issue during the year. Accordingly clause of Para 4 of the Companies (Auditors Report) Order. 2004 is not applicable to the company for the current year.

(xxi) 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, no fraud (i.e. intentional material misstatements resulting from fraudulent financial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the year by the Company.

FOR PRAFUL N. SHAH & CO.,

Chartered Accountants

Sd/-

(P. N. SHAH)

Proprietor

Ahmedabad, September 8,2009 Membership No.:-15591



 
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