Auditor Report of SIP Industries Ltd.

Sep 30, 2014

We have audited the accompanying financial statements of SIP INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at September 30, 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"). 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 September 30, 2014;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

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

e. on the basis of written representations received from the directors as on September 30, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on September 30, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT Re: SIP INDUSTRIES LIMITED,

Referred to in paragraph 1 of our report of even date,

i)

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

(b) Fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) No substantial part of fixed assets has been disposed off during the year.

ii)

(a) All inventories maintained in the Floriculture Division are perishable in nature. Hence, the company has not taken any value for the closing inventory.

(b) The stock in trade shown under Balance Sheet relates to shares. These shares are valued at lower of cost or market value.

(c) In our opinion and according to the information and explanations given to us, the procedures followed by the management for physical verification of the above said items are reasonable and adequate in relation to size of the company and nature of its business.

(d) The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii)

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

(b) The company has taken unsecured loan from SIP Technologies & Exports Limited and from Managing Director. The maximum amount outstanding during the period of such loans was Rs. 1.18,04,984/- and amount remaining unpaid at the year end was Rs. 1,18,04,984/-.

The company is not charging any interest on the said loan. The question of payment of interest on the said loan does not arise as interest is payable as per the mutual arrangement at the time of final settlement that may be on demand along with the principal. All other terms and conditions are prima - facie not prejudicial to the interest of the company.

In respect of repayment of principal, the agreement between the companies does not specify a fixed repayment schedule. Considering the above, question of overdue does not arise.

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

v) As per the information and explanation given to us, the contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that needs to be entered into the register have been so entered.

vi) The company has not accepted any deposits from public during the year. Hence the provisions of section 58A, 58AA or other relevant provisions of the Companies Act, 1956 are not applicable.

vii) The internal audit for the period has not been carried out even though required. The management informs us that there have been no manufacturing activities during the period and other activities are not significant.

viii) No cost audit has been prescribed for floriculture division.

ix)

(a) The company has generally been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable were in arrears, for a period more than six months from the date they become payable. The Employees'' State Insurance Act does not apply to the company.

(b) According to the information and explanations given to us, there are no dues of Sales Tax/lncome Tax/Customs Duty/Wealth Tax/ Service Tax/Excise Duty/Cess which have not been deposited on account of any dispute other than those given below:

Name of the statute Nature of Dues Amount

Income Tax Act 1961 Tax, Interest u/s 234B u/s Rs. 3,01,697- 234C u/s 220(2) AY 2000-01.

Income Tax Act 1961 Tax, Interest u/s. 234B u/s Rs. 39,98,745/- 220(2) AY 1996-97.

Name of the statute Forum where dispute is pending and status.

Income Tax Act 1961 Waiver petition before the Chief Commissioner of Income Tax, Chennai for interest and rectification petition U/s. 154 before AO.

Income Tax Act 1961 Waiver petition before Chief commissioner of Income Tax, Chennai for interest and rectification petition U/s. 154 before AO.

x) The company''s accumulated losses as at 30th September 2014 have exceeded 50% of its net worth and it has incurred cash losses in the current financial year and the immediately preceding financial year.

xi) The company has not taken any loan from Banks or any other Financial Institutions. So the question of default in repayment does not arise.

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

Hence the question of maintenance of documents and records does not arise.

xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Hence this clause is not applicable to the company.

xiv) The company is a dealer in shares, debentures etc., and proper records and books of accounts are maintained. Also the company in its name holds the shares and debentures.

xv) The company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

xvi) In our opinion, the company has not taken any term loan from Banks or Financial Institutions.

xvii) The company has not acquired any Long Term and Short Term loans. So, the provisions of clause (xvi) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xviii) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

xix) As per the information and explanation given to us, the company has not issued any debentures during the year.

xx) The company has not raised any money through public issue. Hence the provisions of clause 4(xx) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xxi) 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.

Place : Chennai For P.B. Vijayaraghavan & Co. Date : 28.11.2014 Chartered Accountants Firm Regn No. 004721S

P R Krishnamurthy Partner Membership No. 012622

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Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of SIP INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at September 30, 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 September 30, 2013;

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

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

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

e. on the basis of written representations received from the directors as on September 30, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on September 30, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT Re: SIP INDUSTRIES LIMITED,

Referred to in paragraph 1 of our report of even date,

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

(b) Fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) No substantial part of fixed assets has been disposed off during the year.

ii)

(a) All inventories maintained in the Floriculture Division are perishable in nature. Hence, the company has not taken any value for the closing inventory.

(b) The stock in trade shown under Balance Sheet relates to shares. These shares are valued at lower of cost or market value.

(c) In our opinion and according to the information and explanations given to us, the procedures followed by the management for physical verification of the above said items are reasonable and adequate in relation to size of the company and nature of its business.

(d) The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

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

(b) The company has taken unsecured loan from SIP Technologies & Exports Limited and from Managing Director. The maximum amount outstanding during the period of such loans was * 98,87,460/- and amount remaining unpaid at the year end was Rs. 98,87,460/-.

The company is not charging any interest on the said loan. The question of payment of interest on the said loan does not arise as interest is payable as per the mutual arrangement at the time of final settlement that may be on demand along with the principal. All ether terms and conditions are prima - facie not prejudicial to the interest of the company. respect of repayment of principal, the agreement between the companies does not specify a fixed repayment schedule. Considering fhe above, question of overdue does not arise.

iv) In 0''ir opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) The information and explanation given to us, the contracts or arrangements referred to in Section 301 of the Companies Act, 1956 lhat needs to be entered into the register have been so entered.

vi) The company has not accepted any deposits from public during the year. Hence the provisions of section 58A, 58AA or other relevant ¦iu visicns of the Companies Act. 1956 are not applicable.

vii) The internal audit for the period has not been carried out even though required. The management informs us that there have been no manufacturing activities during the period and other activities are not significant.

viii) No cost audit has been prescribed for floriculture division.

(a) The company has generally been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable were in arrears, for a period more than six months from the date they become payable. The Employees'' State Insurance Act does not apply to the company.

x) The company''s accumulated losses as at 30th September 2013 have exceeded 50% of its net worth and it has incurred cash losses in the current financial year and the immediately preceding financial year.

xi) The company has not taken any loan from Banks or any other Financial Institutions. So the question of default in repayment does not arise.

xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Hence the question of maintenance of documents and records does not arise.

xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Hence this clause is not applicable to the company.

xiv) The company is a dealer in shares, debentures etc., and proper records and books of accounts are maintained. Also the company in its name holds the shares and debentures.

xv) The company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

xvi) In our opinion, the company has not taken any term loan from Banks or Financial Institutions.

xvii) The company has not acquired any Long Term and Short Term loans. So, the provisions of clause (xvi) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xviii)According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

xix) As per the information and explanation given to us, the company has not issued any debentures during the year.

xx) The company has not raised any money through public issue. Hence the provisions of clause 4(xx) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xxi) 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.

Place : Chennai For P.B. Vijayaraghavan & Co.

Date : 29.11.2013 Chartered Accountants

Firm Regn No. 004721S

K. Rajagopalan

Partner

M No. 014523

---

Sep 30, 2010

I. We have audited the attached Balance Sheet of SIP INDUSTRIES LIMITED as at 30th September 2010, the Profit and Loss Account and also 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 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 in paragraph 3 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 purpose of our audit.

(b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appear from our examination of those books.

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

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

(e) On the basis of written representations received from the Directors as on 30th September 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30lh September 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) The Company has not levied or collected any cess for the purpose of rehabilitation or revival or protection of assets of the sick industrial companies on its annual turnover and has not paid to the credit of the Central Government the said levy as required u/s 441A of the Companies Act as the same has not been notified by the Central Government.

(g) 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:

i) In the case of Balance Sheet, of the state of affairs of the Company as at 30th September 2010;

ii) In the case of the Profit & Loss Account, of the LOSS for the year ended on that date;

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



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

1) In respect of fixed assets:

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

b) As per the information and explanation given to us, all the fixed assets have been physically verified by the management at regular intervals, 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 substantial part of fixed assets during the year.

2) in respect of inventories:

a) All the inventories maintained in the Floriculture Division are perishable in nature. Hence, the Company has not taken any value for the closing inventory.

b) The Stock In Trade shown under Balance Sheet relates to shares. These shares are valued at lower of the cost or market value.

c) The consumables are valued at lower of the cost or market value.

d) In our opinion and according to the information and explanations given to us, the procedures followed by the management for physical verification of the above said items are reasonable and adequate in relation to size of the Company and nature of its business.

e) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of inventory, the Company is maintaining proper records of inventory. There are no material discrepancies noticed on physical verification.

3) In respect of loans, secured or unsecured, taken by the , Company from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has taken unsecured loan from SIP TECHNOLOGIES & EXPORTS LIMITED.

b) The Company is not charging any interest on the said loan. The question of payment of interest on the said loan does not arise as interest is payable as per the arrangement on final settlement on demand along with the principal. All other terms and conditions are prima- facie not prejudicial to the interest of the Company.

c) In respect of repayment of principal, the same is repayable on demand.The loans taken and granted by the Company and interest are repayable on demand and hence the question of overdue does not arise.

d) The Company has not granted any loans, secured or unsecured, to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

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 nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods. During

the course of audit, no major weakness has been noticed in the internal control.

5) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956.

a) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements, if any, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore, the provisions of Section 58A and 58AA of the Companies Act, 1956 and Rules there under are not applicable to the Company.

7) The internal audit for the period has not been carried out even though required. The management informs us that there have been no manufacturing activities during the period and the other activities are not significant.

8) No cost audit has been prescribed for the Floriculture Division.

9) In respect of statutory dues:

a) According to the information and explanations given to us, the Company is regular in depositing dues in respect of Employees Provident Fund, Employees State Insurance Fund, Income Tax and other statutory dues with the appropriate authority during the year.

b) At the end of the financial year there were no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as follows:

Name of the Nature Amount Forum where

statute of Dues in Rs dispute is

pending and

status

Income Tax Interest u/s 234B Waiver petition Act 1961 u/s 234C u/s 220(2) before the

AY2000-01. Rs 27 66636/- Commissioner

of Income Tax,

(Appeal)

Chennai.

Income Tax Interest u/s. 234B Waiver petition

Act 1961 u/s 220(2) Rs 2719730/- before Chief

AY 1996-97. Rs 992690/- commissioner

of Income Taxi

Chennai.

Industrial Amount

deposited in Case pending in

Tribunal Industrial

Tribunal High Court,

Chennai. Rs 123830/- Chennai.

Industrial Amount

deposited in Case pending in

Tribunal Industrial Tribunal High Court,

Chennai. Rs 575000/- Chennai.

Industrial Amount deposited in Case pending in

Tribunal Industrial Tribunal Labour Court,

Chennai. Rs 469130/- Chennai.

10) The Companys accumulated losses as at 30th September 2010 have exceeded 50% of its net worth. However the Company has not incurred any cash loss during the year and in the immediately preceding financial year.

11) The Company has not taken any loan from Banks or any other Financial Institutions. So the question of default in repayment does not arise.

12) In our opinion and according to information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other security.

13) The Provision of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies is not applicable to the Company.

14) The Company is a dealer in shares, debentures etc., and proper records and books of accounts are maintained. Also the Company in its name holds the shares and debentures.

15) As per the information and explanation given to us by the management, the Company has not given any guarantee for loans taken by others from banks or Financial Institutions.

16) The Company has not taken any term loan from Banks or Financial Institutions.

17) The Company has not acquired any Long Term or Short Term loans. So the question of utilization does not arise.

18) The Company has not made any preferential allotment to parties and Companies covered under register maintained under Section 301 of the Companies Act, 1956 during the year.

19) No debentures have been issued during the year.

20) The Company has not raised money by way of public issues during the year and hence the question of disclosure and verification of end use of such money does not arise.

21) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For P B VIJAYARAGHAVAN & Co.

Chartered Accountants

Firm Regn. No.: 004721S

Place : Chennai K. Rajagopalan

Date : 22.11.2010 Partner

Membership No. 014523

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Sep 30, 2009

1 We have audited the attached Balance Sheet of SIP INDUSTRIES LIMITED as at 30th September 2009, the Profit and Loss Account and also 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 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 in paragraph 3 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 purpose of our audit.

(b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appear from our examination of those books.

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

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

(e) On the basis of written representations received from the Directors as on 30th September 09 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30th September 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) The Company has not levied or collected any cess for the purpose of rehabilitation or revival or protection of assets of the sick industrial companies on its annual turnover and has not paid to the credit of the Central Government the said levy as required uls 441A of the Companies Act as the same has not been notified by the Central Government.

(g) 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:

i) In the case of Balance Sheet, of the state of affairs of the Company as,at 30th September 2009;

ii) In the case of the Profit & Loss Account, of the LOSS for the year ended on that date;

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

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

1) In respect of fixed assets:

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

b) As per the information and explanation given to us, all the fixed assets have been physically verified by the management at regular intervals, 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 substantial part of fixed assets during the year.

2) In respect of inventories:

a) All the inventories maintained in the Floriculture Division are perishable in nature. Hence, the Company has not taken any value for the closing inventory.

b) The Stock In Trade shown under Balance Sheet relates to shares. These shares are valued at lower of the cost or market value.

c) The consumables are valued at lower of the cost or market value.

d) In our opinion and according to the information and explanations given to us, the procedures followed by the management for physical verification of the above said items are reasonable and adequate in relation to size of the Company and nature of its business.

e) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of inventory, the Company is maintaining proper records of inventory. There are no material discrepancies noticed on physical verification.

3) In respect of loans, secured or unsecured, taken by the Company from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has taken unsecured loan from SIP TECHNOLOGIES & EXPORTS LIMITED.

b) The Company is not charging any interest on the said loan. All other terms and conditions are prima-facie not prejudicial to the interest of the Company.

c) The question of payment of interest on the said loan does not arise as nothing has been charged. In respect of repayment of principal, the same is repayable on demand.

d) Since the loans taken and granted by the Company are repayable on demand, question of overdue does not arise.

e) The Company has not granted any loans, secured Qr unsecured, to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

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 nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods. During the course of audit, no major weakness has been noticed in the internal control.

5) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956.

a) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements, if any, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore, the provisions of Section 58A and 58AA of the Companies Act, 1956 and Rules there under are not applicable to the Company.

7) The internal audit for the period has not been carried out even though required. The management informs us that there have been no manufacturing activities during the period and the other activities are not significant.

8) No cost audit has been prescribed for the Florfculture Division.

9) In respect of statutory dues:

a) According to the information and explanations given to us, the Company was regular in depositing dues in respect of Employees Provident Fund, Employees State Insurance Fund, Income Tax and other statutory dues with the appropriate authority during the year.

b) At the end of the financial year there were ho dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as follows:

Name of the Nature Amount Forum where statute of Dues in Rs. dispute is pending and status.

Income Tax Interest u/s 234B Waiver petition Act 1961 u/s 234C u/s 220(2) beforethe AY 2000-01. Rs.27 66636/- Commissioner of Income Tax, (Appeal) Chennai.

Income Tax Interest u/s. 234B Rs.2719730/- Waiver petition Act 1961 u/s220(2) Rs.992690/- before Chief AY 1996-97. commissioner of Income Tax, Chennai.

Industrial Amount deposited in Case pending in Tribunal Industrial Tribunal High Court Chennai. Rs.123830/- Chennai.

Industrial Amount deposited in Case pending in Tribunal Industrial Tribunal High Court Chennai. Rs. 575000/- Chennai.

Industrial Amount deposited in Case pending in Tribunal Industrial Tribunal Labour Court, Chennai. Rs.469130/- Chennai.

10) The Companys accumulated losses as at 30th September 2009 have exceeded 50% of its net worth. However the Company has not incurred any cash loss during the year, even though there was cash loss in the immediately preceding financial year. I

11) The Company has not taken any loan from Banks or any other Financial Institutions. So the question of default in repayment does not arise.

12) In our opinion and according to information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other security.

13) The Provision of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies is not applicable to the Company.

14) The Company is a dealer in shares, debentures etc., and proper records and books of accounts are maintained. Also the Company in its name holds the shares and debentures.

15) As per the information and explanation given to us by the management, the Company has not given any guarantee for loans taken by others from banks or Financial Institutions.

16) The Company has not taken any term loan from Banks or Financial Institutions.

17) The Company has not acquired any Long Term or Short Term loans. So trie question ot utilization does not arise.

18) The Company has not made any preferential allotment to parties and Companies covered under register maintained under Section 301 of the Companies Act, 1956 during the year.

19) No debentures have been issued during the year.

20) The Company has not raised money by way of public issues during the year and hence the question of disclosure and verification of end use of such money does not arise.

21) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For P.B. VIJAYARAGHAVAN & CO.,

CHARTERED ACCOUNTANTS.

P.B. SANTHANAKRISHNAN Place:- Chennai PARTNER

Date: - 25.11.2009 Membership No. 020309