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Auditor Report of SKM Egg Products Export (India) Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of M/s. SKM EGG PRODUCTS EXPORT (INDIA) LIMITED, (Registered Office at 185, Chennimalai Road, Erode - 638 001), which comprise the Balance Sheet as at March 31,2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended , and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility lor the Standalone Financial Statements:

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility:

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Holding Company has an adequate internal financial controls system over financial reporting in place and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015; and its Profit and its Cash flows for the year ended on that date.

Other Matters

We did not audit the financial statements / information of 1 branch (Foreign branch)(In Russia) included in the standalone financial statements of the Company whose financial statements / financial information reflect total assets of Rs.15,42,080 as at 31st March, 2015 and total revenues of Rs.2,46,020 for the year ended on that date, as considered in the standalone financial statements. The financial statements/information of this branch have been furnished to us and our opinion is based on those Financial Statements received from the

I. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the branches not visited by us.

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

e) On the basis of written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015, from being appointed as a director in terms of Section 164(2) of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Also Refer Note No.2(ii) and 2(vii) of Notes on Accounts to the financial statements;

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

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

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph I under the Heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we report that,

1. a. The Company is maintaining proper records showing full particulars including quantities details and situation of fixed assets.

b. The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verifications.

2. a. The Management has conducted physical verification of inventory at reasonable intervals.

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

c. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. The Company during the year has not granted any secured or unsecured loans to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies act.

4. There is an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services and there is no continuing failure to correct major weaknesses in internal control system.

5. The Company has not accepted any deposits from the public and hence this clause is inapplicable.

6. The Central Government has specified the maintenance of Cost Records under sub-section (1) of section 148 of the Companies Act, and such accounts and records have been made and maintained.

7 a.According to the records of the company, the company is regular in depositing undisputed statutory dues including provident fund, employee state insurance, income-tax, sales-tax, wealth tax, service Tax, duty of customs, duty of excise, value added tax, cess and other statutory dues, to the extent applicable, with the appropriate authorities. According to the Information and explanation given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

b. Disputed dues of income-tax, sales-tax, wealth tax, service Tax, duty of customs, duty of excise, value added tax, cess and other statutory dues, if any, pending as at 31st March, 2015 are given below:

Particulars Period to which it Relates Amount Due to be paid

Excise Duty May 2004 to March 2013 Rs. 14,78,171/-

Excise Duty April-2013 to March-2014 Rs. 6,27,888/-

Excise Duty April - 2008 to March 2013 Rs. 2,88,889/-

Excise Duty November 2011 to March 2013 Rs. 3,67,953/-

Excise Duty April-2013 to March 2014 Rs. 4,84,668/-

Service Tax January 2005 to April 2006 Rs. 2,00,863/-

Service Tax July 2005 to March 2008 Rs. 33,19,232/-

Service Tax April 2006 to March 2012 Rs. 4,42,879/-

Service Tax April- 2012 to March 2013 Rs. 1,62,264/-

Income Tax Asst.Year 2008-09 Rs.2,70,07,726/- (Net of Recovery)

Income Tax Asst.Year 2009-10 Rs.2,22,73,500/- (Net of Payments)



Particulars Forum where the appeal is preferred

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise,Salem

Excise Duty Commissiner of Central Excise, Customs & Service Tax (Appeals), Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise,Salem

Excise Duty Commissiner of Central Excise, Customs & Service Tax (Appeals), Salem

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Service Tax Commissiner of Central Excise, Customs & Service Tax (Appeals)Salem

Income Tax Income Tax Appellate Tribunal, Chennai - Stay granted by the Madras High court for the Ay 2008-2009.

Income Tax Income Tax Appellate Tribunal, Chennai - Stay granted by the AO.

The amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 ( 1 of 1956) and rules made there under has been transferred to such fund within time.

1. The company does not have any accumulated losses as at 31st March 2015 and had not incurred cash losses during the financial year ended on that date and also in the immediately preceding financial year.

2. The company has not defaulted in repayment of dues to Financial Institution or banks.

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

4. Based on our audit procedures, we are of opinion that, term loans borrowed by the company were applied for the purposes for which the loans were obtained.

5. According to the information and explanation given to us from the audit procedures adopted by us, we are of opinion that, no fraud on or by the company has been noticed or reported during the year.

For N.C. RAJAGOPAL & CO., Chartered Accountants N.C.VIJAY KUMAR, (PARTNER)

Place- Erode Membership No.208276.

Date: 20.05.2015 Firm Regn No: 003398S


Mar 31, 2014

We have audited the accompanying financial statements of M/s. SKM EGG PRODUCTS EXPORT (INDIA) LIMITED, (Registered Office at 185, Chennimalai Road, Erode 638 001), which comprise the Balance Sheet as at March 31,2014, and the Statement of Profit and Loss and Cash Flow for the year 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 notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act 2013 and in accordance with the accounting principles generally accepted in India. 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, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. 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 thefinancial statements.

We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

OPINION

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

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

b) in the case of the Statement of Profit and Loss Account, of the profit forthe year ended on that date.

c) in the case of Cash Flow Statement, of the Cash flows forthe 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 the paragraphs 4 and 5 of the said order.

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

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe 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 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 notified underthe Act read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act 2013.

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

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 underthe said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

OTHERMATTER

We did not audit the Financial Statements/ Financial Information of the Foreign Branch, which have been only compiled and not audited by other Auditors whose Financial Statements/Financial Information reports have been furnished to us and our opinion is based on the Compiled Financial Statement received from the Branch Office.

ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT Referred to in Paragraph I under the Heading ol "Report on Other Legal and Regulatory Requirements" of our report of even date

As required by the Companies (Auditors'' report) Order, 2003, made by the central Government under section 227 (4 A) of the Companies Act, 1956, we state that:

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

b. The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verifications

c. Fixed assets of a substantial part, affecting the going concern, have not been disposed off during the year.

2. a. The Management has carried out physical verification of inventory at reasonable intervals.

b. The procedure of verification of inventory followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. a. The Company during the year has not granted any secured or unsecured loans to Companies, firms or other parties

covered in the Register maintained under Section 301 of the Companies act, 1956.

b. The Company during the year has taken Unsecured loan during the year and the details are as below. (in Rs.)

Opening Amount Repayment Name of the LenderS Balance as on Borrowed made during 01.04.2013 during the year the year

SKM Maeilanandhan 6,00,00,000 - 6,00,00,000

SKM Universal Marketing 43900000 - -

Company India Limited 4,39,00,000 - -

SKM Shree Shivkumar 4,95,00,000 6,00,00,000 -

NAME OF THE LENDERS Closing BALANCE interest 31.03.2014 PaymentS

SKM Maeilanandhan NIL 62,72,878

SKM Universal Marketing 4.39.00. 000 52,67,998 Company India Limited

SKM Shree Shivkumar 10.95.00.000 68,67,122

c. The rate of Interest and other terms and conditions of the above loan taken by the company are prima-facie not prejudicial to theinterestof the company

4. In our opinion and according to the Explanation and Information given to us there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services andthere isno continuingfailure to correct major weaknesses in internal control system.

5. a. The particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have been entered in the register maintained under that section.

b. Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable, having regard to the prevailing marker prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed maintenance of Cost Records under section 209(1)(d) of the Companies Act and such accounts and records have been made and maintained.

9. a. According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues, to the extent applicable, have been generally regularly deposited with the appropriate authorities. According to the information and explanation given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31,2014 for a period of more than six months from the date they became payable.

b. According to the information and explanation given to us, there are no undisputed amounts payable, in respect of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs duty and Cess, were in arrears as at March 31,2014 for a period of more than six months from the date they become payable except the following payments, the details for which are given below:

Particulars Period to which it Relates Amount Due to be paid

Excise Duty May 1997 to June 1999 Rs.7,32,445/-

Duty - Rs.23,156/- Excise Duty August 2002 to April 2003 Interest - Rs.2 605/-

Excise Duty April 2003 to April 2004 Rs. 64,288/-

Excise Duty May 2004 to March 2005 Rs. 49,650/-

Excise Duty June 2005 to May 2006 Rs. 29,230/-

Excise Duty June 2006 to Feb 2007 Rs. 54,245/-

Excise Duty March 2007 to December 2007 Rs. 73,874/-

Excise Duty Jan 2008 to June 2008 Rs. 45,034/-

Excise Duty July 2008 to March 2009 Rs. 58,364/-

Excise Duty April 2009 to November 2009 Rs. 83,904/-

Excise Duty Dec 2009 to July 2010 Rs.1,46,423/-

Excise Duty Aug 2010 to Jan 2011 Rs. 1,19,853/-

Excise Duty Feb 2011 to Oct 2011 Rs. 2,07,324/-

Excise Duty Nov 2011 to May 2012 Rs. 2,09,114/-

Excise Duty Nov 2011 to May 2012 Rs. 73,907/-

Excise Duty April 2011 to March 2012 Rs. 37,883/-

Excise Duty June 2012 to Mar 2013 Rs. 2,94,046/-

Excise Duty June 2012 to Mar 2013 Rs. 4,01,156/-

Service Tax Jan 2005 to June 2005 Rs. 98,400/-

Service Tax July 2005 to December 2005 Rs.3,10,489/-

Service Tax July 2005 to March 2006 Rs.1,01,786/-

Service Tax January 2006 to March 2006 Rs. 4,82,328/-

Service Tax April 2006 to September 2006 Rs. 1,97,293/-

Service Tax October 2006 to Dec. 2006 Rs. 3,63,898/-

Service Tax January 2007 to March 2007 Rs. 4,36,775/-

Service Tax April 2007 to September 2007 Rs. 4,89,366/-

Service Tax Oct 2007 to Jan 2008 Rs. 4,33,443/-

Service Tax Feb 2008 to March 2008 Rs. 6,05,640/-

Service Tax April 2006 to March 2011 Rs. 3,63,489/-

Service Tax April 2011 to March 2012 Rs. 79,390/-

Income Tax Asst.Year 2008-09 Rs 2,70,07,726/- (Net of Recovery)

Income Tax Asst.Year 2009-10 R.s 2,82,73,500/- (Net of Payments)

Paticular Forum where the appeal is preferred Excise Duty High Court of Madras

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty High Court, Chennai against the order of the CESTAT,Chennai

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Service Tax CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Service Tax High Court of Madras (Stayed the Proceedings)

Service Tax High Court of Madras

Service Tax High Court of Madras (Stayed the Proceedings)

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Service Tax Commissioner of Central Excise,Customs & Service Tax (Appeals), salem

Income Tax Income Tax Appellate Tribunal, Chennai - Stay granted by the Madras High court for the Ay 2008-2009.

Income Tax Income Tax Appellate Tribunal, Chennai - Stay granted by the AO.

10. Based on our Audit Procedures and on the basis of information and explanation given to us by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to banks.

11. In our opinion and on the basis of information and explanation given to us by the Management, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities and hence maintenance of adequate documents and records for such cases does not arise.

12. The Company has no Accumulated losses as on March 31st 2014 and has not incurred cash losses during the financial year ended on that date and also in the immediately preceding financial year.

13. According to the information and explanation given to us by the Management, the Company has not given any guarantee for loans taken by others from banks orfinancial institutions.

14. The company is not a chit fund, Nidhi or Mutual benefit Society. Hence the requirement of item (xiii) of paragraph 4 of the Order is not applicable to the company.

15. In our opinion, the company is not dealing in or trading in shares, Securities, Debentures and other Investments. Accordingly the provisions of clause 4[xiv] of the companies [Auditor''s Report] Order 2003 are not applicable to the company.

16. As per the information and explanations given to us, Term Loans borrowed by the company were applied for the purposes for which the loans were obtained.

17. As per the information and explanations given to us, funds raised on short Term basis have not been used for Long Term Investments.

18. On the basis of the information and explanations furnished by the company no fraud on or by the Company has been noticed or reported during the year.

19. According to the information and explanations given to us no preferential allotment of shares has been made by the company to companies, firms, or parties listed in the register maintained under section 301 of the Companies Act 1956.

20. The company has not issued any debentures. Hence the requirement of clause (xix) of paragraph 4 of the Order is not applicable to thecompany.

21. During the period covered by our audit report, the company has not raised any money by public issue.

For N.C. Rajagopal & Co. Chartered Accountants

N.C. Vijay Kumar Partner Place : Erode Membership No.208276 Date : 30.07.2014 FRN : 003398S


Mar 31, 2013

We have audited the accompanying financial statements of M/s. SKM EGG PRODUCTS EXPORT (INDIA) LIMITED, (Registered Office at 185, Chennimalai Road, Erode – 638 001), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow for the year ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

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

Auditor''s Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion:

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

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

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

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

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 the paragraphs 4 and 5 of the said order.

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

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

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

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

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.

Other Matter:

We did not audit the Financial Statements/ Financial Information of the Foreign Branch, which have been only compiled and not audited by other Auditors whose Financial Statements/Financial Information reports have been furnished to us and our opinion is based on the Compiled Financial Statement received from the Branch Office.

ANNEXURE

As required by the Companies (Auditors'' report) Order, 2003, made by the Central Government under section 227 (4 A) of the Companies Act, 1956, we state that:

1. a. The Company has maintained proper records showing full particulars including quantities details and situation

of fixed assets.

b. The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verifications

c. Fixed assets of a substantial part, affecting the going concern, have not been disposed off during the year.

2. a. The Management has carried out physical verification of inventory at reasonable intervals.

b. The procedure of verification of inventory followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory and no material discrepancies were noticed on

physical verification.

3. a. The Company during the year has not granted any secured or unsecured loans to Companies, firms or other

parties covered in the Register maintained under Section 301 of the Companies act, 1956.

b. The Company during the year has taken Unsecured loan during the year and the details are as below.



Name of the Lenders Opening Amount Repayment Balance Borrowed Made as on uring the During the 01.04.12 1 SKM. Maeilanandhan NIL 6,70,00,000 70,00,000

2 SKM Universal 4,39,00,000 20,00,000 20,00,000 Marketing Company India Limited

3 SKM Shree Shivkumar 5,00,00,000 30,00,000 35,00,000

Name of the Lenders Closing Interest Balance as on Payment 31.03.2013

1 SKM. Maeilanandhan 6,00,00,000 28,99,068

2 SKM Universal 4,39,00,000 56,62,175 Marketing Company India Limited

3 SKM Shree Shivkumar 4,95,00,000 65,33,207

c. The rate of Interest and other terms and conditions of the above loan taken by the company are prima-facie not prejudicial to the interest of the company.

4. In our opinion and according to the Explanation and Information given to us there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services and there is no continuing failure to correct major weaknesses in internal control system.

5. a. The particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have

been entered in the register maintained under that section.

b. Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable, having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed maintenance of Cost Records under section 209(1)(d) of the Companies Act and such accounts and records have been made and maintained.

9. a. According to the records of the company, Undisputed Statutory dues including Provident Fund, Investor

Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues, to the extent applicable, have been generally regularly deposited with the appropriate authorities. According to the information and explanation given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2013 for a period of more than six months from the date they became payable.

b. According to the information and explanation given to us, there are no undisputed amounts payable, in respect of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs duty and Cess, were in arrears as at March 2013, for a period of more than six months from the date they become payable except the following payments, the details for which are given below:

Particulars Period to Which Amount Due it Relates to be Paid

Excise Duty 1.8.2002 to Duty Rs. 23,156/- 30.04.2003 Interest Rs.2,605/-

Excise Duty April 2003 to Rs. 64,288/- April 2004

Excise Duty May 2004 to Rs.49,650/- March 2005

Excise Duty June 2005 to Rs.29,230/- May 2006

Excise Duty June 2006 to Rs.54,245/- Feb 2007

Excise Duty March 2007 to Rs.73,874/- Dec 2007

Excise Duty January 2008 to Rs.45,034/- June 2008

Excise Duty July 2008 to Rs.58,364/- March 2009

Excise Duty April 2009 to Rs.83,904/- Nov 2009

Excise Duty Dec 2009 to Rs.1,46,423/- July 2010

Excise Duty Aug 2010 to Rs.1,19,853/- Jan 2011

Excise Duty Feb 2011 to Rs.2,07,324/- Oct 2011

Excise Duty Nov 2011 to Rs.2,09,114/- May 2012

Excise Duty April 2011 to Rs.37,883/- March 2012

Excise Duty April 2008 To Rs.2,51,006/- March 2013

Service Tax Jan 2005 to Rs.98,400/- June 2005

Service Tax July 2005 to Rs.3,10,489/- Dec 2005

Service Tax July 2005 to Rs.1,01,786/- March 2006

Service Tax Jan 2006 to Rs.4,82,328/- March 2006

Service Tax April 2006 to Rs. 1,97,293/- Sep 2006

Service Tax Oct 2006 to Rs. 3,63,898/- Dec 2006

Service Tax Jan 2007 to Rs. 4,36,775/- March 2007

Service Tax April 2007 to Rs. 4,89,366/- Sep 2007

Service Tax Oct 2007 to Rs.4,33,443/- Jan 2008

Service Tax Feb 2008 to Rs.6,05,640/- March 2008

Service Tax April 2006 to Rs.3,63,489/- March 2011

Service Tax April 2011 to Rs.79,390/- March 2012

Income Tax Asst.Year Rs.88,98,293/- 2007-08

Income Tax Asst.Year Rs.2,70,07,726/- 2008-09 (Net of Recovery)

Particulars Forum where the appeal is preferred

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem.

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Service Tax CESTAT,Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax High Court of Madras

Service Tax CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Service Tax Commissioner of Central Excise,Customs & Service Tax (Appeals), salem

Income Tax Income Tax Appellate Tribunal, Chennai Stay application is filed before the statutory authorities.

Income Tax Income Tax Appellate Tribunal, Chennai – Stay granted by the Madras High court for the Ay 2008-2009.

10. Based on our Audit Procedures and on the basis of information and explanation given to us by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to Financial Institution or banks.

11. In our opinion and on the basis of information and explanation given to us by the Management, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities and hence maintenance of adequate documents and records for such cases does not arise.

12. The Company has no Accumulated losses as on March 31st 2013 and has not incurred cash losses during the financial year ended on that date but incurred cash loss of Rs. 8.14 Crores in the immediately preceding financial year.

13. According to 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.

14. The company is not a chit fund, Nidhi or Mutual benefit Society. Hence the requirement of item (xiii) of paragraph 4 of the Order is not applicable to the company.

15. In our opinion, the company is not dealing in or trading in shares, Securities, Debentures and other Investments. Accordingly the provisions of clause 4[xiv] of the companies [Auditor''s Report] Order 2003 are not applicable to the company.

16. As per the information and explanations given to us, Term Loans borrowed by the company were applied for the purposes for which the loans were obtained.

17. As per the information and explanations given to us, funds raised on short Term basis have not been used for Long Term Investments.

18. On the basis of the information and explanations furnished by the company no fraud on or by the Company has been noticed or reported during the year.

19. According to the information and explanations given to us no preferential allotment of shares has been made by the company to companies, firms, or parties listed in the register maintained under section 301 of the Companies Act 1956.

20. The company has not issued any debentures. Hence the requirement of clause (xix) of paragraph 4 of the Order is not applicable to the company.

21. During the period covered by our audit report, the company has not raised any money by public issue.

For N.C. RAJAGOPAL & CO., CHARTERED ACCOUNTANTS,

N.C. VIJAY KUMAR PARTNER Membership No.208276 FRN : 003398S

Place : Erode Date : 09.08.2013


Mar 31, 2012

We have audited the attached Balance Sheet of SKM EGG PRODUCTS EXPORT (INDIA) LIMITED, 185, Chennimalai Road, Erode - 638 001 as at 31st March 2012 and also the Profit and Loss Account for the year ended on that date annexed thereto and cash flow statement for the period ended on that date. 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.

We conducted our audit in accordance with audit 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditor's Report) Order, 2003 (As Amended) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a Statement on the matters specified in paragraphs 4 & 5 of the said order.

2. Further to our comments in the Annexure referred to in paragraph (1) above:

a. We have obtained all the information and explanations which to the best of our knowledge and belief where 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 it appears from our examination of the books.

c. The Balance sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts.

d. On the basis of written confirmation received from the directors as on 31.03.2012 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31.03.2012 from being appointed as a director in terms of clause (g) of sub section (i) of section 274 of the Companies Act 1956.

e. In our opinion the profit and loss account and balance sheet comply with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act 1956.

f. In our opinion and to the best of our information and according to the explanations given to us, the said profit& loss account and the balance sheet read together with the notes thereon give the information required by the companies Act 1956 in the manner as required and give a true and fair view in conformity with the accounting principles generally accepted in India :-

i. In the case of the Profit and Loss Account, of the Loss for the period ended 31st March 2012 and

ii. In the case of the Balance Sheet of the state of affairs of the Company as at 31st March 2012

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

ANNEXURE

As required by the Companies (Auditors' report) Order, 2003, made by the central Government under section 227 (4 A) ot the Companies Act, 1956, we state that:

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

b. The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verifications

c. Fixed assets of a substantial part, affecting the going concern, have not been disposed off during the year.

2. a. The Management has carried out physical verification of inventory at reasonable intervals.

b. The procedure of verification of inventory followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. a The Company has not granted any secured or unsecured loans to Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies act, 1956.

b. The Company during the year has taken Unsecured loan of Rs.0.55 Crores from the Managing Director Sri SKM. Shree Shivkumar and the interest on the loan being Rs. 0.74 Crores. The Balance outstanding as on 31.3.2012 is Rs.5 Crores. Also the company during the years has taken Rs.3.83 Crores from SKM Universal Marketing Company (Opening Balance) Outstanding Rs. 2.5 Crores and the interest on the loan being Rs.0.40 Crores and after repayment of Rs. 1.94 Crores the balance as on 31.3.2012 is Rs. 4.39 Crores.

c. The rate of Interest and other terms and conditions of the above loan taken by the company are prima-facie not prejudicial to the interest of the company

4. In our opinion and according to the Explanation and Information given to us there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services and there is no continuing failure to correct major weaknesses in internal control system.

5. a. The particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have been entered in the register maintained under that section.

b. Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable, having regard to the prevailing marker prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. We have been informed that the Central Government has not prescribed maintenance of Cost Records under section 209(1) (d) of the Companies Act, 1956.

9. a. According to the records of the company, Undisputed Statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues, to the extent applicable, have been generally regularly deposited with the appropriate authorities. According to the information and explanation given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2012 for a period of more than six months from the date they became payable.

b. According to the information and explanation given to us, there are no undisputed amounts payable, in respect

Period to which Amount Due Particulars it Relates to be paid

Excise Duty 1.8.2002 to Duty Rs. 23,156/- 30.04.2003 Interest Rs. 2,605/-

Excise Duty April 2003 to Rs. 64,288/- April 2004

Excise Duty May 2004 to Rs.49,650/- March 2005

Excise Duty June 2005 to Rs.29,230/- May 2006

Excise Duty June 2006 to Rs.54,245/- Feb 2007

Excise Duty March 2007 to Rs.73,874/- Dec 2007

Excise Duty January 2008 to Rs.45,034/- June 2008

Excise Duty July 2008 to Rs.58,364/- March 2009

Excise Duty April 2009 to Rs.83,904/- Nov 2009

Excise Duty Dec 2009 to Rs.1,46,423/- July 2010

Excise Duty Aug 2010 to Rs.1,19,853/- Jan 2011

Excise Duty Feb 2011 to Rs.2,07,324/- Oct 2011

Service Tax Jan 2005 to Rs. 98,400/- June 2005

Service Tax July 2005 to Rs.3,10,489/- Dec 2005

Particulars Forum where the appeal is preferred

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem.

Excise Duty CESTAT, Chennai against the order of the Commissioner of Central Excise, Salem

Excise Duty Commissioner of Central Excise, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem.

Excise Duty Commissioner of Appeal, Salem.

Excise Duty Commissioner of Appeal, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Excise Duty Commissioner of Central Excise Appeals, Salem

Service Tax CESTAT, Madras.

Service Tax High Court of Madras.

Period to which Amount Due Particulars it Relates to be paid

Service Tax July 2005 to Rs.1,01,786/- March 2006

Service Tax Jan 2006 to Rs.4,82,328/- March 2006

Service Tax April 2006 to Rs.1,97,293/- Sep 2006

Service Tax Oct 2006 to Rs.3,63,898/- Dec 2006

Service Tax Jan 2007 to Rs.4,36,775/- March 2007

Service Tax April 2007 to Rs.4,89,366/- Sep 2007

Service Tax Oct 2007 to Rs.4,33,443/- Jan 2008

Service Tax Feb 2008 to Rs.6,05,640/- March 2008

Income Tax Asst. Year 2007-08 Rs.88,98,293/-

Income Tax Asst. Year 2008-09 Rs.2,70,07,726/- (Net of Recovery)

Particulars Forum where the appeal is preferred

Service Tax High Court of Madras.

Service Tax High Court of Madras.

Service Tax High Court of Madras.

Service Tax High Court of Madras.

Service Tax High Court of Madras.

Service Tax High Court of Madras.

Service Tax High Court of Madras.

Service Tax High Court of Madras.

Income Tax Income Tax Appellate Tribunal, Chennai (Special Bench)

Income Tax Income Tax Appellate Tribunal, Chennai (Special Bench) - Stay granted by the Madras High court for the Ay 2008-2009 and stay granted by AO for the AY 2007-2008.

of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs duty and Cess, were in arrears as at March 2012, for a period of more than six months from the date they become payable except the following payments, the details for which are given below:

10. Based on our Audit procedures and on the basis of information and explanation given to us by are the Management, we are of the opinion that the Company has not defaulted in repayment of dues to Financial Institution or banks.

11. In our opinion and on the basis of information and explanation given to us by the Management, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities and hence maintenance of adequate documents and records for such cases does not arise.

12. The Company does not have any Accumulated losses. The Company has incurred cash loss of Rs.8.14 crores during the year covered by our audit and the immediately preceding financial year.

13. According to 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.

14. The company is not a chit fund, Nidhi or Mutual benefit Society. Hence the requirement of item (xiii) of paragraph 4 of the Order is not applicable to the company.

15. In our opinion, the company is not dealing in or trading in shares, Securities, Debentures and other Investments. Accordingly the provisions of clause 4[xiv] of the companies [Auditor's Report] Order 2003 are not applicable to the company.

16. As per the information and explanations given to us, Term Loans borrowed by the company were applied for the purposes for which the loans were obtained.

17. As per the information and explanations given to us, funds raised on short Term basis have not been used for Long Term Investments.

18. On the basis of the information and explanations furnished by the company no fraud on or by the Company has been noticed or reported during the year.

19. According to the information and explanations given to us no preferential allotment of shares has been made by the company to companies, firms, or parties listed in the register maintained under section 301 of the Companies Act 1956.

20. The company has not issued any debentures. Hence the requirement of clause (xix) of paragraph 4 of the Order is not applicable to the company.

21. During the period covered by our audit report, the company has not raised any money by public issue.

For N.C. RAJAGOPAL & CO.,

Chartered Accountants,

Place : Erode N.C. SAMPATH

Date : 06.08.2012 (PARTNER)

Membership No.009592.


Mar 31, 2010

We have audited the attached Balance Sheet of SKM EGG PRODUCTS EXPORT (INDIA) LIMITED, 185, Chennimalai Road, Erode – 638001 as at 31st March 2010 and also the Profit and Loss Account for the year ended on that date annexed thereto and cash flow statement for the period 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.

We conducted our audit in accordance with audit 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 (As Amended) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a Statement on the matters specified in paragraphs 4 & 5 of the said order.

2. Further to our comments in the Annexure referred to in paragraph (1) above:

a. We have obtained all the information and explanations which to the best of our knowledge and belief where 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 it appears from our examination of the books.

c. The Balance sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts.

d. On the basis of Written confirmation received from the directors as on 31.03.2010 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31.03.2010 from being appointed as a director in terms of clause (g) of sub section (i) of section 274 of the Companies Act 1956.

e. In our opinion and to the best of our information and according to the explanations given to us, the said profit & loss account and the balance sheet read together with the notes thereon give the information required by the companies Act 1956 in the manner as required and give a true and fair view in conformity with the accounting principles generally accepted in India :- i. In the case of the Profit and Loss Account, of the Profit for the period ended 31st March 2010

ii. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010 and

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

As required by the Companies (Auditors report) Order, 2003, made by the central Government under section 227 (4 A) of the Companies Act, 1956, we state that:

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

b. The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verifications

c. Fixed assets of a substantial part, affecting the going concern, have not been disposed off during the year.

2. a. The Management has carried out physical verification of inventory at reasonable intervals.

b. The procedure of verification of inventory followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3 a. The Company has not granted any secured or unsecured loans 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 of Rs. 4.30 crores from Managing Director and Rs.2.49 Crores from SKM Universal Marketing Company (India) Limited. The interest paid on the loans being Rs.25.85 lacs/- to the Managing Director and Rs.5.46 Lacs to the SKM Universal Marketing Company (India) Limited. The Balance outstanding as on 31.3.2010 is Rs.90.89 Lacs in respect of the Managing Director and Rs.2.49 Crores in respect of SKM Universal Marketing Company (India) Limited.

c. The rate of Interest and other terms and conditions of the above loan taken by the company are prima-facie not prejudicial to the interest of the company.

4. There is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services and there is no continuing failure to correct major weaknesses in internal control system.

5. a. The particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have been entered in the register maintained under that section.

b. Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable, having regard to the prevailing marker prices at the relevant time.

6. The Company has not accepted any deposits from the public.

7. The company has an internal audit system commensurate with its size and nature of its business.

8. We have been informed that the Central Government has not prescribed maintenance of Cost Records under section 209(1)(d) of the Companies Act, 1956.

9. a. According to the records of the company, Undisputed Statutory dues including Provident Fund,

Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues, to the extent applicable, have been generally regularly deposited with the appropriate authorities. According to the information and explanation given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2010 for a period of more than six months from the date they became payable.

b. According to the information and explanation given to us, there are no undisputed amounts payable, in respect of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs duty and Cess, were in arrears as at March 2010, for a period of more than six months from the date they become payable except the following payments, the details for which are given below:

particulars Period to Amount Due to Forum where the appeal which it be paid is preferred Relates

Excise Duty 1.8.2002 to Duty- Rs.23,156/- CESTAT, Chennai the 30.4.2003 Imterest-Rs.2,605/- order of the Commissio -ner of Central Excise, Salem Excise Duty May 2004 to Rs. 49,650/- Commissioner of Centeral Excise,Salem

Excise Duty June 2006 to Commissioner of Appeal Feb 2007 Rs. 54,245/- Salem

Excise Duty March 2006 Rs. 73,874/- Commissioner of Appeal to December Salem 2007

Service Tax April 2006 Rs. 1,97,293/- High Court of Madras to September 2006

Service Tax October 2006 Rs. 3,63,898/- High Court of Madras to Decenber 2006

Srvice Tax January 2007 Rs. 4,36,775/- High Court of Madras to March 2007

Service Tax April 2007 Rs. 4,89,366/- High Court of Madras to September 2007

Service Tax July 2005 to December 2005 Rs. 3,10,489/- High Court of Madras

Service Tax January 2006 to March 2006 Rs. 1,01,786/- High Court of Madras

Excise Duty June 2005 to Rs. 29,230/- Commissiner of Central May 2005 Excise Appeals, Salem

Excise Duty Jan 2008 to June 2008 Rs. 40,034/- Commssioner of Central Excise Appeals, Salem

Service Tax Oct 2007 to Jan 2008 Rs. 4,33,443/- Proceeding stayed by the Madras High Court Vide WP No.26418 of 2008

Excise Duty April 2009 Rs. 83,904/- Commissioner of Central to November Excise Appeals, Salem 2009

Service Tax Feb 2008 to Rs. 6,05,640/- Proceeding stayed by the March 2008 Madras High Court WP No 17194/2009

Excise Duty July 2008 to March 2009 Rs. 58,364/- Commissioner of Central Excise Appeals, Salem

Income Tax Asst. Year 2004-2005 Rs.31,33,992/- Commissioner of Income Tax Appeals(I), Coimbatore

Income Tax Asst. Year 2007-2008 Rs.12,42,210/- Commissioner o9f Income Tax Appeals (I) Coimbatore

10. The Company has not defaulted in repayment of dues to Fin ancial Institution or banks.

11. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence maintenance of adequate documents and records for such cases does not arise.

12. The Company does not have any Accumulated losses. The Company has not incurred cash losses during the year covered by our audit and the immediately preceding financial year.

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

14. The company is not a chit fund, Nidhi or Mutual benefit Society. Hence the requirements of item (xiii) of paragraph 4 of the Order is not applicable to the company.

15. In our opinion, the company is not dealing in or trading in shares, Securities, Debentures and other Investments. Accordingly the provisions of clause 4[xiv] of the companies [Auditors Report] Order 2003 are not applicable to the company.

16. As per the information and explanations given to us, Term Loans borrowed by the company were applied for the purposes for which the loans were obtained.

17. As per the information and explanations given to us, funds raised on short Term basis have not been used for Long Term Investments.

18. On the basis of the information and explanations furnished by the company no fraud on or by the Company has been noticed or reported during the year.

19. According to the information and explanations given to us no preferential allotment of shares has been made by the company to companies, firms, or parties listed in the register maintained under section 301 of the Companies Act 1956.

20. The company has not issued any debentures. Hence the requirement of clause (xix) of paragraph 4 of the Order is not applicable to the company.

21. During the period covered by our audit report, the company has not raised any money by public issue.

For N.C. RAJAGOPAL & CO., Chartered Accountants, N.C. SAMPATH (PARTNER) Membership No. 009592. Place : Erode Date : 30.07.2010