Auditor Report of Sky Industries Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of SKY Industries Limited, which comprise the Balance Sheet as on March 31,2015,the Statement of Profit and Loss, the Cash Flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. The Company's Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to 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 principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

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

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

5. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the act and other applicable authorities pronouncements, issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and 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 true and fair view 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 Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2015;

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

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

Report on other Legal and Regulatory Requirements

9. As required by the Companies (Auditor's Report) Order, 2015, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (hereinafter referred to as the 'Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraph 3 and 4 of the Order.

10. As required by section 143(3) ofthe Act, wereport that:

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

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

c) the Balance Sheet, the 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 aforesaid financial statements comply with the Accounting Standards specified under Section 133 ofthe Act, read with Rule 7 ofthe Companies (Accounts) Rules, 2014.

e) On the basis of written representations received from the directors as on 31 March, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 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 knowledge and belief and according to the information and explanations given to us-

i. the Company does not have any pending litigations which would impact its financial position.

ii. The Company does not have any long-term contracts including derivatives 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, the question of delay of transferring funds does not arise.

Annexure to Independent Auditors' Report

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

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of two years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets, pursuance to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

ii. (a) As explained to us, inventories have been physically verified during the year by the management at reasonable intervals.

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

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No major material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

iii. (a) The Company has granted unsecured loans, to three companies covered in the register maintained under Section 189 of the Act. The Company has not granted any secured/unsecured loans to firms or other parties covered in the register maintained under Section 189 of the Act.

(b) In respect of the aforesaid loans, there is no overdue amount more than Rupees One Lakh.

iv. In our opinion, and according to the information and explanations 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 and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 of the Act and the rules framed there under to the extent notified.

vi. The Central Government of India has not specified the maintenance of cost records under sub-section (1) of Section 148 of the Act for any of the products of the Company.

vii. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed statutory dues, including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, wealth tax and service tax as at March 31,2015 which have not been deposited on account of a dispute, are as follows:

Period for Forum where Nature of dues Amount which dispute dispute is in Rs. relates pending

Income Tax 114896 Asst year 2009-10 CIT(A)

Gujarat VAT 3208752 20006-07 & 2007-08 Commissioner of Sales Tax

CST 125149 2066-2007 Commissioner of Sales Tax

(c) There is no requirement for transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, the question of delay of transferring funds does not arise.

viii. The Company has no accumulated losses as at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

ix. The Company has not defaulted in repayment of dues to any financial institution or bank nor has it issued any debentures as at the balance sheet date. The provisions of Clause 3(ix) of the Order are not applicable to the Company.

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

xi. The Company has not raised any term loans, Accordingly, the provisions of Clause 3(xi) of the Order are not applicable to the Company.

xii. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management,

For and on behalf of- Thanawala & Company CharteredAccountants Firm Reg. No. 110948W Place: Mumbai Dated: 30/05/2015

[ V.K. Thanawala ] Proprietor Membership No. 15632

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Mar 31, 2014

We have audited the accompanying financial statements of Sky Industries Limited which comprise the Balance Sheet as at March 31,2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in term of General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs) 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.

AUDITORS'' 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 Company''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 the financial statements.

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

Thanawala & Co.

OPINION

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

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 of the Company for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the Cash Flows of the company 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 Section 227(4A) 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, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circulars 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs)

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 Section274(l)(g) of the Act.

Annexure referred to in paragraph 3 of the Report of even date of the Auditors to the members of M/s Sky Industries Limited on the financial statements for the year ended 31st March, 2014

1. In regard to Fixed Assets -

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion the company has not disposed off major part of its Fixed Assets during the year.

2. In regard to inventories -

(a) The inventories (Excluding stock with 3rd party and material in transits) have been physically verified during the year by the management at reasonable intervals.

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

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No major material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) The Company has not granted any loans, secured, unsecured loans to the companies, firm or other parties covered in the register maintained under section 301 of the Act. Therefore the provision of clause 4(iii)(b),(c) and (d) of the said order are not applicable to the company.

(b) The Company has taken interest free loans from 16 parties covered in the register maintained under Section 301 of the Companies Act, 2013. The total amount of such loans received and outstanding as of 31st March 2014 is Rs.7,57,74,603/-.

(c) The terms and conditions on which loans have been taken by the Company are not prejudicial to the interest of the company.

(d) As no terms of repayment have been specified, we are unable to comment whether the payment of principal is regular in respect of loans taken by the company;

4. In our opinion and according to the information and explanations given to us, the internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories, fixed assets and sale of goods and services need to be strengthened. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls

5. (a) The transactions made in pursuance of contracts of arrangements, that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been recorded in the register;

(b) In our opinion and according to the information and explanations given to us, these transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956 and exceeding the value of Rupees five lacs in respect of each party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has accepted deposits from shareholders without issue of advertisement The company has not maintained adequate liquid assets. Hence the company has contravened the provisions of Section 58A, 58AA of the Companies Act, 1956 and the rules framed there under.

7. In our opinion, the internal audit system is not commensurate with the size of the Company and the nature of its business.

8. The company has not maintained cost records as prescribed by the Central Government under section 209(l)(d) of the Companies Act, 1956 in respect of its products/activities.

9. (a) The Company has been generally regular in depositing undisputed dues of Provident Fund, Employees State Insurance, Income Tax, Profession Tax, except VAT of Rs.5,00,989/-, CST of Rs. 4,9697- Entry Tax of Rs. 1,37,472/- & Income Tax of Rs. 33,22,504/- outstanding for more than six months, as at 31st March 2014.

(b) Details of dues of Sales Tax, Excise Duty & Service Tax which have not been deposited as on 31st March 2014 on account of disputes are given below

Nature of Dues Amount in Rs. Period for which Forum where dispute dispute relates is pending

Income Tax 114896 Asst year 2009-10 CJT (A)

Gujarat VAT 3208752 2006-07 & 2007-08 Commissioner of Sales Tax

CST 125149 2006-2007 Commissioner of Sales Tax

Cess 3683521 1998-99 & 1999-00 Supreme Court of India

10. The Company does not have accumulated losses at the end of the financial year but it has not incurred cash losses in the current financial year but incurred cash loss in immediately preceding the financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

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

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures or other investments and hence the requirements of Para 4(xiv) are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given a guarantee for loan taken by a subsidiary of Rs. 1.26 crore from a bank. The terms and conditions thereof are prima facie not prejudicial to the interest of the company

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made preferential allotment of shares during the year to the parties and companies covered in the Register maintained under Section301 of the Companies Act 1956.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.



For and on behalf of- Thanawala & Company Chartered Accountants Firm Reg. No. U0948W

Place: Mumbai Dated: 20/05/2014

(V.K. Thanawala) Proprietor Membership No. 15632

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Mar 31, 2013

We have audited the accompanying financial statements of SKY INDUSTRIES LIMITED, which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow statement for the year then ended, and a summary of significant accounting policies and other explanatoryinformation.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performanceof the Companyinaccordance 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 tofraudorerror.

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 disclosuresin 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 evidencewe have obtainedissufficient and appropriate toprovide abasis for our audit opinion.

The company has not provided for diminution in the value of investments in its subsidiary of Rs. 35,60,515/- as at the year end as required by paragraph 19 of Accounting Standards (AS) 13 Accounting for Investments issued by the Institute of Chartered Accounts of India. This has resulted in understatement of loss for the current year and overstatementof ReservesbyRs. 35,60,515/-.

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 subjecttoabove paragraph:

a) in the case of the Balance Sheet,of the stateof affairsof the Company asatMarch 31, 2013; and

b) in the case of the Profit and Loss Account,of theLOSSfor the year ended onthat date;

c) in the case of the Cash Flow statement,of the Cash Flows for the year endedon 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 paragraphs4and 5of the Order.

2. Asrequiredbysection 227(3)of the Act,wereportthat:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposeof 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 examinationof 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 booksof account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards subjecttoabove note referredtoinsubsection (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 termsof clause (g) of sub-section (1)of section 274of the Companies Act, 1956.

AnnexuretoIndependent AuditorsReport

Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

1. InregardtoFixed Assets -

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticedonsuch verification.

(c) Inour opinion the company has not disposed off major partof its Fixed Assets during the year.

2. In regard to inventories -

(a) The inventories (Excluding stock with 3rd party and material in-transits) have been physically verified during the year by the managementat reasonable intervals.

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

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No major material discrepancy was noticed on physical verification of stocks by the management as compared tobook records.

3. (a) The Company has not granted any loans, secured, unsecured loans to the companies, firm or other parties covered in the register maintained under section 301 of the Act. Therefore the provision of clause 4(iii)(b),(c) and (d) of the said order are not applicableto the company.

(b) The Company has taken interest free loans from 4 parties covered in the register maintained under Section 301 of the Companies Act, 1956. The total amountof such loans received and outstandingasof 31st March 2013isRs.5,26,73,865/-.

(c) The terms and conditions on which loans have been taken by the Company are not prejudicial to the interest of the company.

(d) As no terms of repayment have been specified, we are unable to comment whether the payment of principal is regular in respectof loans takenbythe company;

4. In our opinion and according to the information and explanations given to us, the internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories, fixed assets and sale of goods and services need to be strengthened. During the course of our audit, we have not observed a continuing failureto correct major weaknessesininternal controls

5. (a) The transactions made in pursuance of contracts of arrangements, that need to be entered into the register maintained under Section 301of the Companies Act, 1956 have been recordedinthe register;

(b) In our opinion and according to the information and explanations given to us, these transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956 and exceeding the value of Rupees five lacs in respect of each party during the year have been made at prices which are prima facie reasonable having regardto the prevailing market pricesatthe relevant time.

6. In our opinion and according to the information and explanations given to us, the company has accepted deposits from shareholders without issue of advertisement and at an interest rate higher the prescribed limits. The company has not maintained adequate liquid assets. Hence the company has contravened the provisions of Section 58A, 58AA ofthe Companies Act, 1956andtherulesframed there under.

7. Inouropinion, the internal audit system is not commensurate with the sizeof the Company and the natureof its business.

8. The company has not maintained cost records as prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956 in respect of its products / activities.

9 (a) The Company has been generally regular in depositing undisputed dues of Provident Fund, Employees State Insurance, Income Tax, Profession Tax, except CST of Rs.3,32,870/-, Entry Tax of Rs. 49,242/- & Income Tax of Rs. 33,22,504/- outstanding for more than six months,as at31st March 2013.

(b) Details o dues o ales Tax,ExciseDuty&Service Tax which have not been deposited as on 3 March 2013 on account of disputes are given below

Nature of Dues Amount in Rs. Period for which Forum where dispute dispute relates is pending

Income Tax 114896 Asst year 2009-10 CIT(A)

Gujarat VAT 3208752 2006-07 & 2007-08 Commissioner of Sales Tax

CST 125149 2006-2007 Commissioner of Sales Tax

Cess 3683521 1998-99 & 1999-00 Supreme Court of India

10. The Company does not have accumulated losses at the end of the financial year but it has not incurred cash losses in the current financial year but incurred cash loss in immediately preceding the financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures or other investments and hence the requirements of Para 4(xiv) are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given a guarantee for loan taken by a subsidiary of Rs. 2.5 crore from a bank. The terms and conditions thereof are prima facie not prejudicial to the interest of the company

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 3 March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made preferential allotment of shares during the year to the parties and companies covered in the Register maintained under Section 301 of the Companies Act 1956.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.



For and on behalf of Sd/-

Thanawala & Company [ V.K. Thanawala ]

Chartered Accountants Proprietor



Firm Reg. No. 110948W Membership No. 15632



Place : Mumbai

Dated : 30/05/2013

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Mar 31, 2010

1. We have audited the attached Balance Sheet of Sky Industries Limited, as at 31st March, 2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company 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 in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is invited to note 21 (b) of Schedule 13 of the accounts, wherein the Company has recognized profit of Rs. 236,700,000/- on sale of assets of Discontinued Operations of Ribbon Division pending approval for sale transfer of immovable property from Maharashtra Industrial Development Corporation Limited and Labour Authorities.

5. The Company has entered into transactions with parties covered in the register maintained under Section 301 of the Companies Act, 1956. The Company has not made an application to the Central Government for transaction amounting to Rs. 32,12,836.

6. The Company has not obtained an approval in a general meeting for payment of managerial remuneration ofRsl0,560,000/- for the year ended March 31, 2009 and for Rs.5,280,000/- for the period April 1, 2009 to September 30, 2009 as per the requirements of ScheduleXIII of the Companies Act,1956.

7. The Company has not determined an actuarial valuation of its Leave Encashment liability as per the requirements of AS 15- Employee Benefits (Revised). We are unable to ascertain the impact on the profit for the year.

8. 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 purposes of our audit.

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

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

d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report, subject to para 7 above, comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given to us, subject to paras 5 to 7 above, the said financial statements read with the notes thereon, 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 the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; and

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

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

5. On the basis of the written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditors Report Referred to in paragraph (3) of our report of even date.

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

(b) The Company has a program for the physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verification.

(c) The Company has disposed off the assets of the Discontinued Ribbon Division during the year. In our opinion, the disposal does not affect the going concern assumption.

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

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

(c) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification have been properly dealt with in the books of account.

3) (a) The Company has not granted any loan to a company covered in the register maintained under section 301 of the Companies Act, 1956.

(b) Consequently, the question of commenting on the rates of interest and commenting on whether does not arise. In the absence of any stipulated terms and conditions of the deposits/ advance granted, we are unable to comment whether the same are prejudicial to the interests of the Company, whether receipt of principal is regular and whether reasonable steps have been taken for recovery of principal.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.

5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 are entered in the register required to be maintained under that section. However, as stated in para 5 of the Auditors Report, the Company has not complied with section 297 of the Companies Act, 1956.

(b) In the absence of a comparative price of transactions made in pursuance of such contracts or arrangements, we are unable to comment whether these were made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other provision of the Companies Act, 1956, and the rules framed there under are not applicable.

7) In our opinion and according to the information and explanations given to us, the internal audit system is not commensurate with the size of the Company and nature of its business.

8) The maintenance of cost records has not been prescribed by the Central Government under section 209(1) (d) of the Companies Act, 1956, in respect of any of its products.

9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of the above as at 31st March, 2010 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty or cess on account of any dispute, other than the following:

Name of Statue Nature of Period to which the Forum where Amount Dues amount relates dispute is (Rs.) pending

The Bombay Provincial Cess 1998-1999 Deputy Municipal Corporation 20,74,603 Act, 1959 Commissioner

The Bombay Provincial 1999-2000 Deputy Municipal Corporation Cess 16,08,000 Act, 1959 Commissioner

The Income Tax Act, 1961 Penalty u/s 2001-2002 Assistant 90,000 274(l)(c) Commissioner

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

11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks and financial institutions. However, subject to bank confirmations for outstanding bills payable not received we are not aware whether there are any defaults for outstanding bills. There are no dues to debenture holders.

12) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies.

14) The Company does not deal in shares, securities, debentures and other investments.

15) According to the information and explanations given to us, the Company has given a guarantee for loan taken by a subsidiary of Rs.12,000,000/-from a bank.

16) According to the information and explanations given to us, term loans were applied for the purpose for which the loans were obtained.

17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investment.

18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

19) The Company did not issue any debentures during the year.

20) The Company has not raised any money through a public issue during the year.

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

For and on behalf of

KALYANIWALLA & MISTRY

CHARTERED ACCOUNTANTS

Sd/-

ERMIN K. IRANI PARTNER Firm Registration No.l04607W. Membership No. 35646 Mumbai; Dated: May 29,2010.