Auditor Report of Solid Carbide Tools Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Solid Carbide Tools Ltd ('the Company') which comprise the Balance Sheet as at 31st March, 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 for the 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 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 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 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 the 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 Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of the 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 financial statements.

Basis for qualified opinion:

As explained in note no. 18 the accounts have been prepared on the going concern basis. The company's business operations have been discontinued and the losses have exceeded the 50% of the net worth.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the basis for qualified opinion paragraph above, the aforesaid financial statements gives the information required by the Act in the manner so required and gives 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 loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1 As required by Companies (Auditors Report) Order 2015 issued by Central Government of India in terms of sub section 11 of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the order

2 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 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 it 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 aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) In the absence of the written representations received from the directors as on 31st March, 2015, we are unable to report whether any of the director is prima facie disqualified as on 31st 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 information and according to the explanations given to us:

i. The Company has not evaluated the impact of pending litigations on its financial position in its 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 a delay in transferring amount of Rs 81,927 which is 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 1 under 'Report on other legal and Regulatory requirements' section of our report of even date)

(i) a. The Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets;

b. As informed fixed assets have not been physically verified by the management during the year, and hence we are unable to comment on the discrepancies, if any.

(ii) a. Due to suspension of business at the factory, the management could not conduct physical verification of inventory during the year.

b. The management has not conducted physical verification of inventory, hence we are unable to comment on the procedure of physical verification of inventory.

c. Due to suspension of business at the factory, the management could not conduct physical verification of inventory during the year. Hence, we are unable to comment on the maintenance of proper records and discrepancies between physical and book records.

(iii) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. Accordingly, the provisions of clause 3(iii)(a) and (b) of the Order are not applicable to the Company.

(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. During the course of our audit, we observed that during the year there are no purchase of raw material, stores, purchase of plant & machinery, equipment & other assets and sale of goods.

(v) The Company has not accepted any deposits during the year within the meaning of the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the products/services of the Company.

(vii) a. According to records of the company and as per the information and explanation given to us, as the Company's manufacturing activity has remained suspended during the year, the company during the year has not incurred any liability towards statutory dues including Investors Education & Protection Fund, Provident Fund, Employee' State Insurance dues, Wealth Tax, Service Tax, Custom duty, Excise duty, Sales tax, Cess.

b. In the absence of information and explanation it was not possible for us to verify, whether there are any dues outstanding of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess on account of any dispute.

c. According to the information and explanations given to us, the amounts pending 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 is Rs 81,927.

(viii) The accumulated losses of the company at the end of the financial year are more than fifty percent of its net worth. The company has incurred cash loss during the financial year covered by our audit. The company has also incurred cash loss in the immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that company does not have any outstanding dues to banks and financial institutions. The company does not have any borrowings by way of debentures.

(x) The Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) The Company has not taken any Term Loans.

(xii) Based on the audit procedures performed and as per the information and explanation given by the management we report that no material fraud on or by the Company has been noticed or reported during the year.

For BATLIBOI & PUROHIT Chartered Accountants ICAI Firm Regn. No.101048W

Paresh Chokshi Partner Membership No. 033597

Place: Mumbai Date : 1 September , 2015

---

Mar 31, 2014

We have audited the accompanying financial statements of SOLID CARBIDE TOOLS LIMITED, which comprise the Balance Sheet as at March 31, 2014, 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.

2. MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

2.1) Management is responsible for the preparation of these financial statements that ought to 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 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 ought to give a true and fair view and ought to be free from material misstatement, whether due to fraud or error.

2.2) The accompanying financial statements have been prepared by the management assuming that the company will continue as a going concern, inspite of the observations/remarks referred to in the annexure to this report. The Company''s manufacturing activity continued to remain suspended during the F.Y. 2013-14 also. Also, the Company''s office & factory were under court''s seal & the said seal has been removed in November, 2005 and the Management of the Company has been entrusted to an administrator appointed by the Honourable Mumbai High court. The management of the company was under the said administrator upto 03rdAugust,2012 & thereafter, the management of the company is under a newly Constituted Board of Directors. The Company has also suffered cash losses in the financial year under audit and in the immediately preceding financial year, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3. 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.

4. OPINION

In our opinion, and to the best of our information and according to the explanations given to us, in view of the facts as stated in para 2.2 above and observations/remarks referred to in the annexure to this report

The financial statements doesn''t give the information required by the Act in the manner so required and therefore doesn''t 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 March 31,2014;

ii) In the case of the Statement of Profit and Loss, of the LOSS of the company for the year ended on that date, and

iii) In the case of the Cash Flow Statements,of the Cash Flows of the Company for the year ended on that date.

5. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2003(as amended)(''the order'') issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in 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 purposes of our audit.

(b) In our opinion, books of account for the purpose of recording the financial transactions have been kept by the company so far as appears from our examination of those books. However, as per our examination and as per the information and explanation given to us, the other books/registers as required by law were not produced to us for verification.

(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, in view of the facts as stated in para 2.2 above and in view of non- ascertainability of method of valuation of inventories, non-consideration of effect of Deferred Taxation, the Balance Sheet ,Statement of Profit and Loss and Cash Flow Statement doesn''t comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(e) In the absence of the confirmations, received from the directors as on 31st March, 2014, we are unable to report whether any of the directors is prima facie disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956.

ANNEXURE REFERRED TO IN PARAGRAPH 5[11 OF OUR REPORT OF EVEN DATE ON THE ACCOUNTS OF SOLID CARBIDE TOOLS LIMITED FOR THE YEAR ENDED 31st MARCH, 2014.

1. a) The Company has not maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.

b) The fixed assets have not been physically verified by the management during the year and therefore the same could not be reconciled with the book records. The Company has not updated the entries regarding additions to fixed assets & purchase of fixed assets in the earlier financial years.

c) In the absence of proper records showing particulars of assets & in the absence of physical verification of assets and in view of the remarks as referred to in the Annexure to this report, we could not verify whether any fixed assets have been disposed off during the year.

2. The management has not conducted physical verification of inventory during the year. The records in respect of inventory were not made available for verification. Therefore, we could not verify whether there are any discrepancies between the physical stock as on 31st march, 2014 and the stocks as per book records.

3. a) According to the information & explanation given to us, the company has not granted any loans, secured or unsecured to the companies, firms or other parties covered in the register maintained u/s.301 of the Companies Act, 1956..

b) The Company has taken loans from Companies, Firms or other parties, which might have been required to be listed in the register maintained under Section 301 or from the Companies under the same management as defined under sub-section (1B) of Section 370 of the companies Act, 1956.The rate of interest and the other terms & conditions are prima facie not prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanation given to us, the internal control procedures are commensurate with the size of the company and the nature of its business, in respect of administrative expenses incurred during the year .According to the information & explanation given to us, during the year there are no purchase of raw material, stores, purchase of Plant & Machinery, Equipment & other assets, and sale of goods.

5. In the absence of availability of the register to be maintained under Section 301 of the Companies Act, 1956, we could not verify whether the transactions that need to be entered into such register have been entered as such. For the same reason, the transactions, with any of such parties could not be verified as regards to reasonableness of the price charged.

6. 6.1)The Company has not accepted deposits from the Public. However, the company has taken unsecured loan of Rs.15,442/- from VHCL Industries Ltd. in FY 2013-14 which was utilized for payment of Security Charges.

6.2) During the FY 2013-14, the company has repaid the loan amounting to Rs.59,12,195/- to VHCL Industries Ltd.The loan amount outstanding to be repaid to VHCL Industries Ltd. as on 31st March 2014 is Rs.Nil.

6.3) The company has taken unsecured loan from one of the Director, Mr Dilip Shah amounting to Rs .1,24,93,695/- in FY 2013-14 for Repayment of Unsecured Loan taken from VHCL Industries Ltd & Mr. Sham Gandhi in the earlier years & meeting day to day expenditure during the financial year 2013-14.The Company has repaid the Loan amounting to Rs.76,000/- to Mr.Dilip Shah during the FY 2013-2014.

6.4) The company has also taken unsecured loan from one of the Scheme Creditor Mr Sham S Gandhi amounting to Rs 4,75,281/- in F.Y 2013-14. For meeting day to day expenditure during the financial year 2013-14.The Company has repaid the Loan amounting to Rs.63,00,000/- to Mr.Sham Gandhi during the F.Y 2013-14.

6.5) The Loan amount outstanding to be repaid to the above mentioned two persons as on 31st March,2014 is Rs 3,93,72,101/-.

7. The Company does not have an Internal Audit System commensurate with its size and nature of its business.

8. In our opinion and according to the information and explanations given to us, the Central Government has not prescribed for, the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records of the company and as per the information & explanation given to us, as the company''s manufacturing activity has remained suspended during the year, the company during the year has not incurred any liability towards statutory dues including Investor Education & Protection Fund, Provident Fund, Employees'' State Insurance dues, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Sales Tax, Cess .

b) In the absence of any information and explanations & confirmations given to us by the Management, it was not possible for us to verify, whether there are any dues outstanding of Sales Tax, Customs Duty, Excise duty, Income Tax, wealth tax, service tax & cess on account of any dispute.

10. The accumulated losses of the company at the end of financial year are more than Fifty percent of its Net Worth. The company has incurred cash loss of 9,10,169/-during the financial year covered by our audit. The company has also incurred cash loss of Rs.6,68,852/- in the immediately preceding financial year.

11. a) Accounting to the records of the company and as per the information and explanation given to us, during the year the company has not defaulted in the repayment of dues to bank or financial institution.

b)The Company does not have any borrowings by way of debentures.

12. In our opinion and according to the information and explanations & confirmations given to us by the management, the company has not granted any loans and advances on the basis of security by the 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. In our opinion and according to the information and explanations & confirmations given to us, by the management, the company has not undertaken any dealing / trading in shares, debentures, Securities and other investments.

15. Based on our audit procedures and on the basis of information & explanations given to us by the management, the company has not given guarantees for loans taken by others from banks & financial institutions.

16. According to the information and explanations given to us by the management, the company has not taken any term loans during the year , nor any term loan was outstanding to be repaid as at the beginning of the year.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company,we are of the opinion that there are no funds raised on short-term basis that have been used for long- term investment.

18. In our opinion and according to the information and explanations & confirmations given to us by the management, the company has not made any preferential allotment of shares to parties or companies covered in the register maintained U/s. 301 of the Companies Act, 1956.

19. The company did not have any outstanding debentures during the year.

20. The company has not raised money through a public issue during the year.

21 .In our opinion and according to the information and explanantions given to us,no material fraud on or by the company has been noticed or reported during the year.

For SINGAVI, OTURKAR & KELKAR Chartered Accountants FRN 110265W

Place: Thane [CA R.K. Mulchandani]

Date : 30.05.2014 Partner

M.No.45550