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Auditor Report of Srikalahasthi Pipes Ltd.

Mar 31, 2016

To,

The Members of

Srikalahasthi Pipes Limited

Report on the financial Statements

We have audited the accompanying financial statements of Srikalahasthi Pipes Ltd. ("the Company"), which comprise the Balance
Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year 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 and presentation 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.

Auditors'' 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. 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.

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, of the state of affairs of the Company as at 31st March, 2016, and its
profit and its cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("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, 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) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as director in terms of Section 164
(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating
effectiveness of such controls, refer to our separate Report in "Annexure B".

g) 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 – Refer Note 28.1 to the financial statements;

ii. The Company has made provision, as required under the applicable law and accounting standards, for material foreseeable
losses, if any, on long-term contracts and the Company is not required to make provision for losses on derivative contracts –
Refer Note 37 to the financial statements;

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


(i) With respect to Fixed Assets:

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

(b) As explained to us, the fixed assets have been physically verified by the management during the year as per a detailed
program drawn for the said purpose, which in our opinion is reasonable having regard to the size of the Company and nature of its
assets. In our opinion, the periodicity and procedures of such physical verifications are reasonable having regard to the size of
the Company and nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company,
the title deeds of immovable properties are held in the name of the Company.

(ii) As explained to us, the management has conducted physical verification of inventories during the year at reasonable
intervals, except the materials in transit/materials lying with third parties. According to the information and explanations
given to us, no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to
companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the
Companies Act, 2013.

(iv) According to the information and explanations given to us, the Company has not given any loans, investments, guarantees, and
security covered under the provisions of section 185 and 186 of the Act, accordingly, clause (iv) of para 3 of the Order is not
applicable to the company.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the cost records maintained by the Company relating to its products for which maintenance of cost
records has been specified by the Central Government under Section 148(1) of the Companies Act, 2013 and are of the opinion that
prima facie, the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination
of the records with a view to determining whether they are accurate or complete.

(vii) With respect to Statutory Dues:

(a) According to the information and explanations given to us and the records of the Company examined by us, the Company is
generally 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, cess and other material statutory dues as applicable to it,
with the appropriate authorities and there were no undisputed statutory dues outstanding as at 31st March, 2016 for a period
exceeding six months from the date they became payable.


(b) According to the information and explanations given to us, there are no dues of Wealth tax, Service tax and Cess which have
not been deposited on account of any dispute and the following are the details of dues of Sales tax, Income tax and Excise duty
that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2016

Name of the
Statute Nature of Dues Amount Period to which
(in Rs.
lakhs) the amount
relates

APGST Act, 1957 Sales Tax 67.52* 1999-00

-do- -do- 40.51* 1999-00

-do- -do- 194.70* 2002-03

APVAT Act, 2005 Interest
on tax 22.46* 2012-13

-do- VAT 1.37 2013-14

Central Sales
Tax Act, Sales Tax 158.71* 2000-01
1956

-do- -do- 41.60 2000-01

-do- -do- 202.99 2003-04

-do- -do- 196.24 2004-05

-do- -do- 8.50 2011-12

-do- -do- 2.09 2012-13

Income Tax
Act, 1961 Income Tax 10.87* 2003-04

-do- -do- 1.85 2004-05

Central
Excise Act, Central
Excise & 174.75 2007-08 &
2008-09
1944 Interest

Name of the Forum where dispute is pending
Statute

APGST ACT Sales Tax Appellate
1957 Tribunal

-do- -do-

-do- -do-

APVAT Act 2005 ADC(CT)

-do- Sales Tax Appellate Tribunal

Central Sales Tax Sales Tax Appellate Tribunal
Act

-do- High Court of Andhra Pradesh

-do- Sales Tax Appellate Tribunal

-do- -do-

-do- ADC, Kurnool

-do- ADC, Kurnool

Income tax Act 1961 High Court of Andhra Pradesh

-do- -do-

Central excise act 1944 CESTAT, Bangalore


*Stay of collection granted for the demands.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment
of dues to banks. The Co mpany has no borrowings from financial institutions, government or by way of debentures.

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and
term loans during the year.

(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers
or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations give to us and based on our examination of

the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals
mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company.
Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company,
transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such
transactions have been disclosed in the financial statements as required by the applicable accounting standards.


(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the
Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during
the year.

(xv) According to the information and explanations given to us and based on our examination of the

records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him.
Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.


We have audited the internal financial controls over financial reporting of Srikalahasthi Pipes Limited ("the Company") as of
March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal
control over financial reporting criteria established by the Company considering the essential components of internal control
stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered
Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including
adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy
and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the
Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our
audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10)
of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of
Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India.

Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained
and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system
over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting
included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the
Company''s internal financial controls system over financial reporting.

Meaning of Internal financial Controls over financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies
and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and


(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal financial Controls over financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of
collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be
detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are
subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial
reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on
"the internal control over financial reporting criteria established by the Company considering the essential components of
internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the
Institute of Chartered Accountants of India.

For K. R. BAPUJI & Co.

Chartered Accountants

(Firm''s Registration No. 000395S)

P. R. SATISH Place: Chennai (Partner)

Date: 09/05/2016 (Membership No. 219432)


Mar 31, 2015

We have audited the accompanying financial statements of SRIKALAHASTHI PIPES LIMITED ("the Company") which comprise the Balance Sheet as at 31st March 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date and a summary of 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 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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of internal financial controls, that were operating effectively for ensuring the accuracy and completeness of 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.

auditors'' 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 there under.

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 auditors'' 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 control system over financial reporting 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 financial statements.

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:

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1) As required by the Companies (Auditor''s Report) Order, 2015("the Order"), issued by the 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 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;

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the

Accounting Standards specified 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 31stMarch 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch 2015 from being appointed as a director in terms of Section 164(2) of the Act; and

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 - Refer Note 27 to the financial statements;

ii) the Company has made provision, as required under the applicable law and accounting standards, for material foreseeable losses, if any, on long-term contracts and the Company is not required to make provision for losses on derivative contracts - Refer Note 37 to the financial statements;

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 AUDITORS'' REPORT

Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Srikalahasthi pipes Limited for the year ended 31st March, 2015.

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

b) As explained to us, the fixed assets have been physically verified by the management during the year as per a detailed program drawn for the said purpose, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. In our opinion, the periodicity and procedures of such physical verification is reasonable having regard to the size of the Company and nature of it assets.

ii) a) As explained to us, the management has conducted physical verification of inventories during the year at reasonable intervals, except the materials in transit/ materials lying with third parties.

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

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

iii) According to the information and explanations given to us, 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, 2013.

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. We have not observed any major weakness in the internal control system during the course of the audit.

v) The Company has not accepted any deposits from the public.

vi) We have broadly reviewed the cost records maintained by the Company relating to its products for which maintenance of cost records has been specified by the Central Government under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination of the records with a view to determining whether they are accurate or complete.

vii) a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally 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, cess and other material statutory dues as applicable to it,with the appropriate authorities and there were no undisputed statutory dues outstanding as at 31stMarch, 2015 for a period exceeding six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Wealth tax, Service tax and Cess which have not been deposited on account of any dispute and the following are the details of dues of Sales tax, Income tax and Excise duty that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2015:

Amount period to which the Name of the Nature of Dues (In Rs. amount Statute lakhs) relates

APGST Act, 1957 Sales Tax 67.52* 1999-00

-do- -do- 40.51* 1999-00

-do- -do- 194.70* 2002-03

-do- -do- 10.59 1999-00

APVAT Act, 2005 Interest on tax 22.46* 2012-13

-do- VAT 27.7C 2005-06 & 2006-07

-do- VAT 19.37 2012-13

Central Sales Tax Act, Sales Tax 158.71* 2000-01 1956

-do- -do- 41.60 2000-01

-do- -do- 202.99 2003-04

-do- -do- 196.24 2004-05

Income Tax Act, 1961 Income Taxt 10.87* 2003-04

-do- -do- 1.85 2004-05

Central Excise Act, Central Excise & 174.75 2007-08 & 1944 Interest 2008-09

Service tax under Service tax 47.47 2012-13 Finance Act, 1994

Forum where the dispute is Name of the pending Statute

APGST Act, 1957 Sales Tax Appellate Tribunal

-do- -do-

-do- -do-

-do- High Court of Andhra Pradesh

APVAT Act, 2005 ADC(CT)

-do- ADC(CT)

-do- ADC(CT)

Central Sales Tax Act, Sales Tax Appellate Tribunal 1956

-do- High Court of Andhra Pradesh

-do- Sales Tax Appellate Tribunal

-do- -do-

Income Tax Act, 1961 High Court of Andhra Pradesh Court

-do- -do

Central Excise Act, CESTAT, Bangalore 1944

Service tax under Commissioner - Appeals Finance Act, 1994

*Stay of collection granted for the demands.

c) According to the information and explanations given to us, the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under has been transferred to such fund within time.

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

ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has no borrowings from financial institutions or by way of debentures.

x) 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.

xi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained.

xii) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For K.R. Bapuji & Co. Chartered Accountants Firm Registration Number: 000395S

Dheeraj Agarwal Place : Chennai Partner Date : 30th April 2015 Membership Number: 219788


Mar 31, 2014

We have audited the accompanying financial statements of Lanco Industries Limited ("the Company") which comprise the Balance Sheet as at 31st March 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date and a summary of signifcant 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 principles generally accepted in India including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. 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 the financial statements.

We believe that the audit evidence we have obtained is suffcient 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:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014 ;

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

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

report on otHer legal anD regulatory requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 ("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 specifed 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 it appears from our examination of those books;

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.; and

e) On the basis of written representations received from the directors as on 31st March 2014, and taken on record by the Board of Directors, none of the directors is disqualifed 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 to the independent auditors'' report

Referred to in paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date to the members of lanco industries limited for the year ended 31st march, 2014.

i) In respect of its Fixed Assets:

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

b) As explained to us, the fixed assets have been physically verifed by the management during the year as per a detailed program drawn for the said purpose, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verifcation.

c) The fixed assets disposed off during the year do not constitute a substantial part of the fixed assets, and therefore, there is no affect on the going concern status of the Company.

ii) In respect of its Inventories:

a) As explained to us, the management has conducted physical verifcation of inventories during the year, except the materials in transit/materials lying with third parties. In our opinion, the frequency of the said verifcation is reasonable.

b) The procedures of physical verifcation of inventories followed by the management were reasonable and adequate in relation to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material

Discrepancies were noticed on physical verification.

iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured to /from companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses (iii) (a) to (iii) (g) of paragraph 4 of the Order are not applicable.

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 with regard to purchase of inventory, fixed assets and for the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in v (a) above and the value aggregating to more than Rupees five Lakhs in respect of each such party, have been made at the prices which are reasonable having regard to prevailing market prices.

vi) The Company has not accepted any deposits from the public.

vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company relating to its products, where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) In respect of statutory dues

a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing the 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 material statutory dues as applicable, with the appropriate authorities and there were no undisputed dues outstanding as at 31st March, 2014 for a period exceeding six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Wealth tax, Service tax and Cess which have not been deposited on account of any dispute and the following are the details of dues of Sales tax, Income tax and Excise duty that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2014:

period to Nature of amount which the Name of the statute Dues (rs. in lakhs) amount relates

Sales Tax APGST Act, 1957 67.52* 1999-00 -do- -do- 40.51* 1999-00

-do- -do- 194.70* 2002-03

Interest on APVAT Act, 2005 22.46* 2012-13 tax

Central Sales Tax Act, Sales Tax 158.71* 2000-01 1956 -do- -do- 41.60 2000-01

Income Tax Act, 1961 Income Tax 10.87 2003-04

-do- -do- 1.85 2004-05

Central Excise Act, Central Excise 2007-08 & 174.75 1944 & Interest 2008-09

Name of the Statute Forum where the dispute is pending

APGST Act, 1957 Sales Tax Appellate Tribunal

-do- -do-

-do- -do-

APVAT Act, 2005 ADC (CT)

Central Sales Tax Act, 1956 Sales Tax Appellate Tribunal

-do- High Court of Andhra Pradesh

Income Tax Act, 1961 High Court of Andhra Pradesh

-do- -do-

Central Excise Act, 1944 CESTAT, Bangalore

* Stay of collection granted for the demands.

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

xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks. The Company did not have outstanding dues to debenture holders.

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

xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund/ nidhi/ mutual benefit fund / society.

xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments.

xv) 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.

xvi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of balance sheet of the Company, funds raised on short-term basis have not been used for long-term investment.

xviii) The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Act.

xix) During the year, the Company did not have any outstanding debentures.

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

xxi) During the course of our examination of the books and other records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, no instance of fraud on or by the Company was reported during the year, nor have we been informed of such case by the management.

For K.R. Bapuji & co. Chartered Accountants Firm Registration Number: 000395S

K.R. Bapuji Place: Chennai Partner Date: 3rd May 2014 Membership Number: 021169


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of LANCO INDUSTRIES LIMITED ("the Company") which comprise of the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date 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 principles generally accepted in India including 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 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 the 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 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 accounting principles generally accepted in India:

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

ii) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 ("the Order"), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 oi 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 it appears from our examination of those books; 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; in our opinion,

c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred in sub-section (3C) of Section 211 of the Act;

d) on the basis of written representations received from the directors of the Company as on 31st March, 2013 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

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

i) In respect of its fixed Assets

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

b) As explained to us, the fixed assets have been physically verified by the management during the year as per a detailed program drawn for the said purpose, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) The fixed assets disposed off during the year do not constitute a substantial part of the fixed assets, and therefore, there is no affect on the going concern status of the Company.

ii) In respect of its inventories

a) As explained to us, the management has conducted physical verification of inventories during the year, except the materials in transit and the materials lying with third parties. In our opinion, the frequency of the said verification is reasonable.

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

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured to /from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses (iii)(a) to (iii)(g) of paragraph 4 of the Order are not applicable.

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 nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of the said areas.

v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, there were no transactions made in pursuance of contracts or arrangements referred to in v(a) above and exceeding the value of Rupees five lakhs with any such party.

vi) The company has not accepted any deposits from the public. Therefore, the provisions clause (vi) of paragraph 4 of the Order are not applicable to the Company.

vii) In our opinion, the Company''s internal audit system is commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company relating to its products, where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) In respect of statutory dues

a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing the 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 material statutory dues as applicable, with the appropriate authorities and there were no undisputed dues outstanding as at 31st March, 2013 for a period exceeding six months from the date they became payable.

b) According to the information and explanations given to us, the disputed dues of sales tax, income-tax, customs duty, wealth-tax, excise duty, service-tax and cess, if any, that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2013 are as follows:

Name of the Amount Nature of dues Satute (Rs. In lakhs)

APGST Act, 1957 Sales tax 67.52*

-do- -do- 40.51*

-do- -do- 259.59*

APVATAct,2005 Interest on tax 39.30

Central Sales Tax Sales tax 158.70* Act, 1956

-do- -do- 41.60

Income Tax Act, Income tax 10.87 1961

-do- -do- 1.85

Central Excise Central Excise & 8.26 Act, 1944 Interest

Name Period to which Forum where the the amount relates dispute ,s pending

APVATAct,2005 1999-00 Sales Tax Appellate Tribunal, A.P.

1999-00 -do-

2002-03 -do-

2012-13 ADC(CT)

Central Sales 2000-01 Sales Tax Appellate Tribunal, A.P.

2000-01 A.P High Court

2003-04 A.P. High Court

2004-05 -do-

Central Sales 2007-08 CESTAT, Bangalore

*Stay of collection granted for the demands.

x) The Company''s accumulated losses at the end of the financial year are less than fifty percent of its net worth but it has not incurred cash losses in the current and immediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks. The Company did not have outstanding dues to debenture holders.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable.

xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable.

xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from Banks or Financial Institutions.

xvi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the Balance sheet of the Company, we report that the Company has used short term funds to the extent of Rs. 3655.11 lakhs for long term investment towards capital works.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year, the Company has not made any issue of debentures. Accordingly, clause (xix) of paragraph 4 of the Order is not applicable.

xx) The Company has not raised any money through a public issue during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of the Order are not applicable.

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

For K.R. Bapuji & Co.

Chartered Accountants

Firm Registration No. 000395S

K.R. Bapuji

Place: Chennai Partner

Date: 6th May, 2013 Membership No. 021169


Mar 31, 2012

1. We have audited the attached Balance Sheet of LANCO INDUSTRIES LIMITED ("the Company") as at 31st March, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date and Summary of significant accounting policies and other explanatory information annexed thereto. 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.

2. We have 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 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.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such examination of the books and records of the Company as we considered appropriate and the information and explanations given to us during the course of the audit, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

b) in our opinion, proper books of 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the Directors of the company as on 31st March, 2012 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 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 accounts read together with the Significant Accounting Policies and Other Notes (Note No. 1 to 43) 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, 2012;

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 Statement, of the cash flows of the Company for the year ended on that date.

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

b) As explained to us, the fixed assets have been physically verified by the management during the year as per a detailed program drawn for the said purpose, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) The fixed assets disposed off during the year do not constitute a substantial part of the fixed assets, and therefore, there is no affect on the going concern status of the Company.

ii) a) As explained to us, the management has conducted physical verification of inventories during the year, except the materials in transit and the materials lying with third parties. In our opinion, the frequency of the said verification is reasonable.

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

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

iii) According to the information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured to /from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses (iii)(a) to (iii)(g) of paragraph 4 of CARO are not applicable.

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 nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of the said areas.

v) a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, there were no transactions made in pursuance of contracts or arrangements referred to in v(a) above and exceeding the value of Rupees five Lakhs with any such party.

vi) The company has not accepted any deposits from public covered under Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and Rules framed there under.

vii) In our opinion, the Company's internal audit system is commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company relating to its products, where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing the 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 material statutory dues as applicable with the appropriate authorities and there were no undisputed dues outstanding as at 31st March, 2012 for a period exceeding six months from the date they became payable.

b) According to the information and explanations given to us, the disputed dues of sales tax, income-tax, customs duty, wealth-tax, excise duty, service-tax and cess, if any, that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2012 are as follows:

Name of the Amount Period to which Forum where the Nature of dues the amount statute (Rs. In Lakhs) dispute is pending relates

APGST Act, 1957 Sales tax 67.52* 2002-03 Sales Tax Appellate Tribunal, A.P. 40.51* 1999-00 -do-

259.59* 1999-00 -do-

Central Sales Tax Sales tax 158.70* 2000-01 Sales Tax Appellate Tribunal, A.P. Act, 1956

Income tax Act, Income tax 10.87 2003-04 A.P. High Court 1961 1.85 2004-05 -do-

Central Excise Central Excise & 8.26 2007-08 CESTAT, Bangalore. Act,1944 Interest

* Stay of collection granted for the demands.

x) The Company has no accumulated losses as at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks. The Company did not have outstanding dues to debenture holders.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of CARO are not applicable.

xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of paragraph 4 of CARO are not applicable.

xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from Banks or Financial Institutions.

xvi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained.

xvii) Based on the information and explanations given to us and on an overall examination of the cash flow statement and the Balance Sheet of the Company, in our opinion, the funds raised by the Company on short term basis have prima facie not been used for long term investment.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year, the Company has not made any issue of debentures. Accordingly, clause (xix) of paragraph 4 of CARO is not applicable.

xx) The Company has not raised any money through a public issue during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of CARO are not applicable.

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



For K.R. Bapuji & Co.

Chartered Accountants

Firm Registration No. 000395S

K.R. Bapuji

Place: Chennai Partner

Date: 27th April, 2012 Membership No. 021169


Mar 31, 2011

1. We have audited the attached Balance Sheet of Lanco Industries Limited ("the Company”) as at 31st March, 2011 and also the Proft and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 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.

3. As required by the Companies (Auditors Report) Order, 2003 (CARO) (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such examination of the books and records of the Company as we considered appropriate and the information and explanations given to us during the course of the audit, we enclose in the Annexure a statement on the matters specifed in the paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

b) in our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the Balance Sheet, the Proft 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 Proft and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the Directors of the Company as on 31st March, 2011 taken on record by the Board of Directors, none of the Directors is disqualifed as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 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 accounts read together with the Notes as per Schedule 17, 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, 2011;

ii) in the case of the Proft and Loss Account, of the proft of the Company for the year ended on that date;

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

annexure to auditors report re: Lanco industries Limited (Referred to in paragraph 3 of our report of even date)

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

b) As explained to us, the fxed assets have been physically verifed by the management during the year as per a detailed program drawn for the said purpose, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verifcation.

c) The fxed assets disposed off during the year, in our opinion, do not constitute as substantial part of the fxed assets of the Company and such disposal, in our opinion, has not affected the going concern status of the Company.

ii) a) As explained to us, the management has conducted physical verifcation of inventories during the year, except the materials in transit and the materials lying with third parties. In our opinion, the frequency of the said verifcation is reasonable.

b) The procedures of physical verifcation of inventories followed by the management were reasonable and adequate in relation to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verifcation.

iii) According to the information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured to / from companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses (iii)(a) to (iii)(g) of paragraph 4 of CARO are not applicable.

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 nature of its business, for the purchase of inventory, fxed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of the said areas.

v) a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, there were no transactions made in pursuance of contracts or arrangements referred to in v(a) above and exceeding the value of Rupees fve lakhs with any such party.

vi) The company has not accepted any deposits from public covered under Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and Rules framed there under.

vii) In our opinion, the Companys internal audit system is commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company relating to the products, where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing the 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 material statutory dues as applicable with the appropriate authorities and there were no undisputed dues outstanding as at 31st March, 2011 for a period exceeding six months from the date they became payable.

b) According to the information and explanations given to us, the disputed dues of sales tax, income-tax, customs duty, wealth-tax, excise duty, service-tax and cess, if any, that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2011 are as follows:

amount Sl. nature of period to which it forum where the name of the Statute (rs. in no. dues relates dispute is pending lakhs)

1. Central Sales Tax Sales tax 308.85 2000-01 A.P. Sales Tax Appellate Tribunal Act, 1956 47.70 2005-06

2. APGST Act, 1957 -do- 67.52 2002-03 Sales Tax Appellate Tribunal

3. Income tax Act 1961 Income-tax 56.11 2003-04 A.P. High Court

3.65 2004-05 -do-

0.14 2006-07 Commissioner of Income tax (Appeals)

4. Central Excise Act, Central Excise 17.38 2005-06 Commissioner (Appeals) 1944 Duty/ Interest 8.26 2007-08 CESTAT

x) The Company has no accumulated losses as at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks or debenture holders.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual beneft fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of CARO are not applicable.

xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of paragraph 4 of the CARO are not applicable.

xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from Banks or Financial Institutions.

xvi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained.

xvii) Based on the information and explanations given to us and on an overall examination of the cash fow statement and the Balance Sheet of the Company, in our opinion, the funds raised by the Company on short term basis have prima facie not been used for long term investment.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) During the year, the Company has not made fresh issue of debentures. Accordingly, clause (xix) of paragraph 4 of CARO is not applicable.

xx) The Company has not raised any money through a public issue during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of the CARO are not applicable.

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

For K.r. Bapuji & co. Chartered Accountants Firm Registration No. 000395S

Dheeraj agarwal

Place: Chennai Partner Date: 7th May, 2011 Membership No. 219788


Mar 31, 2010

1. We have audited the attached Balance Sheet of Lanco Industries Limited ("the Company") as at 31st March, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 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.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (hereinafter referred to as the said Order) and on the basis of such examination of the books and records of the Company as we considered appropriate and the information and explanations given to us during the course of the audit, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

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

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

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

e) On the basis of written representations received from the directors of the Company 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.

f) Subject to Note No. 4 of Schedule 17 i.e. provision for commission payable to the Managing Director aggregating to Rs. 200 lakhs, pending approval of the Company in general meeting, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and other 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,

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

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

ANNEXURE TO AUDITORS REPORT Re: Lanco Industries Limited (Referred to in paragraph 3 of our report of even date)

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

b) As explained to us, the fixed assets have been physically verified by the management during the year as per a detailed program drawn for the said purpose, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

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

ii) a) As explained to us, the management has conducted physical verification of inventories during the year, except the materials lying with third parties. In our opinion, the frequency of the said verification is reasonable.

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

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clause (b), (c) and (d) of paragraph 4 of the Order are not applicable.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clause (f) and (g) of paragraph 4 of the Order are not applicable.

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 nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of the said areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.

v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, there were no transactions made in pursuance of contracts or arrangements referred to in v(a) above and exceeding the value of Rupees five lakhs with any such party.

vi) The Company has not accepted any deposits from public covered under Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and Rules framed thereunder.

vii) In our opinion, the Companys internal audit system is commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company relating to the products, where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing the 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 material statutory dues as applicable with the appropriate authorities and there were no undisputed dues outstanding as at 31st March, 2010 for a period exceeding six months from the date they became payable.

b) According to the information and explanations given to us, the disputed dues of sales tax, income-tax, customs duty, wealth-tax, excise duty, service-tax and cess, if any, that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2010 are as follows:

Sl. Nature of Amount Period to which it Name of the Statute (Rs. in No. dues relates lakhs)

1. Central Sales Tax Sales tax 97.61 1999-00 Act, 1956 47.70 2005-06

2. APGST Act, 1957 -do- 67.52 2002-03

3. Income-tax Act 1961 Income-tax 56.11 2003-04

3.65 2004-05

0.14 2006-07

4. Central Excise Act, Central Excise17.00 2005-06 1944 Duty/Interest 43.00 2006-07 to 2008-09

16.50 2007-08



Name of the Statue Forum where the dispute is pending

Central Sales Tax Act, 1956 Sales Tax Appellate Tribunal

APGST Act, 1957 Sales Tax Appellate Tribunal

Income-tax Act 1961 Income Tax Appellate Tribunal

-do- Commissioner of Income-tax (Appeals) Central Excise Act, 1944 Commissioner (Appeals)

-do- CESTAT

x) The Company has no accumulated losses as at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks or debenture holders.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from Banks or Financial Institutions.

xvi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained.

xvii) Based on the information and explanations given to us and on an overall examination of the cash flow statement and the Balance Sheet of the Company, in our opinion, the funds raised by the Company on short term basis have prima facie not been used for long term investment.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) According to the information and explanations given to us, during the year, the Company has fully redeemed the secured debentures and there was no fresh issue of debentures during the year. Accordingly, the provisions of clause (xix) of paragraph 4 of the Order are not applicable to the Company.

xx) The Company has not raised any money through a public issue during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of the Order are not applicable to the Company.

xxi) Based on the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For K.R. Bapuji & Co.

Firm Registration No. 000395S Chartered Accountants

K.R. Bapuji

Place: Chennai Partner

Date: 28th April, 2010 Membership No. 21169

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