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Auditor Report of Sundaram Brake Lining Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Sundaram Brake Linings Limited ("the Company"), 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.

B. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act") (read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013). 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.

C. 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 sufficient and appropriate to provide a basis for our audit opinion.

D. Opinion

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

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

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

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

E. Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

1. The nature of the Company''s business / activities during the year is such that, to the best of our knowledge and the information and explanation given to us, clauses (xiii) and (xiv) of Paragraph 4 of the Order are not applicable to the Company.

2. In respect of fixed assets:

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

b. All fixed assets have been physically verified by the management during the year in accordance with a programme of verification, which in our opinion provides for physical verification of all fixed assets at reasonable intervals. According to information and explanation given to us, no material discrepancies were noticed on such verification.

c. During the year, the Company has not disposed off a substantial part of its fixed assets.

3. In respect of its inventories:

a. The stock of finished goods, spare parts and raw material has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c. The Company has maintained proper records for inventory. The discrepancies noticed on physical verification by the management, which reported to be not material, have been properly dealt with in the books of accounts.

4. According to information and explanation 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 u/s 301 of the Act.

5. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to sale of goods and services and there is no continuing failure to correct major weakness in the aforesaid internal control system.

6. In respect of transactions entered in the register maintained in pursuance of Section 301 of the Act:

a. To the best of our knowledge and according to the information and explanations given to us, particulars of contracts and arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under this section.

b. According to the information and explanations given to us, transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

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

8. The Company has an Internal Audit System, the scope and coverage of which is commensurate with its size and nature of its business.

9. On the basis of records produced we are of the opinion that prima-facie the cost records and accounts prescribed by the Government of India under Section 209(1)(d) of the Companies Act, 1956, have been made and maintained by the Company. We have not, however, made a detailed examination of the records with a view to determine whether these are accurate and complete.

10. According to information and explanation given to us, in respect of statutory dues:

a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Cess, Excise Duty, Service Tax and any other Statutory dues with the appropriate authorities.

b) According to the information & explanations given to us, the following are the details of the disputed dues that were not deposited with the authorities concerned:

(Rs. In lakhs)

Nature of Nature of Assessment Statute dues year

Income Tax Act, Income Tax 2008-2012 1961

Central Sales Central Sales 1991-1993 Tax Act, Tax 1956 2009-2011

Tamil Nadu VAT 2007-2009 & VAT Act, 2006 2010-2012

2007-2010 Finance Act, 1994 Service Tax 2007-2009 1999-2004

Name of the Statue Forum where dispute is pending Amount

Income Tax Act,1961 Commissioner of Income Tax (Appeals) 990.00

Central Sales Appellate Assistant Commissioner of Tax Act,1956 Sales Tax 13.68 Sales Tax Appellate Tribunal 18.11

Tamil Nadu VAT Act, 2006 The Hon''ble High Court at Madras 12.03

Finance Act, 1994 The Hon''ble High Court at Madras 8.69 Assistant Commissioner of Central Excise 3.68

The Hon''ble Supreme Court of India 2.68

11. There are no accumulated losses as at the end of the financial year. The Company has not incurred cash losses during the financial year and in the immediately preceding financial year.

12. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayments to banks or financial institutions.

13. 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.

14. According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from Banks or financial Institutions. Hence, the relative reporting requirements are not applicable.

15. According to the information and explanation given to us, term loans availed by the Company were prima- facie applied by the Company for the purpose for which the loans were obtained.

16. According to the Cash Flow Statement and other records examined by us and other information and explanations given to us, and on an overall examination, no funds raised on short term basis have been used for long term investment.

17. According to the information and explanation given to us, the Company has not made any preferential allotment

of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act 1956 during the year.

18. According to the information and explanation given to us, the Company has not issued any debentures during the year.

19. The Company has not raised money from the public issues during the year and hence the relative reporting requirements are not applicable.

20. Based on our audit, information and representations received from the management we have no reason or evidence that lead us to believe that any fraud on or by the Company were noticed or reported during the year.

For SUNDARAM & SRINIVASAN

Chartered Accountants

Registration Number: 004207S

P MENAKSHI SUNDARAM

Madurai Partner

Membership No.217914

May 26, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Sundaram Brake Linings Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Author''s Responsibility

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

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

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

1. The nature of the Company''s business/activities during the year is such that, to the best of our knowledge and the information and explanations given to us, clauses (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the Company.

2. 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) All the fixed assets have been physically verified by the Management during the year in accordance with a programme of verification, which in our opinion provides for physical verification of all fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on verification.

c) During the year, the Company has not disposed off any substantial/major part of fixed assets.

3. In respect of its inventories:

a) The stock of finished goods, stores, spare parts and raw materials have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

b) The procedure of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The company has maintained proper records of the inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and the same have been properly dealt with in the books of accounts.

4. The company has neither granted nor taken any loans, Secured or Unsecured to/from companies, firms or other parties covered in the register maintained u/s 301 of the Companies Act, 1956.

5. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of Inventory and Fixed Assets and with regard to Sale of Goods and Services and there is no continuing failure to correct major weaknesses in Internal Control System.

6. In respect of transactions entered in the register maintained in pursuance to Section 301 of the Companies Act, 1956:

a) to the best of our knowledge and belief and according to the information and explanations given to us, 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 and

b) according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

The Company has not accepted any deposits from the public.

7. The Company has an Internal Audit System, the scope and coverage of which is commensurate with its size and nature of its business.

8. On the basis of the records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Government of India under Section 209(1)(d) of the Companies Act have been made and maintained by the Company.

9. According to the information and explanations given to us in respect of statutory dues:

a) the Company has been regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income

Tax, Sales Tax, Wealth Tax, Custom Duty, Cess, Excise Duty, Service Tax and any other Statutory dues, wherever applicable.

b) the Company has unpaid dues of Rs. 15.44 lacs in respect of disputed demands of sales tax of which appeals involving Rs. 14.61 lacs are pending before Appellate Assistant Commissioner of Sales Tax and appeals involving Rs. 0.83 lacs are pending before the Sales Tax Appellate Tribunal.

c) In respect of Income Tax, the following is the status of disputed liabilities:

Sl. No. Assessment Year Status Amount (Rs. lacs)

1 2009-10 Appeal made to Commissioner of Income Tax (Appeals)-pending 130.88

2 2010-11 Appeal made to Commissioner of Income Tax (Appeals)-pending 45.25

10. The company does not have any accumulated losses as at the end of the financial year. The Company has not incurred cash losses during the financial year and in the immediately preceding financial year.

11. According to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks or financial institutions.

12. The Company has not granted any advance or loan on the basis of security by way of pledge of shares, debentures and other securities.

13. According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from Banks or financial Institutions. Hence, the relative reporting requirements are not applicable.

14. To the best of our knowledge and according to the information and explanations given to us, term loans availed by the company were, prima facie, applied by the company during the year for the purposes for which loans were obtained.

15. According to the Cash Flow Statement and other records examined by us and the information and the explanations given to us, on an overall basis, funds raised on short term basis have, prima facie, not been used during the year for long term investment.

16. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

17. According to the information and explanations given to us and the records examined by us, the Company has not issued any debentures during the year.

18. The company has not raised any money by public issue.

19. Based on our audit, information and representations received from the Management, we have no reason/ evidence that lead us to believe that any fraud on or by the Company has been noticed or reported during the year.

For SUNDARAM & SRINIVASAN

Chartered Accountants

Registration Number: 004207S

P MENAKSHI SUNDARAM

Chennai Partner

May 29, 2013 Membership No.217914


Mar 31, 2012

We have audited the Balance Sheet of M/s Sundaram Brake Linings Limited as at 31st March 2012, the Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both 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.

We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(a) As required by the Companies (Auditors' Report) Order 2003, issued by the Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and as amended, we enclose in the annexure a statement on the matters specified in paragraphs (4) and (5) of the said Order, to the extent applicable to the Company.

(b) Further to our comments in the annexure referred to in paragraph (a) above, we report that :

1 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.

2 In our opinion, proper books of accounts as required by law have been kept by the Company, so far as appears from our examination of those books.

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

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

5 On the basis of written representations received from the Directors, and taken on record by the Board of Directors, none of the Directors is disqualified as at 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.

6 In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required, 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 Profit & Loss Account, of the Profit of the Company for the year ended on that date; and

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

ANNEXURE TO AUDITORS' REPORT REFERRED TO IN PARAGRAPH (a) OF OUR REPORT OF EVEN DATE

1 The nature of the Company's business/activities during the year is such that, to the best of our knowledge and the information and explanations given to us, clauses (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the Company.

2 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) All the fixed assets have been physically verified by the Management during the year in accordance with a program of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on verification.

(c) During the year, the Company has not disposed of any substantial/major part of fixed assets.

3 In respect of its Inventories:

(a) The stock of finished goods, stores, spare parts and raw materials have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedure of physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company has maintained proper records of the Inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and the same have been properly dealt with in the books of account.

4 The Company has not granted / 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.

5 In our opinion and according to the information and explanations given to us there is 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 and there is no continuing failure to correct major weaknesses in Internal Control System.

6 In respect of transactions entered in the register maintained in pursuance to section 301 of the Companies Act, 1956:

(a) to the best of our knowledge and belief and according to the information and explanations given to us, 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 and

(b) according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

In our opinion and according to the information and explanations given to us, in respect of the deposits accepted by the Company from public, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under, wherever applicable.

7 In our opinion, the Company has an Internal Audit System commensurate with its size and nature of its business.

8 On the basis of the records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Government of India under Section 209 (1) (d) of the Companies Act have been made and maintained by the Company.

9 According to information and explanations given to us in respect of statutory dues:

(a) the Company has been regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues, wherever applicable.

(b) the Company has unpaid dues of Rs.15.44 lacs in respect of disputed demands of sales tax of which appeals involving Rs. 14.61 lacs are pending before Appellate Assistant Commissioner of Sales Tax and appeals involving Rs. 0.83 lacs are pending before the Sales Tax Appellate Tribunal.

c) In respect of Income Tax, the following is the status of disputed liabilities :

Sl. No. Assessment Year Status Amount (Rs. lacs)

1 2008-09 Appeal proposed to be made to Income Tax Appellate Tribunal 38.45

2 2009-10 Appeal made to Commissioner of Income Tax (Appeals)-pending 130.88

10 The Company does not have any accumulated losses and has not incurred cash losses in the current financial year and in the immediate preceding financial year.

11 Based on our audit procedures and the information and explanations given to us, we are of the opinion that the Company has not defaulted in the repayment of dues to banks or financial institutions.

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

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

14 To the best of our knowledge and belief and according to the information and the explanations given to us, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

15 According to the Cash Flow Statement and other records examined by us and the information and the explanations given to us, on an overall basis, funds raised on short term basis have, prima facie, not been used during the year for long term investment.

16 According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

17 According to the information and explanations given to us and the records examined by us, the Company has not issued any debentures during the year.

18 The Company has not raised any money by public issue.

19 Based on our audit, information and representations received from the Management, we have no reason / evidence that lead us to believe that any fraud on or by the Company has been noticed or reported during the year.

For SUNDARAM & SRINIVASAN

Chartered Accountants (FRN 004207 S)

M PADHMANABHAN

Chennai Partner

May 23, 2012 (Membership No.13291)


Mar 31, 2010

We have audited the Balance Sheet of M/s Sundaram Brake Linings Limited as at 31 st March 2010, the Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both 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.

We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(a) As required by the Companies (Auditors Report) Order 2003, issued by the Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and as amended, we enclose in the annexure a statement on the matters specified in paragraphs (4) and (5) of the said Order, to the extent applicable to the Company.

(b) Further to our comments in the annexure referred to in paragraph (a) above, we report that:

1 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

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

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

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

5 On the basis of written representations received from the Directors, and taken on record by the Board of Directors, none of the Directors is disqualified as at 31 st 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

6 In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and taking into account Note No. I (15) of schedule 16, 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 & Loss Account, of the Profit of the Company for the year ended on that date; and

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

ANNEXURE TO AUDITORS REPORT REFERRED TO IN PARAGRAPH (a) OF OUR REPORT OF EVEN DATE

1 The nature of the Companys business/activities during the year is such that, to the best of our knowledge and the information and explanations given to us, clauses (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the Company.

2 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) All the fixed assets have been physically verified by the management during the year in accordance with a program of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on verification.

(c) During the year, the Company has not disposed of any substantial/major part of fixed assets.

3 In respect of its inventories:

(a) The stock of finished goods, stores, spare parts and raw materials have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedure of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business

(c) The Company has maintained proper records of the inventory. The discrepancies noticed on verification between physical stocks and the book records were not material and the same have been properly dealt with in the books of account

4. The Company has not granted/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.

5 In our opinion and according to the information and explanations given to us there is 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 and there is no continuing failure to correct major weaknesses in internal control system.

6 In respect of transactions entered in the register maintained in pursuance to section 301 of the Companies Act, 1956:

(a) to the best of our knowledge and belief and according to the information and explanations given to us, 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 and

(b) according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

7 In our opinion and according to the information and explanations given to us, in respect of the deposits accepted by the Company from public, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under, wherever applicable.

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

9 On the basis of the records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Government of India under Section 209 (1) (d) of the Companies Act have been made and maintained by the Company.

10 According to information and explanations given to us in respect of statutory dues:

(a) the Company has been regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales tax, wealth tax, Service Tax, custom duty, excise duty, cess and any other statutory dues, wherever applicable.

(b) the Company has unpaid dues of Rs.15.44 lakhs in respect of disputed demands of sales tax of which appeals involving Rs. 14.61 lakhs are pending before Appellate Assistant Commissioner of Sales Tax and appeals involving Rs. 0.83 lakh are pending before the Sales Tax Appellate Tribunal.

11 The Company does not have any accumulated losses and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

12 Based on our audit procedures and the information and explanations given to us, we are of the opinion that the Company has not defaulted in the repayment of dues to banks or financial institutions.

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

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

15 To the best of our knowledge and belief and according to the information and the explanations given to us, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

16 According to the Cash Flow Statement and other records examined by us and the information and the explanations given to us, on an overall basis, funds raised on short term basis have, prima facie, not been used during the year for long term investment.

1 7 According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

18 According to the information and explanations given to us and the records examined by us, the Company has not issued any debentures during the year.

19 The Company raised in June 2009, additional Equity Share Capital on Rights basis by issue of 12,21,075 Equity Shares of Rs.10/-each with a premium of Rs. 112/-per share for a total value of Rs. 14,89,71,150/- and utilized the same for the purpose of Working Capital requirements.

20 Based on our audit, information and representations received from the management, we have no reason / evidence that lead us to believe that any fraud on or by the Company has been noticed or reported during the year.

for SUNDARAM & SRINIVASAN Chartered Accountants (FRN 004207 S)

MPADHMANABHAN Camp: Kodaikanal Partner

May 24, 2010 Membership No. 13291



 
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