Auditor Report of VXL Instruments Ltd.

Mar 31, 2015

1. We have audited the accompanying standalone financial statements of VXL INSTRUMENTS 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 then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

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

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

4. 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.

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

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

Opinion

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

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

b. in the case of the Statement of Profit and Loss, of the 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..

Emphasis of Matter

7. Without qualifying our report, we draw attention to:

a. Note No.2 (b) of notes to the accounts, regarding non-provision for diminution in the value of investment of Rs. 51,69,261/- and receivables of Rs. 4,96,36,260/- in respect of a subsidiary of the company whose accumulated losses are in excess of the paid-up capital. The Company's view is dependent on the projected profitability and cash flow of the subsidiary Company.

Report on Other Legal and Regulatory Requirements

8. 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 the paragraph 3 and 4 of the Order, to the extent applicable.

9. 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 appears from our examination of those books;

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

d. In our opinion, the aforesaid standalone 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 written representations received from the directors as on 31 March, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015, from being appointed as a director in terms of Section 164(2) of the Act;

f. With respect to the other matters included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to our 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 under contingent liabilities (refer note 2 (p) of notes on accounts)

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

iii. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure referred to in our report to the members of VXL INSTRUMENTS LIMITED for the year ended on March 31, 2015

1. a) The Company has maintained records showing full particulars, including quantitative details and the

situation of its fixed assets. b) All the assets have been physically verified by the management during the year which in our opinion, is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification.

2. a) Inventories other than those lying with third parties have been physically verified during the year by the management. In our opinion, the frequency of verification was 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 the nature of its business.

c) In our opinion the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book records, where applicable, as noticed on physical verification were not material and have been properly dealt with in the books of account;

3. The Company has not granted any loans to companies, firms and other parties covered in the register maintained under section 189 of the Companies Act, 2013. Hence clause 3 (iii) (a) and (b) of the Companies Auditor's Report Order, 2015 is not applicable to the Company for the year under review.

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

5. The Company has not accepted any deposits and hence the requirement of clause 3 (v) of Companies (Auditor's Report) Order, 2015 is not applicable to the Company during the year under review.

6. We have been informed that maintenance of books of accounts pursuant to the rules made by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 for maintenance of Cost records in respect of products of the Company are not applicable to the Company for the year under review and hence the requirement of clause 3 (vi) of Companies (Auditor's Report) Order, 2015 is not applicable to the Company during the year under review.

7. a) The Company has been regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues applicable.There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income Tax, Sales Tax and Value Added Tax, Wealth Tax, Service Tax, duty of Customs, duty of Excise, Cess and other material statutory dues in arrears as at March 31, 2015 for a period of more than six months from the date they became payable. b) According to the information and explanation given to us, the following amounts of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited with the relevant authorities on account of any dispute are detailed under:-

Name of the Nature of dues Related Period Statute

Central Sales Tax Sales tax 2001-02 to 2004-05 Act, 1956

Finance Act, 1994 Service Tax 2008-09 to 2011-12

Central Excise Education cess 2009-10 Act, 1944 on excise duty

The Customs Customs Duty 2006-07 Act, 1962

Name of the Statute Amount (Rs.) Forum where dispute is pending

Central Sales Tax Act,1956 66,52,351 Honourable High Court of Karnataka.

Finance Act, 1994 10,34,66,834 Central Excise & Service Tax Appellate Tribunal

Central Excise 3,26,098 Central Excise & Service Tax Act, 1944 Appellate Tribunal

The Customs 7,70,839 Central Excise & Service Tax Act, 1962 Appellate Tribunal

c) There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company in accordance with relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder. Hence the provisions of clause 3(vii) ( c) of the Companies (Auditor's Report) Order, 2015 are not applicable to the company.

8. The accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the financial year but had not incurred cash losses in the preceding financial year.

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

10. As far as we could ascertain, the Company has not given guarantees for loans taken by others from banks or financial institutions and hence the provisions of clause 3(x) of the Companies (Auditor's Report) Order, 2015 are not applicable to the company.

11. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that term loans were applied for the purpose for which the loans were obtained.

12. According to the information and explanations given to us, no material frauds on or by the Company that causes material misstatements to financial statements have been noticed or reported during the year.

For Ishwar & Gopal Chartered Accountants

Firm Reg. No. 001154S

K.V. Gopalakrishnayya

Partner

Membership No.: 021748

Date : 22nd May 2015

Place : Bangalore

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Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

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

3. 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.

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

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

Opinion

6. 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 Profit and Loss Account, of the profit for the year ended on that date; and

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

Emphasis of Matter

7. Without qualifying our report, we draw attention to:

a. Note No.2 (b) of notes to the accounts, regarding non-provision for diminution in the value of investment of Rs. 51,69,261/ and receivables of Rs. 5,89,13,634/- in respect of a subsidiary of the company whose accumulated losses are in excess of the paid-up capital. The Company''s view is dependent on the projected profitablity and cash flow of the subsidiary Company.

b. Note No 14 to the Balance Sheet, regarding recognition and quantification of deferred tax asset of Rs. 5,07,84,606/- based on the opinion of the management that the same would be adjusted against future profits. The Company''s view is dependent on the projected profitabilty of the Company.

Report on Other Legal and Regulatory Requirements

8. 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.

9. 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 notified under the Companies Act, 1956 read with the General Circular15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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

ANNEXURE TO AUDITORS'' REPORT (AS REFERRED TO IN CLAUSE 1 OF OUR REPORT TO THE MEMBERS OF VXL Instruments Limited)

1. a. The Company has maintained records showing full particulars, including quantitative details and the situation of its fixed assets.

b. All the assets have not been physically verified by the management during the year but there is a program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification

c. The fixed assets disposed off during the year, in our opinion, will not affect the going concern status of the Company.

2. a. Inventories other than those lying with third parties have been physically verified during the year by the management. In our opinion, the frequency of verification was 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 the nature of its business

c. In our opinion the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book records, where applicable, as noticed on physical verification were not material and have been properly dealt with in the books of account;

3. a. The Company has not granted any loans to companies and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence clause 4 (iii) (a) to (d) of the Companies Auditor''s Report Order, 2003 (as amended) is not applicable to the Company for the year under review.

b. The Company has taken loans from parties (2 in number) covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.4 Lakhs and the year-end balance of loans taken was Nil.

c. In our opinion, the rate of interest and other terms and conditions are not prima facie, prejudicial to the interests of the company.

d. The Company has not defaulted in repayment of principal amount and interest as per the terms of the said deposit.

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

5. a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions entered in the registers maintained under Section 301 and except for items which are of special nature for which no alternative sources of supply is available or no comparison could be made of the prices in the absence of quotations / similar transactions with other parties, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

6. The Company has generally complied with the provisions of section 58A and 58AA of the companies Act, 1956 and the directives issued by the Reserve Bank of India in respect of the deposits accepted / renewed by the Company during the year under review. We have been informed that no order has been passed by the Company Law Board.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 for maintenance of Cost records in respect of products of the Company 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 determine whether they are accurate or complete.

9. a. The Company has been regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, customs duty and other material statutory dues applicable.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and cess were in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

c. According to the information and explanation given to us, the following amounts of income tax, wealth tax, customs duty, sales tax, excise duty and cess which have not been deposited with the relevant authorities on account of any dispute are detailed under:-

Name of the Nature of dues Related Period Amount (Rs.) Statute

Central Sales Sales tax 2005-06 & 2006-07 15,17,858 tax Act, 1956 2001-02 to 2004-05 97,43,434 Central Excise Service tax 2008-09 to 2011-12 10,34,66,834 Act, 1944

Education cess 2009-10 3,26,098 on excise duty

The Customs Customs Duty 2006-07 7,70,839 Act, 1962

Name of the From where dispute is Statute pending

Central Sales Joint Commissioner of tax Act, 1956 Commercial Taxes (Appeals)

Karnataka Appellate Tribunal, Bangalore

Central Excise Central Excise & Act, 1944 Service Tax Appellate Tribunal

Central Excise & Service Tax Appellate Tribunal

The Customs Central Excise & Act, 1962 Service Tax Appellate Tribunal

10. The accumulated losses of the Company at the end of the financial year are more than 50% of net worth. The Company has not incurred cash losses during the financial year covered by our audit and in the preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks.

12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clauses 4(xii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

14 In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments during the year under audit. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

15. As far as we could ascertain, the Company has not given guarantees for loans taken by others from banks or financial institutions and hence the provisions of clause 4(xv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

16. In our opinion, no term loans have been borrowed during the year and hence the provisions of clause 4(xvi) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long- term investment.

18. There was no issue of shares during the year. Accordingly, the provisions of clause 4(xviii) of the Companies (Auditor''s Report) Order, 2003 regarding creation of securities are not applicable.

19. According to the information and explanations given to us, there are no debentures issued by the Company during the year. Accordingly, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003 regarding creation of securities are not applicable.

20. The Company has not raised any monies by way of public issue during the year. Accordingly, the provisions of paragraph 4(xx) of the Companies (Auditor''s Report) Order, 2003 regarding end use of money are not applicable.

21. According to the information and explanations given to us, no material frauds on or by the Company that causes material misstatements to financial statements have been noticed or reported during the year.

For Ishwar & Gopal Chartered Accountants K.V. Gopalakrishnayya Date : 30th May 2014 Partner Place : Bangalore Membership No.: 21748 FRN 001154S

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Mar 31, 2013

Report on the Financial Statements

1 We have audited the accompanying financial statements of VXL Instruments 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

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

Auditor''s Responsibility

3 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.

4 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.

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

Opinion

6 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 subject to

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 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.

Emphasis of Matter

7 We draw attention to Note No. 2 (b) of notes to the accounts, regarding non-provision for diminution in the value of investment of Rs. 51,69,261/- and receivables of Rs. 6,12,05,837/- in respect of a subsidiary of the company whose accumulated losses are in excess of the paid-up capital, Note No 14 to the Balance Sheet, regarding recognition and quantification of deferred tax asset of Rs. 8,39,13,262/- based on the opinion of the management that the same would be adjusted against future profits. Our opinion is qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

8 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.

9. 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 sub section (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 TO THE AUDITOR''S REPORT

AS REFFERED TO IN CLAUSE 1 OF OUR REPORT TO THE MEMBERS OF VXL INSTRUMENTS LIMITED

1. a. The Company has maintained records showing full particulars, including quantitative details and the situation of its fixed assets.

b. All the assets have not been physically verified by the management during the year but there is a program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification

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

2. a Inventories other than those lying with third parties have been physically verified during the year by the management. In our opinion, the frequency of verification was 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 the nature of its business.

c. In our opinion the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book records, where applicable, as noticed on physical verification were not material and have been properly dealt with in the books of account.

3. a. The Company has not granted any loans to companies and other Marties covered in the register maintained under section 301 of the Companies Act, 1956. Hence clause 4 (iii) (a) to (d) of the Companies Auditor''s Report Order, 2003 (as amended) is not applicable to the Company for the year under review.

b. The Company has taken loans from parties (2 in number) covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 21.35 Lakhs and the year-end balance of loans taken was Rs. 4.00 Lakhs.

c. In our opinion, the rate of interest and other terms and conditions are not prima facie, prejudicial to the interests of the company.

d. The Company has not defaulted in repayment of principal amount and interest as per the terms of the said deposit.

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

5. a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions entered in the registers maintained under Section 301 and except for items which are of special nature for which no alternative sources of supply is available or no comparison could be made of the prices in the absence of quotations / similar transactions with other parties, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

6. The Company has generally complied with the provisions of section 58A and 58AA of the companies Act, 1956 and the directives issued by the Reserve Bank of India in respect of the deposits accepted / renewed by the Company during the year under review. We have been informed that no order has been passed by the Company Law Board.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 for maintenance of Cost records in respect of products of the Company 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 determine whether they are accurate or complete.

9. a. The Company has been regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, customs duty and other material statutory dues applicable.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and cess were in arrears as at March 31, 2013 for a period of more than six months from the date they became payable.

Name of the Nature of dues Related Statute Period

Central Sales tax Sales tax 2005-06 & Act, 1956 2006-07

2001-02 to 2004-05

Central Excise Act, Service tax 2008-09 to 1944 2009-10

Education cess on 2009-10 excise duty

Service tax 2010-11

The Customs Customs Duty 2006-07 Act, 1962

Karnataka Motor Road tax 2009-10 Vehicles Act, 1957

Name Amount From where dispute is (Rs.) pending

Central Sales tax 15,17,858 The Joint Commissioner of Commercial taxes (Appeals)

97,43,434 Karnataka Appellate Tribunal, Bangalore

Central Sales tax 66,82,997 Central Excise & Service Tax Appellate Tribunal

3,26,098 Central Excise & Service Tax Appellate Tribunal

1,55,53,518 Central Excise & Appellate Tribunal

7,70,839 Central Excise & Service Tax Appellate Tribunal

Central Sales tax 5,95,520 High Court of Karnataka, Bangalore

c. According to the information and explanation given to us, the following amounts of income tax, wealth tax, customs duty, sales tax, excise duty and cess which have not been deposited with the relevant authorities on account of any dispute are detailed under:-

10. The accumulated losses of the Company at the end of the financial year are not more than 50% of net worth. The Company has not incurred cash losses during the financial year covered by our audit and in the preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks.

12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clauses 4(xii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

14. In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments during the year under audit. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

15. As far as we could ascertain, the Company has not given guarantees for loans taken by others from banks or financial institutions and hence the provisions of clause 4(xv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

16. In our opinion, no term loans have been borrowed during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

18. There was no issue of shares during the year. Accordingly, the provisions of clause 4(xviii) of the Companies (Auditor''s Report) Order, 2003 regarding creation of securities are not applicable.

19. According to the information and explanations given to us, there are no debentures issued by the Company during the year. Accordingly, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003 regarding creation of securities are not applicable.

20. The Company has not raised any monies by way of public issue during the year. Accordingly, the provisions of paragraph 4(xx) of the Companies (Auditor''s Report) Order, 2003 regarding end use of money are not applicable.

21. According to the information and explanations given to us, no material frauds on or by the Company that causes material misstatements to financial statements have been noticed or reported during the year.

For Ishwar & Gopal

Chartered Accountants

K. V. Gopalakrishnayya

Partner

Membership No.: 21748

FRN 001154S

Place : Bangalore

Date : 29th May 2013

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of VXL Instruments Limited, as at 31st March 2012, the Profit & Loss Account and Cash Flow Statement for the year ended on that date 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 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.

3. As required by the Company's (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said order.

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

i. 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;

ii. 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:

iii. The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the Books of Account.

iv. In our opinion and to the best of our information and according to the explanation given to us, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors prima facie is disqualified as on 31st March 2012, from being appointed as director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

In our opinion and to the best of our information and according to the explanations given to us, the said statement of accounts together with the notes thereon subject to:, Note No.2

(b) of notes to the accounts, regarding non-provision for diminution in the value of investment of Rs.5,169,261/ and receivables of Rs. 677,99,928/- in respect of a subsidiary of the company whose accumulated losses are in excess of the paid-up capital, Note No 14 to the Balance Sheet, regarding recognition and quantification of deferred tax asset of Rs 84,288,706/- based on the opinion of the management that the same would be adjusted against future profits, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India

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

2. In the case of the Profit and Loss Account, of the profit for the year ended on that date.

3. In so far as it relates to the cash flow statement, of the cash flows of the Company for the year ended on that date.

(i) In respect of its Fixed Assets

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

(b) The fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its business. No material discrepancies were noticed on such physical verification.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets and therefore do not affect the going concern assumption

(ii) In respect of its Inventories:

(a) As explained to us, inventories other than that lying with third parties have been physically verified by the management at reasonable intervals. In our opinion frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business;

(c) In our opinion the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account;

(iii) Loans:

(a) During the year, the Company has not granted any loans to parties listed in the register maintained under Section 301of the Companies Act, 1956. Hence clause 4 (iii) (a) to (d) of the Companies Auditor's Report Order, 2003 (as amended) is not applicable to the Company for the year under review.

(b) The Company has taken loans (in the form of fixed deposits) from 2 parties listed in the register maintained under section 301 of the Companies Act, 1956 aggregating to Rs. 21,35,000. The maximum amount involved during the year was Rs. 21,35,000 and year end balance was Rs. 21,35,000/-

(c) In our opinion, the rate of interest and other terms on which the said loan have been taken are not, prima facie, prejudicial to the interest of the Company;

(d) As per the information furnished to us, the Company has not defaulted in payment of principal amount and interest as per the terms of the said deposits;

(iv) Internal Control Procedures

In our opinion and according to the information and explanations provided to us there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for sale of goods and services.

(v) In respect of transactions covered under section 301 of the Companies Act, 1956:

(a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been properly entered in the said register;

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the registers maintained under Section 301 and except for items which are of special nature for which no alternative sources of supply is available or no comparison could be made of the prices in the absence of quotations / similar transactions with other parties, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time ;

(vi) The Company has generally complied with the provisions of section 58A and 58AA of the companies Act, 1956 and the directives issued by the Reserve Bank of India in respect of the deposits accepted / renewed by the Company during the year under review. We have been informed that no order has been passed by the Company Law Board.

(vii)The Company has a system of internal audit which, in our opinion, is commensurate with its size and nature of its business;

(viii)We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 for maintenance of Cost records in respect of products of the Company 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 determine whether they are accurate or complete.

(ix) In respect of Statutory Dues:

(a) According to the information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of provident fund, investors education and protection fund, employees' state insurance, sales tax, wealth tax, customs duty, excise duty, cess and any other statutory dues applicable to it.

According to the information and explanations provided to us, there are no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears as at 31.03.2012 for a period of more than six months from the date they became payable.

The above data has been furnished to the extent dues payable have been identified from the records of the company.

The disputed statutory dues amounting to Rs. 326,098 that have not been deposited on account of disputed matters pending before statutory authorities are as under:

Sl. Name of the Statute Nature of the dues Amount Period to which Forum where No. the dues relate dispute is pending

1 Central Excise Act, 1944 Education Cess on Rs. 326,098 2007 & 2008 Central Excise & excise duty Service Tax Appellate Tribunal

The above data has been furnished to the extent dues payable have been identified from the records of the Company

(x) As per the Balance Sheet, accumulated losses of the Company as at the end of the financial year is more than 50% of its net worth. The Company has not incurred cash losses during the year and in the immediately preceding previous year.

(xi) As per the information furnished to us, generally the Company has not defaulted in repayment of dues to Banks / Financial Institutions.

(xii) Based on our examination and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

(xiii) The Company is not a chit/ nidhi/ mutual benefit fund/society and clause xiii of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. The investments made by the Company in the shares and other securities are in the name of the Company.

(xv) On the basis of the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions;

(xvi) According to the information and explanations given to us, the Company has not taken any term loans during the year and hence requirement of reporting regarding application of term loans does not arise.

(xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet and Cash flow statement of the Company, we report that no funds raised on short term basis have been used for long term investments.

(xviii)According to the information and explanation given to us, the Company has not made preferential allotment of shares to any party listed in the Register maintained under Section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year;

(xx) The Company has not raised any money by public issues during the year;

(xxi) Based on the audit procedures performed and information and explanations given to us 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 Ishwar & Gopal

Chartered Accountants

K. V. Gopalakrishnayya

Partner

Membership No.: 21748

FRN 001154S

Place : Bangalore

Date : 28th May 2012

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of VXL Instruments Limited, as at 31st March 2011, the Profit & Loss Account and Cash Flow Statement for the year ended on that date 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 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.

3. As required by the Company's (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said order.

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

i. 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;

ii. 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:

iii. The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the Books of Account.

iv. In our opinion and to the best of our information and according to the explanation given to us, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors prima facie is disqualified as on 31st March 2011, from being appointed as director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said statement of accounts together with the notes thereon subject to:, Note No.2 of Schedule 17, regarding non-provision for diminution in the value of investment of Rs.5,169,261/ and receivables of Rs. 6,27,06,509 in respect of a subsidiary of the company whose accumulated losses are in excess of the paid-up capital, Note No 12 in Schedule 17, regarding recognition and quantification of deferred tax asset of Rs 10,04,04,.865/- based on the opinion of the management that the same would be adjusted against future profits, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India

1. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2011, and

2. In the case of the Profit and Loss Account, of the profit for the year ended on that date.

3. In so far as it relates to the cash flow statement, of the cash flows of the Company for the year ended on that date

ANNEXURE TO THE AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF VXL INSTRUMENTS LIMITED

(i) In respect of its Fixed Assets

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

(b) The fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its business. No material discrepancies were noticed on such physical verification.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets and therefore do not affect the going concern assumption

(ii) In respect of its Inventories:

(a) As explained to us, inventories other than that lying with third parties have been physically verified by the management at reasonable intervals. In our opinion frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business;

(c) In our opinion the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account;

(iii) Loans:

(a) During the year, the Company has not granted any loans to parties listed in the register maintained under Section 301 of the Companies Act, 1956. Hence clause 4 (iii) (a) to (d) of the Companies Auditor's Report Order, 2003 (as amended) is not applicable to the Company for the year under review.

(b) The Company has taken loans (in the form of fixed deposits) from 2 parties listed in the register maintained under section 301 of the Companies Act, 1956 aggregating to Rs. 21,35,000. The maximum amount involved during the year was Rs. 28,35,000 and year end balance was Rs. 21,35,000/- (c) In our opinion, the rate of interest and other terms on which the said loan have been taken are not, prima facie, prejudicial to the interest of the Company;

(d) As per the information furnished to us, the Company has not defaulted in payment of principal amount and interest as per the terms of the said deposits;

(iv) Internal Control Procedures

In our opinion and according to the information and explanations provided to us there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for sale of goods and services.

(v) In respect of transactions covered under section 301 of the Companies Act, 1956:

(a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been properly entered in the said register;

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the registers maintained under Section 301 and except for items which are of special nature for which no alternative sources of supply is available or no comparison could be made of the prices in the absence of quotations / similar transactions with other parties, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

(vi) The Company has generally complied with the provisions of section 58A and 58AA of the companies Act, 1956 and the directives issued by the Reserve Bank of India in respect of the deposits accepted / renewed by the Company during the year under review. We have been informed that no order has been passed by the Company Law Board.

(vii)The Company has a system of internal audit which, in our opinion, is commensurate with its size and nature of its business;

(viii)We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 for maintenance of Cost records in respect of products of the Company 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 determine whether they are accurate or complete.

(iv) In respect of Statutory Dues:

(a) According to the information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of provident fund, investors education and protection fund, employees' state insurance, sales tax, wealth tax, customs duty, excise duty, cess and any other statutory dues applicable to it.

The above data has been furnished to the extent dues payable have been identified from the records of the company.

(b) There are no outstanding disputed amounts of income-tax, wealth tax, customs duty, excise duty, cess as at the end of the year.

The above data has been furnished to the extent dues payable have been identified from the records of the Company.

(x) As per the Balance Sheet, accumulated losses of the Company as at the end of the financial year is more than 50% of its net worth. The Company has not incurred cash losses during the year and in the immediately preceding previous year.

(xi) As per the information furnished to us, generally the Company has not defaulted in repayment of dues to Banks / Financial Institutions.

(xii) Based on our examination and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

(xiii) The Company is not a chit/ nidhi/ mutual benefit fund/society and clause xiii of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. The investments made by the Company in the shares and other securities are in the name of the Company.

(xv) On the basis of the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions;

(xvi) According to the information and explanations given to us, the Company has not taken any term loans during the year and hence requirement of reporting regarding application of term loans does not arise.

(xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet and Cash flow statement of the Company, we report that no funds raised on short term basis have been used for long term investments..

(xviii)According to the information and explanation given to us, the Company has not made preferential allotment of shares to any party listed in the Register maintained under Section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year;

(xx) The Company has not raised any money by public issues during the year;

(xxi) Based on the audit procedures performed and information and explanations given to us 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 Ishwar & Gopal Chartered Accountants

K.V. Gopalakrishnayya Partner Membership No.: 21748 FRN - 001154S

Place : Bangalore Date : 25th May, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of VXL Instruments Limited, as at 31st March 2010, the Profit & Loss Account and 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 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.

3. As required by the Companys (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said order.

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

i. 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;

ii. 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:

iii. The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the Books of Account.

iv. In our opinion and to the best of our information and according to the explanation given to us, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors prima facie is disqualified as on 31st March 2010, from being appointed as director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said statement of accounts together with the notes thereon subject to:, Note No.2 of Schedule 17B, regarding non-provision for diminution in the value of investment of Rs.5,169,261/ and receivables of Rs. 79,186,388 in respect of a subsidiary of the company whose accumulated losses are in excess of the paid-up capital, Note No12 in Schedule 17 B, regarding recognition and quantification of deferred tax asset of Rs 106,267,948/- based on the opinion of the management that the same would be adjusted against future profits,

give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India.

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

2. In the case of the Profit and Loss Account, of the profit for the year ended on that date.

3. In so far as it relates to the cash flow statement, of the cash flows of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF VXL INSTRUMENTS LIMITED

(i) In respect of its Fixed Assets

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

(b) The fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its business. No material discrepancies were noticed on such physical verification.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets and therefore do not affect the going concern assumption

(ii) In respect of its Inventories:

(a) As explained to us, inventories other than that lying with third parties have been physically verified by the management at reasonable intervals. In our opinion frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business;

(c) In our opinion the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account;

(iii) Loans:

(a) During the year, the Company has not granted any loans to parties listed in the register maintained under Section 301of the Companies Act, 1956. Hence clause 4 (iii) (a) to (d) of the Companies Auditors Report Order, 2003 (as amended) is not applicable to the Company for the year under review.

(b) The Company has taken loans (in the form of fixed deposits) from 7 parties listed in the register maintained under section 301 of the Companies Act, 1956 aggregating to Rs. 1,43,82,000. The maximum amount involved during the year was Rs. 1,28,70,000 and year end balance was Rs. 28,35,000/- (c) In our opinion, the rate of interest and other terms on which the said loan have been taken are not,

prima facie, prejudicial to the interest of the Company;

(d) As per the information furnished to us, the Company has not defaulted in payment of principal amount and interest as per the terms of the said deposits;

(iv) Internal Control Procedures

In our opinion and according to the information and explanations provided to us there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for sale of goods and services.

(v) In respect of transactions covered under section 301 of the Companies Act, 1956:

(a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been properly entered in the said register;

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the registers maintained under Section 301 and except for items which are of special nature for which no alternative sources of supply is available or no comparison could be made of the prices in the absence of quotations / similar transactions with other parties, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

(vi) The Company has generally complied with the provisions of section 58A and 58AA of the companies Act, 1956 and the directives issued by the Reserve Bank of India in respect of the deposits accepted / renewed by the Company during the year under review. We have been informed that no order has been passed by the Company Law Board.

(vii)The Company has a system of internal audit which, in our opinion, is commensurate with its size and nature of its business;

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 for maintenance of Cost records in respect of products of the Company 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 determine whether they are accurate or complete.

(ix) In respect of Statutory Dues:

(a) According to the information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of provident fund, investors education and protection fund, employees state insurance, sales tax, wealth tax, customs duty, excise duty, cess and any other statutory dues applicable to it except in case of sales tax. There are no undisputed amounts payable which were outstanding as at the date of the Balance Sheet for a period of more than six months from the date they became payable;

The above data has been furnished to the extent dues payable have been identified from the records of the company.

(b) There are no outstanding disputed amounts of income-tax, wealth tax, custom duty, excise duty, cess as at the end of the year. The above data has been furnished to the extent dues payable have been identified from the records of the Company;

(x) As per the Balance Sheet, accumulated losses of the Company as at the end of the financial year is more than 50% of its net worth. The Company has not incurred cash losses during the year and in the immediately preceding previous year.

(xi) As per the information furnished to us, generally the Company has not defaulted in repayment of dues to Banks / Financial Institutions.

(xii) Based on our examination and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

(xiii) The Company is not a chit/ nidhi/ mutual benefit fund/society and clause xiii of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. The investments made by the Company in the shares and other securities are in the name of the Company.

(xv) On the basis of the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions;

(xvi) According to the information and explanations given to us, the Company has not taken any term loans during the year and hence requirement of reporting regarding application of term loans does not arise.

(xvii)According to the information and explanations given to us and on overall examination of the Balance Sheet and Cash flow statement of the Company, we report that no funds raised on short term basis have been used for long term investments..

(xviii)According to the information and explanation given to us, the Company has not made preferential allotment of shares to any party listed in the Register maintained under Section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year;

(xx) The Company has not raised any money by public issues during the year;

(xxi) Based on the audit procedures performed and information and explanations given to us 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 Ishwar & Gopal

Chartered Accountants

K.V. Gopalakrishnayya

Partner Place : Bangalore Membership No.: 21748

Date : 29th May, 2010 FRN - 001154S