Auditor Report of Innoventive Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Innoventive Industries Limited ("the Company"}, which comprise the Balance Sheet as on 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year ended and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Management is responsible for the matters stated in Section 134(5} of the Companies Act, 2013 ("the Act"} with respect to the preparation 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

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 thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. These Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The selection of the procedures depends 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 controls relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's 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 on the standalone financial statements.

Basis for Qualified Opinion

1. The Company has not made following provisions

i. Stock of slow and/non -moving of stores, raw materials, semi-finished and finished goods valued at Rs. 1,000 lacs approximately;

ii. Debts due from subsidiary amounting to Rs, 2,988.08 lacs and Loans and advances amountinq to Rs 6,198.29 lacs (including loans from subsidiaries amounting to Rs. 1,420.59 Lacs.)

2. The company has investments in subsidiaries whose net worth has been substantially eroded or is negative which has casted material uncertainty in the continuance of the business of these subsidiaries. However, the dimunition in the value of investment in these subsidiaries aggregating to Rs 2,009 lacs is not provided for.

We are unable to comment on ultimate loss which may aiise on realization of these balances. Had the above amounts been fully provided for in the year ended March 31, 2015, the loss would have been higher by Rs 12,195.36 lacs with consequent impact on net worth as on that date.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: .

a. In case of Balance Sheet, of the state of affairs of the Company as on 31st March, 2015;

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

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

We draw attention to the following matters in the Notes to the financial statements:

a. Note 2.1 in the financial statements which indicates that the Company has accumulated losses and its net worth has been fully eroded, the Company has incurred a net loss during the current and previous year(s) aggregating to Rs. 21,348.26 lacs and Rs. 43,465.56 lacs respectively, the Company's current liabilities exceeded its current assets as at the balance sheet date and the company has a net worth of (Rs.16,559.19 Lacs). These conditions indicate existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.

Our opinion is not modified in respect of these matters.

Other Matters

a. Note 38 to the Financial statements, during the year ended March 31, 2015, pending reconciliations with few banks, the interest and other charges on the working capital loans, term loans and the ECB loans taken from the said banks has been provided by the management as per the Master Restructuring Agreement dated September 28, 2014 entered Into with the banks under the Corporate Debt Restructuring Scheme ("CDR").

We are unable to quantify the impact between the interest and other charges debited by the management and amount charged by the bank, if any, arising out of reconciliations with the banks. Further, there are certain unreconciled balances pertaining to fund, non fund based limits & term loans.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order'1} issued by the Central Government of India in terms of Sub-section (11) of Section 143 of the Act, we give in the Annexure a statement on the matters specified in Paragraphs 3 and 4 of the order.

2. As required by Section 143 ( 3) of the Act, we report that:

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

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

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

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, 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) The going concern matter described in the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164(2) of the Act.

g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

a. The legal cases pending against the company are disclosed in Note 27 as on March 31, 2015. However, it may not materially impact its financial position;

b. The company doesn't have any long term contracts. Accordingly, provisions for any material foreseeable loses is not required; and

c. There are no amounts which are required to be transferred to the Investor Education and Protection Fund.

Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of event date.

i. (a) The Company is in the process of updating the fixed asset register to show full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management in the previous year in accordance with a planned programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

ii. (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and appropriate adjustments have been made in the books for discrepancies noticed during physical verification.

iii. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clause 3 [iii)[a) and (b) of the Order are not applicable to the Company and hence not commented upon.

iv. In our opinion and according to the information and explanation given to us, the internal control system needs to he strengthened to make it commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control procedures.

v. The Company has not accepted any deposits from the public within the meaning of sections 73 and 74 of the Act and the rules framed thereunder to the extent notified.

vi. We have broadly reviewed the books of accounts maintained by the Company in respect of products where pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under specified under section 148[1) of the Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We, however, have not made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. [a) The company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess, and other material statutory dues with appropriate authorities except for delays in some cases.

(b) According to the information and explanations given to us, except for dues under income tax aggregating to Rs 37.44 lacs, no undisputed amounts payable to provident fund, investor education and protection fund, employees' state insurance, Central Excise, Maharashtra Value Added Tax, Central Sales tax and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) The company has not delayed in transferring any amount to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

viii. The Company has an accumulated loss of Rs. 49,122.04 lacs at the end of the financial year and it has incurred cash losses of Rs 14,500.83 lacs in the current year and Rs 27207.571acs in the immediately preceding financial year.

ix. As per information and explanation given by the management, we are of the opinion that the Company has not defaulted on repayment of dues to the financial institution and bank as on the Balance Sheet date. The default pertaining to FY 2014 has been converted to Funded Interest Term Loan by the lenders in compliance with the CDR Scheme.

x. According to the information and explanations given to us, the Company has not given guarantee for loans taken by others from bank or financial institutions.

xi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

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

For Bharat Rughani & Co Chartered Accountants FRN 101220W

CA Akash Rughani Partner Membership No. 139664

Place: Pune Date: October 09,2015

---

Mar 31, 2014

Report on the Financial Statements

1. We have audited the accompanying financial statements of Innoventive Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statements of Profit and Loss and Cash Flow 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 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 September 13, 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 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.

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 31st March 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.

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

d. In our opinion, the Balance Sheet, the Statements of Profit and Loss and Cash Flow dealt with by this report, comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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 referred to in paragraph 7 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date

(i) (a) The Company is in the process of updating the fixed asset register to show full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets are physically verified by the management once in three years in accordance with a planned programme, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. However during the year the fixed assets have not been physically verified by the Company.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and appropriate adjustments have been made in the books for discrepancies noticed during physical verification.

(iii) (a) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of the clause 4 (iii) (e), (f) and (g) of the Companies (Auditor''s Report) Order, 2003 are not applicable and hence not commented upon.

The Company has granted an interest free unsecured loan to a company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1,420/- Lacs and the year-end balance to this party is Rs. 1,420/- Lacs.

(b) In our opinion and according to the information and explanation given to us, the other terms and conditions of loans granted by the company, secured or unsecured, are prima facie not prejudicial to the interest of the company.

(c) As informed by the Company, the aforesaid loan is repayable on demand. The Company has not demanded repayment of the said loan during the year, thus, there is no default on the part of the party to whom the money has been lent.

(d) There is no overdue amount of loans granted to any company, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanation given to us, the internal control system needs to be strengthened to make it commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control procedures.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered.

(b) ln our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees Five lakhs have been entered into during the financial year at prices which are reasonable having regard the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public. Therefore, the provisions of section 58A and 58AA and any other relevant provisions of the Companies Act, 1956 and rules framed thereunder are not applicable.

(vii) During the year, the Company did not have an internal audit system.

(viii) We have broadly reviewed the books of accounts maintained by the Company in respect of products where pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under section 209 (1)

(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We however have not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) Undisputed Statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues have not been regularly deposited with appropriate authorities and there have been delays in large number of cases.

(b) According to the information and explanations given to us, except for Income Tax, Maharashtra Value Added Tax, Central Sales Tax and Employees'' State Insurance Amounting to Rs. 1,167.54/- Lacs, Rs 78.10/- Lacs, 15.23/- Lacs, Rs. 0.05/- Lacs respectively, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, there are no dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute.

(x) The Company has an accumulated loss of Rs. 27,774.75/- Lacs at the end of the financial year and it has incurred cash losses of Rs. 27,207.57/- Lacs in the current year and Rs. Nil in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has delayed in certain repayment of dues (including interest) to the financial institutions and banks. The delayed principal amount aggregates to Rs. 5,658.94/- Lacs (delays ranging from 1 to 274 days). The amount is outstanding at the balance sheet date.

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

(xiii) 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 (as amended) are not applicable to the Company.

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

(xv) According to the information and explanations given to us, the Company has not given guarantee for loans taken by others from bank or financial institutions.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statement of the Company, we report that the Company has not used any funds raised on Short Term basis for Long Term Investment Purposes.

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

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

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

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

For B. K. Khare & Co. Chartered Accountants Firm registration number: 105102W



Prasad Paranjape Partner M. No.: 047296 Pune, May 29, 2014

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of Innoventive Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and a summary of signifcant accountng policies and other explanatory informaton.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparaton of these fnancial statements that give a true and fair view of the fnancial positon, fnancial performance and cash fows of the Company in accordance with the Accountng Standards referred to in sub-secton (3C) of secton 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementaton and maintenance of internal control relevant to the preparaton and presentaton of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or errors.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditng issued by the Insttute 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 fnancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparaton and fair presentaton of the fnancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluatng the appropriateness of accountng policies used and the reasonableness of the accountng estmates made by management, as well as evaluatng the overall presentaton of the fnancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our informaton and according to the explanatons given to us, the fnancial statements give the informaton required by the Act in the manner so required and give a true and fair view in conformity with the accountng principles generally accepted in India:

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

(b) in the case of the statement of Proft and Loss, of the proft for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1. As required by ‘the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004'', issued by the Central Government of India in terms of sub-secton (4A) of secton 227 of the Act (hereinafer referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the informaton and explanatons given to us, we give in the Annexure a statement on the maters specifed in paragraphs 4 and 5 of the Order.

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

a. We have obtained all the informaton and explanatons 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 examinaton of those books;

c. The Balance Sheet, Statement of Proft 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 Proft and Loss, and Cash Flow Statement comply with the Accountng Standards referred to in subsecton (3C) of secton 211 of the Companies Act, 1956;

e. On the basis of writen representatons received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-secton (1) of secton 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notfcaton as to the rate at which the cess is to be paid under secton 441A of the Companies Act, 1956 nor has it issued any Rules under the said secton, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

(i) (a) The Company has maintained proper records showing full partculars, including quanttatve details and situaton of fxed assets.

(b) Fixed assets were physically verifed by the management during the year in accordance with a planned programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were notced on such verifcaton.

(c) There was no substantal disposal of fxed assets during the year.

(ii) (a) The management has conducted physical verifcaton of inventory at reasonable intervals during the year.

(b) The procedures of physical verifcaton of inventory followed by the management are reasonable and adequate in relaton to the size of the Company and the nature of its business.

(c) In our opinion and according to informaton and explanatons given to us and on the basis of our examinaton of the records of Rs.the inventory, the Company is maintaining proper records of inventory. Discrepancies notced on verifcaton between the physical stocks and the book records were not material and have been appropriately dealt with in the books of account.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, frms or other partes covered in the register maintained under secton 301 of the Companies Act, 1956. Accordingly, provisions of the clause 4 (iii) (b), (c) and (d) of the Companies (Auditor''s Report) Order, 2003 are not applicable and hence not commented upon.

(b) The Company had taken loan from a company covered in the register maintained under secton 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 270 lacs and the year-end balance of loans taken from such party was Rs. 176 lacs.

(c) In our opinion and according to the informaton and explanatons given to us, the rate of interest and other terms and conditons for such loan are not prima facie prejudicial to the interest of the Company.

(d) The loan taken is re-payable on demand. As informed, the lender has not demanded repayment of any such loan during the year, thus, there has been no default on the part of the company.

(iv) In our opinion and according to the informaton and explanaton given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fxed asset and with regard to the sale of goods and services. During the course of our audit, we have neither come across nor have been informed of any contnuing failure to correct major weaknesses in the internal control procedures.

(v) (a) According to the informaton and explanatons provided by the management, we are of the opinion that the partculars of contracts or arrangements referred to in secton 301 of the Act that need to be entered into the register maintained under secton 301 have been so entered.

(b) In respect of transactons made in pursuance of such contracts or arrangements exceeding value of Rupees fve lakhs entered into during the fnancial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactons were made at prevailing market prices at the relevant tme.

(vi) The Company has not accepted any deposits from the public. Therefore, the provisions of secton 58A and 58AA and any other relevant provisions of the Companies Act, 1956 and rules framed thereunder are not applicable.

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

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

(ix) (a) The Company is generally regular in depositng with appropriate authorites undisputed statutory dues including provident fund, investor educaton and protecton fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it. However, in respect of payment of tax deducted at source there have been slight delays in few cases.

(b) According to the informaton and explanatons given to us, no undisputed amounts payable in respect of provident fund, investor educaton and protecton fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

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

(xi) Based on our audit procedures and as per the informaton and explanatons given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a fnancial insttuton, bank or debenture holders.

(xii) According to the informaton and explanatons given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securites.

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

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

(xv) According to the informaton and explanatons given to us, the Company has not given any guarantee for loans taken by others from bank or fnancial insttutons.

(xvi) Based on informaton and explanatons given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the informaton and explanatons given to us and on an overall examinaton of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferental allotment of shares to partes or companies covered in the register maintained under secton 301 of the Companies Act, 1956.

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

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

(xxi) Based upon the audit procedures performed for the purpose of reportng the true and fair view of the fnancial statements and as per the informaton and explanatons given by the management, we report that no fraud on or by the Company has been notced or reported during the course of our audit.

For B. K. Khare & Co.

Chartered Accountants

Firm registraton number: 105102W

Prasad Paranjape

Partner

Membership No.:47296

Place: Pune

Date: May 29, 2013

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of Innoventive Industries Limited ('the Company') as at March 31, 2012, the statement of Profit and Loss and the 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 conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 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 purposes 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, the statement of profit and loss and the cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, the statement of profit and loss and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. On the basis of the written representations received from the directors, as on March 31,2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (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 accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31,2012;

b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Re: Innoventive Industries Limited (the Company1)

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

(b) Some of the fixed assets have been physically verified by the management during the year based on the regular programmer of verification, which in our opinion is reasonable having regards to the size of the Company and the nature of its assets. As explained, the reconciliation of physical verification of fixed assets with book records is in process.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The inventory, except goods in transit and stocks lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year end, written confirmations have been obtained by the management.

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

(c) In our opinion and according to information and explanations given to us and on the basis of our examination of the records of the inventory, the Company is maintaining proper records of inventory. Discrepancies noticed on verification between the physical stocks and the book records were not material and have been appropriately dealt with in the books of account.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 ('the Act'). Accordingly, the provisions of sub clause (b), (c), (d), (f) and (g) of clause 4(iii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public. Therefore, the provisions of section 58Aand 58AAand any other relevant provisions of the Companies Act, 1956 and rules framed there under are not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to information and explanations given to us and on the basis of our examination of the records of the company, except for slight delays in few cases in payment of Sales Tax dues and Income Tax Deducted at source, the Company has generally been regular in depositing undisputed statutory dues including Investor Education and Protection Fund, Provident Fund and Employees State Insurance, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they become payable. Income tax deducted at source amounting to f 1.83 lacs which was outstanding for payment more than six months. The said amount has since been paid.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the Nature of Rupees in Period to which Forum where statute dues Lacs the amount relates dispute is pending Dues towards Provident sec 7A as per 5.55 2007-2008 Commissioner Fund Act,1952 demand notice

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

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank.

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

(xiii) 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 (as amended)are not applicable to the Company.

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

(xv) According to the information and explanations given to us, the Company has given guarantees of f 170 Lacs for loans taken by subsidiaries and other companies from banks and financial institutions. Considering the nature relations with the companies, in our opinion, the terms and conditions of the guarantees for loans given are not prejudicial to the interests of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

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

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

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

(xx) The Company has raised money during the year through initial public offer. We have verified that the end use of money raised by public issues is as disclosed in the notes to the financial statements.

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

For B. K. Khare & Co.

Firm registration number: 105102W

Chartered Accountants

Prasad Paranjape

Partner Membership No.: 047296

Place: Pune

Date: May30,2012

---

Mar 31, 2011

We have audited the attached Balance Sheet of Innoventive Industries Limited as at March 31, 2011, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (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 the paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

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

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

e) On the basis of the written representations received from the Directors as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on March 31, 2011 from being appointed as director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the said date;

f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts, read together with the Company's accounting policies and the Notes thereto, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as on March 31, 2011;

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

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

Annexure to the Auditors' Report Referred to in paragraph 1 of our Report of even date

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

(b) Major assets have been physically verified by the management during the year based on the regular program of verification, which in our opinion is reasonable having regards to the size of the Company and the nature of its assets. As explained, the reconciliation of physical inventory of fixed assets with book records is in process.

(c) In our opinion and according to the information and explanation given to us, during the year, the Company has not disposed of any substantial/major part of fixed assets.

ii. (a) As explained to us, the inventory, except stocks lying with third parties, has been physically verified during the year by the management. For stocks lying with third parties at the year end, written confrmations have been obtained. 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 the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us and on the basis of our examination of the records of the inventory, the Company is maintaining proper records of inventory. Discrepancies noticed on verification between the physical stocks and the book records were not material and have been appropriately dealt with in the books of account.

iii. According to the information and explanations given to us, no loans secured or unsecured have been granted to or taken from companies, frms or other parties in the register maintained under Section 301 of the Companies Act, 1956.

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

v. In respect of transactions entered in the register maintained in pursuance of Section 301 of Companies Act, 1956;

(a) Based on audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements have been entered in the register required to be maintained under Section 301.

(b) According to the information and explanations given to us and excluding certain transactions of purchase of goods and materials of special nature for which alternate quotations are not available, in our opinion, the transactions have been made at prices which are, prima facie, reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and therefore , the provisions of Section 58A and 58AA and any other relevant provisions of the Companies Act, 1956 and rules there under are not applicable.

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

viii. According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 for any of the products manufactured/services rendered by the Company.

ix. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, except for Sales Tax dues, Income Tax deducted at source , Provident Fund and employees' State Insurance in which there have been delays on several occasions, the Company has generally been regular in depositing undisputed statutory dues including Investor education and Protection Fund, Wealth Tax, Service Tax, Customs Duty, excise Duty, cess and other material statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income tax, Sales tax, Wealth tax, Service tax, Customs duty and excise duty were in arrears, as at March 31, 2011 for a period of more than six months from the date they became payable.

(c) According to the records of the Company and information and explanations given to us, dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and excise Duty and cess, which have not been deposited on account of disputes and forums where dispute are pending are as under:

Name of Statute Nature of dues Amount Period to which Forum where dispute is (Rs. in lacs) amount relates pending

Income Tax Income Tax Demand 10.84 2007-08 Dy. Commissioner

Central excise Act excise Demand 2.09 2006-07 CESTAT

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

xi. Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to its bankers or to any financial institutions.

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

xiii. The provisions of any Special Statue applicable to chit fund or nidhi/mutual benefit fund/societies are not applicable to the Company.

xiv. Based on the records examined by us and according to the information and explanations given to us, we are of the opinion that the Company is not dealing/trading in shares, securities, debentures and other investments.

xv. According to the information and explanations given to us, the Company has given following guarantees for loans taken by subsidiary and other companies from banks and financial institutions. Considering the nature of relations with the companies, in our opinion, the terms and conditions of the guarantees for loans given are not prejudicial to the interests of the Company.

Sr. Given in Guarantee given in Guarantee given on Purpose/ Nature Amount Outstanding As on No. Year favour of behalf of of transaction (Rs. in lacs) March 31, 2011 (Rs. in lacs)

1 2006-07 Saraswat Co- Arihant Steel and Term Loan & 1,490.00 169.45

operative Bank Metal Wires Pvt. Ltd. Deferred Payment Ltd. Guarantee

2 2007-08 M/s. electronica Arihant Steel and Purchase of 105.00 18.59

Finance Ltd. Metal Wires Pvt. Ltd. Machinery

3 2007-08 M/s. electronica M/s. Sankalp Term Loan Facility 70.00 18.29 Finance Ltd. Forgings Pvt. Ltd.

4 2007-08 M/s. electronica M/s. Sankalp Hire Purchase 100.00 34.76 Finance Ltd. Forgings Pvt. Ltd. Finance

5 2006-07 State Bank of India Arihant Auto Term Loan 1,250.00 184.52 Components Pvt. Ltd.

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

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

xviii. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year and the question of whether the price at which the shares have been issued is prejudicial to the interest of the Company does not arise.

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

xx. The Company has issued 26,00,000 equity Shares of Rs. 10 each at a price of Rs. 117 per equity Share to Standard Chartered Private equity (Mauritius) II Limited for general corporate purpose as a pre-IPO placement during the year.

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

For and on behalf of

B. K. Khare and Co.

Chartered Accountants

Sd/-

U B Joshi

Partner

Membership No. 044097

Firm Registration No. 105102W

Date : July 18, 2011

Place : Pune

---

Mar 31, 2010

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

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

1. As required by the Companies (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 the paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

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

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

e) On the basis of the written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2010 from being appointed as" director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the said date;

f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts, read together with the Companys accounting policies and the Notes thereto, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as on 31st March, 2010;

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

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

Annexure to the Auditors Reporr Referred to in paragraph 1 of our Report of even date:

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

(b) Major assets have been physically verified by the management during the year based on the regular program of verification, which in our opinion is reasonable having regards to the size of the company and the nature of its assets. As explained, the reconciliation of physical inventory of fixed assets with book records is in process.

(c) In our opinion and according to the information and explanation given to us. during the year, the company has not disposed of any substantial / major pan of fixed assets.

ii.

(a) As explained to us. the inventory, except stocks lying with third parties, has been physically verified during the year by the management. For stocks lying with third parties at the year end. written confirmations have been obtained. 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 the 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 implemented ERP Solution - SAP R/3 from 1st April. 2010. As explained, the required reports were under testing and implementation process/ configuration issues were under review. In view of this, we are not in a position to comment on the discrepancies that would have been noticed between physical stock and book records.

iii. According to the information and explanations given to us. no loans secured or unsecured have been granted to or taken from companies, firms or other parties in the register maintained under Section 30) of the Companies Act. 1956.

iv. In our opinion and according to the information and explanations given to us. there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and sen-ices. In our opinion and according to the information and explanations given to us. there is no continuing failure to correct major weakness in internal control system.

v. In respect of transactions entered in the register maintained in pursuance of Section 30) of Companies Act. 1956:

(a) Based on audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us. we are of the opinion that the particulars of contracts or arrangements have been enrcred in the register required to be maintained under Section 301.

(b) According to the information and explanations given to us and excluding certain transactions of purchase of goods and materials of special nature for which alternate quotations are not available, in our opinion, the transactions have been made at prices which are. prima facie, reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us. the Company has not accepted any deposits from the public. Hence, the provisions of Section 58A and 58AA and any other relevant provisions of the Companies Act. 1956 and rules framed there under are not applicable.

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

viii. According to the information and explanations given to us. the Central. Government has not prescribed the maintenance of cost records under Section 209 (1) (d) of the Companies Act. 1956 for any of the products manufactured / services rendered by the Company.

ix.

(a) According to the information and explanations given to us and on the basis of our examination of the records of the Comparts except for Sales Tax dues in which there has been delays in a few cases and in case of Income Tax deducted at source in which there have been delays on several occasions, the Company has generally been regular in depositing undisputed statutory dues including Provident Fund. Investor Education and Protection Fund. Employees State Insurance. Wealth Tax. Service Tax. Customs Duty, Excise Duty, cess and other material statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us. no undisputed amounts payable in respect of Income tax. Sales tax. Wealth tax. Service tax. Customs duty and Excise duty were in arrears, as at 31st March. 2010 for a period of more than six months from the date they became payable.

(c) According to the records of the Company and information and explanations given to us. there are no dues of Income Tax, Sales Tax. Wealth Tax. Service Tax, Customs Duty and Excise Duty and cess, which have not been deposited on account of disputes.

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

xi. Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the payment of dues to its bankers or to any financial institutions.

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

xiii. The provisions of any Special Statue applicable to chit fund or nidhi / mutual benefit fund / societies are not applicable to the company.

xiv.

(a) Based on the records examined by us and according to the information and explanations given to us, we are of the opinion that the company is maintaining proper records of the transactions and contracts of dealing in shares and securities and timely entries have been made in these records.

(b) Based on our audit procedures and to the best of our knowledge and belief, and according to the information and explanations given to us, the shares and securities have been held by the company in its own name.

xv. According to the information and explanations given to us, the Company has given following guarantees for loans taken by subsidiary and other companies from banks and financial institutions. Considering the nature of relations with the companies, in our opinion, the terms and conditions of the guarantees for loans given are not prejudicial * to the interests of the company.

Sr. Given Guarantee given Guarantee given on Purpose / Nature No. in year in favour of behalf of

1 2006-07 Saraswat Co- Arihant Steel & Term Loan & operative Bank Metal Wires Pvt. Deferred Payment Ltd. Ltd. Guarantee

2 2007-08 M/s.Electronica Arihant Steel & Purchase of Finance Ltd. Metal Wires Pvt. Machinery Ltd.

3 2007-08 M/s. Electronica M/s. Sankalp Term Loan Finance Ltd. Forgings Pvt. Ltd. Facility

4 2007-08 M/s. Electronica M/s. Sankalp Hire Purchase Finance Ltd. Forgings Pvt. Finance Ltd.

5 2007-08 M/s. Electronica M/s. Sankalp Clean Loan Finance Ltd. Forgings Pvt. Ltd. Finance

6 2008-09 Canbank Factors M/s. Sankalp Sale Bill Ltd., J.M. Road Forgings Pvt. Ltd. Discounting Branch

7 2008-09 New India Co- Arihant Steel & Facility availed operative Bank Metal Wires Pvt. for Bill Financing Ltd., Mumbai Ltd.

8 2006-07 State Bank of Arihant Term Loan India Autocomponents Pvt. Ltd. Sl. Amount Outstanding No. (Rs,In Lacs) as on 31st March, 2010(Rs. In Lacs)

1 1,490.00 235.44

2 1.05.00 39.01

3 70.00 30.97

4 100.00 55.37

5 15.00 0.00

6 75.00 75.00

7 43.00 0.00

8 1,250.00 499.18

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

xvii. On the basis of overall examination of the financial statements including Cash Flow Statement and other financial information furnished, we are of the opinion that the funds raised on short term basis have not been used for making long term investments.

xviii. The Company has not made preferential allotment of shares to parties covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

xix. According to the information and explanations given to us, the company has not issued any debentures during the year.

xx. The Company has not raised any money by public issues during the year.

xxi. A case involving theft of company funds amounting to Rs. 2.02 lacs was reported during the year. Apart from the above, to the best of our knowledge and belief and according to the information and explanations given to us and during the course of our examination of the books of account, carried out by us in accordance with the generally accepted auditing practices in India, no other instance of fraud on or by the Company- was noticed or reported during the year.

For B.K. Khare & Co. Chartered Accountants

U.B.Joshi Partner Membership No. 044097

Place : Pune Dated : 4th August, 2010