Auditor Report of Kanchan International Ltd.

Mar 31, 2012

We have audited the attached Balance Sheet of M/s KANCHAN INTERNATIONAL LIMITED, as at 31st March, 2012 and also the Profit & Loss Account & the Cash Flow of the Company 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 & 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 financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditor's Report) Amendment Order, 2004 (the Order), issued by the Central Government of India in terms of Sub- section (4A) of Section 227 of the Companies Act, 1956, and on the basis of the information and the books and records examined by us in the normal course of the audit and to the best of our knowledge and belief we give below our report on the matters specified in paragraph 4 & 5 of the said order.

2. Further to our comments in the Annexure ,we report that :-

(i) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit.

(ii) In our opinion, the Company has kept proper books of accounts as required by Law so far as it appears from our examination of those books of accounts.

(iii) The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this comply with the mandatory Accounting standard referred to in sub-section (3C) of the section 211 of the Companies Act, 1956.

(iv) On the basis of the written representations received from the Individual Directors and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2012, from being appointed as a Director in the terms of clause (g) of the sub- section (1) of the section 274 of the Companies Act, 1956.

(v) Retirement benefits & Leave encashment is made on accrual basis & charges to P&L A/c on

the basis of valuation certified by Management instead of Actuarial Valuation as required by Accounting Standard -15 " "Employee benefits

(vi) Note no 1 "Notes to accounts" in respect of balances of Sundry Creditors, Debtors, Loans & Advances & Deposit which are subject to Confirmation.

(vii) Note no 14 regarding Concept of Deferred Revenue Expenditure

(viii) Note no 15 regarding Non- Provision of Liabilities in respect of Non- Compliance of certain fiscal Statute. Amount not ascertainable.

(ix) In our opinion and to the best of oui information and according to the explanation given to us, the said financial statements read together with the significant policies and other notes given the information required by the Companies Act, 1956 in the manner required and subject to our comments in Para(v)to(viii) above give a true and fair view in conformity with accounting principles generally accepted in India in the case of the : i] Balance Sheet of the state of affairs of the company as on 31st March,2012 and ii] Profit & Loss Account of the PROFIT of the company for the year ended on that date. iii] Cash Flow Statement of the cash flows for the year ended on that date.

For M.B.Ladha & Company Chartered Accountants FRNol05503W

Mukesh Ladha [Proprietor] M.No. 35544 Place: Mumbai. Date :lstSept.,2012

ANNEXURE TO THE AUDITORS* REPORT

i) Fixed Assets

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

(b) We are informed that all the fixed assets have been physically verified by the management during the year.

(c) According to the information and explanations given to us, Company has not disposed off substantial part of the fixed assets during the year, hence the going concern status of the company is not affected.

ii) Inventory

(a) In our opinion and according to the information and explanation given to us, the inventories of the company at all its locations have been physically verified by the management during the year.

(b) In our opinion, the procedure of physical verification of Inventory followed by the management were found to be reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of Inventories. We are informed that the discrepancies ' noticed on such verification between the physical inventories and book records were not material and they were properly dealt with in the books of accounts.

iii) Loans/ Deposit taken/ granted

(a) The Company has given deposit against use of premises to one party listed in the Register maintained under Section 301 of the Companies Act, 1956. The Maximum amount involved during the year and the year end -balance of such deposit is Rs 155.52 lacsAmount shown as deposit.

(b) As explained to us, the Deposit is interest free and will be repaid on vacating the premises by the company. In our opinion the other terms and conditions of the said Deposit given by the company are not prima f aciepara (b),(c) and (d) related loans than how we should show in audit report prejudicial to the interest of the company.

(c) The Company has taken loan from a Company under the same management listed in the register maintained under section 301 of the Companies Act, 1956. The Maximum amount involved during the year and the year end -balance of such loans is Rs 30.75 lacs.

(d) As explained to us, the loans are interest free and do not carry any stipulation as to its repayment. In our opinion the other terms and conditions of the said loan taken by the company are not prima facie prejudicial to the interest of the company

iv) Internal Control

In our opinion and according to the information given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of plant & machinery, equipment and other assets and for the sale of goods. We have not come across any major weaknesses in the Internal Control.

v) Section 301

(a) The transactions that are required to be entered into Register in pursuance of Section 301 of the Act have been so entered.

(b) The transactions for Sales & Services rendered in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. Five Lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) Deposit from Public

The Company has not accepted any Public Deposits and hence compliance of provisions of Section 58A, 58AA or any other provisions do not apply.

vii) Internal Audit

The Company have an internal audit system which needs to be strengthened to commensurate with the size and nature of the Company' s business.

viii) Cost Records

We have been informs d that the Central Government has not prescribed maintenance of cost records under section209(l)(d) of the Companies Act, 1956 in thecaseof the Company.

Compiled by : Dion Global Solutions Limited ix) Payment of Statutory Dues

The Company is generally regular in depositing undisputed statutory dues except following Sales Tax and FBT with the appropriate authorities in India which are as follows.

Name of Nature of the Amount the statute dues Rs

Fringe Benefit Tax Taxes 3,22,332/-

Fringe Benefit Tax Taxes 3,17,543/-

Sales Tax(CST) Taxes 6,18,620/-

Sales Tax(CST) Taxes 24,33,242/-

VAT Taxes 6,48,253/-

VAT Taxes 1,53,227/-

Name of the statute Period to Due date Date of which Payment amount relates

Fringe Benefit Tax F.Y.2007-08 15/06/2007 Pending

15/09/2007

15/12/2007

15/03/2008

Frings Benefit Tax F.Y.2008-09 15/06/2008 Pending

15/09/2008

15/12/2008

15/03/2009

Sales Tax (CST) F.Y.2010-11 21st of each Pending

month

Sales F.Y.2011-12 21st of each Pending

month Tax(CST) VAT FY.2010-11 21st of each Pending

month

VAT FY.2011-12 21st of each Pending

month

At the end of the Financial Year there are no disputed dues of Income Tax, Sales tax, Wealth tax ,Custom duty & Cess which have not been deposited.

x) Accumulated Losses / Cash Losses

The Company has accumulated losses of Rs 1,90,48,791/- as on March 31,2012 .The company has not incurred any cash losses in the current financial year ended on 31st March,2012

xi) Default in Repayment of Dues

According to the records of the company examined by us and the explanations given to us, the Company has defaulted in the repayment of dues to Bank.

i. Installment of FITL Rs. 11.66 Lacs

ii. Installment of WCTL Rs. 394.50 Lacs

xii) Grant of Secured Loans & Advances

According to the information and explanations given to us ,the Company has not granted Loans & Advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) Special Statute-Chit Fund Companies, Nidhis/Mutual Benefit Fund/Societies

The provisions of any special status applicable to Chit Fund Nidhi or Mutual Benefit Fund or Societies are not Applicable to Company.

xiv) Company dealing or Trading in Shares, Securities etc

In our opinion and according to the information and explanations given to us, the company is not a dealer or trader in shares, securities, debentures and other investment. .Accordingly the provisions of clause 4(xiv) of the Companies (Auditors report) Order, 2003 are not applicable to the Company.

xv) Provision of Guarantee - ¦¦¦

In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions during the year.

xvi) Term Loans

In our opinion and according to the information and explanations given to us, the Company has not obtained any Term Loans during the year.

xvii) Usage of Funds

In our opinion and 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, the funds raised on Short-Term basis have not been used for Long Term Investment and vice-versa.

xviii) Preferential Allotments

The Company has made a preferential allotment of 4,76,300 equity shares to parties and companies covered in the register maintained U/S 301 of the Act, and as per the information and explanation given to us the price at which the shares have been issued are not prejudicial to the interest of the company.

xix) Creation of Security for Debenture Issue

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

xx) Disclosure of end use of fund

The Company has raised Rs 2,48,56,854/-by way of Application money for 25,00,000 Fully Convertible Equity Share Warrants which is used for its purpose of meeting the working capital requirement of the company.

xxi) Frauds

Based on the audit procedures performed for the purpose of reporting the true and fair view of the Financial Statements and as per information and explanation given by the management, we report that no material fraud on or by the company has been noticed or reported during the course of our audit.

For M.B.Ladha & Company Chartered Accountants F R No 105503W

Mukesh Ladha [Proprietor] M.No. 35544 Place: Mumbai. Date : 1st Sept.,2012

---

Mar 31, 2010

We have audited the attached Balance Sheet of M/s KANCHAN INTERNATIONAL LIMITED, as at 31st March, 2010 and also the Profit & Loss Account & the Cash Flow of the Company 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 & 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 financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for ¦ . ouropinion.

As rpquired by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) Amendment Order, 2004 (the Order), issued by the Central Government of India in terms of Sub- sectidn (4A) of Section 227 of the Companies Act, 1956, and on the basis of the information and the books and records examined by us in the normal course of the audit and to the best of our knowledge and belief we give below our report on the matters specified in paragraph 4 & 5 of the said order.

2. Further to our comments in the Annexure ,we report that :-

(I) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit.

(ii) In our opinion, the Company has kept proper books of accounts as required by Law-so far as it appears from our examination of those books of accounts except in case of subsidiary situated in the Middle East FZE of Ajman (UAE) whose Accounts are neither audited by us or by any other auditor and whose figures have been included in the financial statement covered by this report solely relying on the statement prepared by management and converting the revenue figures at the closing exchange rates instead of yearly average rate.

(iii) The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this comply with the mandatory Accounting standard referred to in sub-section (3C) of the section 211 of the Companies Act, 1956.

(iv) On the basis of the written representations received from the Individual Directors 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 a Director in the terms of clause (g) of the sub-section (1) of the section 274 of the Companies Act, 1956.

(v) In our opinion and to the best of our information and according to the explanation given to us, the said financial statements read together with the significant policies and other notes given the information required by the Companies Act, 1956 in the manner required and subject to our comments in para (II) above give a true and fair view in conformity with accounting principles generally accepted in India in the case of the:

i] Balance Sheet of the state of affairs of the company as on 31st March, 2010 and

ii] Profit & Loss Account of the LOSS of the company for the year ended on that date.

iii] Cash Flow Statement of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

i) Fixed Assets

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

(b) We are informed that all the fixed assets have been physically verified by the management during the year and no material discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us, Company has not disposed off substantial part of the fixed assets during the year, hence the going concern status of the company is not affected.

II) Inventory

(a) In our opinion and according to the information and explanation given to us, the inventories of the company at all its locations have been physically verified by the management during the year.

(b) In our opinion , the procedure of physical verification of Inventory followed by the management were found to be reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of Inventories. We are informed that the discrepancies noticed on such verification between the physical inventories and book records were not material and they were properly dealt with in the books of accounts.

iii) Loans taken / granted

(a) The Company has granted unsecured loan to one party listed in the Register maintained under Section 301 of the Companies Act, 1956. The Maximum amount involved during the year and the year end-balance of such loans is Rs 116.52 lacs.

(b) As explained to us, the loans are interest free and do not carry any stipulation as to the repayment of the principal amount taken by the company. In our opinion the other terms and conditions of the said loan taken by the company are not prima facie prejudicial to the interest of the company

(c) The Company has taken loan from a Company under the same management listed in the register maintained under section 301 of the Companies Act, 1956. The Maximum amount involved during the year and the year end-balance of such loans is Rs 30.75 lacs.

(d) As explained to us, the loans are interest free and do not carry any stipulation as to its repayment. In our opinion the other terms and conditions of the said loan taken by the company are not prima facie prejudicial to the interest of the company

iv) Internal Control

In our opinion and according to the information given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of plant & machinery, equipment and other assets and for the sale of goods. We have not come across any major weaknesses in the Internal Control.

(V) I) Section 301

(a) The transactions that are required to be entered into Register in pursuance of Section 301 of the Act have been so entered.

(b) The transactions for services rendered in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. Five Lacs in respect

of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time

vi) Deposit from Public

The Company has not accepted any Public Deposits and hence compliance of provisions of Section 58A, 58AAor any other provisions do not apply.

vii) Internal Audit

The Company does not have an internal audit system commensurate with the size and nature of the Companys business.

viii) Cost Records

We have been informed that the Central Government has not prescribed maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 in the case of the Company.

ix) Payment of Statutory Dues

The Company is generally not regular in depositing undisputed statutory dues including Service Tax, Sales Tax and other statutory dues with the appropriate authorities in India which are as follows.

Name of Name of Amount Period to

the Statute the dues Rs. which amount

relates

Fringe Taxes 3,22,332/- F.Y.2007-08

Benefit

Tax

Fringe Taxes 3,17,543/- F.Y.2008-09

Benefit

Tax

M Vat Taxes 40,488/- F.Y.2008-09

Sales Tax Taxes 47,381/- F.Y.2008-09 (CST)

M Vat Taxes 10,519/- F.Y.2009-10

Service Tax Taxes 31,904/- F.Y.2009-10

Payable

Name of

the Statute Due date Date of

Payment

Fringe 15/06/2007

Benefit

Tax 15/09/2007

15/12/2007 Pending

15/03/2008

15/06/2008

Fringe

Benefit Tax 15/09/2008

15/12/2008

Pending 15/03/2009

M Vat 21/04/2009 Paid on

07-08-2010

Sales Tax 31/03/2009 Pending

(CST)

MVat 21/04/2010 Pending

Service Tax 31/03/2010 Pending

Payable At the end of the Financial Year there were some disputed dues of Income Tax Sales tax .Wealth tax .Custom duty & Cess which have not been deposited which are as follows

Name of the Nature of the dues Amount Rs. Period to which Forum where

Statute amount relates dispute is

pending Central Excise Excise Duty 3,07,386/- F.Y.2006-07 Commissioner

(Appeals)

x) Accumulated Losses/Cash Losses

The Company has accumulated losses of Rs 2,22,89,972/- as on March 31,2010 which is more than fifty percent of its networth and it has incurred cash loss Of Rs.85,08,039/- in the current financial year ended on 31st March,2010

xi) Default in Repayment of Dues

According to the records of the company examined by us and the explanations given to us, the Company has defaulted in the repayment of dues to Financial Institution or Bank or Debentures Holders as at the balance sheet date.

xii) Grant of Secured Loans & Advances

According to the information and explanations given to us ,the Company has not granted Loans & Advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) Special Statute-Chit Fund Companies. Nidhis/Mutual Benefit Fund/Societies

The provisions of any special status applicable to Chit Fund Nidhi or Mutual Benefit Fund or Societies are not Applicable to Company.

xvi) Company dealing or Trading in Shares. Securities etc

In our opinion and according to the information and explanations given to us, the company is not a dealer or trader in shares, securities, debentures and other investment. .Accordingly the provisions of clause 4(xiv) of the Companies (Auditors report) Order, 2003 are not applicable to the Company.

xv) Provision of Guarantee

In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions during the year.

xvi) Term Loans

In our opinion and according to the information and explanations given to us, the Company has not obtained any Term Loans during the year.

xvii) Usage of Funds

In our opinion and 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, the funds raised on Short- Term basis have not been used for Long Term Investment and vice-versa.

xviii) Preferential Allotments

The Company has made preferential allotment of shares of Rs.85,50,000/- during the year to parties and companies covered in the register maintained under section 301 of the Act, 1956.

xix) Creation of Security for Debenture Issue

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

xx) Disclosure of end use of fund

The Company has not raised any money by public issues during the year hence the question of disclosure and verification of end use of money does not arise.

xxi) Frauds

Based on the audit procedures performed for the purpose of reporting the true and fair view of the Financial Statements and as per information and explanation given by the management , we report that no material fraud on or by the company has been noticed or reported during the course of our audit.



For Shankar & Kishor

Chartered Accountants



Shankar B. Shetty

[Partner]

M.No. 38139

Place : Mumbai.

Date : 09th August,2010

---

Mar 31, 2009

We have audited the attached Balance Sheet of M/s KANCHAN INTERNATIONAL LIMITED, as at 31st March, 2009 and also the Profit & Loss Account & the Cash Flow of the Company 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 & 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 financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) Amendment Order, 2004 (the Order), issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of the information and the books and records examined by us in the normal course of the audit and to the best of our knowledge and belief we give below our report on the matters specified in paragraph 4 & 5 of the said order.

2. Further to our comments in the Annexure ,we report that :-

(i) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit.

(ii) In our opinion, the Company has kept proper books of accounts as required by Law so far as it appears from our examination of those books of accounts except in case of subsidiary situated in the Middle East FZE of Ajman (UAE) whose Accounts are neither audited by us or by any other auditor and whose figures have been included in the financial statement covered by this report solely relying on the statement prepared by management and converting the revenue figures at the closing exchange rates instead of monthly average rate.

(iii) The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this comply with the mandatory Accounting standard referred to in sub-section (3C) of the section 211 of the Companies Act, 1956.

(iv) On the basis of the written representations received from the Individual Directors and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2009, from being appointed as a Director in the terms of clause (g) of the sub-section (1) of the section 274 of the Companies Act, 1956.

(v) In our opinion and to the best of our information and according to the explanation given to us, the said financial statements read together with the significant policies and other notes thereon especially note no 13 regarding steps for the recovery of doubtful debts against the earlier provision of 20% of doubtful debts. Since the company has recovered Rs. 64.65 lakhs and are positive of further recovery from the debtors, the Company has not made any further provision for doubtful debts, given the information required by the Companies Act, 1956 in the manner required and subject to our comments in para (ii) above give a true and fair view in conformity with accounting principles generally accepted in India in the case of the:

i] Balance Sheet of the state of affairs of the company as on 31 st March, 2009 and ii] Profit & Loss Account of the LOSS of the company for the year ended on that date. iii] Cash Flow Statement of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

i) Fixed Assets

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

(b) We are informed that all the fixed assets have been physically verified by the management during the year and no material discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us, Company has not disposed off substantial part of the fixed assets during the year, hence the going concern status of the company is not affected.

ii) Inventory

(a) In our opinion and according to the information and explanation given to us, the inventories of the company at all its locations have been physically verified by the management during the year.

(b) In our opinion , the procedure of physical verification of Inventory followed by the management were found to be reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of Inventories. We are informed that the discrepancies noticed on such verification between the physical inventories and book records were not material and they were properly dealt with in the books of accounts.

iii) Loans taken / granted

(a) The Company has granted unsecured loan to one party listed in the Register maintained under Section 301 of the Companies Act, 1956. The Maximum amount involved during the year and the year end -balance of such loans is Rs 116.52 lacs.

(b) As explained to us , the loans are interest free and do not carry any stipulation as to the repayment of the principal amount taken by the company. In our opinion the other terms and conditions of the said loan taken by the company are not prima facie prejudicial to the interest of the company

(c) The Company has taken loan from a Company under the same management listed in the register maintained under section 301 of the Companies Act, 1956. The Maximum amount involved during the year and the year end -balance of such loans is Rs 30.75 lacs.

(d) As explained to us, the loans are interest free and do not carry any stipulation as to its repayment. In our opinion the other terms and conditions of the said loan taken by the company are not prima facie prejudicial to the interest of the company

iv) Internal Control

In our opinion and according to the information given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of plant & machinery, equipment and other assets and for the sale of goods. We have not come across any major weaknesses in the Internal Control.

v) Section 301

(a) The transactions that are required to be entered into Register in pursuance of Section 301 of the Act have been so entered.

(b) The transactions for services rendered in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. Five Lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time

vi) Deposit from Public

The Company has not accepted any Public Deposits and hence compliance of provisions of Section 58A, 58AAor any other provisions do not apply.

vii) Internal Audit

The Company does not have an internal audit system commensurate with the size and nature of the Companys business.

viii) Cost Records

We have been informed that the Central Government has not prescribed maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 in the case of the Company.

ix) Payment of Statutory Dues

The Company is generally not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection fund, Employees State Insurance, income Tax, Excise Duty, Cess Tax, Service Tax, Sales Tax, Custom Duty and other statutory dues with the appropriate authorities in India which are as follows.

Name of Name of Amount Period to Due date Date of the Statutethe dues Rs. which amount Payment relates

15/06/2006 Fringe Taxes 3,45,000/- F.Y.2005-06 15/09/2006 Benefit 15/12/2006 Pending Tax 15/03/2007

Fringe 15/06/2007 Benefit Taxes 3,22,332/- FY-2007-08 15/09/2007 Pending Tax 15/03/2008

15/06/2008 Fringe Taxes 3,17,543/- F.Y.2008-09 15/09/2008 Benefit 15/12/2008 Pending Tax 15/03/2009

Service Taxes 32,034/- F.Y.2008-09 31/03/2009 Pending Tax

Sales Tax Taxes 1,296/- F.Y.2003-04 31/03/2004 Pending

Vat Taxes 37,432/- F.Y.2006-07 31/03/2007 Pending

Vat Taxes 1,260/- F.Y.2007-08 21/07/2007 Pending

PF. Contribution 57,266/- F.Y.2007-08 21/07/2007 Pending

Mvat Taxes 53,793/- F.Y.2008-09 20/09/2008 Pending

At the end of the Financial Year there were some disputed dues of Income Tax Sales tax .Wealth tax Custom, duty & Cess which have not been deposited which are as follows

Name of the Statute Nature of the Amount Rs. Period to which Dues Forum where amount relates dispute is pending

Central Excise Excise Duty 3,07,386/- F.Y.2006-07 Commissioner (Appeals)

Income Tax Income tax o/s 97.62 lacs A.Y.2006-07 Commissioner disputed (Appeals) statutory dues

x) Accumulated Losses / Cash Losses

The Company has accumulated losses of Rs 1,13,77,202 as on March 31,2009 which is less than fifty percent of its networth and it has not incurred any cash losses in the financial year ended on that date but of Rs. 500.15 lacs in the immediately preceding financial year.

xi) Default in Repayment of Dues

According to the records of the company examined by us and the explanations given to us, the Company has defaulted in the repayment of dues to Financial Institution or Bank or Debentures Holders as at the balance sheet date.

xii) Grant of Secured Loans & Advances

According to the information and explanations given to us ,the Company has not granted Loans & Advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) Special Statute-Chit Fund Companies. Nidhis/Mutual Benefit Fund/Societies

The provisions of any special status applicable to Chit Fund Nidhi or Mutual Benefit Fund or Societies are not Applicable to Company.

xiv) Company dealing or Trading in Shares. Securities etc

In our opinion and according to the information and explanations given to us, the company is not a dealer or trader in shares, securities, debentures and other investment. .Accordingly the provisions of clause 4(xiv) of the Companies (Auditors report) Order, 2003 are not applicable to the Company.

xv) Provision of Guarantee

In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions during the year.

xvi) Term Loans

In our opinion and according to the information and explanations given to us, the Company has not obtained any Term Loans during the year.

xvii) Usage of Funds

In our opinion and 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, the funds raised on Short-Term basis have not been used for Long Term Investment and vice-versa.

xviii) Preferential Allotments

The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Act, 1956. However the Share Application money for issue of Preference shares has been received during the year, which has been allotted subsequently.

xix) Creation of Security for Debenture Issue

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

xx) Disclosure of end use of fund

The Company has not raised any money by public issues during the year hence the question of disclosure and verification of end use of money does not arise.

xxi) Frauds

Based on the audit procedures performed for the purpose of reporting the true and fair view of the Financial Statements and as per information and explanation given by the management, we report that no material fraud on or by the company has been noticed or reported during the course of our audit.

For Shankar & Kishor Chartered Accountants

Shankar B. Shetty

[Partner] M.No. 38139

Place : Mumbai. Date : 30/06/2009