Auditor Report of Paos Industries Ltd.

Mar 31, 2025

We have audited the accompanying standalone financial statements of PAOS Industries Limited ("the Company") which
comprise the Balance Sheet as at 31^st March 2025, the statement of Profit and Loss (including Other Comprehensive
Income), the statement of changes in Equity and the Statement of Cash Flows Statement for the year ended on that
date and a summary of significant accounting policies and other explanatory information, (hereinafter referred to as
"the standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid
standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so
required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133
of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other
accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025, its loss
and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are
independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of
India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements
under the provisions of the Act and the Rules made there-under, and we have fulfilled our other ethical responsibilities

in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us
is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
standalone financial statements of the current period. We have determined the following key audit matter to
communicate in our report.

1. Acquisition of Business Transfer Agreement (BTA):

The company has entered into Business transfer agreement dated 16^th July, 2024 to acquire the running business of M/s
National Soap Mills (a partnership firm in which the directors of the company are partners) for a consideration
discharged through the issue of 8% Non-Convertible Debentures, redeemable after 10 years from the date of issue.

Audit Procedure: Our audit procedures included, but were not limited to, verifying the accounting treatment of this
transaction in accordance with the provisions of Ind AS 103 (Business Combinations) and Ind AS 109 (Financial
Instruments).

Information Other than the Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the
information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s
Report, Business Responsibility Report, Corporate Governance and Shareholders'' Information, but does not include the
standalone financial statements and our auditor''s report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the standalone financial
statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information;
we are required to report that fact. We have nothing to report in this regard.

Management''s Responsibilities for the Standalone Financial Statements

The accompanying standalone financial statements have been approved by Company''s Board of Directors. The
Company''s Board of Directors is responsible for the matters stated in section 134(5) of 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, including other comprehensive income, changes in equity and cash flows of the Company in accordance
with the Ind AS and other accounting principles generally accepted in India.

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;

• the 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 standalone financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Company''s financial reporting process.

Auditors'' Responsibility for the Audit of Standalone Financial Statements:

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with Standards on Auditing specified under section 143(10) of the Act, we exercise
professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that
are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our
opinion on whether the Company has adequate internal financial controls system in place and the operating
effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor''s However, future events or conditions may cause the Company to cease to continue as a going
concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the
disclosures, and whether the standalone financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate,
makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial
statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of
our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements
in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the standalone financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government of
India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the "Annexure A" a statement
on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required under the provisions of 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 standalone financial statements dealt with by this report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards
prescribed under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as
amended.

e) On the basis of the written representations received from the directors of the Company as on March 31, 2025
taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2025 from being
appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the
operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an
unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over
financial reporting.

g) With respect to other matters to be included in the Auditors'' Report under section 197(16) of the Act, We report
that the company has not paid any remuneration to its directors during the year.

h) 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, as amended, in our opinion and to the best of our information and
according to the explanations given to us:

a) The Company does not have any pending litigations as on March 31, 2025;

b) The Company did not have any long-term contracts including derivative contracts for which there were any
material foreseeable losses;

c) There is no such amount, which is required to be transferred to the Investor Education and Protection Fund by the
Company.

d) (i) The management has represented that, to the best of it''s knowledge and belief, other than as disclosed in the
notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share
premium or any other sources) by the company to or in any other person(s) or entity(ies), including foreign entities
("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall,
whether, directly or indirectly:

• lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company
("Ultimate Beneficiaries") or

• provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(ii) The management has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes
to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign
entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall,
whether, directly or indirectly:

• lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding
Party ("Ultimate Beneficiaries") or

• provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(iii) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has
come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) contain any
material mis-statement.

e) The company has not declared or paid any dividend during the year in contravention of the provisions of section
123 of the Companies Act, 2013.

f) The company has used such accounting software for maintaining its books of account which has a feature of
recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded
in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the
company as per the statutory requirements for record retention.

FOR RAKSHIT KHOSLA& ASSOCIATES
CHARTERED ACCOUNTANTS

(POOJA SHARMA)

PARTNER

M. NO: 562557

FRN:017151N

PLACE: LUDHIANA

DATE: 29-05-2025

UDIN: 25562557BMKOHG6671

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Mar 31, 2024

PAOS Industries Limited

Report on the Audit of the Standalone Financial Statements

We have audited the accompanying standalone financial statements of PAOS Industries Limited ("the Company") which comprise the Balance Sheet as at 31^st March 2024, the statement of Profit and Loss (including Other Comprehensive Income), the statement of changes in Equity and the Statement of Cash Flows Statement for the year ended on that date and a summary of significant accounting policies and other explanatory information, (hereinafter referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, its loss and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made there-under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. We have determined the following key audit matter to communicate in our report.

The company had made investment in the Joint Venture namely PAOS Productions, which become negative since FY 2021. The Company was one of the Partners in PAOS PRODUCTIONS till 30-09-2023. However, the Company has withdrawn its partnership from the said Joint Venture with effect 01-10-2023. Consequently, consolidation of accounts of the Company with the accounts of PAOS Productions for the year ending March 31, 2024 is not required and therefore the consolidated statements as at 31-03-2024 have not been prepared by the Company. Moreover, the carrying amount of Company''s investment in the joint venture namely M/s PAOS Productions had become negative since more than two years on account of which the Standalone as well as the consolidated financial statements are

same since then because according to provisions of Ind AS 28 when the Group''s share of Losses in an equity-accounted investment equals or exceeds its interest in entity then the Group should not recognize any further losses unless it has incurred obligations or made payments on behalf of that entity. Hence, the company stopped booking its share of losses in PAOS Productions and the same fact had already been reported in the previous Financial Statements of company from 31-03-2021 onwards.

Information Other than the Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholders'' Information, but does not include the standalone financial statements and our auditor''s report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Management''s Responsibilities for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of 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, including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India.

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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Company''s Board of Directors is responsible for overseeing the Company''s financial reporting process.

Auditors'' Responsibility for the Audit of Standalone Financial Statements:

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required under the provisions of section 143(3) of the Act, we report that;

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

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

c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

e) On the basis of the written representations received from the directors of the Company as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.

g) With respect to other matters to be included in the Auditors'' Report in accordance with the requirements of section 197(16) of the Act, as amended, we report that in our opinion and to the best of our information and according to explanation provided to us, the company has not paid any remuneration to its directors during the year.

h) 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, as amended, in our opinion and to the best of our information and according to the explanations given to us:

a) The Company does not have any pending litigations as on March 31,2024;

b) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

c) There is no such amount, which is required to be transferred to the Investor Education and Protection Fund by the Company.

d) (i) The management has represented that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(ii) The management has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(iii) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.

e) The company has not declared or paid any dividend during the year in contravention of the provisions of section 123 of the Companies Act, 2013.

f) The company has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded

in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.

g) Based on our examination, which included test checks, the Company has used accounting softwares for maintaining its books of account for the financial year ended March 31, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the softwares. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2024.

FOR RAKSHIT KHOSLA& ASSOCIATES CHARTERED ACCOUNTANTS(POOJA SHARMA)

PARTNER M. NO: 562557 FRN:017151N

PLACE: LUDHIANA DATE: 23-05-2024 UDIN: 26562557BKAIPD2630

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Mar 31, 2010

We have audited the attached Balance Sheet of Raj Agra Mills Ltd as at 31st March 2010, the profit and loss account and also 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.

1. 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 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.

2. 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 paragraphs 4 and 5 of the said Order.

3. Further to our comments in the Annexure referred to 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 those books;

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

d) In our opinion, the Balance sheet, Profit and loss account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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

f) 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:

i) in the case of balance sheet, of the state of affairs of the company as at 31st March 2010; and

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF RAJ AGRO MILLS LTD., ON THE ACCOUNTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2010.

(i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

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

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

(ii) (a) The inventory has been physically verified during the year by the management In our opinion, the frequency of verification is reasonable.

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

(c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the books records were not material.

(iii) (a) The Company has taken unsecured loan from one person covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.139.00 Lacs and year end balance of the loan taken from such person is Rs.114.00 Lacs. The company has not granted any ioan to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) In our opinion, the rate of interest and other terms and conditions of such loan are net., prima face, prejudicial to the interest of the company.

(c) The company is regular in repayment of principal as stipulated and has been regular in payment of interest.

(d) There is no overdue amount of loan taken from companies, firms & other persons listed 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 are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

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

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board.

(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 relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cos! records under section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However we are not required to and have not carried out detailed examination of such accounts and records with a view of determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the books and records examined by us, the company has been regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employees state insurance, Income tax, Vat/CST, Wealth tax, Service Tax, Custom Duty, Excise duty, Cess and other material statutory dues applicable to it.

(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, VAT/CST, Wealth tax, Custom Duty, Excise duty, Cess were in arrears, as at 31.03.2010 for a period of more than six months from the date they became payable.

(c) As at 31st March 2010 according to the records of the company and the information and explanation given to us, the following are the particulars of dues on account of sales tax penalty matters that have not been deposited on account of any dispute:

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

The Punjab Penalty u/s 35,500/- Fin Year 2006- Appeal before Deputy Excise & Taxation VAT ACT, 51(7)(b) 2007 Commissioner Cum Joint Director 2005 (Enforcement), Bathinda.

The Punjab Penalty u/s 2,62,000/- Fin Year 2005- Appeal before Deputy Excise & Taxation VAT ACT, 51(7)(b) 2006 Commissioner, Patiala. 2005

However according to information and explanation given to us, a sum of Rs.8,875/- was deposited on 22.07.2006 and Rs.65,500/- deposited on 10.06.2006 against the above demand.

(x) Thft,accumulated losses of the company are more than 50% of its net worth. The company has incurred cash (dlsses during the financial year covered by our audit and there were also cash losses in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to Banks, financial institutions. There is no debenture issued by the company.

(xii) In our opinion and according to the information and explanations given to us the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) 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 (Auditors Report) Order, 2003 are not applicable to the company.

(xiv) In our opinion and according to the information and explanations given to us, the company is not a dealer or trader in securities. The Company has not made any investment during the year under review. However with regard to the investment already made in mutual funds, the proper records have been maintained and the said investments have been held by the company in its own name.

(xv) According to the information and explanations given to us, the company has not given any guarantee in respect of loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for 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 the no funds raised on short-term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets except permanent working capital.

(xviii) The company has hot made any preferential allotment of shares to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year under review.

(xix) The company has not issued debentures during the period covered by our audit report.

(xx) The company has not raised any money through a public issue during the period covered by our audit report.

(xxi) Based upon the audit procedures performed and 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 P.C. GOYAL & CO.

CHARTERED ACCOUNTANTS

SD/-

(CA P.C. GOYAL)

PLACE : LUDHIANA PROP.

DATE : 24.05.2010 M.NO. 80377