Auditor Report of Tejassvi Aaharam Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of M/s Sterling Spinners Ltd., Chennai ("the Company") which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 principles generally accepted in India including Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"), This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility:

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

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

Opinion

Subject to the following comments:

BIFR SCHEDULE:

The Company has been declared sick by BIFR on 6.5.2003. Pending Proceedings before BIFR action has been initiated under SARFAESI Act, 2002 by TIIC. BIFR has abated the proceedings, since SARFAESI action has been taken. Appeal against the Abatement Order also been dismissed by AAIFR. SARFAESI action has been challenged and when it is pending, settlement has been made to TIIC. There is no liability either with Secured or Unsecured Creditors.

GOING CONCERN BASIS:

The Company has stopped its operations since October, 2007 and whole of the Plant and Machineries has been disposed off leaving only Land and Building. In spite of all the above, accounts has been prepared on a going concern basis.

UN-SECURED LOANS FROM RELATED PARTIES:

In order to settle the dues to Banks and other Creditors, the Company has taken Unsecured Loans from its Managing Director and one of Its related Company. The Company has paid an amount of Rs.241.02 lakhs towards interest on the above loans.

SUBJECT TO ABOVE COMMENTS:

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

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

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

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements:

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

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

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

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

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

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

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

ANNEXURE TO THE AUDITORS'' REPORT

Referred to in Paragraph 1 of our Report of even date to the Members of M/s Sterling Spinners Ltd, (the Company) on the Financial Statement for the Year ended March 31, 2014.

(i) In respect of Fixed Assets :

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

(b) All the Fixed Assets were physically verified by the Management during the year and there is a regular programme of verification, which, in our opinion, is reasonable haying regard to size of the Company and the nature of its assets. No material discrepancies were noticed during verification.

(c) During the year the Company has not disposed off any Fixed Assets

(ii) In respect of its Inventory :

The Company has stopped production at the mill. There is no inventory, Therefore the provisions of Clause 4 (ii) of the order are not applicable to the Company.

(iii) (a) As informed the Company has not granted any loans, Secured or unsecured to Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies ACt. 1956.

(b) 1. The Company has taken Un-Secured loans from two parties covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum Amount involved during the year for those loans was Rs. 1760.94 lakhs. The year end balance of those loans was Rs. 1760.94 Lakhs.

2, The rate of Interest and all other Terms and Conditions for the loans taken are not prima facie, prejudicial to the interest of the Company, they are regular in payment of interest, wherever applicable.

3. The terms of arrangement do no stipulate any principal repayment schedule and is repayable on demand.

4. There is no overdue amount of Loan taken from the party covered 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 and procedures commensurate with the size of the Company and the nature of its business, with regard to purchase 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 weakness in the internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956have been entered into the register required to be maintained under that Section.

(b) In our opinion, and according to the Information and explanations 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, have been made at prices that are 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 consequently the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are: not applicable.

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

(viii) Since the Company has stopped operations in the plant, reporting under Clause 4 (viii) of the Companies'' (Auditor''s Report) Order, 2003 does not arise.

(ix) (a) According to the information and explanations given to us,the Company is regular In depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor education protection fund, Emloyees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs 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 Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty and Cess were in arrears, as at 31st March, 2014 for a period of more than six months from the date they became payable.

(c) Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute

(x) In our opinion, accumulated losses have exceeded its net worth at the end of financial year. The company has incurred cash losses in this financial year, but incurred cash Profit in the immediate preceding financial year.

(xi) According to the information and explanations given to us, the Company has no loans due to bank and Financial Institutions.

(xii) In our opinion and according to information and explanations given to us, no loans and advances have been granted by the Company 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 / Nidhi / Mutual Benefit Fund / Society, therefore, the provisions of Clause 4 (xiii) of the Companies (Auditors Reprot) Order, 2003 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 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by M/s Savorit Limited from Banks. According to the information and explanations given to us, we are of the opinion that the Terms and Conditions thereof are not primafacie prejudicial to the interest of the Company.

(xvi) The Term Loans raised by the Company, was applied for the purpose of 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) According to the information and explanation given to us, the Company has not made preferential allotment of shares to parties and companies covered In the register maintalned under Section 301 of the Companies Act, 1956

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company has not issued any debentures.

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

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit

PLACE: CHENNAI For D.SAMPATH KUMAR & CO., DATE : 30.05.2014 CHARTERED ACCOUNTANTS (FRN. 003556S)

M.K.RAVINDRAN (PARTNER) Membership No: 20887

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Mar 31, 2012

1. We have audited the accompanying financial statements of M/s Sterling Spinners Ltd, Chennai which comprise the Balance Sheet as at 31st March, 2012, the statement of Profit and Loss and the Cash Flow Statement for the Year ended and a summary of the significant accounting policies and other explanatory information.

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 statements 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) ("the order") issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, ("the Act"), 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:

a) i. The Company's networth has eroded due to losses and the Company has become a Sick Industrial Company within the meaning of (Clause 'O') of Sub-Section (1) of Section 3 of Sick Industrial Companies(Special Provisions) of Act, 1985. The Company has made a reference before BIFR on 28.05.2001. The Company has been declared as Sick Industrial Company by the BIFR on 06.05.2003.

However, proceedings before BIFR were abated as per the Order by BIFR on 22.04.2010 and the Company has filed an Appeal against the above said Order of BIFR with AAIFR which has been disallowed. Now, the matter is pending before the High Court of Madras.

Since Oct' 2007 the Company has stopped operations in its plant. Despite erosion of Networth the accounts have been prepared on a going concern basis.

ii. The Company has already settled M/s Punjab National Bank Loans and M/s Tamilnadu Industrial Investment Corporation Limited Term Loans and is in the process of settling dues with M/s State Industries Promotion Corporation of Tamilnadu Ltd., under One Time Settlement Scheme, pending settlement the amount paid Rs. 2,04,00,000/- has been shown under Other Loans and Advances.

iii. Some of the balances of Short Term Loans and Advances and Trade payables are subject to confirmation.

b) Subject to our comments above, 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;

c) 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;

d) 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;

e) In our opinion, the Balance Sheet, Statement of Profit and Loss 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;

f) On the basis of written representations received from the Directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012, from being appointed as Director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

g) 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 the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012;

ii. In the case of the Statement of Profit and Loss, 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 the date.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 1 of our Report of even date

RE : Sterling Spinners Ltd. ("The Company")

(i) In respect of Fixed Assets :

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

(b) All Fixed Assets were physically verified by the Management during the year and 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) During the year, the Company has not disposed off any Fixed Assets.

(ii) In respect of its Inventory :

The Company has stopped production at the mill. Except old stores and spares, there is no inventory. Therefore the provisions of Clause 4(ii) of the order are not applicable to the Company.

(iii) (a) As informed the Company has not granted any loans, Secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act. 1956.

(b) The Company has taken loan from one party covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 678.26 lakhs. The year end balance of loan was Rs. 678.26 Lakhs.

(c) In our opinion, the rate of Interest and other terms and conditions for such loan are not prima facie, prejudicial to the interest of the Company.

(d) The Company is regular in repaying the Principal Amount as stipulated and no interest has been paid as it is waived by the Party.

(e) There is no overdue amount of Loan taken from the party covered 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 procedure commensurate with the size of the Company and the nature of its business, with regard to purchase 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 weakness in the internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that Section.

(b) In our opinion, and according to the information and explanations 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, have been made at prices that are 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 consequently the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

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

(viii) Since the Company has stopped operations in the plant, reporting under Clause 4 (viii) of the Companies' (Auditor's Report) Order, 2003 does not arise.

(ix)(a) According to the information and explanations given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor education protection 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.

(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, Excise Duty and Cess were in arrears, as at 31st March, 2012 for a period of more than six months from the date they became payable.

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

(x) In our opinion, the accumulated losses of the Company are more than fifty percent of its networth and the Company has incurred cash losses during the financial year, covered by our audit and also in the immediately preceding financial year. The company has been declared as Sick Industrial Company by the BIFR on 06.05.03.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to Financial Institutions as detailed below.

Name of the Principal Funded Financial Rs. interest and TOTAL Institution interest accrued Rs. Rs.

A. TERM LOAN: M/s. SIPCOT 3,00,00,000 25,86,63,433 28,86,63,433

TOTAL 3,00,00,000 25,86,63,433 28,86,63,433

Name of the Remarks Financial Institution

A. TERM LOAN: Paid against the Loans M/s. SIPCOT Rs. 2,04,00,000 (under OTS Scheme)

(xii) In our opinion and according to information and explanations given to us, no loans and advances have been granted by the Company 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 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 are not applicable to the Company.

(xv) 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.

(xvi) The Company has not raised any fresh Term Loan during the year.

(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) According to the information and explanation given to us, 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.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company has not issued any debentures.

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

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For D. SAMPATHKUMAR & CO., Regn.No.003556S CHARTERED ACCOUNTANTS

M.K. RAVINDRAN Partner CHARTERED ACCOUNTANTS M. No. 20887

Place: Chennai Date : 09.04.2012

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Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s Sterling Spinners Ltd, Chennai as at 31st March, 2010, the Profit and Loss Account on that date and also Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We 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 (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) 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:

a) The Companys net worth has eroded due to losses and the Company has become a Sick Industrial Company within the meaning of (Clause O) of Sub Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act 1985. The Company has made a reference before BIFR on 28.05.2001 and the Company has been declared as Sick Industrial Company by the BIFR on 06.05.2003. The rehabilitation package is still not formulated. Since Oct. 2007 the Company has stopped operations in its Plant. Despite erosion of net worth the accounts have been prepared on a going concern basis.

ii The Company has defaulted in payment to M/s. SIPCOT and M/s. TIIC.

a) M/s. SIPCOT : Principal and interest outstandingRs. 2394 lac. This includes interest of Rs. 417.69 charged during the year. The company is yet to enter into OTS Scheme (one time settlement) M/s. SIPCOT.

b) M/s. TIIC : The company has entered into one time settlement (OTS)on 23.03.2007 for payment of Rs. 270 lakhs, but did not comply with time schedule. M/s. TIIC has taken possession of mill on 10.02.2010 under SARFAESI Act. The company is renegotiating OTS Scheme. Total dues as per earlier OTS Rs. 296.16 lakhs, including interest of Rs.25.02 lacs charged during the year.

iii. Some of the balances of Loans.and Advances, Sundry Debtors and Sundry Creditors are subject to confirmation.

a) Subject to our comments above, 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, 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 Section 211 (3C) of the Companies Act, 1956;

e) On the basis of written representation 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 31 st March, 2010 from being appointed as a director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

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 accounting principles generally accepted in India:

i. In the case of the Balance Sheet, of the State of Affairs of the Company as at 31 st March, 2010;

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 the date.

ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 1 of our Report of even date

i. In respect of Fixed Assets :

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

b) All the assets have been physically verified by the Management during the year and 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) During the year, the Company has not disposed off any fixed assets.

ii. In respect of Inventory :

The company has stopped production at the mill. Except old stores and spares, there is no inventory. Therefore the provisions of Clause 4 (ii) of the order are not applicable to the company.

iii. a) As informed the company has not granted any loans, Secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

b) The Company has taken loan from one party covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.331.82 lakhs, The year end balance of loan was Rs.288 71 Lakhs.

c) In our opinion, the rate of Interest and other terms and conditions on which loan has been taken from the party covered in the Register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

d) The company is regular in repaying the Principal Amount as stipulated and rrn in*orpSt has been paid as it is waived by him.

e) There is no overdue amount of Loan taken from the party covered 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 adequete internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

v. a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion, and according to the information and explanations 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, have been made at prices that 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 not accepted any deposits from the Public and consequently the provisons of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

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

viii. Since the Company has stopped operations in the plant, reporting under Clause 4 (viii) of the Companies (Auditors Report) Order, 2003 does not arise.

ix. a) According to the information and explanations given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education Protection 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.

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, Excise Duty and Cess were in arrears, as at 31 st March, 2010 for a period of more than six months from the date they became payable.

c) According to the information and explanations given to us, except the following there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute.

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

P.F. ACT P. F. Dues Rs. 2.95 lakhs 22.09.97 to 05.07.99 Madras High Court

x. In our opinion, the accumulated losses of the Company are more than fifty percent of its networth and the Company has incurred cash losses during the financial year, covered by our audit and also in the immediately preceeding financial year. The company has been declared as Sick Industrial Company by the BIFR on 06.05.03.

xi. In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to Financial Institutions as detailed below.

Rs. in Lakhs

Name of the Financial Institution Prinicipal Funded interest Total and interest accured

A. TERM LOAN:

M/s. SIPCOT 300.00 2094.00 2394.00

M/s. TIIC (Under OTS) 244.32 51.84 296.16

Total 544.32 2145.84 2690.16



xii. In our opinion and according to information and explanations given to us, no loans and advances have been granted by the company on the basis of security byway 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, 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 (Auditors Report) Order, 2003 are not applicable to the company.

xv. 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.

xvi. The Company has not raised any fresh Term Loan during the year.

xvii. According to the infromation 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. According to the information and explanation given to us, 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.

xix. According to the information and explanations given to us,during the period covered by our audit report, the Company has not issued any debentures

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

xxi. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.



Place: Chennai For S. DHANYAKUMAR & CO.,

Date: 23.04.2010 Chartered Accountants

(Regn. No.000748S)

D. SAMPATH KUMAR

Proprietor

M. No. 3483