Auditor Report of Vertical Industries Ltd.

Mar 31, 2014

1. We have audited the accompanying financial statements of M/s Vertical Industries Limited (Formerly known as La Mansion Granites limited), which comprise the Balance Sheet as at March 31,2014, and the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

2. Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards 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:

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

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

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

Opinion:

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

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

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

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

Report on Other Legal and Regulatory Requirements:

7. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") as amended by the companies (Auditor''s Report) (Amendment) Order 2004'' issued by the Central Government of India in terms of sub-section (4A)of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

c) The Balance Sheet, 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;

e) On the basis of written representations received from the directors as on March 31st, 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.

The Annexure referred to in paragraph 7 of the Our Report of even date to the members of Vertical Industries Limited (Formerly known as La Mansion Granites limited) on the accounts of the company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

I. (a) The company has no fixed asset during the F.Y 2013-2014, hence the provisions of the Clause 4(i) of the said order is not applicable to the company.

ii. (a) As explained to us, inventories have been physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, 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) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

iii. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of Clauses 4 {iii (b), iii(c) and iii(d)}of the Order are not applicable to the Company.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraphs4 {iii (e) to (g)}of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business regarding payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

v. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, there is no transaction with related parties during the financial year 2013-2014, hence the provisions of Clauses 4 {v (a) & (b)}of the order are not applicable to the Company.

vi. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

vii. As per information & explanations given by the management, the company has an internal audit system commensurate with its size and the nature of its business.

viii. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

ix. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

x. The Company have accumulated loss during the financial year 2013-2014 and has incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

xi. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the company has not taken any loans from any financial institution, bank or debenture holders; hence this clause is not applicable to the said company.

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

xiii. The company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provisions of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended)as amended by the companies (Auditor''s Report) (Amendment) Order 2004''is not applicable to the Company.

xiv. According to information and explanations given to us, the company is not trading in Shares, Mutual funds & other Investments; hence this clause is not applicable to the said company.

xv. According to the information and explanations given to us, the company has not given any guarantees for loan taken by others from a bank or financial institution.

xvi. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

xvii. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

xviii. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the company has not made any preferential allotment of shares during the year.

xix. The company has no outstanding debentures during the period under audit.

xx. The company has not raised any money by public issue during the year.

xxi. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the year, nor have we been informed of such case by the management.

ForP.S.NAGARAJU& CO., Chartered Accountants, (Firm Registration No:011447S)

CA P.S. NAGARAJU Partner (Membership No: 210268)

Place: Hyderabad, Date: 28.05.2014

---

Mar 31, 2013

Report on the Financial Statements:

1. We have audited the accompanying financial statements of M/s Vertical Industries Limited (Formerly known as La Mansion Granites limited), which comprise the Balance Sheet as at March 31,2013, and the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

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

Auditors'' Responsibility:

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

4. An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the financial statements. The procedures selecteddepend on the auditor''s judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevantto the Company''s preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of accounting policies usedand the reasonableness of the accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.

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

Opinion:

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

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

b) in the case of the Profit and Loss Account, of the profit/ loss for the yearended on that date; and

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

Report on Other Legal and Regulatory Requirements:

7. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") as amended by the companies (Auditor''s Report) (Amendment) Order 2004'' issued by the Central Government of India in terms of sub-section (4A)of section 227 of the Act, we give in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the Order.

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

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

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

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

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;

e) On the basis of written representations received from the directors as on March 31st, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of theCompanies Act, 1956.

The Annexure referred to in paragraph 7 of the Our Report of even date to the members of Vertical Industries Limited (Formerly known as La Mansion Granites limited) on the accounts of the company for the year ended 31st March, 2013.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

i. (a) The company has no fixed asset during the F.Y 2012-2013, hence the provisions of the Clause 4(i) of the said order is not applicable to the company.

ii. (a)As explained to us, inventories have been physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, 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) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

iii. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of Clauses 4 {iii (b), iii(c) and iii(d)} of the Order are not applicable to the Company.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraphs4 {iii (e) to (g)} of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business regarding payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

v. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, there is no transaction with related parties during the financial year 2012-2013, hence the provisions of Clauses 4 {v (a)

& (b)}of the order are not applicable to the Company.

vi. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

vii. As per information & explanations given by the management, the company has an internal audit system commensurate with its size and the nature of its business.

viii. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub- section (1) of section 209 of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

ix. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

x. The Company have accumulated loss during the financial year 2012-2013 and has incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

xi. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the company has not taken any loans from any financial institution, bank or debenture holders; hence this clause is not applicable to the said company.

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

xiii. The company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provisions of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended)as amended by the companies (Auditor''s Report) (Amendment) Order 2004''is not applicable to the Company.

xiv. According to information and explanations given to us, the company is not trading in Shares, Mutual funds & other Investments; hence this clause is not applicable to the said company.

xv. According to the information and explanations given to us, the company has not given any guarantees for loan taken by others from a bank or financial institution.

xvi. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

xvii. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

xviii. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the company has not made any preferential allotment of shares during the year.

xix. The company has no outstanding debentures during the period under audit.

xx. The company has not raised any money by public issue during the year.

xxi. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the year, nor have we been informed of such case by the management.

For P S Nagaraju &Co.,

Chartered Accountants

(Firm Registration No: 011447S)



Sd/-

Place : Hyderabad CA P S Nagaraju

Date : 29.05.2013 Partner

Membership No.210268

---

Mar 31, 2010

We have audited the attached Balance sheet of LA MANSION GRANITES LIMITED as at 31st March 2010 and also the Profit & Loss account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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.

1. As required by the Companies (Auditor's Report) Order, 2004 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 paragraph 4 & 5 of the said order.

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

a. 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 and found them to be satisfactory.

b. In our opinion, the Company has kept proper books of accounts as required by Law so far as appears from our examination of such 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 all the Directors of the Company as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified from being appointed as Directors of the Company under clause (g) of sub- section (1) of section 274 of Companies Act, 1956.

3. In our opinion and to the best of our information & according to the explanation given to us, the said accounts read with the notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true & fair view :

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

b. In the Case of the Profit & Loss Account, of the Loss for the year ended on that date: and

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

ANNEXURE TO THE AUDITORS' REPORT

The Annexure referred to paragraph 2 of our report to the members of La MANSION GRANITES LIMITED ("the company")for the year ended march 31st 2010 we report that :

1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed asset

2. The company as phased program of physical verification of its assets which, in our opinion is reasonable having regard to size of the company and the nature of its assets. In accordance with this program, certain fixed assets were physically verified by the management during the year and no material discrepancies were indentified during such verification.

3. The inventories have been physically verified by management at reasonable intervals during the year.

4. In our opinion ,the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

5. The Company is maintaining proper records of inventory. The discrepancies noticed during the physical verification of inventory as compared to the books of record were not material and have been properly dealt with in the books of account.

6. The company has neither granted nor taken any loans ,secured or unsecured to/from companies ,firm or other parties covered in the register maintained under section 301of the companies Act,1956. Consequently clauses 4(iii) (a) to 4(iii) (d) of the companies (Auditor's Report) order, 2004 are not applicable to the company.

7. 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 nature of its business for the purchase of inventory and fixed assets and for the sale of goods. In our opinion and according to information and explanations given to us, there is no continuing failure to correct major weaknesses in internal controls.

8. Based on the audit procedures performed by us and according to the information and explanations given by the management ,we are of the opinion that there were no transactions that need to be entered into the register maintained under section 301 of the companies Act

9. The company has not accepted any deposits from the public and consequently, the directives issued by the Reserve Bank of India and the provisions of the sections 58A and 58AA of the companies Act, 1956 and the rules framed there under are not applicable to the company

10. In our opinion, the Company does not have an internal audit system commensurate with the size and the nature of its business.

11. According to the information and explanations given to us ,the central Government has not prescribed the maintenance of cost records by the company under section 209(i)(d) of the Companies Act ,1956. Accordingly, clause 4(viii) of the order is not applicable .

12. According to the information and explanation given to us and on the basis of our examination of the books of account , the Company is not been regular in depositing undisputed statutory dues including investor education protection Fund, Employees State Insurance, Income tax, Sales Tax, Excise Duty, Cess and other material statutory dues applicable to it ,with the appropriate authorities. The Industrial Finance Corporation of India Ltd (IFCI) has sold all immovable assets of the company and made the auction purchaser to clear all the statutory liabilities to various govt. departments Accordingly, all the amount outstanding towards statutory liabilities, have been written off to the profit and loss account during the Financial year 2008-09.

13. According to information given to us, there are no disputed dues of incomes –tax customs Duty ,Wealth tax ,Excise Duty, service tax and Cess which have not been deposited on account of any dispute.

14. The Company has accumulated losses exceeding 50% of its net worth as at the end of the financial year under the reference and also the Company has incurred cash losses during the this year and also incurred cash losses in the preceding financial year .

15. During the Previous Financial Year, i.e. 2008-09, the company has defaulted in repayment of its dues to IFCI amounting to Rs127.87 lakhs including interest which has been provided in the earlier years .The Company has adjusted this amount against the immovable assets taken over by the IFCI and entries have also been passed books of account of the company

16. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clause 4 (xii) of the order is not applicable

17. In our opinion and according to the information and explanations given to us, the company is not a chit fund / nidhi / mutual benefit fund/ society. Accordingly, clause 4(xiii) of the order is not applicable.

18. According to the information and explanations given to us, the Company is not dealing in or trading in Shares, Securities, debentures and other investment.

19. In our opinion, according to the information and explanations given to us. The company has not given guarantees for loans taken by others from banks or Financial Institutions, Accordingly, clause 4(xv) of the order is not applicable.

20. According to the information and explanations given to us and on the basis of our examination of the books of account, the company has not obtained any term loans during the year, hence 4(xvi) is not applicable to the company

21. According to the information and explanations given to us, on overall examination of the balance sheet of the company ,we are of the opinion that no funds raised on short term basis, has been used for long term investment . Further, no part of the long- term funds has been used to finance working capital and short-term investments.

22. The Company has not made any preferential allotment of shares during the year to parties and companies covered in the Register maintained U/s 301 of the Companies Act, 1956.Accordingly, clause 4(xviii) of the order is not applicable

23. The Company has not issued any debentures .Accordingly, clause 4(xix) of the order is not applicable

24. The Company has not raised any money by Public issues during the year and Accordingly, clause 4(xx) of the order is not applicable

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

For SAYA REDDY & ASSOCIATES

CHARTERED ACCOUNTANTS

Sd/-

(Ch. SAYA REDDY) Proprietor

Place : Hyderabad Date : 09-08-2010