Auditor Report of Ambica Agarbathies & Aroma Industries Ltd.

Mar 31, 2024

We have audited the accompanying financial statements of Ambica Agarbathies Aroma & Industries Limited

(the "Company"), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013, as amended (the "Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, its Loss including total other comprehensive Loss, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing ("SA"s) 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 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 financial statements under the provisions of the Act and the Rules made thereunder, 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 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 financial statements for the financial year ended 31 March 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the financial statements section of our report, including in relation to these matters.

Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements

Key Audit Matter

How our audit addressed the key audit matter

1. Revenue from Operations

Our audit procedures amongst others included the following: 1. We understood and tested on a sample basis the design and operating effectiveness of management control over the recognition of revenue as per Ind AS 115 Revenue. 2. We understood the nature of goods sold/services rendered to the customers, assessed the design and tested the operating effectiveness of internal controls related to the revenue recognition. 3. Performed substantive testing on test check basis and verified supporting documentation for revenue transactions recorded during the year which includes sales invoices, purchase order from customers and bank statements apart from that performed analytical procedures.

Other Information

The Company''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and auditor''s report(s) thereon. The annual report is expected to be made available to us after the date of this auditor''s report.

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

Responsibilities of Management and those charged with governance for the 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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income/(Loss), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, Board of Directors 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.

Those charged with governance are also responsible for overseeing the Company''s financial reporting process. Auditor''s Responsibilities for the Audit of the Financial Statements:

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

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

• Identify and assess the risks of material misstatement of the 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 control.

• Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section l43(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 the 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 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 report. 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 financial statements for the financial year ended 31 March 2024 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 Section 143(3) of the Act, based on our audit, 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, except for the matters stated in the paragraph (vi) below, on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive lncome/(Loss), the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

e) On the basis of the written representations received from the directors as on 31 March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 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" to this report;

g) In our opinion, the managerial remuneration for the year ended 31 March 2024 has been paid/provided by the Company to its directors is in accordance with the provisions of section 197 read with Schedule V to the Act;

h) The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 1(b) above on reporting under section 143(3)(b) of the Act and paragraph (vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

i) 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:

i. The Company has disclosed the impact of its pending litigations on its financial position in its financial statements. Refer note 28 to the financial statements.

ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses;

iii. As per the information furnished to us the amounts of Rs.6.24/- lakhs lying with the company in unpaid dividend account which have remained unclaimed or unpaid for a period of 7 years or more have not been transferred to the Investor Education and Protection Fund by the Company.

iv. (a) The Management has represented that, to the best of its knowledge and belief, as disclosed in note-25.18 to the financial statements, no funds (which are material either individually or in the aggregate) 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 or entity, 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;

(b) The Management has represented that, to the best of its knowledge and belief, as disclosed in note-25.19 to the financial statements, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("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

( c) Based on such audit procedures that were 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 (a) and (b) contain any material misstatement.

v. During the year the company has not declared any dividend. Therefore compliance with section 123 of the act was not applicable.

vi. Based on our examination which included test checks and information given to us, the Company has used accounting software''s for maintaining its books of account, which did not have a feature of recording audit trail (edit log) facility throughout the year for all relevant transactions recorded in the respective software''s, hence we are unable to comment on audit trail feature of the said software.

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

For Ramasamy Koteswara Rao and Co LLP

Chartered Accountants Firm Registration Number: 010396S/S200084

Sd/

Peri Reddy Talla Partner

Place: Hyderabad ^Membership ^N°. ²³⁶⁷⁵⁹

_{Date: 28-05-2024} UDIN: 24236759BKEOVH6002

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Mar 31, 2012

1. We have audited the attached Balance Sheet of AMBICA AGARBATHIES AROMA AND INDUSTRIES LIMITED, (the "Company") as at 31st March 2012, the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company, as we considered appropriate and the information and explanations given to us, we enclose in the Annexure, a statement on the matter 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. 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

e. 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 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 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 profit 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 to the Auditors' Report

(Refer to in paragraph 3 of our report of even date to the Members of Ambica Agarbathies Aroma and Industries Limited for the year ended 31st March 2012)

i. In respect of its fixed assets:

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

b. The fixed assets of the company have been physically verified by the management during the year, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

c. In our opinion, and according to the information and explanations given to us, substantial part of fixed assets of the Company has not been disposed off during the year.

ii. In respect of its inventory:

a. As explain to us, the inventories were 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 the inventory followed by the Management were reasonable and adequate in relation to the size of the company and nature of its business.

c. In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification.

iii. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956. According to the information and explanations given to us:

a. The company has granted unsecured loan to two parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year is Rs. 11,68,21,269/- and the year-end balance of the loans granted is Rs.11,68,21,269/-.

b. In our opinion, the rate of interest and other terms and conditions of such loans given by the company are not, prima facie, prejudicial to the interest of the company.

c. In our opinion, the party has repaid the principal amounts and interest regularly to the company.

d. There is no overdue amount in excess of Rs.1,00,000/- in respect of loans granted by the company, to the parties listed in the register maintained under Section 301 of the Companies Act, 1956.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

e. The Company has not taken any loans, secured or unsecured, by the companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Accordingly, the requirements of clauses (iii) (f) and (iii) (g) of paragraph 4 of the order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, the company has an internal control procedures, which in our view requires improvement, commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods and services. Further on the basis of examination of the books and records of the company, we have not come across any instances of continuing failure to correct major weaknesses in the internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements maintained under Section 301 of the Companies Act, 1956 have been so entered.

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 and exceeding a value of Rs.5,00,000/- in respect of any party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause (vi) of the paragraph 4 of the order are not applicable to the Company.

vii. In our opinion, the internal audit system of the company needs to be strengthened commensurate with the size and nature of its business.

viii. According to the information given to us, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 in respect of the business of the company.

ix. In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Sales- tax, Wealth tax, Service tax, Customs duty, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Excise duty and Investor Education and Protection Fund.

(b) According to the information and explanations given to us, except in case of income tax there are no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Sales tax, Wealth tax, Service tax, Customs duty, Cess and other material statutory dues were in arrears as at 31 March 2012 for a period of more than six months from the date they became payable. As explained to us, the provisions of Excise duty were not applicable to the Company.

Sl Particulars Period to which Amount No amount relates

1 Works contracts (TDS) - Construction division 2007-08 13,20,000

2 Works contracts (TDS) - Construction division 2008-09 8,85,388

3 Works contracts (TDS) - Hotel division 2011-12 3,92,312

4 Income Tax 2010-11 59,94,834

As per the information furnished to us the amounts of Rs.6,23,674 Lakhs lying with the company in unpaid dividend account which have remained unclaimed or unpaid for a period of 7 years or more have not been transferred to the account of the Central Government as required by Sec 205A (5) of the Companies Act, 1956.

(c) According to the information and explanations given to us, there are no dues of Sales tax, Wealth tax Customs duty and Service tax which have not been deposited with the appropriate authorities on the account of any dispute. As explained to us the provisions of excise duty are not applicable to the Company. The following dues of Income-tax have not been deposited by the Company on account of disputes.

Name of the Statue Nature of the dues Demand (Rs.) Year to which Forum where the amount dispute is related pending

Income Tax Act, 1961 Asst. made 87,75,480/- AY 2003-04 CIT(A), Chennai, r.w.s. 143(3) u/s. 147 Tamil Nadu.

x. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and 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 its bankers or to any financial institutions. The Company did not have any outstanding debentures during the year.

xii. In our opinion, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the company is not in the business of chit funds or nidhi / mutual benefit fund / society. Accordingly, the provisions of clause (xiii) of paragraph 4 of the order are not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not dealing in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the order are not applicable to the Company.

xv. In our opinion and according to the information and explanations given to us, the terms and conditions on which the company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company

(a) The corporate guarantee given to Indian Overseas Bank on behalf of Ambica Infraventures Pvt. Ltd., which was a subsidiary of the company at the time when the Corporate Guarantee was issued by the company and according to the information and explanation furnished to us, the process of substitution of the said Corporate Guarantee by the new management of Ambica Infraventures Pvt. Ltd., is in progress.

xvi. In our opinion and according to the information and explanations given to us the company has availed term loans from banks and financial institutions which have been applied for the purposes for which they were sanctioned except in case of the Term Loans of Rs.11.91 crores availed from Corporation Bank for the purpose of renovation of the Hotel Division and for setting up a new hotel at Vizag , which have been used for the purpose of construction, Renovation, and advance for Capital Project of Hotel Division.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are of the opinion that the funds raised on short term basis have not been used for long term investments and vice versa.

xviii. According to the information and explanations given to us, the Company has not made any 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 the Company did not have any outstanding debentures during the year.

xx. According to the information and explanations given to us, the Company has not raised any money by issue of shares to public during the year.

xxi. During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of fraud on or by the Company, noticed or reported during the year nor have we been informed of any such case by the management.

Sd/-

(T.S. AJAI)

Chartered Accountant

Membership No.025524

Place : Hyderabad

Date : 17.08.2012

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Mar 31, 2010

We have audited the attached Balance Sheet of AMBICA AGARBATHIES AROMA & INDUSTRIES LIMITED, as at 31st March 2010, the Proft 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 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 signifcant 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.

As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company, as we considered appropriate and the information and explanations given to us during the course of our audit, we report that in our opinion:

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

(b) As explained to us, the fxed assets of the company have been physically verifed by the management at the year- end and no discrepancies have been noticed on such verifcation.

(c) In our opinion and according to the information and explanation given to us, substantial part of fxed assets has not been disposed off during the year and the going concern status of the Company is not affected.

2. (a) The inventories have been physically verified during the year by the Management. In our opinion, the frequency of verifcation is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verifcation of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verifcation of inventory as compared to book records were not material.

3. The company has neither granted nor taken any loans, secured or unsecured, from companies, frms or other parties listed in the Register maintained U/Sec 301 of the Companies Act, 1956.

Since the company has not granted or taken any loans from parties listed in the register maintained U/Sec 301, Clauses (iii) (b) to (d) of Paragraph 4 are not applicable.

4. In our opinion and according to the information and explanations given to us, the Company follows a system of internal control procedures, which in our view requires improvement, commensurate with the size of the Company and the nature of its business with regard to the purchases of stores, raw materials including components, plant and machinery, equipment and other assets and with regard to the sale of goods manufactured by the Company. Further on the basis of examination of the books and records of the Company, we have not come across any instances of major weaknesses in the aforesaid internal control procedures.

5. (a) In our opinion, the transactions that need to be entered into a register in pursuance of Section 301 of the Act have been so entered.

(b) Each of the above transactions has been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Hence the directives issued by the Reserve Bank of India and the provisions of Section 58Aand 58AA of the Companies Act 1956 and the Rules there under etc. are not applicable.

7. In our opinion, the internal audit system of the Company needs to be strengthened commensurate to the size and nature of its business.

8. According to the information given to us the Central Government has not prescribed maintenance of cost records U/Sec 209(1) (d) of the Companies Act in respect of the business of the Company.

9. (a) As per the records of the company and

information and explanation provided to us, the Company is generally regular in depositing the undisputed statutory dues with appropriate authorities including Provident Fund, Employees State Insurance, Sales Tax and other statutory dues. Except the following, no undisputed amounts were outstanding as at 31.03.10 for a period more than six months from the day they become payable:

Sl Particulars Amount No (Rs.)

1 TDS Payable-F.Y. 2008-09 Construction-Division 5,22,237

2 Works Contracts (TDS) F.Y. 2007-08 Construction-Division 13,20,000

3 Works Contracts (TDS) F.Y. 2008-09 Construction-Division 8,85,388

4 Income Tax F.Y. 2008-09 46,10,189

5 FBT F Y. 2008-09 11,32,421

As per the information furnished to us the amounts of Rs.4.27 Lakhs lying with the Company in unpaid dividend account which have remained unclaimed or unpaid for a period of 7 years or more have not been transferred to the account of the Central Government as required by Sec 205A (5) of the Companies Act, 1956.

(b) According to the information and explanations given to us, there are no statutory dues with appropriate authorities including Provident Fund, Employees State Insurance, Sales Tax and other statutory dues which have not been deposited on account of any dispute as at 31st March, 2010, excepting, the following disputed tax appeals, which have been subsequently vide order dt. 23-7-2010 of the ITAT, Chennai disposed off in favour of the company, resulting in refund of Rs. 31,45,000/- deposited during the pendency of the appeals.

Year to Forum where Name of the Nature of the Demand which the dispute Statue dues (Rs.) amount is pending related

Income Tax Disallowance 5,90,281 AY 2000-01 ITAT, Act, 1961 U/Sec. 80-IA Chennai, including interest Tamil Nadu. till date of Asst. Order

Income Tax Disallowance 5,37,185 AY 2001-02 ITAT Act, 1961 U/Sec. 80-IA Chennai, including interest Tamil Nadu. till date of Asst. Order

Income Tax Disallowance 1,37,07,081 AY 2002-03 ITAT Act, 1961 U/Sec. 80-IA&10A Chennai, including interest Tamil Nadu. till date of Asst. Order

Income Tax Disallowance 7,92,636 AY 2003-04 ITAT Act, 1961 U/Sec. 80-IA Chennai, including interest Tamil Nadu. till date of Asst. Order

Income Tax Disallowance 15,58,503 AY 2004-05 ITAT Act, 1961 U/Sec. 80-IA Chennai, including interest Tamil Nadu. till date of Asst. Order

Income Tax Disallowance 17,01,853 AY 2005-06 ITAT Act, 1961 U/Sec. 10A Chennai, Tamil Nadu.

Central Sales Disallowance 4,13,508 FY 2005-06 Remanded Tax Act, 1956 of exemption back to A.O. for export sale Eluru by DCCT.

(Appeals) Vijayawada A.P.

10. The Company has no accumulated losses as at 31st March, 2010 and it has not incurred any cash losses in the financial year covered by the audit or in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not, as at 31.03.2010, defaulted in repayment of dues to financial institutions, banks or debenture holders,

12. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not in the business of chit funds and hence any special statutes relating to chit fund / nidhi / mutual beneft fund / societies are not applicable to the operations of the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions, except Corporate Guarantee given for Rs.1200.00 Lakhs in favour of Indian Over Seas Bank for sanctioning of Loan to its subsidiary company viz., Ambica Infra Ventures (P) Ltd.,

16. On a broad examination of the records of the Company we are of the opinion that the term loans availed by the Company from Banks/ Financial institutions have been applied for the purposes for which term loans were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, the funds raised on short term basis have not been used for long term investments and vice versa.

18. The Company has not made any preferential allotment of shares to parties and companies listed in the register maintained U/Sec 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year and outstanding as at the end of the year.

20. The Company has not raised any monies by way of public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of fraud on or by the Company, noticed or reported during the year nor have we been informed of any such case by the management.

Further to our comments above, we report that:

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

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

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

(iv) In our opinion, the Balance Sheet, Proft 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;

(v) 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 disqualifed 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;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read togetherwith the Signifcant Accounting Policies and Notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Sd/-

(T S Ajai)

Chartered Accountant

Place : Hyderabad Date : 27.08.2010