Auditor Report of Birla Power Solutions Ltd.

Mar 31, 2012

1. We have audited the attached Balance Sheet of Birla Power Solutions Limited (the "Company") as at March 31,2012, and the related Statement of Profit and Loss and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (together the 'Order') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956' of India (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give 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 in paragraph 3 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, 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 dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act.

(e) On the basis of written representations received * from the directors, as on March 31,2012 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon, give, in the prescribed manner, the information required by the Act 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 March 31, 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 AUDITORS' REPORT

[REFERRED TO IN PARAGRAPH 3 OF AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF BIRLA POWER SOLUTIONS LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012]

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

(b) The fixed assets of the Company have been physically verified by the Management during the year under a programme of verification laid down and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

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

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year, in respect of inventory lying with third parties, these have been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) 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.

(c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. As informed to us no material discrepancies were noticed on physical verification.

3. (a) The Company has granted loan to one company covered in the register maintained under Section 301 of the Act. The maximum amount outstanding at any time during the year was Rs. 989.24 lacs and the year end balance is nil.

(b) In our opinion, the rate of interest and other terms and conditions of such loan is not prima facie prejudicial to the interest of the Company.

(c) As the loan has been repaid during the year the provision of clause iii (c) and iii (d) of the Order are not applicable

(d) The Company has taken unsecured loan from one company, covered in the register maintained under Section 301 of the Act. The maximum amount outstanding anytime during the year was Rs. 610.76 lacs and the year end balance is Rs 610.76 lacs.

(e) In our opinion, the rate of interest and other terms and conditions of such loan is not prima facie prejudicial to the interest of the company.

(f) In respect of the aforesaid loan; the company is regular in repaying the principal amount wherever stipulated and is also regular in payment of interest.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act 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 such contracts or arrangements and exceeding the value of Rs five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, in respect of compliance by the Company with the provisions of Section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public, we have to state that the company has invested Rs. 283.55 lacs out of the amount of Rs.292.86 lacs, in liquid assets. Further there has been a delay of some days in obtaining the said assets.There has been a small delay in issue of Fixed Deposit Receipts to the extent of Rs. 105.90 lacs during January and February 2012 consequent to the change in the Registrars of the Company. Except for what is stated above the Company has complied with the provisions of Section 58A and 58AA or any other provisions of the Act and the Companies (Acceptance of Deposits) Rules 1975. According to the information and explanations given to us, no Order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, except for dues in respect of Income Tax, and Sales Tax the Company is generally regular in depositing the undisputed statutory dues including provident fund, employees' state insurance, investor education and protection fund, wealth tax, service tax, excise duty, custom duty, cess and other material statutory dues as applicable with the appropriate authorities. The extent of the arrears of Income Tax and Sales tax dues outstanding as at March 31, 2012, for a period of more than six months from the date they became payable are as follows:

Sr. Name Nature of Amount Period to No of the dues (Rs lacs) which the Statute amount relates

1 Income Dividend 261.54 2010-11 Tax Distribution Act. 1961 Tax

2 Sales Sales Tax 23.64 Up to 30th Tax Acts September 2011

(b) According to the information and explanations given to us and the records of the Company examined by us, there were no disputed dues in respect of Income-tax, Wealth-tax, Service- tax, Custom duty, Excise duty and Cess. The particulars of dues of Sales-tax as at March 31, 2012, which have not been deposited on account of disputes, are as follows:

Sr. Name of Nature Amount Forum where No. Statute of (Rs in dispute is Dues Lacs) pending.

1 Delhi Sales Sales 3.77 Jt. Commissioner/ Tax Act Tax Dy. Commissioner

2 Kerala Sales Sales 91.63 Tribunal / Dy. Tax Act Tax Commissioner (A)

3 Uttar Pradesh Sales 66.25 Tribunal / High Sales Tax Act Tax Court

4 Bihar Sales Sales 7.69 Jt. Commissioner Tax Act Tax

5 Tamilnadu Sales 18.57 Tribunal Sales Tax Act Tax

6 West Bengal Sales 15.38 Revisionary Board Sales Tax Act Tax

7 Orissa Sales Sales 1.29 Jt. Commissioner Tax Act Tax / Commissioner

8 Gujarat Sales Sales 2.25 Dy. Commissioner Tax Act Tax

9 Uttarakhand Sales 489.32 Dy. Commissioner Sales Tax Act Tax Appeals

TOTAL 696.15

10. The Company has no accumulated losses as at March 31, 2012 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holder as at the balance sheet date.

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

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader 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 during the year.

16. The Company has not obtained any term loans during the year.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures during the year.

20. The Company has not Raised any money by way of Public issue 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 instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Thakur, Vaidyanath Aiyar & Co

Chartered Accountants

Firm Registration Number: 000038N

C. V. Parameswar

Place: Mumbai Partner

Date: 14.08.2012 M.No:11541

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of Birla Power Solutions Limited (the "Company") as at March 31, 2011, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. 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.

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

II. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (together the 'Order') issued by the Central Government of India in terms of sub- section (4A) of Section 227 of "The Companies Act, 1956' of India (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

III. Further to our comments in the Annexure referred to in paragraph 3 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 beep kept by the Company so far as appears from our examination of those books;

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

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

(e) On the basis of written representations received from the directors, as on March 31,2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and in particular note no.8 in regard to a compounding application made to the ROC, give, in the prescribed manner, the information required by the Act 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 March 31, 2011;

ii) in the case of the Profit and Loss Account, 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 AUDITORS' REPORT

[REFERRED TO IN PARAGRAPH 3 OF AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF BIRLA POWER SOLUTIONS LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2011]

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

(b) The fixed assets of the Company have been physically verified by the Management during the year under a programme of verification laid down and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

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

2. (a) The inventory has been physically verified by the management during the year. In respect of inventory lying with third parties, these have been physically verified by the management and confirmed by the parties. In our opinion, the frequency of verification is reasonable.

(b) 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.

(c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been adjusted in books of accounts.

3. (a) The Company has granted unsecured loans to two companies covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans aggregate X 1700.30 Lacs and X 1700.24 Lacs respectively.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the aforesaid loans, the companies are repaying the principal amount wherever stipulated and are also regular in payment of interest.

(d) In respect of the aforesaid loans, there are no overdue amounts.

(e) The Company has not taken an unsecured loans from any companies, firms or parties covered in the register maintained under Section 301 of the Act.

(f) As the company has not taken unsecured loan from companies, firms or parties under section 301 of the Act, the question of rate of interest and other terms are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act 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 such contracts or arrangements and exceeding the value of Rs. five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time, except for purchase of certain items of a specialized nature for which alternate quotations were not available.

6. In our opinion and according to the information and explanations given to us, in respect of compliance by the Company with the provisions of Section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public, we have to state that the company has invested Rs. 118.5 lacs out of the amount of 12504.3 lacs, in liquid assets, after the period specified under Rule 3A of the Rules. Except for what is stated above the Company has complied with the provisions of Section 58A and 58AA or any other provisions of the Act and the Companies (Acceptance of Deposits) Rules 1975. According to the information and explanations given to us, no Order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, except for dues in respect of Income Tax and Sales Tax, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, wealth tax, service tax, excise duty, custom duty, cess and other material statutory dues as applicable with the appropriate authorities. The extent of the arrears of Sales tax dues outstanding as at March 31, 2011, for a period of more than six months from the date they became payable are as follows:

Sr. Name of Nature Amount Period to No the Statute of dues (Rs. lacs.) which the amount relates

1 Sales Tax Sales 144.84 Upto 30th Acts Tax September 2010

(b) According to the information and explanations given to us and the records of the Company examined by us, there were no disputed dues in respect of Income-tax, Wealth-tax, Service-tax, Custom duty, Excise duty and Cess. The particulars of dues of Sales-tax as at March 31, 2011, which have not been deposited on account of disputes, are as follows:

Sr. Name of Nature Amount Forum where No. Statute of Rupees dispute is Dues pending

1 Delhi Sales Sales 173.21 Additional . Tax Act Tax Commissioner Appeal in Tribunal

2 Kerala Sales Sales 92.12 Assessing Tax Act Tax Officer

3 U.P. Sales Sales 71.36 Joint

Tax Act Tax Commissioner

Appeal

High Court

4 Bihar Sales Sales 7.69 Joint

Tax Act Tax Commissioner

Commercial Tax

Appeal

5 Andhra Sales 1.14 Assessing Pradesh Tax Officer Sales Tax Act

6 Orissa Sales Sales 1.29 Joint Tax Act Tax Commissioner Sales Tax

7 Tamil Nadu Sales 18.57 Assessing

Sales Tax Act Tax Officer

8 West Bengal Sales 15.38 Directorate of Sales Tax Act Tax Commercial Tax

9 Gujarat Sales Sales 2.25 Commissioner of Tax Act Tax Sales Tax

10 Uttarakhand Sales 489.31 Deputy Sales Tax Act Tax Commissioner (Appeal)

Total 1872.32

10. The Company has no accumulated losses as at March 31, 2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holder as at the balance sheet date.

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

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company. *

14. In our opinion, the Company is not a dealer or trader 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 during the year.

16. The Company has not obtained any term loans during the year.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long-term investment.

18. The Company has net made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures during the year.

20. The management has disclosed the enduse of money raised by issue of Global Depository Receipts and we have verified the same.

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 instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

ForTHAKUR, VAIDYANATH AIYAR & CO.

Chartered Accountant

Firm Registration Number: 000038N

C.V. Parameswar

Place: Mumbai Partner

Date: 11.08.2011 M.No:11541

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Birla Power Solutions Limited (the "Company) as at March 31, 2010, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report (Amendment) Order 2004 (together the Order) issued by the Central Government of India in terms of sub- section (4A) of Section 227 of The Companies Act, 1956of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give 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 in paragraph 3 above, we report that:

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

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

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

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

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

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act 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 March 31, 2010;

ii) in the case of the Profit and Loss Account, 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 AUDITORS REPORT

[Referred to in paragraph 3 of Auditors Report of even date to the members of Birla Power Solutions Limited on the Financial Statements for the Year Ended March 31,2010]

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

(b) The fixed assets of the Company have been (D) physically verified by the Management during the

year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion the frequency of verification is reasonable.

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

2. (a) The inventory (excluding stocks with third parties)

has been physically verified by the management during the year. In respect of inventory ying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) Inour 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.

(c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material and has been adjusted in books of accounts.

3. (a) The Company has granted unsecured loans to two

companies covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans aggregate Rs 1820 57 Lacs and Rs 228.07 Lacs respectively.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the aforesaid loans, the companies are repaying the principal amount as stipulated and are also regular in payment of interest.

(d) In respect of the aforesaid loans, there are no overdue amounts.

(e) The Company has taken an unsecured loans from five companies covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans aggregate Rs 4061.88 Lacs and 1878.73 Lacs respectively.

(f) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of interest.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and

explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act 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 such contracts or arrangements and exceeding the value of Rs five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time, except for purchase of certain items of a specialized nature for which alternate quotations were not available.

6. In our opinion and according to the information and explanations given to us, in respect of compliance by the Company with the provisions of Section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975with regard to the deposts accepted from the public, we have to state that (I) The Company has, during the year, upto 16th December, 2009 accepted deposits aggregating Rs 157.73 Lacs without issuing any advertisement/Statement in lieu of advertisement as required under Section 58(2) (b) of the Act, (ii) The Company has invested amounts in liquid assets after the period specified under Rule 3A of the Rules and (Hi) The Company has borrowed funds aggregating Rs 3852.80 Lacs (outstanding as at 31st March, 2010 from certain parties viz. Individuals, Hindu Undivided Families Partnership Firms and Trusts, under financing arrangements which is not in compliance with the Rules. Except for what is stated in ( i ) to (iii), the Company has complied with the provisions of Section 58A and 58AA or any other provisions of the Act and the Companies (Acceptance of Deposits) Rules 1975. According to the information and explanations given to us, no Order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, except for dues in respect of Income Tax and Sales Tax, the Company is regular in depositing the undisputed statutory dues including provident fund investor education and protection fund, employees state insurance, wealth tax, service tax, excise duty, custom duty, cess and other material statutory dues as applicable with the appropriate authorities. The extent of the arrears of Income tax and Sales tax dues outstanding as at March 31, 2010, for a period of more than six months from the date they became payable are as follows:

Sr. Name of the Nature of Amount Period to No. Statute dues Rs. which the amount relates

1 Income Tax Income Tax 341.08 A.Y 2007-08 to Act 1962 2009-10

2 Sales Tax Sales Tax 257.76 Upto 31st March Acts 2009

(b) According to the information and explanations given to us and the records of the Company examined by us, there were no disputed dues in respect of Income-tax, Wealth-tax Service-tax, Custom duty, Excise duty and Cess. The particulars of dues of Sales-tax as at March 31, 2010, which have not been deposited on account of disputes, are as follows:



Sr. Name of Nature Amount Forum where No. Statute of Dues Rupees dispute is pending.

1 Delhi Sales Tax Sales 173.21 Additional Act Tax Commissioner Appeal in Tribunal

2 Keraia Sales Sales 90.24 Assessing Officer Tax Act Tax

3 UP. Sales Tax Sales 78.45 Joint Act Tax 6.31 Commissioner Appeal High Court

4 Bihar Sales Tax Sales 7.69 Joint Act Tax Commissioner Commercial Tax Appeal

5 Maharastra Sales 8.61 Assistant Sales Tax Act Tax Commissioner (Appeal)

6 Andhra Pradesh Sales 1.14 Assessing Officer Sales Tax Act Tax

7 Orissa Sales Sales 1.29 Joint Tax Act Tax Commissioner Sales Tax

8 Tamil Nadu Sales 18.57 Assessing Officer Sales Tax Act Tax

9 West Bengal Sales 11.60 Directorate of Sales Tax Act Tax Commercial Tax

10 Karnataka Sales Sales 27.11 Joint Tax Act Tax Commissioner Commercial Tax (Appeal)

11 Gujarat Sales Sales 2.25 Commissioner of Tax Act Tax Sales Tax

12 Uttarakhand Sales 489.31 Deputy Sales Tax Act Tax Commissioner (Appeal)

Total 915.78

10. The Company has no accumulated losses as at March 31, 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us the Company has not defaulted in repayment of dues to any financialI institution or bank or debenture holder as at the balance sheet date.

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

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader 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 during the year.

16. The Company has not obtained any term loans during the year.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by 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 instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For and on behalf of

DALAL & SHAH

Chartered Accountants

Firm Registration Number:102021W

S Venkatesh

Partner

Membership No. 037942

Mumbai: August 30, 2010