Auditor Report of Osian Industries Ltd.

Mar 31, 2009

1. We have audited the attached Balance Sheet of OSIAN INDUSTIRES LIMITED the Company as 31st March 2009 and also the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial Statement are the responsibility of the Company management our responsibility is to express an opinion on these financial statement based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit or obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on test basis evidence supporting the amounts and disclosure in the financial statement. An audit also included assessing the accounting principles used and significant estimates made by managements 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) issued By the Central Government of India in terms of sub-section (4a) of Section 227 of the Companies Act. 1956 we enclose in the Annexure a statements on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above we report that:

i) We have obtained all the information and explanations. Which to the best of our Knowledge and belief were necessary for the purpose or our audit.

ii) In our opinion proper books of accounts as required by law have been kept by the Company as far as appears from our examination of those books.

iii) The Balance Sheet. Profit & Loss A/c and Cash Flow Statements dealt with by this report is in agreements with the books of account.

iv) 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.

v) On the basis of the written representation received from the directors as on 31st March, 2009 and taken on records by the Board of Directors, we report that of the directors is disqualified as on March 31st 2009 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 explanation given to us the said accounts give the information 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 Balance Sheet of the state of affairs of the Companies as at 31st March 2009.

b) In the case of the Profit & Loss account, of the Loss for the year ended on that date.

c) In the case of Cash Flow statements, of the cash flow for the year ended on that date.

ANNEXURE

Referred to in paragraph 3 of our report of even date

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

(b) The Company has a program for physical verification on rotation basis. Which in our opinion is reasonable having regards to the size of the company and the nature of its business, accordingly certain fixed assets have been physically verified by the managements during the year and no material discrepancies were identified on such verification.

(c) During the year there was no substantial disposal of fixed assets.

(ii) (a) The managements has conducted physical verification of inventory at reasonable intervals other that material laying the third parties, which have been substantial tidally confirmed by them.

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

(c) The Company has maintained proper records of inventory and no material discrepancies were noticed on physical verification as compared to book of account.

(iii) (a) The Company has not granted any loans secured or unsecured to companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans secured or unsecured from companies firms or other parties covered register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanation given to us there is an adequate internal control system commensurate with the size of the Companies and the nature of its business for the purchase of inventory and fixed Assets and for the sale of goods and services during the course of our audit. No major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) According to the information and explanation provided by the managements we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained Under Section 301 have been so entered.

(b) In our opinion and according to the information and explanation given to us the Transaction made in pursuance of such contracts or arrangements exceeding value of rupees five lakhs have been entered into during the financial year at prices which are reasonable having regards to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposit from the public to which the directives issued by the Reserve Bank of India the provision of Section 58A, 58AA or any other relevant provisions of the Act and the Rules framed there under apply.

(vii) In our opinion the company has an internal audit system commensurate with the size and Nature of its business

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant of the rules made by the Central Government for the maintenance of Cost records under section 209(a)(d) of the Companies Act, 1956 and are of the opinion that prima facie the records with a view to determined that they are accurate.

(ix) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor, education and protection fund, employee's state insurance income-tax sale tax wealth tax service tax Customs duty excise and other material statutory dues applicable to it.

(b) According though the information and explanations given to us no disputed amounts payable in respect of provident fund, investor, education and protection fund, employees state insurance income - tax, sales-tax, wealth tax, service tax customs duty excise cuss and other material statutory dues cess and other undisputed statutory dues were outstanding at the yearend for a period of more than six months from the date they became payable.

(x) The Company has suffered a loss of Rs. 20262879/- due to earthquake in the Year 2000-2001 and the same have been carried forward every year.

(xi) Based on the information and explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to debentures holders. The company has no outstanding dues in respect of the financial institution.

(xii) According to the information and explanation given to us based on the documents and records produced to us the company has not granted loans and advances on the basis of security by way of pledge of shares debentures and other securities.

(xiii) In our opinion the Company is not a chit fund or a nidhi (Mutual benefit fund / society. Therefore the provision or clause 4(xii) of the companies (Auditor Report) order 2003 (as amended) are not applicable to the company.

(xiv) In our opinion and according to the information and explanation given to the company is not dealing in or trading in share securities, debentures and other investment surplus funds in marketable securities and mutual funds. According to the information and explanation given to us proper records have been maintained of the transactions and contracts and timely entries have been made therein. The marketable securities and mutual fund have been held by the company in its own name.

(xv) According to the information and explanation given to us the company has not given any guarantee for loans taken by others from bank of financial institutions.

(xvi) The company did not have any term loans outstanding during the year.

(xvii) According to the information and explanation given to us an overall examination of the Balance Sheet of the company we report that no funds raised on short term basis have been used for long- term investment.

(xviii) The Company has not made any preferential allotment or companies covered in the register maintained under section 301 of the companies Act, 1956.

(xix) According to the information and explanation given to us the company has not created security on the debentures issued.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit performed procedures for the purpose of reporting the true and fair view and of the financial statements and as per the information and explanation given by the managements, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For C. K. VYAS AND CO.

CHARTERED ACCOUNTANTS

(C K VYAS)

PARTNER

M. NO. 07516

RAJKOT