Auditor Report of Salora International Ltd.

Mar 31, 2024

We have audited the accompanying financial statements of Salora International Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of the 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 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, the loss and total comprehensive income, changes in equity and its cash flows 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 specified under section 143(10) of the Act (SAs). 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 independence 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 we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Emphasis of Matters

We draw attention to the following matters in the notes to the statements: -

1 Note no 40(A)(viii) which states that, the company filed a SLP on merits with the Honorable Supreme Court which is pending for disposal. However, on 16.12.2021, the Company filed a writ petition in High Court of Delhi to direct the department to condone the delay due to Covid-19 and accept payment Rs.1210.99 lakhs as approved in the SVLDR scheme against which pre deposit Rs 600 lakhs for settlement of the disputed Excise matters of Rs.2435.21 lakhs and penalty thereon Rs. 2435.21 lakhs demanded by Excise authorities related to financial year 1993-94 to 200304. The High Court has issued notice to the concerned authorities which is pending for disposal. The Contingent Liability against this matter Rs 4870.42 lakhs against this matter shall stand as it is, till either the High Court or the Supreme Court decides on this matter. Further there has been no hearing and progress in the case, however two of similar nature of cases has been decided in the favour of the appellant by the CESTAT and Honorable Supreme Court.

2) Note no 40(A)(ix) which states that, Contingent liabilities of Rs.1399.15 lakhs (excluding Rs.4870.42 Lakhs as referred in above (a) of EOM) related to Sales tax, Excise duty, Service tax, Goods and Service tax and Income tax etc. against which amount deposited Rs 214.24 Lakhs which are contested by the company and pending before various forums. However, management believes that based on legal advice, the outcome of these contingencies will be favorable and that outflow of economic resources is not probable.

3) Note no 46 which statesthat, the Company has material statutory dues recoverable of Sales tax of Rs 366.90 lakhs and Income tax Rs. 214.70 lakhs which has been considered good, pending final assessment, as well as old material of value Rs.71.49 lakhs with third party for replacement, subject to confirmation has been considered good

4) Note no 9 which states that, Deferred tax assets Rs. 2176.24 lakhs as at 31st March 2024 ( Includes Rs 1023.00 lakhs which can be carried forward for indefinitely period and Rs 1153.24 lakhs up to a certain specified period) is expected to be realized as the company strongly believes that it has reasonably certainty of realization, as the company has enhanced its product portfolio and the new business strategy of deeper penetration with greater operational efficiency, and also keeping in view the realization of generation of sufficient profits in the future as anticipated / projected by the management on a prudent basis. Moreover, there is no brought forward losses under the Income Tax Act which is expiring during the current financial year as well as in the next financial year.

Our conclusion is not modified in respect of these matters stated above.

Key Audit Matter

Key audit matter is those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion, there is no any such matter to be reported by us.

Information Other than the Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board''s Report including Annexures to Board''s Report, Management Discussion and Analysis, Business Responsibility Report and Report on Corporate Governance but does not include the financial statements and our auditors'' report thereon. The above-referred information is expected to be made available to us after the date of this audit 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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions necessitated by the circumstances and the applicable laws and regulations.

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 of these financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. 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, management 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.

The Board of Directors are 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 controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(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 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.

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

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

2 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 booksread with the matters stated in the paragraph 2(f) 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 other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account.

d. In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of the written representations received from the directors as on 31st March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2024 from being appointed as a director in terms of Section 164 (2) of the Act.

f. The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2(b) above on reporting under Section 143(3)(b) of the Act and paragraph 2 (i)(VI) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

g. With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B." Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls with reference to financial statements.

h. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of Sec 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

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 pending litigations on its financial position in its financial statements. Refer Note no. 40 to the financial statements.

II. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses, and

III. There were no amount which were required to be 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 47(h) 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 entity ("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 47(h)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;

c) Based on the audit procedures that have been 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 (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

V) The Company has not declared any dividend during the year.

VI) The reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is applicable from 1 April 2023. Based on our examination the feature of recording audit trail (edit log) facility was not enabled at application as well as database level for the customized Oracle based ERP accounting software used for maintaining the books of accounts right through the financial year. Further, since the audit trail (edit log) facility was not enabled, reporting on whether this was tampered or otherwise cannot be reported.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, as amended is applicable for the Company only w.e.f. 1 April 2023, therefore, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, as amended, on preservation of audit trail as per the statutory requirements for record retention is not applicable for financial year ended 31 March 2024.

For R Gopal & Associates

Chartered Accountants Firm Registration No.: 000846C

Vikash Aggarwal

Partner

Membership No.: 519574 UDIN: 24519574BKDIEQ6879

Place : New Delhi Date- : 27.05.2024

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Mar 31, 2016

INDEPENDENT AUDITOR’S REPORT

To the Members of Salora International Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SALORA INTERNATIONAL LIMITED (the “Company”), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,

2014 This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the 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 financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls of the entity''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at 31st March, 2016 and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor''s Report) Order, 2016 (“the Order'''') issued by the Central Government of India, in exercise of powers conferred by sub-section 11 of section 143 of the Act, we give in the “Annexure A” attached hereto our comments on the matters specified in the paragraphs 3 and 4 of the said Order.

2) As required by sub-section 3 of Section 143 of the Act, 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.

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 aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Account) Rules, 2014.

e) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms section 164 (2) of the Companies Act, 2013.

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”, and

g) With respect to the matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, 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 pending litigations on its financial position in its financial statements- Refer Note 35 to the financial statements.

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

THE ANNEXURE A REFERRED TO IN INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THE COMPANY ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2016, WE REPORT THAT:

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

b. Major fixed assets have been physically verified by the management during the year. As explained to us, no discrepancy were noticed on such verification.

c. According to the information and explanation given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the company, except the following-

- Lease hold land at D-13/4 Okhla Industrial Area, Phase

II, New Delhi is in the Company''s old name.

2. Inventories has been physically verified by the management during the year except service spares and goods/ material in

Name of the Statute	Nature of the dues	Dispute Amount (R /Lacs )	Amount Deposited (R /Lacs )	Amount not Deposited (R /Lacs )	Period to which the amount relates to various years covering the period	Forum where pending
Income Tax Act,	Income Tax	37.88	37.88	0	2002-2003	Appellate Authority - High Court
1961	Income Tax	7.12	2.55	4.57	2009-2010	Appellate Authority - CIT (A)
Sales Tax Law	Sales Tax	42.21	16.18	26.03	2000-2004	Appellate Authority - Supreme Court
	Sales Tax	38.21	8.32	29.89	1995-2002	Appellate Authority - High Court
	Sales Tax	808.35	166.62	641.73	2000-2012	Appellate Authority - Sales Tax Commissioner

bond, transit or with third party. In our opinion, the frequency of physical verification is reasonable.

3. According to the information and explanation given to us, the Company''s has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties listed in the register maintained under section 189 of the Companies Act 2013 and hence sub clause (a) (b) (c) are not applicable.

4. According to the information and explanation given to us, In respect of loans, investments, guarantees and security the provisions of section 185 and 186 of the Companies Act, 2013 have been complied with.

5. The company has not accepted any deposits from the public in accordance with the provisions of sections 73 to 76 of the Act and the Rules framed there under.

6. We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by the Central Government of India, maintenance of cost records has been prescribed under sub section (1) of section 148 of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records are being made and maintained.

7. a. According to the records of the Company and

information and explanations given to us, Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Custom Duty, Cess, Excise Duty, Service Tax, Value added tax, and other material statutory dues have been deposited regularly during the period with the appropriate authorities. According to the records of the Company and information and explanations given to us there were no arrears of outstanding statutory dues as at 31st March, 2016 for a period of more than six months from the date they became payable.

b. According to the records of the Company and information and explanations given to us the following are the particulars of disputed amounts payable in respect of Income tax, Sales Tax, Custom Duty, Excise Duty and Service tax as at the last day of the period ending 31st March, 2016 are as follows:

8. According to the information and explanation given to us by the management, the Company has not defaulted in the repayment of dues to banks. The company did not have any debenture holders during the year.

Finance Act, 1994	Service Tax on Royalty	1.97	0	1.97	2002-2003	Appellate Authority - Excise Commissioner
Custom Act, 1962	Custom Duty	Not ascertained	20	0	1994-1995	Appellate Authority - Tribunal
	Custom Duty	20.14	20.14	0	2015-2016	Commissioner
Central Excise Act, 1944	Excise Duty	2435.21	300.00	2135.21	1993-1994 to 2003-2004	Appellate Authority - Tribunal
	Excise Duty	89.23	0	89.23	2000-2011	Appellate Authority - Tribunal
	Excise Duty	7.66	7.66	0	2006-2007	Assistant Commissioner
	Excise Duty	1.78	2.00	0	1995-1996	Commissioner
	Excise Duty	41.65	4.20	37.45	2009-2010	Appellate Authority - Tribunal
	Penalty	2435.22	0	2435.22	1993-1994 to 2003-2004	Appellate Authority - Tribunal

9. Term loans were applied for the purpose for which they were raised. The company has not raised any money by way of Initial public offer or further public offer (Including debt instrument) during the year.

10. To the best of our knowledge and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, its officers or employees, noticed or reported during the year, nor have we been informed of such case by the management.

11. According to the information and explanation given to us and to best of our knowledge, we are of the opinion that the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

12. According to the information and explanation given to us, the provisions of any Special Statute applicable to Nidhi Companies are not applicable to the Company, so the provisions of this clause is not applicable to the Company.

13. According to the information and explanation given to us and based on our examination of the records, all the transactions with related parties are in compliance with section 177 and 188 of the Companies Act, 2013 and all the details have been disclosed in the financial statements as per Accounting Standard-18.

14. According to the information and explanation given to us and to the best of our knowledge, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the period under review.

15. According to the information and explanation given to us and to the best of our knowledge, the Company has not entered into any non-cash transactions during the period with directors or persons connected with him.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

ANNEXURE B TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF SALORA INTERNATIONAL LIMITED.

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of SALORA INTERNATIONAL LIMITED (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on “the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future years are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For K. PRASAD & COMPANY

CHARTERED ACCOUNTANTS FRN: 002755N

Place : New Delhi. (R. S. GUPTA)

Date : 27^th May 2016. PARTNER.

Membership No.: 072666

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Mar 31, 2015

We have audited the accompanying standalone financial statements of Salora International Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2015, and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act') with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone 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 of the state of affairs of the Company as at 31st March 2015, its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters Specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by section 143(3) of the Act, 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 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 aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. on the basis of the written representations received from the directors as on 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and

f. 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, 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 pending litigations on its financial position in its financial statements - Refer note no. 35 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. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditors' Report The Annexure referred to in our Independent Auditor's Report to the members of the Company on the standalone financial statements for the year ended 31 March 2015, we report that :

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

(b) Major Fixed assets have been physically verified by the management during the year. As explained to us no material discrepancies were noticed on such verification.

(ii) (a) Inventories have been physically verified by the management during the year except goods / material in bond, transit and with third parties. In our opinion, the frequency of physical verification is reasonable.

(b) 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) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

(iii) The company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act 2013.

(iv) In view of above sub-clauses a & b of the order, are not applicable.

In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company 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, we have not observed any major weakness in internal control system.

Nature of the Nature of the Disputed Amount Amount not Statute dues Amount Deposited Deposited (Rs/Lacs) (Rs./Lacs) (Rs./Lacs)

Income Tax Act, Income Tax 37.88 37.88 NIL 1961

Income Tax 12.57 12.57 NIL

Income Tax 7.12 2.55 4.57

Sales Tax Laws Sales Tax 16.59 16.18 0.41

Sales Tax 38.21 8.32 29.89

Sales Tax 264.22 61.09 203.13

Sales Tax 339.21 92.56 246.65

Finance Act, 1994 Service Tax 1.97 - 1.97 on Royalty

Customs Act, 1962 Custom Duty Not ascer- 20.00 - tained

Central Excise Act, Excise Duty 2435.21 300.00 2135.21 1944

Excise Duty 89.23 - 89.23

Excise Duty 7.66 7.66 -

Excise Duty 1.78 2.00 -

Penalty 2435.22 - 2435.22



Nature of the Statute Period to which the Forum where pending amount relates to various years covering the period

Income Tax Act, 1961 2002 - 2003 Appellate Authority - High court

2008 - 2009 Appellate Authority - ITAT

2009 - 2010 Appellate Authority - CIT (A)

Sales Tax Laws 2000 - 2004 Appellate Authority - Supreme Court

1995 - 2002 Appellate Authority - High Court

2003 - 2010 Appellate Authority - Sales Tax Tribunal

2000 - 2012 Appellate Authority - Sales Tax Commissioner

Finance Act, 1994 2002 - 2003 Appellate Authority - Excise Commissioner

Customs Act, 1962 1994 - 1995 Appellate Authority - Tribunal

Central Excise Act, 1944 1993 -1994 to 2003-2004 Appellate Authority - Tribunal

2000-2011 Appellate Authority Tribunal 2006-2007 Assistant Commissioner 1995-1996 Commissioner

1993 -1994 to 2003-2004 Appellate Authority - Tribunal

(v) The company has not accepted any deposits from the public during the year.

(vi) To the best of our knowledge and as explained to us, the Central Government has not prescribed the maintenance of cost records under sub section (1) of section 148 of the Act, in respect of Company's products for the year 2014-15. Accordingly, the provisions of clause 3 (vi) of the Order are not applicable to the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the company has been regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues with the appropriate authorities during the year. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following are the particulars of dues on account of Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax and Cess, that have not been deposited on account of any dispute as on 31st March, 2015. There is no dues on account of Wealth Tax.

(c) The amount required to be transferred to investor education and protection fund has been transferred to such fund within time.

(viii) The company does not have any accumulated losses at the end of the financial year and has not incurred cash loss in such financial year and in the immediately preceding financial year.

(ix) According to the information and explanations given to us, the company has not defaulted in repayment of dues to Banks. The Company does not have any debenture holders.

(x) The company has not given any Guarantee for loans taken by others from bank or financial institution.

(xi) Term loans raised during the year have been applied for the purpose for which they are obtained.

(xii) To the best of our knowledge & belief and according to the information & explanations given to us, no material fraud on or by the company was noticed or reported during the year.

For K. PRASAD & COMPANY

CHARTERED ACCOUNTANTS FRN: 002755N

Place : New Delhi. (R. S. GUPTA)

Date : 2nd July 2015. PARTNER.

Membership No.: 072666

---

Mar 31, 2014

We have audited the accompanying financial statements of Salora International Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notifed under the Companies Act, 1956 ("the Act") read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

(b) in the case of the Statement of profit and Loss, of the profit for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

c. the Balance Sheet, Statement of profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of profit and Loss, and Cash Flow Statement comply with the Accounting Standards notifed under the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

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

Annexure to Independent Auditors'' Report of even date (Refer to in paragraph 1 thereof)

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

(b) Major Fixed assets have been physically get verifed by the management during the year. As explained to us no material discrepancies were noticed on such verifcation.

(c) The company has not made substantial disposals of fixed assets during the year.

(ii) (a) Inventories have been physically verifed by the management during the year except goods / material in bond, transit and with third parties. In our opinion, the frequency of physical verifcation is reasonable.

(b) The procedures of physical verifcation 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) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verifcation.

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

(b),(c) Since the company has not granted loan, hence & (d) the sub clauses (b),(c) and (d) are not applicable.

(e) The company has taken unsecured loans repayable on demand amounting to Rs. 849 lacs in last year from two companies and Rs 13 lacs during the year from one out of those companies covered in the register maintained u/s 301 of the Act.

(f) The rate of interest and other terms and conditions of unsecured loans taken by the company are not prima facie prejudicial to the interest of the company.

(g) There is no comment on the payment of the principal and the interest since the same are repayable on demand. There is repayment of principal of Rs 472 Lacs and the company is regular in interest payment.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal

control systems commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion and according to the information and explanations given to us, there were no major weaknesses in internal control systems.

(v) (a) 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) As explained to us, transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

(vii) The company has an internal audit system commensurate

with its size and the nature of its business.


(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the company has been regular in depositing

Nature of the Nature of the Disputed Amount Amount not Statute dues Amount Deposited Deposited (Rs./Lacs) (Rs./Lacs) (Rs./Lacs)

Income Tax Act, Income Tax 37.88 37.88 NIL 1961

Income Tax 12.57 12.57 NIL

Income Tax 7.12 2.55 4.57

Sales Tax Laws Sales Tax 16.59 16.18 0.41

Sales Tax 38.21 8.32 29.89

Sales Tax 277.46 65.44 218.02

Sales Tax 237.86 72.97 164.89

Service Tax Act, Service Tax on 3.74 2.00 1.74 1994 Royalty

Customs Act, 1962 Custom Duty Not ascer -tained 20.00 -

Central Excise Act, Excise Duty 2435.21 300.00 2135.21 1944

Excise Duty 67.37 19.79 47.58

Penalty 2435.22 NIL 2435.22



Nature of the Period to which the amount Forum where pending Statue relates to various years covering the period

Income Tax Act, 1961 2002 – 2003 Appellate Authority - High court

2008 – 2009 Appellate Authority – ITAT

2009 – 2010 Appellate Authority – CIT (A)

Sales Tax Laws 2000 – 2004 Appellate Authority -Supreme Court

1995 – 2002 Appellate Authority -High Court

1999 – 2010 Appellate Authority - Sales Tax Tribunal

2000 – 2012 Appellate Authority -Sales Tax Commissioner Service Tax Act, 1994 1995 – 2003 Appellate Authority - Excise Commissioner

Customs Act, 1962 1994-1995 Appellate Authority – Tribunal

Central Excise Act, 1944 1993 -1994 to 2003-2004 Appellate Authority - Tribunal

1997 -1998 to 2006-2007 Appellate Authority Tribunal

1993 -1994 to 2003 – 2004 Appellate Authority - Tribunal

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, and any other statutory dues with the appropriate authorities during the year. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable except of professional tax of R 0.83 lacs. due to registration number not obtained.

(b) According to the information and explanations given to us, the following are the particulars of dues on account of Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and Cess, that have not been deposited on account of any dispute as on 31st March, 2014. There is no dues on account of Wealth Tax.

(x) The company does not have any accumulated losses

at the end of the financial year and has not incurred cash loss in such financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the company has not defaulted in repayment of dues to Banks. The Company does not have any debenture holders.

(xii) According to the information and explanations given to us, the company has not granted any 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, nidhi, mutual benefit fund or a society. Accordingly, clause 4 (xiii) of the order is not applicable.

(xiv) According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable.

(xv) The company has not given any Guarantee for loans taken by others from bank or financial institution.

(xvi) Term loans raised during the year have been applied for the purpose for which they are obtained.

(xvii) To the best of our knowledge and belief and according to the information and explanations given to us, funds raised on short-term basis have not been used for long term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in register maintained under Section 301 of the Act.

(xix) The company has not issued any debentures, so no security or charge has been created.

(xx) The company has not raised any money by Public Issue during the year.

(xxi) To the best of our knowledge & belief and according to the information & explanations given to us, no material fraud on or by the company was noticed or reported during the year.

For K. PRASAD & COMPANY

CHARTERED ACCOUNTANTS

FRN: 002755N

Place : New Delhi. (R. S. GUPTA)

Date : 24th May, 2014. PARTNER.

Membership No.: 072666

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of Salora International Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows 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 fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial 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 fnancial 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 fnancial statements.

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

Opinion

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

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

(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 fows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

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

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

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

c. the Balance Sheet, Statement of Proft 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 Proft 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 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditors'' Report of even date (Refer to in paragraph 1 thereof)

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

(b) Major Fixed assets have been physically verifed by the management during the year. As explained to us no material discrepancies were noticed on such verifcation.

(c) The company has not made substantial disposals of fxed assets during the year.

(ii) (a) Inventories have been physically verifed by the management during the year except goods / material in bond, transit and with third parties. In our opinion, the frequency of physical verifcation is reasonable.

(b) The procedures of physical verifcation 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) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verifcation.

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

(b),(c) Since the company has not granted loan, hence the & (d) sub clauses (b),(c) and (d) are not applicable.

(e) The company has taken unsecured loans repayable on demand amounting to R 703 lacs in last years and R 654 lacs during the year from two companies covered in the register maintained u/s 301 of the Act.

(f) The rate of interest and other terms and conditions of unsecured loans taken by the company are not prima facie prejudicial to the interest of the company.

(g) There is no comment on the payment of the principal and the interest since the same are repayable on demand and there is repayment of principal of R 508 Lacs to two companies and interest of R 49.02 Lacs for the last year to one company during the year.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business, for the purchase of inventory and fxed assets and for sale of goods and services. In our opinion and according to the information and explanations given to us, there were no major weaknesses in internal control systems.

(v) (a) 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) As explained to us, transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

(vii) The company has an internal audit system commensurate with its size and the nature of its business.

(viii) It has been explained that the cost records and accounts prescribed by the Central Government of India under Section 209 (1) (d) of the Act, are being made up and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. 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, and any other statutory dues with the appropriate authorities during the year except professional tax. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the fnancial year for a period of more than six months from the date they became payable except professional tax of R 1.02 lacs due to registration number not obtained.

(b) According to the information and explanations given to us, the following are the particulars of dues on account of Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and Cess, that have not been deposited on account of any dispute as on 31st March, 2013.

(x) The company does not have any accumulated losses at the end of the fnancial year and has not incurred cash loss in such fnancial year but has incurred cash loss in the immediately preceding fnancial year.

(xi) According to the information and explanations given to us, the company has not defaulted in repayment of dues to Banks. The Company does not have any debenture holders.

(xii) According to the information and explanations given to us, the company has not granted any 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, nidhi, mutual beneft fund or a society. Accordingly, clause 4 (xiii) of the order is not applicable.

(xiv) According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable.

(xv) The company has not given any Guarantee for loans taken by others from bank or fnancial institution.

(xvi) The Company has not raised new term loans during the year.

(xvii) To the best of our knowledge and belief and according to the information and explanations given to us, funds raised on short-term basis have not been used for long term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in register maintained under Section 301 of the Act.

(xix) The company has not issued any debentures, so no security or charge has been created.

(xx) The company has not raised any money by Public Issue during the year.

(xxi) To the best of our knowledge & belief and according to the information & explanations given to us, no material fraud on or by the company was noticed or reported during the year. For K. PRASAD & COMPANY

CHARTERED ACCOUNTANTS

FRN: 002755N

Place : New Delhi. (R. S. GUPTA)

Date : 30th May, 2013. PARTNER. Membership No.: 072666

---

Mar 31, 2012

We have audited the attached Balance Sheet of SALORA INTERNATIONAL LIMITED as at 31st March, 2012, Statement of Profit & Loss 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 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides the reasonable basis for our opinion.

1. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (hereinafter referred to as the "Act"), we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the annexure referred to in paragraph 1 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 accounts 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 & 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 & Loss and Cash flow statement dealt with by this report comply with the Accounting Standards as 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 are disqualified from being appointed as a director in terms of Clause (g) of Sub Section (1) of Section 274 of the Companies Act, 1956.

3. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with Significant 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 2012;

(b) in the case of the Statement of Profit and loss, of the "Loss" of the Company for the year ended on that date.

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

Annexure to the Auditors' Report of even date (Refer to in paragraph 1 thereof)

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

(b) Major fixed assets have been physically verified by the management during the year. As explained to us no material discrepancies were noticed on such verification.

(c) The company has not made substantial disposals of fixed assets during the year.

(ii) (a) Inventories have been physically verified by the management during the year except goods/material in bond, transit and with third parties. In our opinion, the frequency of physical verification is reasonable.

(b) 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) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

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

(b),(c) Since the company has not granted loan, hence the & (d) sub clauses (b),(c) and (d) are not applicable.

(e) The company has taken unsecured loans repayable on demand amounting to R 565 lacs during the year from two companies covered in the register maintained u/s 301 of the Act.

(f) The rate of interest and other terms and conditions of unsecured loans taken by the company are not prima facie prejudicial to the interest of the company.

(g) There is no comment on the payment of the principal and the interest since the same are repayable on demand and there is repayment of principal of R 115.70 Lacs and interest of R 68.15 Lacs for the year to two companies during the year.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion and according to the information and explanations given to us, there were no major weaknesses in internal control systems.

(v) (a) 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) As explained to us, transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

(vii) The company has an internal audit system commensurate with its size and the nature of its business.

(viii) It has been explained that the cost records and accounts prescribed by the Central Government of India under Section 209 (1) (d) of the Act, are being made up and maintained.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the company has been regular in depositing 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, and any other statutory dues with the appropriate authorities during the year except of professional tax. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable except of professional tax of Rs. 0.78 lacs.

(b) According to the information and explanations given to us, the following are the particulars of dues on account of Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and Cess, that have not been deposited on account of any dispute as on 31st March, 2012.

Nature of the Nature of the Disputed Amount Amount not Statute dues Amount Deposited Deposited (Rs./Lacs) (Rs./lacs) (Rs./lacs)

Income Tax Act, Income Tax 88.51 88.51 NIL 1961

Income Tax 21.31 19.42 1.89

Income Tax 12.44 12.57 (0.13)

Income Tax 7.12 - 7.12

Sales Tax Laws Sales Tax 16.59 16.18 0.41

Sales Tax 38.21 8.32 29.89

Sales Tax 132.63 113.61 19.02

Sales Tax 480.75 261.98 218.77

Service Tax Act, Service Tax on 3.74 2.00 1.74 1994 Royalty

Customs Act, 1962 Custom Duty Not 20.00 - ascert -ained

Central Excise Act, Excise Duty 1142.77 300.00 842.77 1944

Excise Duty 1411.32 19.79 1391.53

Penalty 1142.77 NIL 1142.77





Nature of Statute Period to which the Forum where pending amount relates to various years covering the period

2002 - 2003 Appellate Authority - High court

2004-2005 Appellate Authority - Tribunal

2008-2009 Appellate Authority -CIT(A)

2009 - 2010 Appellate Authority -CIT(A)

Sales Tax Laws 2000 - 2004 Appellate Authority -Supreme Court

1995-2002 Appellate Authority -High Court

1999 - 2007 Appellate Authority - Sales Tax Tribunal

2000 - 2012 Appellate Authority Sales Tax Commissioner

Service Tax Act, 1994 1995-2003 Appellate Authority - Excise Commissioner

Customs Act,1962 1994-1995 Appellate Authority - Tribunal

Central Excise Act, 2002 -2003 to 1944 2003-2004 Appellate Authority - Tribunal

1994 -1995 to 2001-2002 Appellate Authority Tribunal

2002 -2003 to 2003-2004 Appellate Authority - Tribunal

(x) The company does not have any accumulated losses at the end of the financial year and has incurred cash losses in such financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the company has not defaulted in repayment of dues to Financial Institutions & Banks. The Company does not have any debenture holders.

(xii) According to the information and explanations given to us, the company has not granted any 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, nidhi, mutual benefit fund or a society. Accordingly, clause 4 (xiii) of the order is not applicable.

(xiv) According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable.

(xv) The company has not given any Guarantee for loans taken by others from bank or financial institution.

(xvi) The Company has not raised new term loans during the year. Term loan at beginning of the year has been repaid during the year.

(xvii) To the best of our knowledge and belief and according to the information and explanations given to us, funds raised on short-term basis have not been used for long term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in register maintained under Section 301 of the Act.

(xix) The company has not issued any debentures, so no security or charge has been created.

(xx) The company has not raised any money by Public Issue during the year.

(xxi) To the best of our knowledge & belief and according to the information & explanations given to us, no material fraud on or by the company was noticed or reported during the year.

For K. PRASAD & COMPANY

Chartered Accountants

FRN: 002755N

(R. S. GUPTA)

Place : New Delhi. Partner

Date : 29th May, 2012 Membership No. : 072666

---

Mar 31, 2011

We have audited the attached Balance Sheet of Salora International Limited as at 31st March, 2011 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides the reasonable basis for our opinion.

1. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (hereinafter referred to as the "Act"), we enclose in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the annexure referred to in paragraph 1 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 accounts 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 & 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 & Loss Account and Cash flow statement dealt with by this report comply with the Accounting Standards as 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, 2011 and taken on record by the Board of Directors, we report that none of the directors are disqualified from being appointed as a director in terms of Clause (g) of Sub Section (1) of Section 274 of the Companies Act, 1956.

3. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with Significant Accounting Policies and Notes on Accounts in Schedule "U" 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 2011;

(b) in the case of the Profit & Loss Account, of the "Loss" of the Company 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.

ANNEXURE TO THE AUDITORS' REPORT OF EVEN DATE (REFER TO IN PARAGRAPH 1 THEREOF)

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

(b) Major fixed assets have been physically verified by the management during the year. As explained to us, no material discrepancies were noticed on such verification.

(c) The company has not made substantial disposals of fixed assets during the year.

(ii) (a) Inventories have been physically verified by the management during the year except goods / material in bond, transit and with third parties. In our opinion, the frequency of physical verification is reasonable.

(b) 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) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

(iii) (a) The company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the act.

(b),(c) Since the company has not granted loan, hence the & (d) sub clauses (b),(c) and (d) are not applicable.

(e) The company has taken unsecured loans repayable on demand amounting to Rs. 542.70 lacs from two companies covered in the register maintained u/s 301 of the Act.

(f) The rate of interest and other terms and conditions of unsecured loans taken by the company are not prima facie prejudicial to the interest of the company.

(g) There is no comment on the payment of the principal and the interest since the same are repayable on demand and there is repayment of principal of Rs. 289 Lacs and interest of Rs. 8.16 Lacs for the year to two companies during the year.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion and according to the information and explanations given to us, there were no major weaknesses in internal control systems.

(v) (a) 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) As explained to us, transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

(vii) The company has an internal audit system commensurate with its size and the nature of its business.

(viii) It has been explained that the cost records and accounts prescribed by the Central Government of India under Section 209 (1) (d) of the Act, are being made up and maintained.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the company has been regular in depositing 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, and any other statutory dues with the appropriate authorities during the year except of professional tax and some delays of ESI. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable except of professional tax of Rs. 0.82 lacs.

(b) According to the information and explanations given to us, the following are the particulars of dues on account of Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and Cess, that have not been deposited on account of any dispute as on 31st March, 2011. There is no dues of Wealth Tax that has not been deposited on account of any dispute.

Nature of the Nature of the Disputed Amount Amount Statue dues Amount Deposited not (Rs./Lacs) (Rs./Lacs) Deposi- ted (Rs/ Lacs) Income Tax Act, 1961 Income Tax 88.51 88.51 NIL

Income Tax 31.16 6.77 24.39

Income Tax 65.57 85.27 -

Income Tax 30.24 30.24 Nil

Sales Tax Laws Sales Tax 16.59 16.18 0.41

Sales Tax 37.77 7.70 30.07

Sales Tax 107.58 90.90 16.68

Sales Tax 560.95 287.03 273.92

Service Tax Act, 1994 Service Tax on Royalty 7.07 NIL 7.07

Customs Act, 1962 Custom Duty Not ascertained 20.00 -

Central Excise Act, 1944 Excise Duty 1142.77 300.00 842.77

Excise Duty 1420.17 21.79 1398.38

Penalty 1142.77 NIL 1142.77

Nature of the Period to which the amount Forum where pending statute relates to Various years covering the period

Income Tax Act, 1961 2002 - 2003 Appellate Authority - High court

2004 - 2005 Appellate Authority - Tribunal

2006 - 2007 Appellate Authority - CIT (A)

2008 - 2009 Appellate Authority - CIT (A)

Sales Tax Laws 2000 - 2004 Appellate Authority -Supreme Court

1995 - 2002 Appellate Authority -High Court

1999 - 2007 Appellate Authority - Sales Tax Tribunal

2000 - 2010 Appellate Authority - Sales Tax Commissioner

Service Tax Act, 1994 1997 - 2003 Appellate Authority - Excise Commissioner

Customs Act, 1962 1994-1995 Appellate Authority - Tribunal

Central Excise Act, 1944 1994 & 2003 Appellate Authority - Tribunal

1995 -2009 Appellate Authority Excise Commissioner

1994 & 2003 Appellate Authority - Tribunal

(x) The company does not have any accumulated losses at the end of the financial year and has incurred cash losses in such financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the company has not defaulted in repayment of dues to Financial Institutions & Banks. The Company does not have any debenture holders.

(xii) According to the information and explanations given to us, the company has not granted any 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, nidhi, mutual benefit fund or a society. Accordingly, clause 4 (xiii) of the order is not applicable.

(xiv) According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable.

(xv) The company has not given any Guarantee for loans taken by others from bank or financial institution.

(xvi) Term loan taken was applied for the purpose for which the loan was obtained.

(xvii) To the best of our knowledge and belief and according to the information and explanations given to us, funds raised on short-term basis have not been used for long term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in register maintained under Section 301 of the Act, during the year.

(xix) The company has not issued any debentures, so no security or charge has been created.

(xx) The company has not raised any money by Public Issue during the year.

(xxi) To the best of our knowledge & belief and according to the information & explanations given to us, no fraud on or by the company was noticed or reported during the year.

For K. PRASAD & COMPANY Chartered Accountants FRN 002755 N

R.S. Gupta Partner Membership No. : 072666

Place : New Delhi. Date : 30th May, 2011

---

Mar 31, 2010

We have audited the attached Balance Sheet of Salora International 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 Companys 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides the reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (hereinafter referred to as the "Act"), we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the Annexure referred to in paragraph 1 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 accounts 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 & 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 & Loss Account and Cash flow statement dealt with by this report comply with the Accounting Standards as 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, 2010 and taken on record by the Board of Directors, we report that none of the directors are disqualified from being appointed as a director in terms of Clause (g) of Sub Section (1) of Section 274 of the Companies Act, 1956.

3. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with Significant Accounting Policies and Notes on Accounts in Schedule T 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 Profit & Loss Account, of the Loss of the Company 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.

ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE (REFER TO IN PARAGRAPH 1 THEREOF)

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

(b) Major fixed assets have been physically verified by the management during the year. As explained to us, no material discrepancies were noticed on such verification.

(c) The company has not made substantial disposals of fixed assets during the year.

(ii) (a) Inventories have been physically verified by the management during the year except goods / material in bond, transit and with third parties. In our opinion, the frequency of physical verification is reasonable.

(b) 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) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

(iii) (a) The company has granted unsecured loans amounting to Rs.1470.00 lacs repayable on demand to two companies covered in the register maintained under Section 301 of the Act.

(b) The rate of interest and other terms & conditions of loans given by the company are not prima facie prejudicial to the interest of the Company.

(c) Principal and interest has been recovered during the year.

(d) There is no overdue amount at the end of the year.

(e) The company has not taken any loan, secured or unsecured from companies, firms or other parties covered in the register maintained u/s 301 of the Act.

(f) & (g) Since the Company has not taken loan, hence the sub-clauses (f) & (g) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion and according to the information and explanations given to us, there were no major weaknesses in internal control systems.

(v) (a) 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) As explained to us, transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

(vii) The company has an internal audit system commensurate with its size and the nature of its business.

(viii) It has been explained that the cost records and accounts prescribed by the Central Government of India under Section 209 (1) (d) of the Act, are being maintained.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the company has been regular in depositing 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, and any other statutory dues with the appropriate authorities during the year. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following are the particulars of dues on account of Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and Cess, that have not been deposited on account of any dispute as on 31st March, 2010. There is no dues of Wealth Tax that has not been deposited on account of any dispute.

Nature of the Nature of the Disputed Amount Amount statute dues Amount Deposited not Deposited (Rs/Lacs) (Rs/Lacs) (Rs/Lacs)

Sales Tax Laws Sales Tax 55.31 16.18 39.13

Sales Tax 37,44 7.56 29.88

Sales Tax 107.58 90.90 16.68

Sales Tax 543.82 274.58 269.24

Income Tax Act, 1961 Income Tax 88.51 88.51 NIL

Income Tax 31.16 6.77 24.39

Income Tax 65.57 85.27 (-) 19.70

Customs Act, 1962 Custom Duty Not ascertained 20.00 --

Central Excise Act, 1944 Excise Duty 1142.77 300.00 842.77

Excise Duty 67.38 19.79 47.59

Penalty 1109.71 NIL 1109.71

Modvat 1.78 2.00 (0.22)

Service Tax Act, 1994 Service Tax on Royalty 7.07 NIL 7.07





Name of the Period to which the amount Forum where pending Statue relates to Various years covering the period

Sales Tax Laws 2000 - 2004 Appellate Authority -Supreme Court

1995-2001 Appellate Authority - High Court

1999 - 2007 Appellate Authority - Tribunal

1995 - 2010 Appellate Authority -Commissioner

Income Tax Act, 1961 2002 - 2003 Appellate Authority - High Court

2004 - 2005 Appellate Authority - Tribunal

2006 - 2007 Appellate Authority - CIT (A)

Customs Act, 1962 1994 -1995 Appellate Authority -Tribunal

Central Excise Act, 1944 1994 & 2003 Appellate Authority - Tribunal

2004 - 2007 Appellate Authority - Commissioner

1994 & 2003 Appellate Authority - Tribunal

1995 -1996 Appellate Authority - Commissioner

Service Tax Act, 1994 1997 - 2003 Appellate Authority - Excise Commissioner

(x) The company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in such financial year and in the immediately preceding financial year.

xi) According to the information and explanations given to us, the company has not defaulted in repayment of dues to Financial Institutions & Banks. The Company does not have any debenture holders.

(xii) According to the information and explanations given to us, the company has not granted any 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, nidhi, mutual benefit fund or a society. Hence, clause 4 (xiii) of the order is not applicable.

(xiv) According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Hence, clause 4(xiv) of the order is not applicable.

(xv) The company had given Corporate Guarantee of Rs.250.00 lacs for cash credit facility taken by a company under the same management from bank to assist in borrowing for working capital against which loan has been repaid by that company during the year.

(xvi) According to the information and explanations given to us, the company has not taken term loans during the year.

(xvii) To the best of our knowledge and belief and according to the information and explanations given to us, funds raised on short-term basis have not been used for long term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in register maintained under Section 301 of the Act, during the year.

(xix) The company has not issued any debentures, so no security or charge has been created.

(xx) The company has not raised any money by Public Issue during the year.

(xxi) To the best of our knowledge & belief and according to the information & explanations given to us, no fraud on or by the company was noticed or reported during the year.

For K. PRASAD & COMPANY

Chartered Accountants FRN 002755 N R.S. Gupta

Place : New Delhi. Partner

Date : 29th May, 2010 Membership No.: 072666