Auditor Report of Sharp Industries Ltd.

Jun 30, 2013

We have audited the attached Balance Sheet of SHARP INDUSTRIES LIMITED as on 30th June, 2013, the Statement of Profit and Loss Account and the Cash Flow Statement for the 9 months period ended on that date, both annexed thereto. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of the Section 227(4A) of the Companies Act, 1956, on the basis of books and records examined by us in the normal course of Audit and on the basis of such test checks as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 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 explanation which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

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

(d) In our opinion, the Balance Sheet, the Profit & Loss Account and the Cash Flow Statement, read with significant accounting policy and notes on accounts, comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable.

(e) On the basis of written representations received from the Directors as on 30th June, 2013 and taken on record by the Board of Directors, we report that none of the Directors is, prima facie, disqualified under section 274(1) (g) of the Companies Act, 1956 as on 30th June, 2013 from being appointed as director of the Company.

i) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with other notes and accounting policies thereon, give the information required by the Companies Act, 1956 in the manner so required and present a true and fair view:

(i) in the case of Balance Sheet, of the state of affairs of the Company as at 30th June, 2013;

(ii) in the case of Profit & Loss Account of the profit of the Company for the 9 months period on that date; and

(iii) in case of Cash Flow Statement, of the cash flows for the 9 months period ended on that date.

ANNEXURE TO THE AUDITORS'' REPORT

Annexure referred to in paragraph ''1'' of the Auditor''s Report to the Members of SHARP INDUSTRIES LIMITED on the accounts for the 9 months period ended 30th June, 2013.

(i) (a) As per the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, these fixed assets have been physically verified by the management at reasonable intervals. We have been informed that no material discrepancies were noticed on such verification.

(ii) (a) As explained to us, during the year the inventories have been physically verified by the management. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) As informed to us, the Company has not taken unsecured loans from any party covered in the register maintained under section 301 of the Companies Act, 1956.

(b) As informed to us, the Company has not granted unsecured loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there are generally adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets, sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) (a) As informed to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which appear reasonable having regard to the prevailing market prices at the relevant time aggregating during the financial year exceeding the value of Rs.5Lac in respect of each party except where comparable quotations are not available having regard to the specialized nature of the materials purchased by the Company.

(vi) As informed to us, during the year, the Company has not accepted deposits from the public to which the directives issued by the Reserve Bank and the provisions of Section 58-A and 58AA of the Companies Act, 1956 or any other provisions of the Act and the rules framed there under apply.

(vii) Company has internal audit system to commensurate with the size and nature of its business.

(viii) As informed to us, the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Professional Tax and Income-tax deducted at source, though there is a slight delay in payment.

(b) As per information and explanations given to us, there is no any undisputed amount payable in respect of Provident Fund, Income-tax, Professional Tax and Income-tax deducted at source for the 9 months period which was in arrears as at 30th June, 2013 of more than six moths from the date they become payable.

(x) The Company has not incurred cash losses in the immediately preceding financial year as well as in this financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the long term dues to financial institutions and banks have been repaid.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, the provisions of paragraph 4 Clause (xii) of the Order are not applicable.

(xiii) The Company is not a chit fund/nidhi/mutual benefit funds/society to which the provisions of special statute relating to chit fund are applicable and therefore the provisions of paragraph 4 Clause (xiii) of the Order are not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, provisions of paragraph 4 clauses (xiv) of the Order are not applicable.

(xv) As informed to us, during the year under review, the Company has not given any guarantee for loans taken by others from banks; provisions of paragraph 4 clause (xv) of the Order are not applicable.

(xvi) According to the information and explanations given to us, the Company has utilized the term loans for the purpose for which they were obtained.

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

(xviii) As the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act, provisions of paragraph 4 clauses (xviii) of the Order are not applicable.

(xix) As the Company has not issued any debentures, provisions of paragraph 4 clause (xix) of the Order are not applicable.

(xx) Since the Company has not raised money during the year by way of public issue, provisions of paragraph 4 clause (xx) of the Order are not applicable.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of the 9 months period under audit.

For R.R. MANDALI & CO.

Chartered Accountants

(Firm Regn. No. 114223W)

R. R. MANDALI

Place :Mumbai (Proprietor)

Date :22.11.2013 M. NO. 033118

---

Sep 30, 2011

We have audited the attached Balance Sheet of SHARP INDUSTRIES LIMITED as on 30th September, 2011, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of the Section 227(4A) of the Companies Act, 1956, on the basis of books and records examined by us in the normal course of audit and on the basis of such test checks as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 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 explanation which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

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

(d) In our opinion, the Balance Sheet, the Profit S Loss Account and the Cash Flow Statement, read with significant accounting policy and notes on accounts, comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable.

(e) On the basis of written representations received from the Directors as on 30th September, 2011 and taken on record by the Board of Directors, we report that none of the Directors is, prima facie, disqualified under section 274(1) (g) of the Companies Act, 1956 as on 30th September, 2011 from being appointed as director of the Company.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with other notes and accounting policies thereon, give the information required by the Companies Act, 1956 in the manner so required and present a true and fair view:

(i) in the case of Balance Sheet, of the state of affairs of the Company as at 30th September, 2011;

(ii) in the case of Profit & Loss Account of the profit of the Company for the year ended on that date; and

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

ANNEXURE TO THE AUDITORS' REPORT

Annexure referred to in paragraph T of the Auditor's Report to the Members of SHARP INDUSTRIES LIMITED on the accounts for the year ended 30th September, 2011.

(i) (a) As per the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, these fixed assets have been physically verified by the management at reasonable intervals. We have been informed that no material discrepancies were noticed on such verification.

(c) During the year, the Company has disposed off certain part of fixed assets which were not major.

(ii) (a) As explained to us, during the year the inventories have been physically verified by the management. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) As informed to us, the Company has not taken unsecured loans from any party covered in the register maintained under section 301 of the Companies Act, 1956.

(b) As informed to us, the Company has not granted unsecured loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there are generally adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets, sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) (a) As informed to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which appear reasonable having regard to the prevailing market prices at the relevant time aggregating during the financial year exceeding the value of Rs.5l.ac in respect of each party except where comparable quotations are not available having regard to the specialized nature of the materials purchased by the Company.

(vi) As informed to us, during the year, the Company has not accepted deposits from the public to which the directives issued by the Reserve Bank and the provisions of Section 58-A and 58AA of the Companies Act, 1956 or any other provisions of the Act and the rules framed there under apply.

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

(viii) As informed to us, the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Professional Tax and Income-tax deducted at source, though there is a slight delay in payment.

(b) As per information and explanations given to us, there is no any undisputed amount payable in respect of Provident Fund, Income-tax, Professional Tax and Income-tax deducted at source for the year which was in arrears as at 30th September, 2011 of more than six moths from the date they become payable.

(x) The Company has not incurred cash losses in the immediately preceding financial year as well as in this financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the long term dues to financial institutions and banks have been repaid.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, the provisions of paragraph 4 Clause (xii) of the Order are not applicable.

(xiii) The Company is not a chit fund/nidhi/mutual benefit funds/society to which the provisions of special statute relating to chit fund are applicable and therefore the provisions of paragraph 4 Clause (xiii) of the Order are not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, provisions of paragraph 4 Clause (xiv) of the Order are not applicable.

(xv) As informed to us, during the year under review, the Company has not given any guarantee for loans taken by others from banks, provisions of paragraph 4 Clause (xv) of the Order are not applicable.

(xvi) During the year, the Company has not raised any term loans. Hence, provisions of paragraph 4 Clause (xvi) of the Order are not applicable.

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

(xviii) As the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act, provisions of paragraph 4 Clause (xviii) of the Order are not applicable.

(xix) As the Company has not issued any debentures, provisions of paragraph 4 Clause (xix) of the Order are not applicable. (xx) Since the Company has not raised money during the year by way of public issue, provisions of paragraph 4 Clause

(xx) of the Order are not applicable.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of the year under audit.

For R.R. MANDALI & CO.

Chartered Accountants

(Firm Regn. No. 114223W)

R. R. MANDALI

Place : Mumbai (Proprietor)

Date : 1st December, 2011 M. NO. 033118

---

Sep 30, 2010

We have audited the attached Balance Sheet of SHARP INDUSTRIES LIMITED as on 30th September, 2010, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, both 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 management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a 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 the Section 227(4A) of the Companies Act, 1956, on the basis of books and records examined by us in the normal course of Audit and on the basis of such test checks as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 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 explanation which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

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

(d) In our opinion, the Balance Sheet, the Profit & Loss Account and the Cash Flow Statement, read with significant accounting policy and notes on accounts, comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable.

(e) On the basis of written representations received from the Directors as on 30th September, 2010 and taken on record by the Board of Directors, we report that none of the Directors is, prima facie, disqualified under section 274(1} (g) of the Companies Act, 1956 as on 30th September, 2010 from being appointed as director of the Company.

i) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with other notes and accounting policies thereon, give the information required by the Companies Act, 1956 in the manner so required and present a true and fair view:

(i) in the case of Balance Sheet, of the state of affairs of the Company as at 30th September, 2010;

(ii) in the case of Profit & Loss Account of the profit of the Company for the year ended on that date; and

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



Annexure referred to in paragraph V of the Auditors Report to the Members of SHARP INDUSTRIES LIMITED on the accounts for the year ended 30th September, 2010.

(i) (a) As per the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, these fixed assets have been physically verified by the management at reasonable intervals. We have been informed that no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off any fixed assets.

(ii) (a) As explained to us, during the year the inventories have been physically verified by the management. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) As informed to us, the Company has not taken unsecured loans from any party covered in the register maintained under section 301 of the Companies Act, 1956.

(b) As informed to us, the Company has not granted unsecured loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

[i] In our opinion, there are generally adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets, sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v] (a) As informed to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which appear reasonable having regard to the prevailing market prices at the relevant time aggregating during the financial year exceeding the value of Rs.5Lac in respect of each party except where comparable quotations are not available having regard to the specialised nature of the materials purchased by the Company.

(vi) As informed to us, during the year, the Company has not accepted deposits from the public to which the directives issued by the Reserve Bank and the provisions of Section 58-A and 58AA of the Companies Act, 1956 or any other provisions of the Act and the rules framed there under apply.

(vii) Company has internal audit system to commensurate with the size and nature of its business.

(viii) As informed to us, the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Professional Tax and Income-tax deducted at source, though there is a slight delay in payment.

(b) As per information and explanations given to us, there is no any undisputed amount payable in respect of Provident Fund, Income-tax, Professional Tax and Income-tax deducted at source for the year which was in arrears as at 30th September, 2010 of more than six moths from the date they become payable.

(x) The Company has accumulated losses at the end of the financial year exceeding fifty percent of the net worth. The Company has not incurred cash losses in the immediately preceding financial year as well as in this financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the repayment of dues to financial institutions and banks is being regularised as per the terms and conditions laid down in scheme of One Time Settlement (OTS) between the Company and its Secured Creditors.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, the provisions of paragraph 4 Clause (xii) of the Order are not applicable.

(xiii) The Company is not a chit fund/nidhi/mutual benefit funds/society to which the provisions of special statute relating to chit fund are applicable and therefore the provisions of paragraph 4 Clause (xiii) of the Order are not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, provisions of paragraph 4 clauses (xiv) of the Order are not applicable.

(xv) As informed to us, during the year under review, the Company has not given any guarantee for loans taken by others from banks, provisions of paragraph 4 clause (xv) of the Order are not applicable.

(xvi) During the year, the Company has not raised any term loans. Hence, provisions of paragraph 4 clause (xvi) of the Order are not applicable.

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

(xviii) As the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act, provisions of paragraph 4 clauses (xviii) of the Order are not applicable.

(xix) As the Company has not issued any debentures, provisions of paragraph 4 clause (xix) of the Order are not applicable.

(xx) Since the Company has not raised money during the year by way of public issue, provisions of paragraph 4 clause (xx) of the Order are not applicable.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of the year under audit.

For R. R. MANDALI & CO.

Chartered Accountants

(FirmRegn. No. 114223W)

R. R. MANDALI

Proprietor

M. NO. 033118

Place: Mumbai

Date : 3rd December, 2010

---

Sep 30, 2009

We have audited the attached Balance Sheet of SHARP INDUSTRIES LIMITED as on 30th September, 2009, Profit and Loss Account and 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 management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a 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 sub-section (4A) of section 227 of the Companies Act, 1956, on the basis of books and records examined by us in the normal course of Audit and on the basis of such test checks as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 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 explanation which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

(c) The Balance Sheet and Profit & Loss Account dealt with this report are in agreement with the books of accounts.

(d) In our opinion, the Profit & Loss Account and Balance Sheet, read with significant accounting policy and notes on accounts, comply with Accounting Standards, to the extend applicable, except Accounting Standard 15 relating to retirement benefits as reported in note no. 3 of Schedule 19 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 ,we report that none of the directors are prima facie .disqualified under section 274(1) (g) of the Companies Act, 1956 as on 30,h September, 2009 from being appointed as director of the company.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to;

i) Note No. 2 of Schedule 19 relating to provision of retirement benefits, as estimated by the management, instead of actuarial valuation, the extent of non-compliance in value terms is not ascertained.

ii) Note No. 3 of Schedule 19 relating to non-provision of doubtful Debtors & Loans and Advances, amount not ascertained.

iii) Note No. 4 of Schedule 19 relating to non-provision of Interest, penal interest and other liquidated damages on unpaid amount of Sales-tax Deferred Credit Loan, Provident Fund, Income-tax Deducted at Source and ESI, the amount of same is not determined.

iv) Note No. 5 of Schedule 19 relating to non provision for diminution in value of investment (amount not ascertained).

v) Note No. 7 of Schedule 19 relating to third party balance confirmations and other matters.

And read with other notes and accounting policies thereon, give the information required by the Companies Act, 1956 in the manner so required and present a true and fair view:

(i) In the case of Balance Sheet, of the state of affairs of the Company as at 30th September, 2009 and

(ii) In the case of Profit & Loss Account of the profit of the Company for the year ended on that date.

(iii) In case of cash flow statement, of the cash flows for the year ended on that date

ANNEXURE TO THE AUDITORS REPORT

Annexure referred to in paragraph 1 of the Auditors Report to the Members of SHARP INDUSTRIES LIMITED on the accounts for the year ended 30th September, 2009.

(i) (a) As per the information and explanations given to us the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, these fixed assets have been physically verified by the management at reasonable intervals. We have been informed that no material discrepancies were noticed on such verification.

(c) During the year, the company has not disposed off any fixed assets.

(ii) (a) As explained to us, during the year the inventories have been physically verified by the management. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) As informed to us, the company has taken Unsecured loans from one party covered in the register maintained under section 301 of the Companies Act, 1956. The total balance outstanding as on 30/09/2009 was Rs.599.96 Lacs. The other terms & conditions were not prejudicial to the interest of the company.

(b) As informed to us, the company has not granted Unsecured loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there are generally adequate internal control procedure commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and with regard to the sale of goods and services, However, there are further scope for strengthening the same. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) (a) As informed 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)ln our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at price which are reasonable having regard to the prevailing market prices at the relevant time aggregating during the financial year exceeding the value of Rs. 5 lacs in respect of each party except where comparable quotations are not available having regard to the specialized nature of the materials purchased by the company.

(vi) As informed to us, during the year, the Company has not accepted deposits from the public to which the directives issued by the Reserve Bank and the provisions of Section 58-A and 58AA or any other provisions of the Act and the rules framed there under, apply.

(vii) Company has internal audit system which is being further strengthened so as to commensurate with the size and nature of its business.

(viii) As informed to us, the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

(ix) (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Professional Tax and Income-tax deducted at source, though there is a slight delay in payment.

(b) As per information and explanations given to us, there is no any undisputed amount payable in respect of Provident Fund, Income-tax, Professional Tax and Income-tax deducted at source were in arrears as at 30th September, 2009 for the year of more than six moths from the date they become payable.

(c) As informed to us, as on 30th September, 2009 there are disputed Income-tax amounting to Rs.12.78 Lacs and Excise Duty amounting to Rs. 48.39 lacs. The details relating to, nature of these dues, year to which the amount relates and forum where dispute is pending, not ascertained.

(x) The Company has accumulated losses at the end of the financial year exceeding fifty percent of the net worth. The Company has not incurred cash losses in the immediately preceding financial year as well as in this financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the default in repayment of dues to financial institutions, banks and debenture holders as per the terms and conditions laid down in scheme of Compromise/Arrangement between its Secured Creditors has not been ascertained by the Company due to subsequent frequent changes on account of further OTS.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Hence provisions of paragraph 4 clause (xii) of the Order are not applicable.

(xiii) As the Company is not a chit fund/nidhi/mutual benefit funds/society to which the provisions of special statute relating to chit fund are applicable. Hence provisions of paragraph 4 clause (xiii) of the Order are not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, provisions of paragraph 4 clauses (xiv) of the Order is not applicable.

(xv) As informed to us, during the year under review, the company has not given any guarantee for loans taken by others from banks, provisions of paragraph 4 clause (xv) of the Order is not applicable.

(xvi) During the year, the company has not raised any term loans. Hence, provisions of paragraph 4 clause (xvi) of the Order are not applicable.

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

(xviii) As the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act, provisions of paragraph 4 clauses (xviii) of the Order is not applicable.

(xix) As the Company has not issued any debentures, provisions of paragraph 4 clause (xix) of the Order is not applicable.

(xx) Since the company has not raised money during the year by way of public issue, provisions of paragraph 4 clause (xx) of the Order is not applicable.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of the year under audit.

FOR R. R. MANDALI & CO. Chartered Accountants

SD/-

Place: Mumbai (Camp) R. R. MANDALI

Date: 1st December, 2009 Proprietor