Auditor Report of VBC Industries Ltd.

Mar 31, 2013

Report on the Financial Statements:

1. We have audited the accompanying financial statements of VBC Industries Limited, Hyderabad ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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 Responsibitity for the Financial Statements:

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

Audito''''s Responsibility:

3. 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 obtaih 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.

4. 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. 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.

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

Opinion:

6. 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 31st March, 2013;

b. In the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and

c. In the case of Cash Flow Statement, of the cash flows for the year ended on that date. Matters of Emphasis:

7. We draw attention to note no 2.28(1) (b) to the financial statements relating to the Fuel Surcharge Adjustments (FSAs) levied by the Electricity Distribution Companies in Andhra Pradesh, which has been challenged by the company before the Hon''ble High Court of Andhra Pradesh and Hon''ble Appellate Tribunal of Electricity, New Delhi. The company is advised by legal experts that it has a good case and accordingly no provision has been considered necessayy in the accounss in this regard. Our opinion is not qualified in respect of this matte..

8. we draw atteniion to note no 2.28(1) (c) to the financial statements relating to the Load factor short fall charges for the period from September. 2005 to Augus,, 2006 during which the Ferro Alloys Unit of the Company was closed, and for the years from 2008-09 to 2011-12 during Load Reliefs (Power Cut Period) together with Surcharge thereon totaiing to Rs. 49,66,49,097 levied by the Central Power Distribution Company of AP Limited, which has been challengdd by the company before the Hon''ble High Court of Andhra Pradesh. The company is advised by legal experts that it has a good case and accordingly no provision has been considered necessayy in the accounss in this regard. Our opinion is not qualified in respect of this matte..

Repott on Other Legal and Regulatory Requirements:

9. As requrred by the Companies (Auditor''s Report) Orde,, 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 Annexuee a statemett on the matters specified in paragraphs 4 and 5 of the Orde..

10. As requrred by section 227(3) of the Act, we repott that:

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

b. in our opinion proper books of account as requrred by law have been kept by the Compayy so far as appeass from our examination of those books ;

c. the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement, deatt with by this Repott are in agreemett with the books of accoun;;

d. in our opinion, the Balance Shee,, the Statemett of Profit and Loss and the 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 the written representations received from the directors as on 31st March, 2013, taken on record by the Board of Directors, none of the directors is disquafified as on 31st March, 2013, from being appointed as a director in terms of section 274 (1) (g) of the Act.

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

b) The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information furnished to us, no material discrepancies have been noticed on such verification

c) According to the information and explanations furnished to us, the Fixed Assets disposed off by the Company during the year do not form a substantial part thereof, so as to affect the going concern assumption in preparing the financial statements under report.

ii) a) Physical verification of inventory has been conducted during the year by the management at reasonable intervals.

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

c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between the physical stocks and the book records were not material.

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 Companies Act, 1956. Consequently, clauses 4(iii) (b) to (d) of the Order are not applicable.

b) The Company has not taken any loans during the year. However it has taken an unsecured loan in earlier years amounting to ~ 1170 lakhs from a company of which ~ 670 lakhs is interest free to whom the provisions of section 301 of the Companies Act, 1956 apply.

c) In our opinion and according to the information and explanations given to us , the rate of interest and other terms & conditions in respect of the loans are not prima facie prejudicial to the to the interest of the company.

d) The company in arrears of payment of interest of ~ 63 lakhs as on the date of Balance Sheet. However, the dates of repayment of principal amounts have not been stipulated.

iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

i. According to the information and explanations given to us, we are ofthe opinion that the particulars of contracts and arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

ii. In our opinion and according to the information and explanations given to us, the contracts and arrangements made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from public. Consequently the clause 4(vi) of the order is not applicable.

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

viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the p"escnbed accounss and records have been made and main.amed. However we have not made a detalled examination of the record~.

ix) a) Accordigg tc the Information and explanations given to us and on the basIs of exammatior of the records of the Company, there are delays ,n deposit/ remittancss of amounss deducted/ accrued In the books of account In respect of undisputed statutory dues inciuding providett fund incon-- tax, sales-tax, wealth-tax, custom duty, excise duty, service-tax, cess and other material statutory dues during the year by the Company with the appropriate authorities.

x) The Company has no accumulated losses. It has incurred cash losses in the financial year covered by our audit and however in the immediately preceding financial year it has not incurred cash losses.

xi) The Company during the year has defaulted in payment of loan installments and the interest thereon in respect of a term loan obtained from a bank. The overdue^ loan installments and interest arrears up to 31- March 2013 amount to ~ 68,32,338 and ~ 32,87,982 respectively.

xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Consequently the clause 4(xii) of the order is not applicable.

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Consequently the clause 4(xiii) of the order is not applicable.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other instruments. Consequently the clause 4(xiv) of the order is not applicable.

xv) According to the information and explanation given to us, the company has not given any guarantees for loans taken from any banks or financial institutions.

xvi) In our opinion, the company has utilized fully the term loan obtained from a bank for the purpose for which the same has been obtained.

xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet of the Company, we report that funds raised on short term basis to the extent of Rs 465 lakhs have been used for long term investment.

xviii) During the year, the Company has not made any preferential allotment of shares. Consequently the clause 4(xviii) of the order is not applicable.

xix) The Company has not issued any debentures so far. Consequently clause 4(xix) of the order is not applicable.

xx) During the year, the Company has not raised money by Public issue. Consequently the clause 4(xx) of the order is not applicable.

xxi) 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 our audit.

For Brahmayya & Co.,

Chartered Accountants

(Firm Regd. No. 000513S)

Sd/-

C.V. RAMANA RAO

Camp: Hyderabad Partner

Date :30-05-2013 Membership

No. 018545

---

Mar 31, 2012

1 We have audited the attached Balance Sheet of VBC Industries Limited, Hyderabad as at 31st March, 2012 the Statement of Profit and Loss for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. '

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

3 As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956' of India (the 'Act') and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we set out in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4 Further to our comments in the Annexure referred to 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 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 such books.

c) The Balance Sheet and Statement of Profit and Loss dealt with by this report are in agreement with the books of account.

d) In our opinion the Balance Sheet and Statement of Profit and Loss dealt with by this report comply with the accounting standards referred to in Sub Section (3c) of Section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India: '

i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2012.

ii) in the case of the statement of Profit and Loss, of the Profit for the year ended on that date.

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

f) On the basis of written representations received from the Directors as on March 31st 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31st, 2012 from being appointed as a director in terms pf clause (g) of sub-section (1) of section 274 of the Act.

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

b) The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information furnished to us, no material discrepancies have been noticed on such verification.

c) The Fixed Assets disposed off by the Company during the year do not form a substantial part thereof.

ii) a) Physical verification of inventory has been conducted during the year by the management at reasonable intervals.

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

c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between the physical stocks and the book records were not material.

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 Companies Act, 1956. Consequently, clauses 4(iii)(b) to (d) of the Order are not applicable.

b) The Company has taken an unsecured loan of Rs. 1195.98 lakhs from a company of which Rs.695.98 lakhs is interest free unsecured loan, to whom the provisions of section 301 of the companies Act apply.

c) In our opinion and according to the information and explanations given to us , the rate of interest and other terms and conditions in respect of the loans are not prima facie prejudicial to the interest of the company.

d) The company is in arrears of payment of interest of Rs.11.39 lakhs as on the date of Balance Sheet. However, the entire loan amount is not due for repayment during the year under report.

iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

v) a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts and arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the contracts and arrangements made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable , having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from public. Consequently the clause 4(vi) of the order is not applicable.

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

viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

ix) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales-tax, wealth-tax, custom duty, excise duty, service-tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues which were in arrears as at 31st March 2012 for a period of more than six months from the date they became payable.

c) As at 31st March 2012, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Sales tax, Wealth-tax, Service tax, Customs duty, Excise Duty and Cess except the following:

Name of the Nature of the Amount Period to which Forum where Statute dues (Rs. in Lakhs) the matter the dispute is relates pending

Central excise Demand for 40.68 01-03-1994 CESTAT, Act Differential duty to 31-08-1997 Bangalore on finalization Bench

Central excise Demand for 0.86 1997-98 CESTAT, Act interest & Bangalore penalty Bench

Sales Tax Act Demand for 18.93 Assessment Sales Tax Sales tax on years 1996-97 & Appellate tribunal, lease rentals of 1997-98 Hyderabad, bottles & crates

Sales Tax Act Non-submission 23.40 2008-09 Commercial Tax of "c" and "H" officer, Hyderabad, forms

Income Tax Act Income Tax 21.80 2008-09 Dy, Commissioner of Income Tax,Hyderabad

* Net of pre-deposits made.

x) The Company has no accumulated losses and has not incurred cash losses in the financial year covered by our audit and the immediately preceding financial year.

xi) The Company has neither taken any term loan from a financial institution or a bank nor issued any debentures. Accordingly clause 4(xi) of order is not applicable.

xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Consequently the clause 4(xii) of the order is not applicable.

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Consequently the clause 4(xiii) of the order is not applicable.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other instruments. Consequently the clause 4(xiv) of the order is not applicable.

xv) The Company has not given any guarantees which are outstanding as at the end of the year under report for loans taken by others from banks or financial institutions. Consequently the clause 4(xv) of the order is not applicable.

xvi) In our opinion, the company has not obtained any term Loans, accordingly clause 4(xvi) of the order is not applicable.

xvii) According to the information and explanations given to us and on overall examination of the Balance Sheet of the Company, we report that Rs.1000 lakhs funds raised on short term basis have been used for long term investment. .

xviii)During the year, the Company has not made any preferential allotment of shares. Consequently the clause 4(xviii) of the order is not applicable.

xxix) The Company has not issued any debentures so far. Consequently clause 4(xix) of the order is not applicable.

xx) During the year, the Company has not raised money by Public issue. Consequently the clause 4(xx) of the order is not applicable.

xxi) 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 our audit.

For Brahmayya & Co.,

Chartered Accountants

(Firm Regd. No. 000513S)

Sd/-

C.V. RAMANA RAO

Camp: Hyderabad Partner

Date : 25-05-2012 Membership No. 018545

---

Mar 31, 2010

We have audited the attached Balance Sheet of VBC Industries Limited, Hyderabad as at 31st March, 2010, the Profit and 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.

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

our audit provides a reasonable basis for our opinion.

2. 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 of India (the Act) and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we set out in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. . .

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

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

b. In our opinion, the company has kept proper books of account, as required by law so far, as appears from our examination of such books.

c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

d. In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in Sub Section (3c) of Section 211 of the Companies Act, 1956.

e. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March 2010.

ii) in the case of the Profit and Loss account, of the Profit for the year ended on that date.

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

f. On the basis of written representations received from the Directors as on March, 31, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act. 1.1 The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

1.2 The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information furnished to us, no material discrepancies have been noticed on such verification.

1.3 The fixed assets disposed-off by the company during the year do not form a substantial part thereof.

2.1 Physical verification of inventory has been conducted during the year by the management at reasonable intervals.

2.2 The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

2.3 On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between the physical stocks and the book records were not material.

3.1 The company has not granted any loans; secured or unsecured to Companies, firms or other parties to whom the provisions of Section 301 of the Companies Act, 1956 apply. Accordingly, sub clauses (b), (c) and (d) of clause (iii) of paragraph 4 of the order are not applicable.

3.2 The Company has not taken any loans, secured or unsecured from companies, firms, or other parties to whom the provisions of section 301 of the Companies Act apply. Accordingly, sub clauses (f), (g) and (h) of clause (iii) of paragraph 4 of the order are not applicable.

4.1 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

5.1 According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

5.2 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 are reasonable having regard to prevailing market prices at the relevant time.

6.1 The company has not accepted any deposits from public. Accordingly, the Clause 4(vi) of the order is not applicable to the company.

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

8.1 According to the information and explanations given to us, maintenance of cost records is not required under section 209(1) (d) of the Companies Act, 1956 in respect of the business activities carried out by the company.

9.1 According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

9.2 According to the information and-explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess or any other material statutory dues applicable to it.

9.3 As at 31st March 2010, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Sales tax, Income-tax, Wealth-tax, Service tax, Excise Duty and Cess, except the following:

Name of the Nature of the Amount Period to which Forum where Statute dues (Rs. in the matter the dispute is Lakhs) relates pending Central Excise Demand for 40.68 01-03-1994 CESTAT, Act differential to Bangalore Bench duty on finalisation 31-08-1997 of price list. Central Excise Demand for 0.86 1997-98 CESTAT, Act interest & Bangalore Bench penalty. Sales tax Demand for 18.93 Assessment Sales Tax Act Sales Tax on years - Appellate lease rentals of 1996-97 & Tribunal, bottles & crates. 1997-98 Hyderabad.

10.1 The company has no accumulated losses-and has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11.1 The Company has neither taken any loans from a financial institution or a bank nor issued any debentures. Accordingly, clause 4(xi) of the order is not applicable.

12.1 The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clause 4(xii) of the order is not applicable.

13.1 In our opinion, the Company is not a chit fund or a nidhi /mutual benefit fund/society. Accordingly, clause 4(xiii) of the order is not applicable.

14.1 In our opinion, the Company is not dealing in or trading in shares, debentures and other instruments. Accordingly, clause 4 (xiv) of the order is not applicable.

15.1 According to the information and explanation given to us, the company has given two guarantees for loans taken by two body Corporates from financial institutions. The guarantees given by the company along with other co-promoters to financial institutions on behalf of these two companies promoted by them are with the approval of shareholders in a general meeting and in accordance with the promoters agreements. Having regard to the information and explanations given to us, the said guarantees are not prejudicial to the interest of the company.

16.1 In our opinion, the company has not obtained any term loans. Accordingly, clause (xvi) of the order is not applicable.

17.1 According to the information and explanations given to us and on 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.

18.1 During the year, the Company has not made any allotment of shares. Accordingly, clause 4(xviii) of the order is not applicable.

19.1 The Company has not issued any debentures. Accordingly, clause 4(xix) of the order is not applicable.

20.1 During the year, the Company has not raised money by Public issue. Accordingly, clause 4 (xx) of the order is not applicable.

21.1 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 our audit.

For Brahmayya & Co., Chartered Accountants (Firm Regd. No. 000513S) Sd/- C.V. RAMANA RAO Camp : Hyderabad Partner Date : 15-05-2010 Membership No. 018545