Auditor Report of C Mahendra Exports Ltd.

Mar 31, 2015

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

Management's Responsibility for the 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 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 the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of the appropriate accounting policies, making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of 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 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 financials control relevant to the Company's preparation of the financial statements and 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. 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 financial statements.

Basis for qualified opinion Basis for Disclaimer of Opinion

1. Reference is invited to note no. 1 regarding preparation of accounts on a Going Concern basis and the reasons stated therein, the Company's operating results have been materially affected due to various factors including non availability of finance in view of the consortium bankers recalling the financial facilities granted, symbolic possession of premises taken by the Bankers, Factory has ceased to carry on manufacturing activity. These events cast significant doubts on the ability of the Company to continue as a going concern since the volumes of business have also drastically dropped in the last 12 months. The appropriateness of the going concern assumption is dependent on the Company's ability to raise adequate finance from alternate means and/ or recoveries from overseas debtors to meet its short term and long term obligations as well as to establish consistent business operations. In absence of any convincing audit evidences, no positive steps taken by the management, non recovery of trade receivables on due dates, non payment of liabilities including Income Tax dues and in view of multiple uncertainties stated above, we are unable to determine the possible effects on the financial statements. We are also unable to conclude on the ability of the company to carry on as a going concern.

2. Reference is invited to note no.42 most banks have not provided balance confirmations, hence we also unable to confirm the bank balance (including working capital facility and overdraft) and interest payable thereon since the accounts are freezed by the consortium of banks and as a result facility has been ceased to be operational. and notice under section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 is received by the Company.

No provision for interest is made amounting to Rs 915,371,518/- since all the bank accounts have become non performing assets (NPA)

3. Reference is invited to note no. 43 regarding Trade Receivables amounting to Rs. 11,949,340,981/-which are outstanding for more than 1 year from invoice date. As explained therein, the recoveries from these trade receivables have been almost negligible. There have been defaults on the payment obligations by the debtors on the due dates. As informed by the management no reply is received from any parties to whom legal notices were sent. No confirmations are obtained. In view of the above we are unable to comment on the realisability of the debts and any provision to be made for unrealisability in the carrying amounts of these balances and the consequential impact, on the financial statements.

4. In absence of audited / unaudited results of subsidiaries and step down subsidiaries, we were unable to obtain sufficient appropriate audit evidence about the carrying amount of Company's investment in various subsidiaries as at March 31, 2015. Consequently, we were unable to determine whether any adjustments to these amounts were necessary. The said investments continue to be valued at cost.

5. No valuation has been carried out by an independent valuer as done in earlier years accordingly, the determination of estimated net realizable value is made by management, hence we were unable to satisfy ourselves by alternative means concerning the inventory held at 31st March, 2015 which are stated in the Balance Sheet at Rs.163,01,90,777/-

6. The factory has ceased to carry on manufacturing activity since October, 2014. The Management has not carried out impairment of assets test as required by Accounting Standard (AS) 28 regarding Impairment of Assets. Hence we are unable to comment upon the impact in the financial statements.

Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph specifically relating to the multiple uncertainties created above, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the aforesaid financial statements.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

1. Reference is invited to note no.43 of the financial statements, the Company's advances to the extent of Rs. 11,706,797/- we are unable to ascertain whether such balances are fully recoverable. Accordingly, we are unable to ascertain the impact, if any, that may arise in case any of these advances are subsequently determined to be doubtful of recovery. Had the Company provided for the same, the loss for the period would have been higher by the said amount.

2. Reference is invited to note no. 47 to the Companies Act, 2013 ("the Act") coming in to effect from April 1, 2014, the Company has not realigned the remaining useful life of fixed assets in accordance with the provisions prescribed under Schedule II to the Act and has continued to provide depreciation as per old Companies Act, 1956 hence we are unable to comment upon the impact in the financial statements.

3. Reference is invited to note no.48 the management has confirmed that no financial adjustment is required to be made in the financial statements on account of various allegations, amongst promoters and defamation notice received by the Managing Director of the company.

4. Reference is invited to note no.50 regarding absence of any intimation received from vendors regarding the status of their registration under "Micro, Small and Medium Enterprises Development Act, 2006", the company is unable to comply with the disclosures required to be made under the said Act.

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 exercise of powers conferred by Section 143 (11) of the Act, we enclose in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order,

2. As required by Section 143(3) of the Act, we report that:

a) As described in the basis of Disclaimer of opinion paragraph, we sought but were unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) Due to possible effects of the matter described in the basis for Disclaimer of opinion paragraph, we are unable to state whether 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) Due to possible effects of the matter described in the basis for Disclaimer of opinion paragraph, we are unable to state whether 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) Due to possible effects of the matter described in the basis for Disclaimer of opinion paragraph, we are unable to state whether the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 Companies (Accounts) Rules, 2014.

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

f) The reservation relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Disclaimer of Opinion paragraph above.

g) With respect to the other matters to be included in the Auditors' 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 34 to the financial statements;

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

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITOR' REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

i. In respect of its fixed assets:

(a) The Company has not satisfactorily maintained records showing particulars including quantitative details and situation of fixed assets. In the absence of on updated fixed asset register and due to non-availability of records of physical verification we are unable to ascertain the appropriateness of the same.

(b) As explained to us most of the assets have been physically verified by the Management during the year in accordance with a phased programme of verification adopted by the company and no material discrepancies were noticed on such verification. However we are unable to verify the reasonableness of the same, as necessary documentary evidences were not made available for our verification

ii. In respect of its inventories:

(a) As explained to us the company has conducted physical verification at reasonable intervals in respect of inventory. However we have not received any documentary evidence to verify the same.

(b) In the absence of documentary evidence we are unable to ascertain whether the procedures of physical verification of stock followed by the Management are reasonable and adequate or in relation to the size of the company and the nature of its business.

(c) In our Opinion the company is not maintaining proper records of inventory. In the absence of records we are unable to ascertain whether discrepancies if any were noticed on physical verification of stocks.

iii. The Company has granted unsecured loan to 3 Companies covered in the register maintained under section 189 of the Act, which is repayable on demand. The maximum amount outstanding during the year Rs.2,67,150/- and the year end balance of such loan is Rs.NIL. There is no interest charged and other terms and conditions of the loan granted are prime facie, not prejudicial to the interest of the Company.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets except in case of sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weakness in internal control system.

v. In our opinion and according to the information and explanations given to us, 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

vi. According to the information and explanations given to us, the Central Government of India has not prescribed the maintenances of cost records under Section 148(1) of the Companies Act, 2013 in respect of the operations of the Company during the year. Accordingly clause (vi) of the Order in not applicable to the Company.

vii. According to the information and explanations given to us in respect of statutory dues:

(a) The Company is not regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Sales-tax / Value Added Tax, Service tax, Customs duty, Excise Duty, Cess, and other applicable statutory dues with the appropriate authorities except for following dues which are undisputed and outstanding for the period exceeding 6 months

Particulars Amount (Rs).

Income Tax AY 2013-14 41,743,490

Income Tax AY 2014-15 15,382,910

Wealth Tax AY 2014-15 200,555

Dividend Distribution Tax AY 2012-13 10,236,842 Dividend Distribution Tax AY 2013-14 3,650,783 Dividend Distribution Tax AY 2014-15 1,529,550 Interest on Dividend Distribution Tax 1,854,411 AY 2012-13

Interest on Dividend Distribution Tax 235,250 AY 2013-14

Vat Payable 25,771 ~

(b) According to the records of the Company, there are no dues of Income Tax, Sales Tax, Service tax, Custom Duty, Wealth Tax, Excise Duty, Value added tax or Cess which have not been deposited as on 31st March, 2015 on account of any dispute except the following

Name of the statue Nature of dues Amount Period to which Rs. it relates

Custom Act,1962 Penalty 11,000,000 2007-2008

Finance Act, 1994 Service Tax 15,494,737 2006-2011 (Service Tax Provisions)

Income Tax Act,1961 Income Tax 220,910 2007-2008

Income Tax Act,1961 Income Tax 98,612,870 2008-2009

Income Tax Act,1961 Income Tax 12,716,980 2009-2010

Income Tax Act,1961 Income Tax 63,652,219 2007-2008

Income Tax Act,1961 Income Tax 42,635,270 2011-2012

Name of the statue Forum where dispute is pending

Custom Act,1962 Appellate Tribunal

Finance Act, 1994 High Court (Service Tax Provisions)

Income Tax Act,1961 Income Tax Appellate Tribunal

Income Tax Act,1961 Commissioner of Income Tax - Appeals

Income Tax Act,1961 Commissioner of Income Tax - Appeals

Income Tax Act,1961 Commissioner of Income Tax - Appeals

Income Tax Act,1961 Commissioner of Income Tax - Appeals

(c) There was no amount which was required to be transferred to the Investor Education and Protection Fund by the Company.

viii The Company has no accumulated losses as at the end of the year. However, it has incurred cash loss in the current financial year but it did not incur cash losses in the immediately preceding financial year,

ix. The company has defaulted in payment of loans to banks as under. As per notice under section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act dated 30.12.2014, 07.02.2015 and 03.03.2015 received from various bank.

BANK NAME TOTAL AMOUNT DATE OF DEFAULT DEFAULTED STARTED

Bank of Baroda 1,93,12,83,319.09 25/08/2014

Bank of India 1,49,53,64,938.93 30/06/2014

Canara Bank 47,86,13,419.98 23/07/2014

Central Bank of India 1,26,16,79,158.50 05/08/2014

Corporation Bank 1,01,75,18,507.37 31/12/2014

H.D.F.C Bank Ltd 27,52,74,428.34 18/06/2014

Indian Bank 39,36,34,704.00 06/02/2014

Punjab National Bank 69,79,43,405.71 31/03/2014

State Bank of Bikaner & Jaipur 41,33,81,224.13 12/10/2014

State Bank of India 55,61,07,944.00 08/10/2014

State Bank of Mysore 46,93,53,902.56 17/06/2014

State Bank of Patiala 36,62,86,324.20 21/06/2014

State Bank of Travancore 36,64,53,625.33 26/11/2014

Union Bank of India 1,43,92,57,047.89 26/11/2014

TOTAL 11,16,21,51,947.00

The said defaults do not consider any levies of interest and penal interest charged by the banks / provided by the company after the date of the defaults or its subsequent reversals by some banks. Some of the Banks have not confirmed the balances outstanding to them even after writing to them.

The Company does not have any outstanding due from financial institutions and/or by way of debentures.

x. As informed to us, the Company had given guarantees of Rs. 689,048,800/- for credit facilities availed by its overseas subsidiary namely, C Mahendra NV (Formerly known as C Mahendra BVBA) from bank. The overseas subsidiary has defaulted in its dues to bank and bank has issued demand notice calling for payment.

xi. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

xii. The management has stated that no financial adjustment is required on various allegations among promoters, defamation notice received by the Managing Director of the Company. Subject to the this, during the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the company, noticed or reported during the year, nor have we been informed of such case by the management.

For R. H. Modi & Co. Chartered Accountants (Firm Reg. No. 106486W)

Sd/-

R. H. Modi Proprietor Membership No. : 037643

Place : Mumbai Date : 26.08.2015

---

Mar 31, 2014

We have audited the accompanying financial statements of C. Mahendra Exports Limited. ("the Company") which comprise the Balance Sheet as at March 31, 2014, 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 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 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'') read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act,2013 and in accordance with the accounting principles accepted in India. 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.

Auditors'' 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 Company''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 sufficient 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 aforesaid 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; and

b) in the case of the Statement of Profit and Loss Account, of the Profit 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.

Emphasis of Matter

We invite the attention of the members to the following material matters:

1. With regards to Note no. 16 relating to inventory, it has been observed that :

a) As per the explanations and information given to us, as on March 31, 2014 material worth Rs. 72,210,561/- was in transit, which was subsequently received during April 2014. Since, as on March 31, 2014 material was not physically received at the company’s premises, the same is included in stock-in-transit. The above stock-in-transit does not have any effect on the Profit and Loss account.

b) We have not carried out physical verification of the stocks as on March 31, 2014. For the purpose of audit, we have relied on the verification reports submitted by Independent valuer and certified by the management.

2. With regard to Note no.17 relating to Trade Receivables, it has been observed that:

a) an amount of Rs. 2,235,936,233 is outstanding for more than one year. We are unable to comment on the extent of realisability.

b) Most of the debtors have not confirmed their balance. The same are considered as per books.

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 with Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

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.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of C Mahendra Exports Ltd. on the accounts of the company for the year ended 31st March, 2014.

1. In respect of its fixed assets:

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

b) The Company has a regular program of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

c) In our opinion and according to the information and explanations given to us, no major fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

2. In respect of its inventories:

(a) As explained to us, inventories have been physically verified during the year by management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, 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) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/ from companies, firm or other parties covered in the registered maintained under section 301 of the Companies Act 1956:

(a) The Company has granted loan to company covered in the Register maintained under section 301 of the Companies Act, 1956.

Maximum during amount the year involved as at Amount 31.03.2014 outstanding Number of Companies 4 Rs. 1,708,228 Rs. 1,617,183 Number of Non-Companies 1 Rs. 652,404 Rs. 652,404

(b) In our opinion and according to the information and explanation given to us the terms and conditions on which loans have been granted to the above parties covered in the register maintained under section 301 of the Companies Act 1956 are not prima facie prejudicial to the interest of the Company.

(c) We are informed that the loans granted to the above parties, do not have stipulation for the payment of principal and interest. In absence of any terms, we are unable to comment on the regularity of repayment of principal amount and repayment of interest.

(d) The company has taken unsecured loan from Directors and a Company covered in the Register maintained under section 301 of the Companies Act, 1956.

Maximum during amount the year involved as at Amount 31.03.2014 outstanding Number of Non-Companies 28 Rs. 436,866,761 Rs. 390,100,885

(e) According to information and explanations given to us, in our opinion, the rate of interest and other terms and conditions on which loans have been taken are prima facie, not prejudicial to the interest of the Company.

(f) According to information and explanations given to us, the Company is regular in paying the interest where applicable and there are no fixed repayment schedule for principal amounts.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods and services. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of the contracts and arrangements referred to in Section 301 of the Companies Act, 1956:

a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, 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 per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arises.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. In our opinion, company needs to strengthen its internal audit system commensurate with the size and nature of its business.

8. According to the information and explanations given to us, the Company has maintained prescribed cost records pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act. However we have not made a detailed examination of records.

9. In respect of statutory dues:

(a) According to the records of the company, 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 to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth tax, excise duty, cess, which have not been deposited on account of dispute. The dues of service tax, income tax and custom duty as disclosed below have not been deposited by the Company on account of dispute:

Name of the statue Nature of dues Amount (Rs.) Custom Act,1962 Penalty 11,000,000

Finance Act, 1994 (Service Tax provisions) Service Tax 15,494,737 Income Tax Act,1961 Income Tax 220,910

Income Tax Act,1961 Income Tax 98,612,870

Income Tax Act,1961 Income Tax 12,716,980

Name of the statue Period to which Forum where dispute it relates is pending

Custom Act,1962 2007-2008 Appellate Tribunal

Finance Act, 1994 2006-2011 High Court (Service Tax provisions) Income Tax Act,1961 2007-2008 Commissioner of Income Tax Appeals

Income Tax Act,1961 2008-2009 Commissioner of Income Tax Appeals

Income Tax Act,1961 2009-2010 Commissioner of Income Tax Appeals

10. The Company does not have any accumulated loss and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11. According to the information and explanations given to us, in our opinion, the company has not defaulted in repayment of dues to banks. Interest accrued and dues on secured loans of Rs. 28,178,806 outstanding as on 31 March 2014 is interest relating to current year provided, out of which Rs. 10,464,769/- is already debited by the bank till 30/05/2014. There are no dues to financial institutions and debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor’s Report) Order, 2003 (as amended) is not applicable to the Company.

14. In our opinion, Company is not a dealer or trader in shares, securities debentures and other investment.

15. According to the information and explanations given to us, in our opinion, the terms and conditions on which the company has given guarantees for the loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

16. In our opinion, according to the information and explanations given to us and based on examination of books of account of the Company, the term loans obtained by the Company were applied for the purpose for which such loans were obtained.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has not issued any secured debentures hence clause 4 (xix) of the Companies (Auditor’s Report) Order, 2003 is not applicable to the company.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For R H Modi & Co. Chartered Accountants (Firm Reg. No. 106486W)

R.H.Modi Place : Mumbai Proprietor Date : 30/05/2014 Membership No. : 37643

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of C. Mahendra Exports Limited, ("the Company") which comprise the Balance Sheet as at March 31, 2013. and the Statement of Profit and Loss for the year 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 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.

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. 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 sufficient 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, 2013;

b) in the case of the Profit and Loss Account, 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 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 March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified 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.;

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of C. Mahendra Exports Ltd. on the accounts of the company for the year ended 31st March, 2013.

1. In respect of its fixed assets:

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

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

(c) In our opinion and according to the information and explanations given to us, no fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

2. In respect of its inventories:

(a) As explained to us, inventories have been physically verified during the year by management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, 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) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/ from companies, firm or other parties covered in the registered maintained under section 301 of the Companies Act, 1956:

(a) The Company has granted loan to company covered in the Register maintained under section 301 of the Companies Act, 1956. outstanding Maximum during the 31.03.2013 amount year as at involved during the year Number of Companies Rs. 510,539,786 Rs. 4,385,433 Number of Non- companies 512,404 Rs. 512,404

(b) In our opinion and according to the information and explanation given to us the terms and conditions on which loans have been granted to the above parties covered in the register maintained under section 301 of the Companies Act 1956 are not prima facie prejudicial to the interest of the Company.

(c) We are informed that the loans granted to the above parties, do not have stipulation for the payment of principal and interest. In absence of any terms, we are unable to comment on the regularity of repayment of principal amount and repayment of interest.

(e) According to information and explanations given to us, in our opinion, the rate of interest and other terms and conditions on which loans have been taken are prima facie, not prejudicial to the interest of the Company.

(f) According to information and explanations given to us, the Company is regular in paying the interest where applicable and there are no fixed repayment schedule for principal amounts.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods and services. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of the contracts and arrangements referred to in Section 301 of the Companies Act, 1956:

a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, 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 per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arises.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. According to the information and explanations given to us, the Company has maintained prescribed cost records pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(l)(d) of the Act. However we have not made a detailed examination of records.

9. In respect of statutory dues:

(a) According to the records of the company, 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 to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth tax, excise duty, cess, which have not been deposited on account of dispute. The dues of service tax, income tax and custom duty as disclosed below have not been deposited by the Company on account of dispute:

Name of the statue Nature Amount Period Forum where of dues Rs. to which dispute is it relates pending

Custom Act, 1962 Penalty 11,000,000 2007- Appellate 2008 Tribunal

Finance Act, 1994 Service 241,156 2006- High Court (Service Tax Tax 2007 provisions)

Finance Act, 1994 Service 15,253,581 2006- High Court (Service Tax Tax 2011 provisions)

Income Tax Act, 1961 Income 446,962 2003- ITAT,Mumbai Tax 2004

Income Tax Act, 1961 Income 220,910 2007- Commissioner Tax 2008 of Income Tax -Appeals

10. The Company does not have any accumulated loss and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11. According to the information and explanations given to us, in our opinion, the company has not defaulted in repayment of dues to banks. Interest accrued and dues on secured loans ofRs. 38,68,150 outstanding as on 31 March 2013 is interest relating to current year provided, out of which Rs. 3,689,690 is already debited by the bank till 30/05/2013. There are no dues to financial institutions and debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a Chit fund or a Nidhi /Mutual benefit fund/Society Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities debentures and other investment.

15. According to the information and explanations given to us, in our opinion, the terms and conditions on which the company has given guarantees for the loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

16. In our opinion, according to the information and explanations given to us and based on examination of books of account of the Company, the term loans obtained by the Company were applied for the purpose for which such loans were obtained.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has not issued any secured debentures hence clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For R. H. Modi & Co.

Chartered Accountants

(Firm Reg. No. 106486W)

R.H.Modi (Proprietor)

(Membership No.: 37643)

Place: Mumbai

Date: 30/05/2013

---

Mar 31, 2012

1. We have audited the attached balance sheet of C. Mahendra Exports Limited ('the Company') as at 31 March 2012, statement of profit and loss and cash flow statement of the Company for the financial 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.

2. 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, on the basis of such checks of books of account and records of the Company, as we considered necessary and appropriate, and according to information and explanations given to us during the course of the audit, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

c) The balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section211 of the Companies Act, 1956;

e) On the basis of written representations received from the directors of the Company, as on 31 March 2012 and taken on record by the Board of directors, we report that none of the directors is disqualified as on 31 March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with other 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:

i. in the case of balance sheet, of the state of affairs of the Company as at 31 March 2012;

ii. in the case of statement of profit and loss, profit of the Company for the year ended on that date; and

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

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

(b) Certain fixed assets have been verified by the management in accordance with a phased program of verification, whereby each asset would be verified at least once in three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As per information and explanations given to us, no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off a substantial part of the fixed assets.

(ii) (a) According to information and explanations given to us, the inventory has been physically verified by the management during the year. In our opinion, the frequency of 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 is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) According to information and explanations given to us, 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. Hence clause 4(b), 4(c) and 4(d) of the Order are not applicable.

(b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies or firms covered in the register maintained under section 301 of the Companies Act, 1956. In respect of unsecured loans taken from twenty four parties covered in the said register maximum amount involved during the year was Rs.589,797,452 and the aggregate year-end balance was Rs.484,693,387.

(c) According to information and explanations given to us, in our opinion, the rate of interest and other terms and conditions on which loans have been taken are prima facie, not prejudicial to the interest of the Company.

(d) According to information and explanations given to us, the Company is regular in paying the interest where applicable and there are no fixed repayment schedule for principal amounts.

(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 for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

(b) According to the information and explanations given to us, in our opinion, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. Five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) According to the information and explanations given to us, in our opinion, the Company has not accepted any deposits from the public, to which the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Act and the rules framed thereunder are applicable.

(vii) According to the information and explanations given to us, in our opinion, the Company has an internal audit system, which is commensurate with the size of the Company and the nature of its business.

(viii) According to the information and explanations given to us, the Company has maintained prescribed cost records pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Act, which became applicable to the Company from 1 April 2011. However we have not made a detailed examination of records.

(ix) (a) The Company is generally 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 other material statutory dues applicable to it with appropriate authorities. There are no arrears in this respect as at 31/03/2012 for a period of more than six months from the date they become payable.

(b) According to the information and explanation given to us, there are no dues in respect of wealth tax, income tax, excise duty and cess, which have not been deposited on account of any dispute. The dues of service tax and custom duty as disclosed below have not been deposited by the Company on account of dispute:

Name of the statute Nature Amount Period Forum where of dues Rs. to which dispute is it relates pending Custom Act, 1962 Penalty 11,000,000 2007- Appellate 2008 Tribunal

Finance Act, 1994 Service 241,156 2006- High Court (Service tax provisions) tax 2007

Finance Act, 1994 Service 15,253,581 2006- High Court (Service tax provisions) tax 2011

Income Tax Act, 1961 Income 446,962 2003- Commissioner tax 2004 of Income Tax

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, in our opinion, the Company has not defaulted in repayment of dues to banks. Interest accrued and due on secured loans ofRs.7,463,449 outstanding as on 31 March 2012 is interest relating to current year debited by banks after the year end upto 30 April 2012. There are no dues to financial institutions and debenture holders.

(xii) According to the information and explanations given to us, in our opinion, 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) According to information and explanations given to us, in our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

(xiv) According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, in our opinion, the terms and conditions on which the Company has given guarantees for the loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion, according to the information and explanations given to us and based on examination of books of account of the Company, the term loans obtained by the Company were applied for the purpose for which such loans 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 are of the opinion that as at 31 March 2012 no 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 to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) We have verified that the end use of money raised by public issue is as disclosed in the notes to the financial statements.

(xxi) In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during course of our audit.

FOR SURESH SURANA & ASSOCIATES

Chartered Accountants

Firm Reg.No.: 121750W

sd/-

(Nirmal Jain)

PARTNER

Membership No.34709

Mumbai; Dated: 28.08.2012

---

Mar 31, 2011

1. We have audited the attached balance sheet of C. Mahendra Exports Limited ('the Company') as at 31 March 2011, the profit and loss account and cash flow statement of the Company for the financial 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.

2. 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, on the basis of such checks of books of account and records of the Company, as we considered necessary and appropriate, and according to information and explanations given to us during the course of the audit, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 except;

i) Accounting Standard (AS)-2 ' Valuation of Inventories' for reasons mentioned in note 3 of Schedule '15'. The impact of which on the profit for the year, reserves and surplus and inventories as at 31 March 2011 could not be ascertained;

ii) Accounting Standard (AS)-10 "Accounting for Fixed Assets" and (AS)-6 "Depreciation" for reason mentioned in note 4 of Schedule '15'. The impact of which on the profit for the year, reserves and surplus and fixed assets (gross block, accumulated depreciation and net block) as at 31 March 2011 could not be ascertained.

e) On the basis of written representations received from the directors of the Company, as on 31 March 2011 and taken on record by the Board of directors, we report that none of the directors is disqualified as on 31 March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and

f) In our opinion and to the best of our information and according to the explanations given to us, subject to our comments in paragraph 4(d) above, the impact whereof on the profit for the year, reserves and surplus, fixed assets and inventories as at 31 March 2011 could not be ascertained, the said accounts read together with other notes thereon in Schedule '15', 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 balance sheet, of the state of affairs of the Company as at 31 March 2011;

ii. in the case of profit and loss account, of the profit for the year ended on that date; and

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

Annexure to the Auditors' Report referred to in Paragraph 3 of our Report of even date

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

(b) Certain fixed assets have been verified by the management in accordance with a phased program of verification, whereby each asset would be verified at least once in three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As per information and explanations given to us, no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off a substantial part of the fixed assets.

(ii) (a) According to information and explanations given to us, the inventory has been physically verified by the management during the year. In our opinion, the frequency of 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 is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) According to information and explanations given to us, 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. Hence clause 4(b), 4(c) and 4(d) of the Order are not applicable. (b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies or firms covered in the register maintained under section 301 of the Companies Act, 1956. In respect of unsecured loans taken from twenty five parties covered in the said register maximum amount involved during the year was Rs. 638,693,490 and the aggregate year-end balance was Rs. 566,697,867.

(c) According to information and explanations given to us, in our opinion, the rate of interest and other terms and conditions on which loans have been taken are prima facie, not prejudicial to the interest of the Company.

(d) According to information and explanations given to us, the Company is regular in paying the interest where applicable and there are no fixed repayment schedule for principal amounts.

(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 for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

(b) According to the information and explanations given to us, in our opinion, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. Five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) According to the information and explanations given to us, in our opinion, the Company has not accepted any deposits from the public, to which the directives issued by the Reserve Bank of India and the provisions of section 58A and 5AA of the Act and the rules framed thereunder are applicable.

(vii) According to the information and explanations given to us, in our opinion, the Company has an internal audit system, which is commensurate with the size of the Company and the nature of its business.

(viii) As explained to us, the Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in the case of any of the activities of the Company.

(ix) (a) The Company is generally 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 other material statutory dues applicable to it with appropriate authorities. There are no arrears in this respect as at 31/03/2011 for a period of more than six months from the date they become payable.

(b) According to the information and explanation given to us, there are no dues in respect of wealth tax, income tax, excise duty and cess, which have not been deposited on account of any dispute. The dues of service tax and custom duty as disclosed below have not been deposited by the Company on account of dispute:

Name of the Nature of Amount Period to Forum where

statute dues Rs. which it dispute is relates pending

Custom Act, 1962 Penalty 11,000,000 2007-2008 Appellate Tribunal

Finance Act, 1994 Service 241,156 2006-2007 High Court (Service tax provisions) tax

Income Tax Act, Income 446,962 2003-2004 Commissioner 1961 tax of Income Tax

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, in our opinion, the Company has not defaulted in repayment of dues to banks. Interest accrued and due on secured loans of Rs.5,299,453 outstanding as on 31 March 2011 is interest relating to current year debited by banks after the year end. There are no dues to financial institutions and debenture holders.

(xii) According to the information and explanations given to us, in our opinion, 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) According to information and explanations given to us, in our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, in our opinion, the terms and conditions on which the Company has given guarantees for the loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion, according to the information and explanations given to us and based on examination of books of account of the Company, the term loans obtained by the Company were applied for the purpose for which such loans 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 are of the opinion that as at 31 March 2011 no 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 to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) We have verified that the end use of money raised by public issue is as disclosed in the notes to the financial statements.

(xxi) In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during course of our audit.

FOR SURESH SURANA & ASSOCIATES

Chartered Accountants

Firm Reg. No.: 121750W

Sd/-

(Nirmal Jain)

PARTNER

Membership No. 34709

Mumbai; Dated: 28.05.2011