Auditor Report of Standard Medical & Pharmaceuticals Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of STANDARD MEDICAL & PHARMACEUTICALS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Profit and Loss Statement and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including 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 controls 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls 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 the accounting policies used and the reasonableness of the accounting estimates made by the 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.

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 subject to Note No. 1.3 in the Notes Forming Part of Financial Statements regarding preparation of accounts on principles applicable to the going concern 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, 2014;

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

c) in the case of the Cash Flow Statement, of the cash flows of the Company 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 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 sub-section (3) of section 227 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 purposes of our audit.

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

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

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

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

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

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

b. All fixed assets have not been physically verified by the Management during the year, but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its Assets. No material discrepancies were noticed on such verification.

c. There was no disposal of fixed assets during the year.

ii) During the year the company has not carried any Trading activity and the Company is not having any Inventory at the Year end. Hence other matters specified in the clause are not applicable to the company.

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.

b. The Company has obtained unsecured Loans from two parties covered in the Register maintained under section 301 of the Act. However, Loans obtained from one party was settled by way of assignment of debt during the year. The maximum amount involved during the year and the year-end balance of loans obtained from the party was Rs.18,48,78,323/-. The said loans/ advances are interest free and other terms and conditions on which the said loans/ advances were obtained are not prima facie prejudicial to the interest of the Company. As per the information and explanations given to us, there are no specific terms and conditions as to repayment of these loans.

iv) In our opinion, there is an adequate internal control procedures commensurate with the size of the company and the nature of it''s business. During the course of our audit no major weaknesses have been noticed in internal controls.

v) a. According to the information and explanations provided by the Management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 has been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions 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) During the year under audit, the Company has not accepted any deposits from the public.

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

viii) The Central Government has not prescribed maintenance of cost records by the Company under section 209(1)(d) of the Companies Act, 1956 for any of it''s products.

ix) a. The provisions of Excise Duty, Cess and others are not applicable to the company. However, the Company is not regular in depositing the Provident Fund and Employee''s State Insurance Contributions.

b. According to the information and explanations given to us excepting an amount of Rs.3,88,480- representing Sales Tax and Provident Fund dues, there were no other undisputed statutory dues outstanding, at the year end for a period of more than six months from the date they became payable.

c. According to the records of the Company and on the basis of the information and explanations given to us, there are no dues of Sales-tax, Income-tax, Customs Duty, Wealth tax, Excise Duty, Service Tax and Cess which have not been deposited on account of any dispute.

x) The accumulated losses of the Company at the end of financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of dues to the Financial Institutions or banks or Debenture Holders.

xii) The Company has not granted any loans or advances on the basis of security by the way of pledge of shares, debentures or other securities.

xiii) In our opinion, the Company is not a chit fund, nidhi / mutual benefit fund / society. Therefore, the provisions of Clause 4(xiii) of the Order are not applicable.

xiv) In our opinion and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the order are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from banks or financial Institutions.

xvi) The Company has not obtained any term loans during the year.

xvii) The Funds raised on short term basis have not been used for long term investment and whereas part of long term funds were used for working capital requirement of the company.

xviii) During the year, the Company has not made, any preferential allotment of the Shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

xix) Based on books and records produced to us by the management, securities have been created in respect of debentures issued.

xx) During the year the Company has not raised any money by way public issue. Hence, other matters specified in the Clause are not applicable to the Company.

xxi) As per the checks carried out by us, no fraud on or by the company has been noticed or reported during the year under report.

for J B REDDY & CO., Chartered Accountants Firm Regn. No. 003256S

Place : Hyderabad A V REDDY Date : 30th May, 2014 Partner M No. 023983

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Mar 31, 2012

We have audited the accompanying financial statements of STANDARD MEDICAL & PHARMACEUTICALS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2012, the Profit and Loss Statement and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including 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 controls 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls 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 the accounting policies used and the reasonableness of the accounting estimates made by the 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 subject to Note No. 1.4 in the Notes Forming Part of Financial Statements regarding preparation of accounts on principles applicable to the going concern, give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

c) in the case of the Cash Flow Statement, of the cash flows of the Company 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 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 sub-section (3) of section 227 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 purposes of our audit.

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

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

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

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

Annexure referred to in paragraph I under the heading "Report on other legal and regulatory requirements" of our report of even date

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

b. All fixed assets have not been physically verified by the Management during the year, but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its Assets. No material discrepancies were noticed on such verification.

c. There was no disposal of fixed assets during the year.

ii) During the year the company has not carried any Trading activity and the Company is not having any Inventory at the Year end. Hence other matters specified in the clause are not applicable to the company.

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.

b. The Company has obtained unsecured Loans from two Companies Covered in the Register maintained under' section 301 of the Act. The maximum amount involved during the year and the year-end balance of loans obtained from such parties was Rs. 18,01,03,694/-. The said loans/ advances are interest free and other terms and conditions on which the said loans/advances were obtained are not prima facie prejudicial to the interest of the Company. As per the information and explanations given to us, there are no specific terms and conditions as to repayment of these loans except that the amounts are to be repaid in a phased manner depending upon the resources available to the Company from time to time.

iv) In our opinion, there is an adequate internal control procedures commensurate with the size of the company and the nature of it's business. During the course of our audit no major weaknesses have been noticed in internal controls.

v) a. According to the information and explanations provided by the Management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 has been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions 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) During the year under audit, the Company has not accepted any deposits from the public.

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

viii) The Central Government has not prescribed maintenance of cost records by the Company under section 209 (I)(d) of the Companies Act, 1956 for any of it's products.

ix) a. The provisions of Excise Duty, Cess and others are not applicable to the company. However, the Company is not regular in depositing the Provident Fund and Employee's State Insurance Contributions.

b. According to the information and explanations given to us excepting an amount of Rs. 4,31,308/- representing Sales Tax and Provident Fund dues, there were no other undisputed statutory dues outstanding, at the year end for a period of more than six months from the date they became payable.

c. According to the records of the Company and on the basis of the information and explanations given to us, there are no dues of Sales-tax, Income-tax, Customs Duty, Wealth tax, Excise Duty, Service Tax and Cess which have not been deposited on account of any dispute.

x) The accumulated losses of the Company at the end of financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of dues to the Financial Institutions or banks or Debenture Holders.

xii) The Company has not granted any loans or advances on the basis of security by the way of pledge of shares, debentures or other securities.

xiii) In our opinion, the Company is not a chit fund, nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Order are not applicable.

xiv) In our opinion and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the order are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) The Company has not obtained any term loans during the year.

xvii) The Funds raised on short term basis have not been used for long term investment and whereas part of long term funds were used for working capital requirement of the company.

xviii) The Company has not made, during the year any preferential allotment of the Shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

xix) Based on books and records produced to us by the management, securities have been created in respect of debentures issued.

xx) During the year the Company has not raised money by public issues. Hence other matters specified in the Clause or not applicable to the Company.

xxi) As per the checks carried out by us, no fraud on or by the company has been noticed or reported during the year under report.

for J B REDDY & CO., Chartered Accountants Firm Regn. No. 003256S

A V REDDY Partner M. No. 23983

Place : Hyderabad Date : 14th August, 2012

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Mar 31, 2011

We have audited the attached Balance Sheet of STANDARD MEDICAL & PHARMACEUTICALS LIMITED, as at March 31, 2011 and also 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 Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

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

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

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

iii. The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts of the Company;

iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the mandatiory accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v. On the basis of written representations received from the directors as on March 31, 2011 and taken on record by the Board of Directors, in our opinion, none of the directors is disqualified from being appointed as Director under Section 274(1)(g) of the Companies Act, 1956;

vi. 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 subject to Note No.1.1 in the Notes on Accounts in Schedule-L regarding preparation of accounts on principles applicable to the going concern, give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

b) In the case of Profit and Loss Account, of the Loss of the Company 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.

ANNEXURE TO AUDITORS' REPORT (This is the Annexure referred to in our Report of even date)

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

b. All fixed assets have not been physically verified by the Management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of it's Assets. No material discrepancies were noticed on such verification.

c. There was no disposal of Fixed Assets during the year.

ii) During the year the company has not carried any Trading activity and the Company is not having any Inventory at the year end. Hence other matters specified in the clause are not applicable to the company.

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.

b. The Company has obtained unsecured Loans from two Companies covered in the Register maintained under section 301 of the Act. The maximum amount involved during the year was Rs.17,95,82,650/- and the year end balance was Rs.17,90,14,605/-. The said loans/advances are interest free and other terms and conditions on which the said loans/ advances were obtained are not prima facie prejudicial to the interest of the Company. As per the information and explanations given to us, there are no specific terms and conditions as to repayment of these loans except that the amounts are to be repaid in a phased manner depending upon the resources available to the Company from time to time.

iv) In our opinion, there is an adequate internal control procedures commensurate with the size of the company and the nature of it's business. During the course of our audit no major weaknesses have been noticed in Internal controls.

v) a. According to the information and explanations provided by the Management,we are of the opinion that the transactions that need to be entered into the register maintained under section 301 has been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions 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) During the year under audit, the company has not accepted any Deposits from the public.

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

viii) The Central Government has not prescribed maintenance of cost records by the Company under section 209(1)(d) of the Companies Act, 1956 for any of it's products.

ix) a. The provisions of Excise Duty, Cess and others are not applicable to the Company. However, the company is not regular in depositing the Provident Fund and Employee's State Insurance contributions.

b. According to the information and explanations given to us excepting an amount of Rs.4,14,674/- representing Sales Tax and Provident Fund dues, there were no other undisputed statutory dues outstanding, at the year end for a period of more than six months from the date they became payable.

c. According to the records of the Company and on the basis of the information and explanations given to us, there are no dues of Sales-tax, Income-tax, Custom Duty, Wealth tax, Excise Duty, Service Tax and Cess which have not been deposited on account of any dispute.

x) The accumulated losses of the Company at the end of the financial year are more than Fifty percent of its net worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of dues to the Financial Institutions or banks or Debenture Holders.

xii) The Company has not granted any loans or advance on the basis of security by the way of pledge of shares, debentures or other securities.

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

xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) The Company has not obtained any term loans during the year.

xvii) The funds raised on short term basis have not been used for long term investment and whereas part of long term funds were used for working capital requirement of the company.

xviii) The Company has not made, during the year any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

xix) Based on books and records produced to us by the management, securities have been created in respect of debentures issued.

xx) During the year the company has not raised money by public issues. Hence other matters specified in the Clause are not applicable to the Company.

xxi) As per the checks carried out by us, no fraud on or by the company has been noticed or reported during the year under report.

for J B REDDY & CO., Chartered Accountants Firm Regn. No. 003256S

A V REDDY Partner M No. 23983

Place : Hyderabad Date : 12th August, 2011

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Mar 31, 2010

We have audited the attached Balance Sheet of STANDARD MEDICAL & PHARMACEUTICALS LIMITED, as at March 31, 2010 and also 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.

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.

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

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

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

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

iii. The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts of the Company;

iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the mandatiory accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v. On the basis of written representations received from the directors as on March 31, 2010 and taken on record by the Board of Directors, in our opinion, none of the directors is disqualified from being appointed as Director under Section 274(1)(g) of the Companies Act, 1956;

vi. 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 subject to Note No.1.1 in the Notes on Accounts in Schedule-L regarding preparation of accounts on principles applicable to the going concern, give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

b) In the case of Profit and Loss Account, of the Loss of the Company 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.

ANNEXURE TO AUDITORS REPORT (This is the Annexure referred to in our Report of even date)

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

b. All fixed assets have not been physically verified by the Management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its Assets. No material discrepancies were noticed on such verification.

c. There was no disposal of Fixed Assets during the year.

ii) During the year the company has not carried any Trading activity and the Company is not having any Inventory at the year end. Hence other matters specified in the clause are not applicable to the company.

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.

b. The Company has obtained unsecured loans from two Companies covered in the register maintained under section 301 of the Act. The maximum amount involved during the year and the year-end balance of loans obtained from such parties was Rs.17,92,08,203/-.The said loans/advances are interest free and other terms and conditions on which the said loans/advances were obtained are not prima facie prejudicial to the interest of the company. As per the information and explanations given to us, there are no specific terms and conditions as to repayment of these loans except that the amounts are to be repaid in a phased manner depending upon the resources available to the Company from time to time.

iv) In our opinion, there is an adequate internal control procedures commensurate with the size of the company and the nature of its business. During the course of our audit no major weaknesses have been noticed in Internal controls.

v) a. According to the information and explanations provided by the Management,we are of the opinion that the transactions that need to be entered into the register maintained under section 301 has been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions 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) During the year under audit, the company has not accepted any Deposits from the public.

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

viii) The Central Government has not prescribed maintenance of cost records by the Company under section 209(1)(d) of the Companies Act, 1956 for any of its products.

ix) a. The provisions of Excise Duty, Cess and others are not applicable to the Company. However, the company is not regular in depositing the Provident Fund and Employees State Insurance contributions.

b. According to the information and explanations given to us excepting an amount of Rs.3,52,312/- representing Sales Tax and Provident Fund dues, there were no other undisputed statutory dues outstanding, at the year end for a period of more than six months from the date they became payable.

c. According to the records of the Company and on the basis of the information and explanations given to us, there are no dues of Sales-tax, Income-tax, Custom Duty, Wealth tax, Excise Duty, Service Tax and Cess which have not been deposited on account of any dispute.

x) The accumulated losses of the Company at the end of the financial year are more than Fifty percent of its net worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of dues to the Financial Institutions or banks or Debenture Holders.

xii) The Company has not granted any loans or advance on the basis of security by the way of pledge of shares, debentures or other securities.

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

xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the Company.

xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) The Company has not obtained any term loans during the year.

xvii) The funds raised on short term basis have not been used for long term investment and whereas part of long term funds were used for working capital requirement of the company.

xviii) The Company has not made, during the year any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

xix) Based on books and records produced to us by the management, securities have been created in respect of debentures issued.

xx) During the year the company has not raised money by public issues. Hence other matters specified in the Clause are not applicable to the Company.

xxi) As per the checks carried out by us, no fraud on or by the company has been noticed or reported during the year under report.

for J B REDDY & CO.,

Chartered Accountants

Firm Regn. No. 003256S

Place : Hyderabad

Date : 3rd August, 2010

A V REDDY

Partner

M No. 23983