Auditor Report of STI Products India Ltd.

Mar 31, 2013

We have audited the attached financial statements of STI Products India Limited (hereinafter referred to as the Company), comprising of the Balance Sheet as at 31 st March 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended along with the Significant Accounting Policies and other explanatory information forming an integral part thereof.

II. Management''s Responsibility forthe Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956(hereinafter referred to as 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.

III. 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 of 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 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 the management, as well as evaluating the overall financial statement presentation.

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

IV. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we enclose in the Annexure a statement on the matters specified in paragraph 4 of the said Order, to the extent applicable to the Company during the year under review.

2. Further to our comments in the Annexure referred to in 1. above, as required by Section 227(3) of the Act, we report as follows:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary forthe purpose of our audit;

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

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

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in subsection (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the respective directors as on 31 st March 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

V. Opinion

(i) Basis for Qualified Opinion

a) Note No. 13 to the financial statement regarding the preparation of accounts on the assumption of going concern even though no manufacturing operation and business activities have been carried out by the Comapny during the financial year keeping in view of the managements''effort to revive the Company.

b) Note no. 14 to the financial statement regarding non confirmation of balances of long term & short borrowings, from banks amounting to Rs. 393.28 lacs & 14.40 lacs respectively.

c) Note no. 15(a) regarding non provision of interest on long term borrowings from bank amount- Unascertainable, due to absence of relevant clause in the order ofDebt Recovery Tribunal and,

d) Note no 15(b) regarding non provision of Interest amounting to Rs. 12384.24 lacs on loan from MPSIDC, since the Company is hopeful offawurable waiver of the same in the proposed OTS.

(ii) In our opinion and to the best of our information and according to the explanations given to us, subject to the effects of the matter as given in comments in para V (i) (a) to (d) above, of the Basis for Qualified Opinion and their consequential impact, to the extent ascertainable on the respective liabilities, provisions and the loss, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

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

(b) In the case of the Statement of Profit and Loss, of the Loss of the Company forthe year ended on that date; and

(c) In the case of the Cash Flow Statement, of the Cash flows of the Company forthe year ended on that date.

Annexure to the Auditors'' Report (Referred to in paragraph IV(1) of our report of even date)

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks as we considered appropriate, we further report as under: (i) a) There was no fixed assets with the Company at any time during the year.

b) As explained to us, during the year, no fixed assets have been procured ordisposed off.

(ii) There was no inventory with the Company at any time during the year.

(iii) During the year, the Company has not taken unsecured loans from the parties covered in the register to be maintained under Section 301 of the Companies Act, 1956. The maximum balance and closing balance Including opening balance against the loan taken in earlier years is Rs. 655.80 lacs.

Further the Company has granted loan to one party covered in the register to be maintained under Section 301 of the Companies Act, 1956. The maximum balance and closing balance against the loan is Rs. 28.81 lacs.

We have been explained that the above loans are payable on demand. As regards the other terms and conditions of the said loans, whether the same are prima facie prejudicial to the Company''s interest can not be commented upon by us since there is no formal documentation in respect of the above loans. Also for the above reason, we cannot comment upon (i) regularity in services (ii) Overdue Principal and (iii) Reasonableness in steps taken by the Company to recoverthe above loan.

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business forthe provision of services. During the course of the audit, we have not come across any major weakness in the internal controls prevailing in the Company.

(v) There were no transactions entered into by the Company during the year, with the parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public within the purview of the directives issued by the Reserve Bank of India and the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii) The Company does not have a formal internal audit system at any time during the year under review.

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

(ix) As per the records verified by us and as explained to us, the Company has been regular in depositing undisputed statutory dues involving Income-tax with the appropriate authorities. There were no arrears under the above heads which were duo for more than six months from the date they became payable as at the close of the year. Keeping in view the present operations of the Company, statutes relating to Employees'' State Insurance, Sales-tax, Services Tax, Wealth Tax, Custom Duty, Investor Education and Protection Fund, Excise Duty and Cess are not applicable to the Company during the year under review.

As per the records, no statutory dues have been disputed and lying pending with the Company as at the close of the year under review.

(x) As per the accounts verified by us, the Company''s accumulated losses as at the end of the current financial year have exceeded 50% of its Net Worth as on that date. Also, the Company has incurred cash losses in the current as well as in the immediately preceding financial years.

(xi) As per the records verified by us, the Company has defaulted in repayment of loans to banks/financial institutions. The balance outstanding as on 31.03.2013 is Rs.134.83 lacs (excluding interest thereon). Further, no amounts were borrowed by the Company through Debentures.

(xii) As per the records verified by us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year under review.

(xiii) As explained to us, the provisions of special statutes applicable to Chit fund, Nidhi, Mutual Benefit Fund or Societies are not applicable to the Company during the year under review.

(xiv) During the year under review, the Company has not dealt with or traded in the shares, securities, etc.

(xv) As explained to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. (Refer Note No. 23 of the financial statements)

(xvi) No Term loans were obtained by the Company during the year under review.

(xvii) Based on the overall funds flow of the Company, we are of the opinion that no funds raised by the Company on short-term basis during the year were utilized for long term investment.

(xviii) The Company has not made any preferential allotment of equity shares during the year.

(xix) The Company has not issued any Debentures and hence no securities kre required to be created in respect thereof.

(xx) The Company has not raised any money by way of public issue during the year under review.

(xxi) As per the books examined by us and based on the explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For S M N P & Co. Chartered Accountants Firm Registration No.105929W

Anand Malpani Membership No.F-125779 Place:Mumbai, Dated:20th August,2013

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Mar 31, 2012

We have audited the attached Balance Sheet of STI Products India Limited, Bangalore, as at 31st March, 2012, 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.

1. 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 principle used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditor''s Report) Order 2003, issued by the Central Government of India In terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

3. 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 account as required by law have been kept the Company so far as appears from our examination of those books;

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;

iv. 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 subject to non-provision of interest of Rs. 3,06,30,314/- to bank and on unsecured loans. The loss for the year would have been higher at Rs. 3, 11, 38,394/- (Refer Note No. 2 of schedule 10);

v. On the basis of written representations received from the directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of 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 and give a true and fair view in conformity with the accounting principles generally accepted in India;

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

b) In the case of the Profit and Loss Account, of the loss for the year ended on that date, and,

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

ANNEXURE TO THE ''AUDITORS'' REPORT

(Referred in Paragraph 3 of our report of even date to the members of STI Products India Limited)

1. There are no Fixed Assets in the company as at 31st March, 2011.

2. As there is no inventory no physical verification has been conducted by the management during the year.

3. The company has neither granted nor taken any loans, secured or unsecured during the year to/from companies, firms or other parties in which directors of the company are interested.

4. The Company has not purchased any inventory nor sold any goods during the year.

5. As per the information and records, there are no transactions that need to be entered in the register in pursuance of section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposit from the public during the year.

7. There is no internal audit system during the year.

8. As informed to us, the Central Government has prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, in respect of the activities of the company. There have been no production activities during the year.

9. The company has no employees and as such not deducted Provident Fund and Employees State Insurance which are to be deposited.

10. As per records and explanations given to us there are no dues of sales tax, Income Tax, Customs duty, etc. which have not been deposited on account of any dispute.

11. According to the records the accumulated losses at the end of the financial year is more than fifty percent of its net-worth. The company has incurred cash losses in the financial year and also in the immediately preceding financial year.

12. The Company has defaulted in repayment of dues to financial institutions and batiks. The amount not repaid is Rs.8, 13, 70,241 /-

13. The Company has not granted any loans and advances to any parties on the basis of security by way of pledge of shares, debentures and other securities.

14. In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the companies (Auditors Report) order 2003 are not applicable to the company.

15. The company is not dealing or trading in shares, securities, debentures and other investments.

16. As per the records and explanations given to us, the company has not given any guarantee for loans taken by others from any financial institutions or banks.

17. As per the records and explanations given to us, the company has not taken any term loans during the year

18. The funds raised on short term basis have not been used for long term investment and vice versa during the year.

19. As per the records the company, has not made any preferential allotment of s14-es during the year.

20. As per the records the company has not issued debentures during the year.

21. The company has not raised any money from public issues during the year.

22. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For GRSRA & CO CHARTERED ACCOUNTANTS Firm Regn.No. 012240S

S.GOVINDA RAO Partner Membership No.20546

Place: Bangalore

Date: 07th July, 2012

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Mar 31, 2011

We have audited the attached Balance Sheet of STI Products India Limited, Bangalore, as at 31st March 2011, the Profit and Loss Account and the Cash Flow statement for the year ended on that dale, 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.

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

2. As required by the Companies (Auditor's Report) Order 2G03, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order,

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

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 account as required by law have been kept the Company so far as appears from our examination of those books;

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;

iv. 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 subject to non provision of interest of Rs.30,099,071/- to banks and on unsecured loans. The loss for the year would have been higher at Rs.30,192,278/- (Refer Note No.2 of Schedule 9.

v, On the basis of written representations received from the directors, as on 31st March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of Section 274 (l)(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 and give a true and fair view in conformity with the accounting principles generally accepted in India;

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

b) in the case of the Profit and Loss Account, of the loss for the year ended on that date, and

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

ANNEXURE TO THE AUDITORS' REPORT (Referred in Paragraph 3 of our report of even date to the members of STI Products India Limited)

1. There are no Fixed Assets in the company as at 31nl March, 2.011.

2. As there is no inventory no physical verification has been conducted by the management during the year,

3. The company has neither granted nor taken any loans, secured or unsecured during the year to/from companies, firms or other parties in which directors of the company are interested.

4. The Company has not purchased any inventory nor sold any goods during the year.

5. As per the information and records, there are no transactions that need to he entered in the register in pursuance of section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposit from the public during the year.

7. I here is no internal audit system during the year.

8. As informed to us, the Central Government has prescribed the maintenance of cost records under section 209{1Xd) of the Companies Act, 1956. in respect of the activities of the company. There have been no production activities during the year.

9. The company has no employees and as such not deducted Provident Fund and Employees State Insurance which arc to be deposited.

10. As per records and explanations given to us there are no dues of sales tax, Income Tax, Customs duty, etc which have not been deposited on account of any dispute.

11. According to the records the accumulated losses at the end of the financial year is more than fifty percent of its net-worth. The company has incurred cash losses in the financial year and also in the immediately preceding financial year,

12. The Company has defaulted in repayment of dues to financial institutions and banks The amount not repaid is Rs.5,07,39,927 /-

13. The Company has not granted any loans and advances to any parties on the basis of security by way of pledge of shares, debentures and other securities.

14. In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the companies (Auditors Report) order 2003 are not applicable to the company.

15. The company is not dealing or trading in shares, securities, debentures and other investments.

16. As per the records and explanations given to us, the company has not given any guarantee for loans taken by others from any financial institutions or banks.

17. As per the records and explanations given to us. the company has not taken any term loans during the year

18. The funds raised on short term basis have not been used Tor long term investment and vice versa during the year,

19. As per the records the company has not made any preferential allotment of shares during the year.

20. As per the records the company has not issued debentures during the year.

21. The company has not raised any money from public issues during the year.

22. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For GRSRA & CO

CHARTERED ACCOUNTANTS Firm Rego.No. 01224OS

S.GOVINDA RAO Place : Bangalore Partner Date : 30/06/2011 Membership No.20546

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Mar 31, 2009

1. We have audited the attached Balance Sheet of STI Products India Limited, Bangalore, as at 31st March 2009, 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.

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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

i. We have obta ned 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 account as required by law have been kept by the Company so far as appears from our examination of those books;

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;

iv. 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 subject to non provision of interest of Rs. 13,47,20,451/- to banks and unsecured loans. The loss would have been higher at Rs.41, 72, 11,855/- (Refer Note No.2 of Schedule 9).

v. On the basis of written representations received from the directors, as on 31s March 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2009 from being appointed as a director in terms of 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 and jive 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, 2009

b) in the case of the Profit and Loss Account, of the loss for the year ended on that date

And

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

ANNEXURE TO THE AUDITORS REPORT

(Referred in Paragraph 3 of .our report of even date to the members of STI Products India Limited)

1. There are no Fixed Assets in the company as at 31st March, 2009.

2. As there is no inventory no physical verification has been conducted by the management during the year. • , • _

3.. . The company has neither granted nor taken any loans, secured or unsecured during the year to/from companies, firms or other parties in which directors of the company are interested.

4. The Company has not purchased "any inventory nor sold any goods during the year.

5; As per the information and records, there are no transactions that need to be entered in the register in pursuance of section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposit from the public during the year.

7. There is no internal audit system during the year.

8. As informed to us, the Central Government has prescribed the maintenance of cost records under section 209(l)(d) of the Companies Act, 1956, in respect of the activities of the company. There have been no production activities during the year.

9. The company has no employees and as such not deducted Provident Fund and Employees State Insurance which are to be deposited.

10. As per records and explanations given to us there are no dues of sales tax, Income Tax, Customs duty, etc which have not been deposited on account of any dispute. v

11. According to the records the accumulated losses at the end of the financial year is more than fifty percent of its net-worth. The company has incurred cash losses in the financial year and also in the immediately preceding financial year.

12: The Company has defaulted in repayment of dues to financial institutions and banks. The amount not repaid is Rs. 1430.00 lacs starting from March 2001.

13. The Company has not granted any loans and advances to any parties on the basis of security by way of pledge of shares, debentures and other securities.

14. In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the companies (Auditors Report) order 2003 are not applicable to the company.

15. The company isnot dealing or trading in shares, securities, debentures and other investments.

16. As per the records and explanations given to us, the company has not given any guarantee for loans taken by others from any financial institutions or banks.

17. As per the records and explanations given to us, the company has not taken any term loans during the year . - .

18. The funds raised onshort term basis have not been used for long term investment and vice versa during ¦ the year.

19. As per the records the company has not made any preferential allotment of shares during the year.

20. As per the records the company has not issued debentures during the year. .

21. The company has not raised any money from public issues during the year.

22. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For BRAHMAYYA & CO CHARTERED ACCOUNTANTS Place :Bangalore S.GOVINDA FLAO Date : 29st May 2009 Partner Membership No.20546