2. We conducted our audit in accordance with the 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 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us during the course of the audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. The Company has prepared the accounts on going concern basis inspite of total closure of Manufacturing Operations and subsequent sale of factory land, Buildings, Plant and Machinery, Office Equipments, Furniture and Fixture and all the inventories.

5. Trade Payables, Trade Receivables, Loans, Advances, deposits and other current liabilities are subject to confirmations and consequent reconciliation.

6. Confirmations from two banks have not been obtained and hence not verified.

7. Cash on hand has not been verified by us.

8. 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 purposes 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 account;

(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 prescribed by the Companies (Accounting Standards) Rules, 2006 referred to in sub-section (3C) of section 211 of the Act;

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

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to point no. 4, 5, 6 and 7 read together with the notes thereon 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 December 2012;

(b) In the case of the Profit and Loss Account, of the Loss for the period ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flow for the period ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT OF EVEN DATE

(i) (a) The Company has maintained inadequate records in respect of fixed assets.

(b) No physical verification of fixed assets was carried out during the period hence question of discrepancies does not arise.

(c) The Company has agreed to disposed of its Manufacturing undertaking held at Manali, Chennai being substantial part of its fixed assets of the Company. Thus has affected going concern.

(ii) (a) No physical verification of Inventory was done during the period and hence we are unable to comment on the clause 4 (ii) (b)of the Order.

(b) The Company has maintained proper records of inventory. Since the Company has not conducted physical verification of Inventory, we are unable to comment on the discrepancies and its treatment in the books of Account;

(iii) (a) In our opinion, the Company has not granted any loans, secured or unsecured to Companies, firms or other parties listed in the Register maintained under Section 301 of the Act.

Accordingly, clause 4(iii) (b), 4(iii) (c) and 4(iii) (d) are not applicable.

(b) During the period the Company has taken unsecured loan amounting to Rs.114.27 lacs from three parties, listed in the register maintained under section 301 of the Companies Act 1956.

(c) The loan taken from the above parties are interest free and there are no terms and conditions prescribed hence Clause No. 4 (iii) (g) of the Order is not applicable.

(iv) There was adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) The Particulars of contracts or arrangements required to in Section 301 of the Act have been entered in the Register.

(b) The Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not complied the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA of the Companies Act or any other relevant provisions of the Act, 1956 and the rules framed under, where applicable.

1. There were delays in repayment of matured fixed deposits.

2. There were delays in intimating to the Tribunal about deposits in respect of repayment of Fixed Deposit.

3. There were delay in filing of Return of Deposits with the Registrar of companies.

4. There was delay in deposit of investment of 15% of deposits maturing during the next financial year.

5. The amount deposited /invested for repayment of maturing deposits was utilized for purposes other than repayment of maturing deposits

The Company Law Board, Mumbai Bench has passed Order and the same has been complied by the Company.

(vii) Internal audit system, Was not commensurate with the size and nature of its business;

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1) (d) of the Act. We are of the opinion that prima facie the prescribed accounts and records have been maintained and are being made up. We have not however made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion the undisputed statutory dues in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Service-tax, Custom Duty, Excise Duty, wealth tax, Cess and any others statutory dues as applicable have not been regularly deposited with the appropriate authorities. According to the information and explanations given to us undisputed amounts payable in respect of the wealth tax ,and Income tax were outstanding as at 31st December 2012 for a period of more than six months from the date of becoming payable;

(b) According to the records made available to us and the information and explanations given by the management, the details of the dues of Income tax / Sales tax / Wealth tax / Service Tax / Custom duty / Excise duty / cess, which have not been deposited with the appropriate authorities on account of dispute, are given in the Appendix to this report.

(x) The Company has accumulated losses at the end of the period which are more than fifty per cent of its net worth. The Company has incurred cash losses during the period covered by our report has also incurred cash loss in the immediately preceding financial year ;

(xi) The Company has defaulted in the repayment of dues to financial Institutions and banks. Due to non availability of required information we are unable to comment on the default in the repayment of dues to financial Institutions and banks.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

(xiii) The Company is not a chit / nidhi / mutual benefit fund / society;

(xiv) The Company is not a dealer or trader in shares, securities, debentures and other investment. The Company has held the investments in its own name.

(xv) During the period, the Company has not given any guarantee for loans taken by others from banks and other financial institutions.

(xvi) During the period, the Company has not obtained any term loan.

(xvii) Funds raised on short term basis has not been used for long term investment.

(xviii) During the period the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

(xix) During the period the Company has not issued any debentures.

(xx) During the period the Company has not raised any monies by way of public issues.

(xxi) 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 N.M. Raiji & Co. 

                                      Chartered Accountants

                                      Firm Reg No. 108296w

                                      CA. Y. N. Thakkar

Place: Mumbai                         Partner

Date : 19th August, 2013              Membership No: 33329