Assambrook Ltd

ASSAMBROOK LIMITED

1. We have audited the attached Balance Sheet of ASSAMBROOK LIMITED as at 31^stMarch 2011, Profit & Loss Account of the Company for the year ended on that date andthe Cash Flow Statement for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company's Management. Out responsibility is toexpress an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditors' Report) Order 2003 as amended by Companies(Auditor's Report) (Amendment) Order, 2004 (the Order) issued by the Central Government interms of Section 227 (4A) of the Companies Act, 1956 ('the Act') and according to theinformation and explanation given to us and on the basis of such checks, as we consideredappropriate, we further report that:

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

(b) There is a phased programme of verification of such assets, based on which physicalverification has been carried out during the year. Discrepancies in respect of fixedassets verified during the year were not material. In our opinion, the frequency of suchverification is reasonable having regard to the size of the company and the nature of itsassets.

(c) No substantial part of Fixed Assets of the Company has been disposed off during theyear, which affects the going concern status of the Company.

ii(a) The inventory except which are in transit and lying with third parties, have beenPhysically verified during the year by the management. In our opinion and according to theinformation and explanation given to us, the frequency of such verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and nature of its business.

(c) On the basis of our examination of the records of inventory and according to theinformation and explanations given to us, we are of the opinion that the company ismaintaining proper records of inventory. As far as ascertained, discrepancies noticed onverification between the physical stocks and the book records were not material and thesame have been properly dealt with in the books of accounts.

iii (a) The Company has not granted any loans secured or unsecured to any company,firm, or other parties covered in the register maintained under Section 301 of the Act.Therefore provisions of clause 4(iii)(b), (c) and (d) of the Order are not applicable tothe Company..

(b) The Company has not taken any loans secured or unsecured from any company, firm, orother parties covered in the register maintained under Section 301 of the Act. Therefore,provisions of clause 4(iii)(e), (f) and (g) of the Order are not applicable to theCompany.

iv. In our opinion and according to information and explanations given to us, there isan adequate internal control system commensurate with the size of the Company and natureof its business for the purchase of inventory and fixed assets and for the sale of goodsand services. Further on the basis of our examination of the books and records of thecompany and according to information and explanation given to us, we have neither comeacross nor have been informed of any continuing failure to correct major weaknesses in theaforesaid internal control system.

v. According to the information and explanations provided by the management, there wereno contracts or arrangements that need to be entered into a register in pursuance ofsection 301 of the Act. According provisions of clause 4(v)(b) of the Order are notapplicable.

vi. The Company has not accepted any deposit from the Public during the year with inthe meaning of sec.58A & 58AA of the Act and the Rules.

vii. In our opinion, the present internal audit system requires to be strengthened tomake it commensurate with size and nature of its business.

viii. As informed to us the Company has maintained the cost records as prescribed bythe Central Government under section 209(1)(d) of the Companies Act, 1956 but we have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.

ix (a) According to information and explanation given to us and as per the records ofthe company, the company is regular in depositing with the appropriate authorityundisputed statutory dues as applicable except Greenleaf Cess & Professional Tax whichare due for more than 6 months from the date they became due and payable, and the amountoutstanding as on date of Balance sheet is as follows:-

As regards amount of Provident Fund Dues which relates to earlier years the office ofP.F. Commissioner, The Board of Trustee vide their letter no.PF(L)/2009/D-96/D-37/D-51/D-35/D-31/3252-59 Dt: 01/09/2009 has granted installments forpayment of arrear due and the same are to be paid in 60 monthly installments from November2009 .The installments during the year are paid regularly by the company ,and theoutstanding amount of P.F. Dues as on the date of Balance sheet is Rs.4,76,50,536.

(b) According to information and explanations given to us and as per the records of theCompany examined by us, there are no dues of sales tax, income tax, custom duty, wealthtax, excise duty and cess which have not been deposited on account of any dispute exceptthe dues as given below:

ix. The accumulated losses at the end of the financial year is Rs. 1008.24 lacs. whichhave not exceeded more than 50% of its net worth. The Company has neither incurred cashlosses during the year covered by our audit nor in the immediately preceding financialyear.

x. The Company has defaulted in repayment of dues of Union Bank of India. Pendingsettlement of dues with U B I , no interest on loan has been provided in the books ofaccounts ' 661.78 including ' 132.36 for the current year as per note no.15 of theSchedule 16.

xi. According to information and explanations given and based on the documents andrecords produced to us, the Company has not granted loans and advances on the basis ofSecurity by way of pledge of shares, Debentures and other securities.

xii. The Company is not a Chit Fund or a Nidhi Mutual Benefit Fund/Society. Therefore,provisions of clause 4(xiii) of the Order are not applicable to the Company.

xiii. In our opinion the Company is not dealing in or trading in shares, securities,debentures and other Investments. Therefore, provisions of clause 4(xiv) of the Order arenot applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, theCompany has not given any guarantees for loans taken by others from Banks and financialInstitutions.

xv. In our opinion and according to the information and explanations given to us, theCompany has not availed fresh term loans during the current financial year.

xvi. According to the information and explanations given to us and on an overallexamination of the records of the Company, we report that the Company has not usedshort-term funds for long term investment.

xvii. The Company has not made any preferential allotment of shares to parties andcompanies covered in the Register maintained under section 301 of the Act during the year.

xviii. The Company does not have any outstanding debentures during the year.

xix. The Company has not raised any money through a public issue during the year.

xx. During the course of our examination of the books of accounts carried out inaccordance with generally accepted auditing practices in India, we have neither comeacross any incidence of fraud on or by the company nor we have been informed of any suchcase by the management.

4. Attention is invited to the following Notes of Schedule 16 :

i) Note No.8 & 3(b) regarding non-provision of interest and penalties on account ofnon-payment of Provident Fund dues, the impact of which is presently not ascertainable.

ii) Note No. 14 and 18.a regarding, Other Receivables and Debtors, respectively, therecoverability and consequential adjustments arising therefrom, presently notascertainable.

iii) Note No. 1(K) and 15 regarding non-provision of up to date retirement benefitsi.e. Gratuity and Leave Encashment etc. and non compliance of AS 15 (Revised 2005) forwant of certificate and information.

iv) Note No. 16 regarding non-provision of interest estimated to Rs. 132.36 lacs forthe current year and Rs. 529.43 lacs for earlier years in respect of loan from Union Bank.Due to this profit for the year is higher by Rs.132.36 lacs and current liabilities islower and debit balance of profit and loss Account lower by Rs. 661.78 lacs.

5. We refer to point no. 19 of schedule 16 regarding Kerala Tea Estates and the legalopinion obtained by the company. No further adjustment is required to be carried out andthe accounts already incorporated are presumed to be correct. In the absence of anyspecific claims, we have accepted the position as explained by the Company in the matter.

6. We further report that without giving the effect of the items as referred in Para4(i), 4(ii), 4(iii), 4(v), above, the impact of which is not ascertainable, and had theimpact of items referred in Para 4(iv) above been given effect in the accounts, the Lossfor the year after tax would have been Rs 113.89 lacs as against the reported Profitfigure of Rs.18.47 lacs, the current liabilities would have been Rs.7573.32 lacs asagainst the reported figure of Rs.7440.96 lacs and debit balance in Profit and lossaccount would have been Rs. 1670.02 lacs as against the reported figure of Rs.1008.24lacs.

7. Further to our comments as given above, we report that :

i. we have obtained all the information and explanations which to the best of ourknowledge 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 theCompany so far as it appears from our examination of the books.

iii. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the Books of Account.

iv. The Balance Sheet, the Profit & Loss Account and the Cash Flow Statement dealtwith by this report comply with the Accounting Standards referred to in subsection (3C) ofsection 211 of the Companies Act, 1956 to the extent applicable except as given in NoteNo. 12 regarding non recognition of Deferred Tax assets as per AS 22, and Note No.14regarding provision of liability for Gratuity and Leave Encashment as per actuarialvaluation and non compliance of AS - 15 (Revised 2005).

v. On the basis of the written representations received from the Directors and taken onrecord by the Board of directors, we report that none of the Directors is disqualified ason 31^st March,2011 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act,1956.

vi. In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts subject to Para 4 above along with their impact includingtheir overall impact to the extent ascertainable as given in Para 6 above and readtogether with other notes thereon, give the information as required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity withaccounting principles generally accepted in India.

a. In the case of the Balance Sheet, of the state of affairs of the Company as at 31^stMarch, 2011;

b. . In the case of Profit & Loss Account, of the Profit of the Company for theyear ended on that date; and

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