Banco Products (India) Ltd

TO THE MEMBERS OF

BANCO PRODUCTS (INDIA) LIMITED,

Bil, Dist. VADODARA

1. We have audited the attached Balance Sheet of BANCO PRODUCTS (INDIA)LIMITED, as at 31stMarch 2010 and also the Profit and Loss Account and cash flowstatement of the Company for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company's management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. 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 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, issued by the CentralGovernment of India ni 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 and5 of the said order.

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

a) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of our audit.

b) In our Opinion proper books of accounts as required by law havo been kept by theCompany so far as appears from our examination of such books.

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account and comply with the accountingstandards referred to in section 211(3C) of the Companies Act, 1956.

d) On the basis of the written representations received from the directors as on 31stMarch, 2010 and taken on record by the Board of Directors, we report that none of thedirectors are disqualified as on 31st March, 2010 from being appointed as a director interms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with the notes in schedule 21, give theinformation required by the companies Act, 1956, in the manner so required and give a trueand 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 31slMarch, 2010.

ii) In the case of Profit and Loss Account of the "PROFIT" of the company forthe year ended on that date.

And

iii) In the case of the cash flow statement of the cash flows for the year ended onthat date.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in Para 3 of our Report of even date)

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

(b) All the assets have not been physically verified by the management during the yearbut there is a regular programme of verification which in our opinion, is reasonablehaving regard to the size of the company and the nature of its assets. We are informedthat no material discrepancies were noticed on such verification.

(c) The company has not disposed off substantial part of its fixed assets during theyear.

(ii) (a) The Inventory has been physically verified by the Management end of the yearexcept stock lying with third parties in respect of which confirmations have been obtainedin majority of the cases by the company

(b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the company and the nature of itsbusiness.

(c) The company is maintaining proper records of inventory. The discrepancies noticedon verification between the physical stocks and the book records were not material.

(iii) (a) According to the information and explanations given to us, the company hasduring the year not granted any loans secured or unsecured to companies, firms or otherparties listed in the register maintained under section 301 of the Companies Act, 1956.Accordingly, paragraphs 4 (iii) (b), (c) and (d) of the Companies (Auditor's Report)order, 2003 are not applicable for the current year.

(b) According to the information and explanations given to us, the company has duringthe year not taken any loans secured or unsecured from companies, firms or other partieslisted in the register maintained under faction 301 of the Companies Act, 1956.Accordingly, paragraphs 4 (iii) (f) and (g) of the Companies (Auditor's Report) order,2003 are not applicable for the current year.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control procedures commensurate with the size of the companyand the nature of its business with regard to purchases of inventory, fixed assets and forthe sale of goods and services. Furrier, on the basis of cur examination and according tothe information and explanations given to is we have neither come across nor have anyinformation of any instances of major weaknesses in the aforesaid Internal controlsystems.

(v) (a) According to the information and explanations given to us the transactions thatneed to be entered into the register maintained under section 301 of the companies Ac,,1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under section 301 of the Companies Act, 1956 and exceeding the value of rupeesfive lakhs in respect of any party during the year have been made at prices which arereasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, thecompany has complied with the provisions of sections 58A, 58AA or any other relevantprovisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 with regard to the deposits accepted from the public. We are informed by themanagement that no order has been passed by the Company Law Board, National Company LawTribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii) We are informed that cost records are required to be maintained by the companyunder Section 209(1) (d) of the Companies Act 1956 from financial year 2002-2003 forcertain products of the company as per notification No. G.S.R 979(E) dated 24th April 2001We have not reviewed the cost record s maintained by the company, but we are informed thatthe prescribed cost records are maintained by the Company.

(ix) (a) The company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund, investor education and protection fund, employeesstate insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty,cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us. no undisputed amountspayable in respect of income tax, wealth tax, sales tax, service tax, customs duty exciseduty and cess were in arrears, as at 31s t March 2010 for a period of more than six monthsfrom the date they became payable.

(c) Following disputed demands aggregating to Rs.38.06 Lacs have not been depositedsince the matters are pending with the relevant concerned authorities

(x) The company has no accumulated losses as at 31st March, 2010. The company has notincurred cash losses in the financial year ended on that date or in the immediatelypreceding financial year.

(xi) According to the information and explanations given to us, the company has notdefaulted in repayment of dues to financial institution or banks.

(xii) According to the information and explanations given to us, the company has notgranted any loans or advances on the basis of security by way of pledge of shares,debentures and other securities.

(xiii) The company is not a chit fund or a nidhi/mutual benefit fund/society.Therefore, the provisions of clause 4(xiii) if the Companies (Auditors' report) Order,2003 are not applicable to the company.

(xiv) The Company has maintained proper records of the transactions and contracts inrespect of dealing or trading in shares, securities and other in investments, and timelyentries have been made therein. All shares securities and other investments have been heldby the company in its own name.

(xv) According to the information and explanations given to us, the company has notgiven any guarantee for loans taken by other om bank or financial instil tions.

(xvi) According to the informa on and explanations given to us, the term loans havebeen applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us. funds raised on shortterm basis have prima facie not been used for long term investment.

(xviii)According to the information and explanations given to us the company has notmade any preferential allotment of shares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956.

(xix)The company has not issued any debentures during the year.

(xx) The company has not raised any monies by public issue during the year,

(xxi) According to the information and explanations given to us, no fraud on or by thecompany has been noticed or reported during the year.