Fluidomat Ltd

TO

THE MEMBERS, FLUIDOMAT LIMITED

1. We have audited the attached Balance Sheet of FLUIDOMAT LIMITED ("theCompany") as at 31st March, 2011 and the Profit & Loss Account and also the CashFlow Statement of the Company for the year ended on that date annexed thereto. TheseFinancial Statements are the responsibility of the Company's management. Ourresponsibility 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 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 also includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003, issued by the CentralGovernment 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 and5 of the said order to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportthat:

(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 accounts as required by law have been kept by thecompany, so far as appears from our examination of those books;

(iii) The Balance Sheet, Profit & Loss Account and Cash flow statement dealt withby this report are in agreement with the books of accounts;

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash FlowStatement dealt with by this report comply with the Accounting Standards referred to inSub Section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors as on 31stMarch, 2011 and taken on record by the Board of Directors, we report that none of thedirectors were disqualified as on 31st March, 2011 from being appointed as a director interms of clause (g) of sub-section (1) of Section 274 of Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts read together with notes appearing in scheduleof significant Accounting Policies and Notes on Accounts give the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view inconformity 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 31stMarch, 2011; and

(b) In case of the Profit & Loss Account, of the PROFIT for the year ended on thatdate; and

(c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.

Annexure to the Auditors Report of Fluidomat Ltd. for the year ended 31.3.2011

(Referred to in paragraph 3 of our report of even date)

(i) In respect of the company's fixed assets:

(a) The company has generally maintained proper records showing full particulars,including quantitative details and situation of fixed assets;

(b) As explained to us, the fixed assets have been physically verified by themanagement in accordance with a phased programme of verification, which in our opinion isreasonable, considering the size and nature of its business. No material discrepancieswere noticed on such verification as compared with the available records.

(c) In our opinion and according to the information and explanations given to us, thecompany has not made any substantial disposal of fixed assets during the year and goingconcern status of the company is not affected.

(ii) In respect of its inventories:

(a) As explained to us, physical verification of inventory has been conducted atreasonable intervals by the management.

(b) In our opinion and according to the information and explanations 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 the nature of its business.

(c) According to the information and explanations given to us and on the basis of ourexamination of inventory records, we are of the opinion that the company is maintainingproper records of inventory. As explained to us, discrepancies noticed on physicalverification of the inventories between the physical inventories and book records were notmaterial, having regard to the size of the operations of the Company, and the same havebeen properly dealt with.

(iii) According to the information and explanations given to us, the company hasneither taken nor granted any loans, secured or unsecured, from / to companies, firms orother parties covered in the register maintained under section 301 of the Companies Act,1956. Therefore, the provisions of clause 4 (iii) of the Companies (Auditors' Report)Order, 2003 are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us,there is adequate internal control procedure commensurate with the size of the company andthe nature of its business, for the purchase of inventory and fixed assets and for thesale of goods. During the course of Audit we observed no continuing failure to correctmajor weaknesses in internal control.

(v) (a) According to the information and explanations given to us, we observed thetransactions that need to be entered into a register in pursuance of section 301 of theAct have been so entered.

(b) According to the information and explanations given to us, we observed that thesetransactions have been made at prices which are reasonable having regard to the prevailingmarket prices at the relevant time, though no such transaction was of the value exceedingRupee Five Lakhs.

(vi) In our opinion and according to the information and explanations given to us, thecompany has not accepted deposits from the public within the meaning of the provisions ofsections 58 and 58AA or any other relevant provisions of the Companies Act, 1956 and theCompanies (Acceptance of Deposits ) Rules, 1975.

(vii) In our opinion and according to the information and explanations given to us, thecompany has an internal audit system commensurate with its size and nature of itsbusiness.

(viii) To the best of our knowledge and as per explanation given to us, maintenance ofcost records has not been prescribed by the Central Government under clause (d) ofsub-section (1) of section 209 of the Act for the products of the company;

(ix) According to the records of the Company, the company has been generally regular indepositing undisputed statutory dues including Provident Fund, Employees' State Insurance,Income-tax, Sales-tax, Custom Duty, Excise Duty, cess and any other statutory dues withthe appropriate authorities though there has been delay in a payment of Sales Tax. Theextent of the arrears of outstanding statutory dues as at the last day of the financialyear concerned for a period of more than six months from the date they became payable, arein aggregate of Rs.13,61,136/- (Commercial Tax (Vat), Central Sales Tax & Entry Tax ).

According to the records of the Company, there are no dues outstanding of custom tax /wealth tax / excise duty / cess etc. on account of any dispute except the following:

(x) The Company has no accumulated losses as at 31st March, 2011 and has not incurredany cash losses in the financial year ended on that date or in the immediately precedingfinancial year.

(xi) In our opinion and according to the information and explanation given to us, thecompany has not defaulted in repayment of dues to Financial Institutions, Banks orDebenture holders as at the Balance Sheet date.

(xii) In our opinion and according to the information and explanation given to us, thecompany has not granted loans and advances on the basis of security by way of pledge ofshares, debentures and other securities.

(xiii) In our opinion and according to the information and explanation given to us, thecompany is not a chit fund or a nidhi or mutual benefit societies. Therefore theprovisions of clause 4 (xiii) of the Companies (Auditors' Report) Order 2003 are notapplicable to the company.

(xiv) In our opinion and according to the information and explanation given to us, thecompany is not dealing in or trading in Shares, Securities, Debentures and otherinvestments. Therefore the provisions of clause 4 (xiv) of the Companies {Auditors'Report} Order 2003 are not applicable to the company;

(xv) In our opinion and according to the information and explanations given to us, thecompany has not given any guarantee for loans taken by others from bank or financialinstitutions.

(xvi) According to the information and explanation given to us and on an overallexamination of the Balance Sheet and cash flow statement of the company, we report that nofunds raised on short term basis have been used for long term investment and vice versa(excluding permanent working capital).

(xvii) During the year the company has not made any preferential allotment of shares toparties and companies covered in the Register maintained under section 301 of theCompanies Act, 1956.

(xviii) The Company has not issued any debentures during the year.

(xix) No money has been raised through the Public Issue during the year under Audit.

(xx) During the course of our examination of the books & records of the companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us, we have neither come across anyinstance of fraud on or by the company noticed or reported during the year, nor have webeen informed of such case by the management.