Fulford (India) Ltd

TO THE MEMBERS OF FULFORD (INDIA) LIMITED

1. We have audited the attached Balance Sheet of Fulford (India) Limited (the'company'), as at 31st December, 2011, and the related Profit and Loss Account and CashFlow Statement for the year ended on that date annexed thereto, which we have signed underreference to this report. These financial statements are the responsibility of thecompany's management. Our responsibility is to express an opinion on these financialstatements 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 (Auditor's Report) Order, 2003 as amended by theCompanies (Auditor's Report) (Amendment) Order, 2004 (together the 'Order') issued by theCentral Government of India in terms of sub-section (4A) of Section 227 of 'The CompaniesAct, 1956' of India (the 'Act') and on the basis of such checks of the books and recordsof the company as we considered appropriate and according to the information andexplanations given to us, we give in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the Order.

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

(a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;

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

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the accounting standards referred to in sub-section(3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on 31stDecember, 2011 and taken on record by the Board of Directors, none of the directors isdisqualified as on 31st December, 2011 from being appointed as a director in terms ofclause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto give in the prescribed manner the information required by the Act and give a trueand fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the company as at 31stDecember, 2011;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended onthat date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

ANNEXURE TO AUDITORS’ REPORT

[Referred to in paragraph 3 of the Auditors' Report of even date to the members of Fulford(India) Limited on the financial statements for the year ended 31st December, 2011]

1. (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of three years which, in ouropinion, is reasonable having regard to the size of the company and the nature of itsassets. Pursuant to the programme, a portion of the fixed assets has been physicallyverified by the management during the year and no material discrepancies between the bookrecords and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed of by the company during the year.

2. (a) The inventory has been physically verified by the management during the year. Inour opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe management are reasonable and adequate in relation to the size of the company and thenature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, thecompany is maintaining proper records of inventory. In our opinion, the discrepanciesnoticed on physical verification of inventory as compared to book records were notmaterial.

3. (a) The company has not granted any loans, secured or unsecured, to companies, firmsor other parties covered in the register maintained under Section 301 of the Act.Accordingly, clauses (iii)(b) to (iii)(d) of paragraph 4 of the Order are not applicableto the company for the current year.

(b) The company has not taken any loans, secured or unsecured, from companies, firms orother parties covered in the register maintained under Section 301 of the Act.Accordingly, clauses (iii)(f) and (iii)(g) of paragraph 4 of the Order are not applicableto the company for the current year.

4. In our opinion and according to the information and explanations given to us, havingregard to the explanation that certain items of inventory purchased are of special naturefor which suitable alternative sources do not exist for obtaining comparative quotations,there is an adequate internal control system commensurate with the size of the company andthe nature of its business for the purchase of inventory and fixed assets and for the saleof goods and services. Further, on the basis of our examination of the books and recordsof the company and according to the information and explanations given to us, we haveneither come across nor have we been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us,the particulars of contracts or arrangements referred to in Section 301 of the Act havebeen entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, inrespect of the transactions made in pursuance of contracts or arrangements entered in theregister maintained under Section 301 of the Act and exceeding the value of Rupees FiveLakhs in respect of any party during the year, prevailing market prices at the relevanttime are not available as these transactions are of a special nature.

6. The company has not accepted any deposits from the public within the meaning ofSection 58A of the Act and the rules framed there under.

7. In our opinion, the company has an internal audit system commensurate with its sizeand nature of its business.

8. We have broadly reviewed the books of account maintained by the company in respectof the products where, pursuant to the Rules made by the Central Government of India, themaintenance of cost records has been prescribed under clause (d) of sub-section (1) ofSection 209 of the Act and are of the opinion that prima facie, the prescribed accountsand records have been made and maintained. We have not, however, made a detailedexamination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of thecompany examined by us, in our opinion, except for the following dues in respect ofincome-tax and cess thereon, the company is generally regular in depositing undisputedstatutory dues including provident fund, investor education and protection fund,employees' state insurance, income-tax, sales-tax, wealth tax, service tax, customs duty,excise duty, cess and other material statutory dues as applicable with the appropriateauthorities in India. The extent of the arrears of income-tax and cess thereon outstandingas at 31st December, 2011, for a period of more than six months from the date they becamepayable are as follows -

(b) According to the information and explanations given to us and the records of thecompany examined by us, there are no dues of wealth-tax, service tax, customs duty, exciseduty and cess which have not been deposited on account of any dispute. The particulars ofdues of income-tax and sales tax as at 31st December, 2011 which have not been depositedon account of a dispute, are as follows -

* Net of amounts paid including under protest.

10. The company has no accumulated losses as at 31st December, 2011 and has notincurred any cash losses in the financial year ended on that date or in the immediatelypreceding financial year.

11. According to the records of the company examined by us and the information andexplanations given to us, the company has not defaulted in repayment of dues to anyfinancial institution or bank or debenture holders.

12. The company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/nidhi/mutual benefitfund/societies are not applicable to the company.

14. The company is not a dealer or trader in shares, securities, debentures and otherinvestments.

15. According to the information and explanations given to us, the company has notgiven any guarantee for loans taken by others from banks or financial institutions duringthe year.

16. The company has not obtained any term loans.

17. On the basis of an overall examination of the Balance Sheet of the company, in ouropinion and according to the information and explanations given to us, there are no fundsraised on short-term basis which have been used for long-term investment.

18. 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.

19. The company has not issued any debentures.

20. The company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the company,carried 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.