Gorani Industries Ltd

To the Members of M/s Gorani Industries Limited

We have audited the attached Balance Sheet of Gorani Industries Limited, Indore(M.P.) as at 31^st March 2011 and Profit and Loss Account and also the Cash flowStatement for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditing standard 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 misstatements. 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.

2. As required by the Companies (Auditor's Report) Order, 2003 as amended, issued bythe Central Government of India in terms of sub-section (4A) of section 227 of theCompanies Act, 1956, we enclose in the Annexure, a statement on the matters specified inparagraph 4 and 5 of the said Order.

3. Further to our comments in the Annexure referred to in paragraph 2 above, we reportthat:

(i) We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany, so far as appears from our examination of those books;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and 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 31^stMarch, 2011, and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on 31^st March 2011 from being appointed as adirector in terms of clause (g) of sub-section (1) of section 274 of the 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 the Significant AccountingPolicies and other notes thereon give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples 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 the Profit and Loss Account, of the profit for the year ended onthat date; and

(c) in the case of the cash flow statement, of the cash flow for the year ended on thatdate.

Annexure to Auditor's Report of even date to the members of Gorani Industries Limited,on the financial statements for the year ended 31 March 2011 referred to in paragraph 2 ofour report, we report that:

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

(b) As informed to us, the fixed assets have been physically verified by the managementduring the year in a phased manner, which in our opinion is reasonable, having regard tothe size of the Company and the nature of its business. No material discrepancies werenoticed on such physical verification.

(c) During the year, the company has not disposed off substantial part of its fixedassets, which will affect the going concern status of the company.

ii(a) As explained to us, inventories have been physically verified by the managementat regular intervals during the year.

(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 only maintaining records of basic raw material on monthly basis. Thediscrepancies noticed on verification between the physical stocks and the book recordswere n6t material as explained to us.

iii(a) The company had taken interest free unsecured loan from three parties covered inthe register maintained under section 301 of the Companies Act, 1956. The maximum amountinvolved at any time during the year was Rs. 310.15 lacs and the year-end balance of loanstaken from such parties is Rs. 310.15. The company has not granted arm loan to thecompanies, firms or other parties covered in the register maintained under section 301 ofthe companies Act, 1956.

(b) In our opinion, being no interest is to be paid and other terms and conditions onwhich loans have been taken from the companies, firms or other parties listed in theregister maintained under section 301 of the Companies Act, 1956, are not, prima facie,prejudicial to the interest of the company.

(c) There is no stipulation as to the repayment of the principal amount taken by thecompany.

(d) There is no overdue amount of more than rupee one lakh on account of loan takenfrom the companies, firms or other parties listed in the register maintained under section301 of the Companies Act, 1956.

iv In our opinion and according to the information and explanation given to us, thereare adequate internal control procedures commensurate with the size of the company and thenature of its business with regard to purchases of inventory, fixed assets and with regardto the sale of goods. During the course of our audit, we have not, observed any majorweakness in internal controls.

v(a) According to the information and explanation given to us, we are of the opinionthat the transaction that need to be entered into the register maintained under section301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, thereare no transactions exceeding the value of rupees five lacs in respect of each party madein pursuance of contracts or arrangement entered in the register maintained under section301 of the Companies Act, 1956.

vi The Company has not accepted any deposits from the public within the meaning ofSection 58 A and 58 AA of the Companies Act, 1956 and the rules framed there under.

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

viii The Central Government has not prescribed for the maintenance of cost recordsunder section 209 (1) (d) of the Companies Act, 1956.

ix(a)The company is generally regular in depositing undisputed statutory dues includingprovident fund, investor education protection fund, employee' state insurance, income tax,sales tax, wealth tax, custom duty, excise duty, service tax & cess and other materialstatutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanation given to us, no undisputed amountspayable in respect provident fund, investor education and protection fund, employee' stateinsurance, income tax, sales tax, wealth tax, custom duty, excise duty, service tax andcess and other undisputed statutory dues were outstanding at the year end for a period ofmore than six month from the date they become payable.

(c) According to the information and explanation given to us, there are no dues ofsales tax, income tax, custom duty, wealth tax, excise duty, service tax and cess, whichhave not been deposited on account of any dispute.

x In our opinion, the accumulated losses of the company are not more than fifty percentof its net worth. Further the company has not incurred cash losses during the financialyear covered by our audit and in immediately preceding financial year.

xi In our opinion, and according to the information and explanation given to us, thecompany has not defaulted in repayment of any dues to any financial institution or bankduring the year.

xii The company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

xiii In our opinion, the company is not a chit fund or a nidhi mutual benefitfund/society. Therefore, the provision of clause 4(xiii) of the Companies (Auditor'sReport) Order, 2003 are not applicable to the Company.

xiv In our opinion, the company is not dealing in or trading in shares, securities,debentures and other investments, Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor's Report) Order, 2003 are not applicable to the company.

xv According to the information and explanation given to us, the company has not givenany guarantees for loans taken by others from banks or financial institutions during theyear.

xvi The Company has not taken any term loan during the year.

xvii According to the information and explanations given to us and on an overallexamination of the balance sheet of the company, we report that no funds raised onshort-term basis have been used for long-term investment.

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

xix The Company has not issued any secured debentures during the year or in earlieryear.

xx The Company has not raised any money by way of public issues during the year.

xxi During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India, we haveneither come across any instance of fraud on or by the company, noticed and reportedduring the year, nor we have been informed of such case by the management.