Gravita India Ltd

To

The Share Holders

GRAVITA INDIA LIMITED

JAIPUR

1. We have audited the attached Balance Sheet of GRAVITA INDIA LIMITED as at31st March 2011, Profit and Loss Account and the Cash Flow Statement for the year ended onthat date annexed thereto. 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 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 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 (hereinafter referred to as‘the Order’) issued by the Central Government of India in terms of sub-section(4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement onthe matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportas follows :->

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 & 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 Companies Act, 1956.

e. On the basis of the written representation received from the directors, and taken onrecord by the Board of Directors, as on March 31, 2011, we report that none of thedirectors is disqualified as on March 31, 2011 from being appointed as a director in termsof clause (g) of sub-section (1) of section 274 of the Companies Act, 1956

f. In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read with notes, give the information required by theCompanies Act, 1956, in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:

i) in the case of Balance Sheet, of the state of affairs of the Company as at March 31,2011;

ii) in the case of Profit & Loss Account, of the profit of the Company for the yearended on that date and

iii) in the case of Cash Flow Statement, of the cash flows for the year ended on thatdate.

For Rajvanshi & Associates

Chartered Accountants

Vikas Rajvanshi

Partner

Membership No. : 073670

Firm Regn. No. : 005069C

Place : Jaipur

Date : 21st May 2011

(i) In respect of fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets on the basis of availableinformation.

(b) As explained to us, fixed assets have been physically verified by the management ina phased periodical manner which in our opinion is reasonable having regard to the size ofthe Company and the nature of its assets. No material discrepancies were noticed on suchverification, as per the explanations provided to us.

(c) In our opinion and according to the information and explanation given to us, thereis no substantial disposal of fixed assets during the year.

(ii) In respect of its inventories:

(a) As explained to us, the inventories have been physically verified by the managementduring the year. In our opinion, the frequency of verification is reasonable having regardto the size of the company and the nature of its business.

(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 nature of its business.

(c) In our opinion and according to the information and explanations given to us, thecompany has maintained proper records of its inventories. No discrepancies noticed onverification between the physical stocks and the book records.

(iii) In respect of loans secured or unsecured, taken or granted by the company to/fromcompanies, firms or other parties covered in the register maintained u/s 301 of theCompanies Act, 1956:

(a) As per information and explanations provided to us, the company has given loan tothree of its subsidiaries namely Floret Tradelink Ltd. of Rs. 48,50,000, GravitaTechnomech LLP of Rs. 2,96,48,000 and Gravita Exim Ltd. of Rs. 5,66,50,000. Maximum amountoutstanding at any time during the year being Rs. 53,02,820, Rs. 2,96,48,000 and Rs.2,62,55,246 respectively and balance at the year end being Rs. 5,26,164, Rs. 2,96,48,000and Rs. 1,04,65,646 respectively.

(b) In our opinion, the rate of interest, where applicable and other terms &conditions on which loans have been given to the parties listed in the register maintainedu/s 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of thecompany.

(c) In our opinion and according to the information and explanations given to us thereceipt of the principal amount and interest as per terms of the agreement are regular.

(d) There is no overdue amount in excess of Rs. 1 Lacs in respect of loans granted tocompanies, firms or other parties listed in the register maintained under section 301 ofCompanies Act, 1956.

(e) According to the information and explanations given to us, the Company has takenunsecured loan of Rs. 66,50,000 from two directors during the year and also repayment wasmade of the same amount which is covered in the register maintained under section 301 ofthe Companies Act, 1956.

(f) In our opinion, the rate of interest, where applicable and other terms &conditions on which loans have been taken from the parties listed in the registermaintained u/s 301 of the Companies Act, 1956 are not prima facie prejudicial to theinterest of the company.

(g) In our opinion and according to the information and explanations given to us thepayment of the principal amount and interest as per terms of the agreement are regular.

(iv) In our opinion, and according to the information and explanations given to us,there is an adequate internal control system commensurate with the size of the Company andnature of its business for the purchase of inventory and fixed assets and for the sale ofgoods and services. During the course of our audit, we have not observed any continuingfailure to correct major weaknesses in such internal control system.

(v) In respect of register maintained under Section 301 of the Companies Act, 1956:

(a) Based on the information and explanations given to us, the transactions pertainingto contracts and arrangements that need to be entered into a register in pursuance ofsection 301 of the Companies Act, 1956 have been so entered.

(b) According to information and explanation given to us, there are transactions ofpurchases and sales entered in the register maintained under section 301 of the CompaniesAct, 1956 and prices of such are reasonable having regard to prevailing market prices atthe relevant time as explained to us.

(vi) In our opinion and according to the information and explanations given to us, theCompany has not accepted deposit from Public and companies, therefore burden of Complianceof the provision of Section 58A and 58AA clause 4(vi) of the Companies Act 1956 do notarise.

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

(viii) As informed to us, Company is maintaining the cost records as prescribed underSection 209(1) (d) of the Companies Act, 1956 by the Central Government for the productsof the Company. We have not, however, carried out the detailed examination of the same.

(ix) According to the information and explanations given to us and on the basis of ourexamination of the books of account, the Company has been regular in depositing undisputedstatutory dues including Income Tax, TDS, Sales-tax, VAT, Custom Duty, Excise Duty,Educational Cess and any other dues during the year with the appropriate authoritiesexcept in three cases.

(x) The Company does not have any accumulated losses at the end of the financial yearand has not incurred cash losses during the financial year covered by our audit and alsoin the immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanationsgiven to us, we are of the opinion that the Company has not defaulted in repayment of duesto financial institutions and the banks during the year.

(xii) In our opinion and according to the explanations given to us and based on theinformation available, no loans and advances have been granted by the Company on the basisof security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society.Therefore, the provisions of the clause 4(xiii) of the Order, are not applicable to theCompany.

(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 theOrder are not applicable to the Company.

(xv) The Company has given guarantees for loans taken by others from banks andfinancial institutions. According to the information and explanations given to us, we areof the opinion the terms and conditions thereof are not prima facie prejudicial to theinterest of the Company.

(xvi) According to the information and explanation given to us, and on an overallexamination of the balance sheet of the Company, the company has raised six term loansduring the year and has applied for the purpose for which they have been raised.

(xvii) According to the information and explanation given to us, and on an overallexamination of the balance sheet of the Company, we are of the opinion that there are nofunds raised on short-term basis that, prima facie, have been used for the long terminvestment nor the long term loan have been used to finance short term assets except forpermanent working capital.

(xviii) During the year the company has not allotted equity shares on preferentialbasis to the parties covered in the register maintained u/s 301 of the Companies Act,1956.

(xix) According to the information and explanation given to us, during the periodcovered by our audit report, the Company has not issued any debentures. Accordingly, nosecurity/charge has been created in respect of debentures issued.

(xx) The Company has issued 36,00,000/- equity shares of Face value of Rs. 10/- each ata premium of Rs. 115/- per share during the year. The end use of proceeds of the fundraised by public issue has been disclosed by the management in the notes to the accountswhich is duly verified by us.

(xxi) To the best of our knowledge and belief and according to the information andexplanations given to us, no fraud on or by the Company was noticed or reported during theyear.

For Rajvanshi & Associates

Chartered Accountants

Vikas Rajvanshi

Partner

Membership No. : 073670

Firm Regn. No. : 005069C

Place : Jaipur

Date : 21st May 2011