National Standard (India) Ltd

M/s. NATIONAL STANDARD (INDIA) LIMITED

We have audited the attached Balance Sheet of M/S. NATIONAL STANDARD (INDIA) LIMITEDas at 31st March, 2012, the Statement of Profit and Loss and also the 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.

We conducted our audit in accordance with the 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.

We report that:

1. As required by the Companies (Auditor's Report) Order, 2003 as amended by theCompanies (Auditor's Report) (Amendment) Order, 2004 ("the Order") issued by theCentral Government of India in terms of Section 227(4A) of the Companies Act, 1956("the Act"), we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

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

3. 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.

4. In our opinion, the Balance Sheet, the Statement of Profit and Loss and the CashFlow Statement dealt with by this report comply with the accounting standards referred toin Section 211(3C) of the Act.

5. On the basis of written representations received from the Directors of the Companyas on 31st March, 2012 and taken on record by the Board of Directors, we report that noneof the directors is disqualified as on 31st March, 2012, from being appointed as aDirector in terms of clause (g) of sub section (1) of Section 274 of the Act.

6. In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements read together with Significant AccountingPolicies and notes thereon, give the information required by the Act, in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2012;

b) in the case of the Statement of Profit and Loss, of the profit of the Company forthe year ended on that date; and

c) in the case of the Cash Row Statement of the cash flows of the Company for the yearended on that date.

(Referred to in Paragraph (1) of our report of even date)

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

b) As informed to us, all the fixed assets have been physically verified by themanagement. No material discrepancies were noticed on such physical verification.

c) No fixed assets have been disposed off by the Company.

2. a) The inventory has been physically verified by the management. In our opinion, thefrequency of verification is reasonable.

b) The procedures for physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and nature of its business.

c) The Company is maintaining proper records of inventory. Discrepancies noticed onverification have been properly dealt with in the books of account.

3. a) As the Company has not granted, secured or unsecured, loans to any party coveredin the register maintained under Section 301 of the Act, the provision of clause (iii) ofparagraph 4 of the Order is not applicable to the Company.

b) According to information and explanations given to us, the company has takenunsecured loan from one party covered in the register maintained under Section 301 of theAct, the maximum amount involved was Rs. 20,393,554. As the said party is not covered inthe said register on 31st March, 2012, balance outstanding as on that date is notapplicable.

c) In our opinion, the terms and conditions on which such loans have been taken are notprima-facie, prejudicial to the interest of the Company.

d) The principal amount and interest in respect of loans taken by the Company arepayable on demand. Therefore, there is no question of being regular in payment ofprincipal and interest.

4. In our opinion and according to the information and explanations given to us, theinternal control system is commensurate with the size of the Company and the nature of itsbusiness in respect of purchase of inventory and fixed assets and for the sale of services(developed units of buildings/ flats). During the course of our audit, we have notobserved any continuing failure to correct major weaknesses in the internal controlsystem.

5. a) According to the information and explanations given to us, the Company hasentered the required particulars of contracts or arrangement in the register maintained asreferred to in Section 301 of the Act.

b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements aggregating during theyear to Rs. 500,000 or more in respect of each party, have been made at prices which arereasonable having regard to prevailing market prices at the relevant time.

6. As the Company has not accepted any deposits from the public within the meaning ofSection 58A, 58AA or any other relevant provisions of the Act and Rules framed thereunder,the provision of clause (vi) of paragraph 4 of the Order is not applicable to the Company.

7. The Company has an internal audit system commensurate with its size and nature ofits business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to theOrder of the Central Government under clause (d) of sub- section (1) of Section 209 of theAct and are of the opinion, that prima facie, the prescribed records have been made andmaintained. We are, however, not required to make a detailed examination of the recordswith a view to determine whether they are accurate or complete.

9. a) The Company is generally regular in depositing the undisputed statutory duesincluding Provident Fund, Employees' State Insurance, Income Tax, Service Tax, Sales Tax,Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicableto the Company with appropriate authorities. However, refer clause 2 and 3 of note 21 ofthe financial statements regarding Service Tax and Sales Tax (MVAT) dues.

According to the information and explanations given to us, there are no undisputedstatutory dues outstanding for a period of more than six months as at 31st March, 2012from the date they became payable.

b) According to the records of the Company, there are no dues in respect of Sales Tax,Income Tax, Service Tax, Customs Duty, Wealth Tax, Excise Duty and Cess, which have notbeen deposited on account of any dispute, except for the followings:

Also, refer clause 2 and 3 of note 21 of the financial statements regarding Service Taxand Sales Tax (MVAT) dues.

10. The Company's accumulated losses as at 31st March, 2012 exceeds fifty percent ofits net worth and has incurred cash losses during the financial year ended on that dateand in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to Financial Institution. The Company hasnot issued any debentures.

12. As the Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities, the provision of clause (xii) ofparagraph 4 of the Order is not applicable to the Company.

13. As the Company is not a chit fund or a nidhi / mutual benefit fund/society, theprovision of clause (xiii) of paragraph 4 of the Order is not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments, the provision of clause (xiv) of paragraph 4 of theOrder is not applicable to the Company.

15. As the Company has not given any guarantee or security for loans taken by othersfrom banks or financial institutions, the provision of clause (xv) of paragraph 4 of theOrder is not applicable to the Company.

16. In our opinion and according to the information and explanations and according tothe records examined by us, the term loans have been applied for the purpose for whichthey were obtained, other than temporary deployment pending application.

17. According to the records examined by us as well as information and explanationsgiven to us, we report that no funds, raised on short term basis, are outstanding as atthe year end.

18. As the Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under Section 301 of the Act, the provisionof clause (xviii) of paragraph 4 of the Order is not applicable to the Company.

19. As the Company has not issued any secured debentures, the provision of clause (xix)of paragraph 4 of the Order is not applicable to the Company.

20. As the Company has not raised any money through public issue, the provision ofclause (xx) of paragraph 4 of the Order is not applicable to the Company.

21. Based upon the audit procedures performed and information and explanations given bythe management, we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit.