PG Electroplast Ltd

To

The Members of

PG Electroplast Limited

1. We have audited the attached Balance Sheet of PG Electroplast Limited as at 31st March 2012, the Statement of Profit & Loss and also the Cash Flow Statement for the year ended on that date both annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility 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 in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended, 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 on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge 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 the Company so far as appears from our examination of those books.

c) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Statement Profits Loss Account and Cash Flow Statement dealt 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 written representations received from the directory as on 31st March 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of 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 explanations given to us, the said accounts, read together with the Significant Accounting Policies and 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 accounting principles generally accepted in India:

i In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2012;

ii In the case of the Statement of Profit & Loss, of the Profit/ Loss for the year ended on that date; and

iii In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For and on behalf of

Chitresh Gupta & Associates

Chartered Accountants

Firm Registration No.: 017079N

Sd/-

CA. Chitresh Gupta

Partner

Membership No.: 098247

Date : 04th July 2012

To in paragraph 3 of our Report of even date on the Accounts of PG Electroplast Limited, for the year ended 31st March 2012

i) In respect of its fixed assets:

a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) According to the information and explanations given to us, all fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) According to the information and explanations given to us, the Company has not disposed off a substantial part of its fixed assets during the year and hence, going concern status of the company is not affected.

ii) In respect of its inventories:

a) As explained to us, the Inventories have been physically verified by the management at reasonable intervals during the year or at the year-end at all locations of the company. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the Information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

a) The Company has given loans to its wholly owned subsidiaries. In respect of the said loans, the maximum amount outstanding at any time during the year was Rs 60,00,000/- and the year-end balance is Rs NIL.

b) In our opinion and according to the Information and explanations given to us, the rate of interest and other terms and conditions of the loans given by the Company, are not prima fade prejudicial to the Interest of the Company.

c) The principal amounts are repayable on demand and there is no repayment schedule. Loan is given Interest free.

d) In respect of the said loans and interest thereon, there are no overdue amounts.

e) The Company has taken unsecured loans from four directors, firms & other parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs 8,78,34,000 /- and the year-end balance was Rs. 8,78,34,000/-.

f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loans taken by the company are not, prima facie, prejudicial to the interest of the Company.

g) The loan of Rs 5,93,00,000 /- has been given by directors as per the commitments given to lending bank and balance loan of Rs 2,85,34,000 /- is repayable on demand and there is no repayment schedule. Loan is taken interest free.

h) In respect of the said loans taken and interest thereon, there are no overdue amounts.

iv) According to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have neither come across nor have been Informed of any continuing failure to correct major weaknesses in the internal control systems.

v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts / arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs 5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per Information available with the Company.

vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause (vi) of paragraph 4 of the Order are not applicable to the company.

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

ix) In respect of Statutory dues:

(a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth- tax, service tax, custom duty, excise duty cess and other material statutory dues applicable to it.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty & cess were in arrears, as at 31st March, 2012 for a period of more than six months from the date they became payable.

xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to a financial institution or bank or debenture holders during the year.

xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions.

xvi) To the best of our knowledge and belief and according to the information and explanations given to us, the term loans availed by the Company were applied for the purposes for which the loans were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company. In our opinion, there are no funds raised on short-term basis which have been used for long term investment.

xviii) According to the Information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xx) According to the information and explanations given to us, the Company has raised a sum of Rs 1,20,64,50,000/- by way of public issue during the year under review. Out of the said amount Rs 89,62,72,599 /- has been utilized and the balance of Rs 31,01,77,401 /- is unutilized [refer note no. 28(10) of the notes on accounts].