Prism Finance Ltd

To,

The Members of

M/S PRISM FINANCE LIMITED

1 We have audited the attached Balance Sheet of M/S PRISM FINANCE LIMITED as at31st March 2010 and the Profit & Loss Account lor the year ended on that dale annexedthereto and the Cash Flow Statement for the year ended on that date These financialstatements are the responsibility of the Company's management Our responsibility is toexpress an opinion on these financial statement based on our audit

2 We have conducted our audit in accordance with auditing statandards generallyaccepted in India Those Standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are tree of materialmisstatement An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements An audit also includes assessing theaccounting principles used and significant estimates made by management as well asevaluating the overall presentation of the financial statement We believe that our auditprovides a reasonable basis for our opinion

3 As required by Companies (Auditors Report) order. 2003 issued by the CentralGovernment of India in terms of section 227 (4A) of the Companies Act 1956 and on thebasis of such checks as we considered appropriate and according to the information andexplanations given to us, we further report that

We report that

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

(ii) In our opinion proper books of account as required by law have been kept by theCompany so fat as appears from our examination of these books

(iii) The Balance Sheet and Profit S Loss Account dealt with by this report are inagreement with the books of account

(iv) In our opinion, these financial statements have been prepared in compliance withthe applicable accounting standards referred to in sub-section (3C) of Section 211 of theCompanies Act, 1956

(v) According to the information and explanations given to us and on the basis of thewritten representations received from the Directors, none of the Directors of the companyare prima-facie, as at 31st March 2010, disqualified from being appointed as directors ofthe Company 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 with the significant accounting policiesand other notes thereon give the information required by the Companies Act 1956 in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India

(a) in the case of Balance Sheet of the state of affairs of the Company as at 31stMarch 2010

(b) In the case of Profit & Loss Account of the Profit for the year ended on thatdate and

(c) In the case of Cash Flow Statement, of the Cash Flow for the year ended on thatdate

1 In respect at its fixed assets

(a) The Company has generally maintained proper records showing full particularsincluding quantitative detals and situation of fixed assets

(b) As information to us the fixed assets have been physically verified by themanagement during the year and according to information and explanations given to us nodiscrepancies were noticed on such verification

(c) In our opinion and according to the information and explanations given to us thecompany has not made any substantial disposal during the year

2 In respect of its inventories

(a] As explained to us the inventory has been physically verified during the year bythe management at reasonable interval In our opinion the frequency of verification isreasonable In respect of materials lying with third parties we relied upon theinformation/ data provided by the management

(b) The procedures of phyiscal 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 generally maintaining proper records of inventory As explained to usno discrepancies were noticed on such verifications between the physical stocks and thebook records

3 According to information and explanations given to us the company has not granted ortaken secured/unsecured loan to or from any parties covered in the register maintainedunder Section 301 of the Companies Act 1956 Consequently the provisions of paragraph4(iii) (g) of the order are not applicable

4 In our opinion and according to the information and explanations given to us thereare adequate internal control procedures commensurate with the size of the company and thenature of its business with regard to purchase of inventory fixed assets and with regardto the sale of goods and services During the course of audit we have not observed anycontinuing failure to correct major weaknesses in internal controls

5 (a) According to the information and explanations given to us we are of the opinionthat the transactions that need to be entered into the register maintained under Section301 of the Companies Act 1956 have been so entered (b) In our qpinion and according to theinformation and explanations given to us the transactions made in pursuance of contractsor arrangements entered in the register maintained under Section 301 of the Companies Act1956 have been made at prices which are reasonable having regard to the prevailing marketprice at the relevant time.

6 The Company has not accepted any deposits from the public during the year

7 The company did not have any formal internal audit system during the year underreview In the opinion of the management the existing internal control procedures areadequate and hence separate internal audit is not called for

8 We are informed that the Central Government has not prescribed maintenance of costrecords under clause (d) of sub section (1) of section 209 of the Companies Act 1956

9 According to the information and explanations given to us in respect of statutory andother dues:

(a) The company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund Income Tax Sales Tax Wealth Tax ServiceTax Custom Duty Excise Duty and other material statutory dues applicable to it We areinformed by the company that Employees State Insurance Act 1948 is applicable only at Kadiplant of the company and contributions in respect of which have beer regularly depositedduring the year with appropriate authorities

(b) According to the information and explanations given to us and based on recordsexamined by us no undisputed amounts payable in respect of Provident Fund, Employee StateInsurance Income Tax, Sales Tax Wealth Tax Custom Duty, Excise Duty and Service Tax wereoutstanding as at 31st March 2010 for a period of more than six months from the date theybecame payable

(c) According to the information and explanations given to us, there are no statutorydues which have not been deposited on account of any dispute

10 The companys accumulated losses are not more than 50% of its net worth as at 3103-2009 Further the company has incurred any cash losses during the financial year coveredby our audit however there was no cash losses in the immediately preceding financial year

11 Based on our audit procedures and on the basis of information and explanations givenby the management, we are of the opinion that the company has not defaulted in therepayment of dues to banks

12 According to information and explanations given to us the company has not grantedany loans and advances on the basis of security by way of pledge of shares debentures andother securities

13 The provisions of special statute applicable to chit fund are not applicable to thiscompany

14 In respect of dealing in shares and other investments the company has generallymaintained proper records of the transactions and contracts for purchase and sale thereofand timely entries for the same have been made therein The company has held all theinvestment in shares and other investments in its own name

15 The company has given guarantees for loans taken by others from banks According tothe information and explanations given to us we are o1 the opinion that the terms andconditions thereof are not prima facie prejudicial to the interest of the company

16 To the best of our knowledge and belief and according to the information andexplanations given to us, the term loans have been applied for the purposes for which theloans were obtained

17 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 on shortterm basis have been used for long term investments

18 During the year under review the company has not made any preferential allotment ofshares to any parties covered in the Register maintained under section 301 of theCompanies Act 1956

19 The company has not issued any debentures during the year

20 During the year under review, the company has not raised money by public issue

21 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