RSWM Ltd

To the Shareholders of

RSWM Limited

We have audited the attached Balance Sheet of RSWM Limited as at 31st March,2011, and also the Profit and Loss Account and the Cash Flow Statement for the year endedon that 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.

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.

As required by the Companies (Auditor's Report) Order, 2003 issued by the CentralGovernment of India in terms of subsection (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 ofthe said Order.

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

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, 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;

v) On the basis of written representations received from the Directors, as on 31stMarch, 2011, and taken on record by the Board of Directors, we report that none of theDirectors is disqualified as on 31st March, 2011 from being appointed as a director interms of clause (g) of sub-Section (1) of Section 274 of the Companies Act, 1956;

In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with notes thereon give the informationrequired by the Companies Act, 1956, in the manner so required and give a true and fairview in conformity with the Accounting Principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2011.

b) In the case of the Profit and Loss Account, of the profit for the year ended on thatdate; and

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

Annexure to the Auditors Report

Annexure referred to in paragraph 3 of our report of even date to the Shareholders ofRSWM Limited on accounts for the year ended 31st March, 2011.

i) a) The Fixed Assets registers showing full particulars including quantitativedetails and situation of the assets are being maintained at respective units, up-dation ofwhich are under completion.

b) The Fixed Assets are physically verified by the Management in a phased programmedesigned to cover all the Assets over a period of three years, which in our opinion, isreasonable having regards to the size of the Company and the nature of its assets.Pursuant to the said programme, a portion of Fixed Assets has been physically verified bythe Management during the year and no serious discrepancies were noticed on suchverification between the book records and physical inventory.

c) The Company had not sold any substantial part of Plant & Machinery during theyear.

ii) a) The Inventories have been physically verified during the year by the management.In our opinion the frequency of verification is reasonable.

b) In our opinion and according to information and explanation given to us, theprocedure of physical verification of inventory followed by the Management is reasonableand adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory and the discrepancies noticedon physical verification have been dealt adequately in the Books of Accounts.

iii) a) The Company has granted unsecured loan to 2 parties covered in the registermaintained under Section 301 of the Companies Act, 1956. The amount outstanding at the endof the year is Rs.1200 lac and the maximum amount outstanding during the year wasRs.2044.37 lac.

b) Loan to wholly owned overseas subsidiary of Rs.640.17 lacs was interest free andbeing irrecoverable has been written off as normal trading loss (Refer Note No:6 of"Notes on Accounts" Schedule 16 B). In respect of the other Loans granted theseare repayable on demand, the rate of interest and other terms and conditions areprima-facie not prejudicial to the interest of the Company.

c) The payment of interest on such loans is regular, wherever applicable. The paymentsof principal amount are also regular, wherever demanded during the year.

d) There is no overdue amount outstanding as at the Balance Sheet date.

e) The Company had not taken any loan from any party covered in the register maintainedunder Section 301 of the Companies Act, 1956.

iv) On the basis of selective checks carried out during the course of audit andexplanations given to us, adequate internal control systems commensurate with the size ofthe Company and nature of its business, for purchase of inventory and fixed assets and forsale of goods and services have been devised by the management and is being generallyfollowed. Further on the basis of our examination of the books and records of the Company,and according to information and explanations given to us, we have neither come across norhave been informed of any continuing failure to correct major weakness in the aforesaidinternal control system.

v) a) On the basis of our examination and as per information given to us all thecontracts or arrangements are needed to be entered into the register maintained inpursuance of Section 301 of the Companies Act, have been recorded in the register.

b) On the basis of our examination and as per information and explanation given by themanagement, the price of the goods and materials purchased and / of sale of goods,materials and services made pursuant to contracts entered in register maintained underSection 301 of the Companies Act, 1956, in respect of each party is reasonable havingregard to the prevailing market price at the relevant time.

vi) We are explained that during the year the Company has not accepted deposits frompublic to which the provisions of Section 58A of the Companies Act, 1956 and Companies(Acceptance of Deposits) Rules, 1975 apply.

vii) In our opinion, the Company has an Internal Audit System commensurate with itssize and nature of its business.

viii) We have broadly reviewed the records including the books of accounts made andmaintained by the Company pursuant to the Rules made by the Central Government formaintenance of Cost records under Section 209 (1) (d) of the Companies Act, 1956, and areof the opinion that prima-facie the prescribed accounts and records have been made andmaintained.

ix) a) According to the information and explanation given to us and the recordsexamined by us, the Company is regular in depositing undisputed statutory dues includingProvident Fund, Investor Education and Protection Fund, Employee's State Insurance,Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and anyother statutory dues with the appropriate authorities. Further, there were no undisputedarrears of statutory dues outstanding as at 31st March, 2011, for a period of more thansix months from the date they became payable.

b) According to the records of the Company and information given to us, the particularsof statutory dues of the Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty andCess which have not been deposited on account of disputes and the forum where the disputeis pending are given hereunder:

x) There are no accumulated losses in the Company as on 31st March, 2011. Further, theCompany has not incurred cash losses during the financial year covered by our audit.

xi) Based on our examination of books and records of the Company and on the basis ofinformation and explanation given by the Management the Company has been regular inrepayment of its dues to the financial institutions or banks.

xii) On the basis of examination of records of the Company and information andexplanation given to us, the Company has not granted any loans and advances on the basisof security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the Company is not a chitfund or nidhi / mutual benefit fund /society. Therefore, the provisions of clauses 4 (xiii) of the Companies (Auditor's Report)Order, 2003 are not applicable to the Company.

xiv) On the basis of examination of books and records of the Company and informationand explanation given by the Management, the Company is not dealing or trading in shares,securities, debentures and other investment.

xv) As per information and explanation given by the Management the terms &conditions on which the Company has given Guarantee for loans taken by others from banksor financial institutions are prima-facie not prejudicial to the interest of the Company.

xvi) As per information and explanation given by the Management, the term loans havebeen applied for the purposes they were raised.

xvii) According to the information and explanation given to us and on an overallexamination of the Cash Flow Statement of the Company for the year, we report that nofunds raised on short-term basis have been used for long term investment.

xviii) The Company has not made any preferential allotment of shares to parties orCompanies covered in the register maintained under section 301 of the Act.

xix) The Company has not issued any debentures whether secured or unsecured during theyear.

xx) The Company has not raised any money through public issue during the year coveredby our report.

xxi) As per the information and explanation given to us, no fraud by the Company hasbeen noticed or reported during the year covered by our Report.