Sintex Industries Ltd

To the Members of

Sintex Industries Limited

1. We have audited the attached Balance Sheet of SINTEX INDUSTRIES LIMITED (theCompany) as at 31st March, 2010, the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date, both annexed thereto. Thesefinancial statements are the responsibility of the Company’s Management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and thedisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and the significant estimates made by the Management, as well asevaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. Without qualifying our opinion, we draw attention to Note 4 of Schedule 20 to thesefinancial statements, regarding the Scheme of Arrangement (the Scheme)approved by the Honourable High Court of Gujarat, as per which Scheme, in the year 2008-09the Company earmarked Rs 200 crore from Securities Premium Reserve to InternationalBusiness Development Reserve Account (the IBDR) and has adjusted against theearmarked balance of IBDR, Rs 141.46 crore upto 31st March, 2010 (including Rs 10.53crores during the year) being expenses of the nature as specified under the Scheme. Thesaid accounting treatment has been followed as prescribed under the Scheme. The relevantIndian Generally Accepted Accounting Principles, in absence of such Scheme, would notpermit the adjustment of expenses against the Securities Premium Reserve / IBDR. Had theCompany accounted for these expenses as per Generally Accepted Accounting Principles inIndia, instead of accounting for as per the Scheme, the balance of Securities PremiumReserve / IBDR would have been higher by Rs 141.46 crore as at 31st March, 2010 and Profitafter tax would have been lower by Rs 10.53 crore for the year ended on 31st March, 2010.

4. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued bythe Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclosein the Annexure a statement on the matters specified in paragraphs 4 and 5 of the saidOrder.

5. 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 it appears from our examination of those books;

c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 211(3C) of the Companies Act, 1956;

e) in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts give the information required by the Companies Act, 1956 inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

i) in the case of the Balance Sheet, of the state of the affairs of the Company as atMarch 31, 2010;

ii) in the case of the Profit and Loss Account, of the profit for the year ended onthat date; and

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

6. On the basis of the written representations received from the Directors as on 31stMarch, 2010 taken on record by the Board of Directors, none of the Directors isdisqualified as on 31st March, 2010 from being appointed as a director in terms of Section274(1)(g) of the Companies Act, 1956.

Annexure to the Auditors’ Report

(Referred to in paragraph 4 of our report of even date)

i. Having regard to the nature of the Company’s business/activities/result,clauses (x), (xiii) and (xiv) of CARO are not applicable.

ii. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of the fixed assets.

b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which, in our opinion, provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us, no material discrepancies were noticed on suchverification.

c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company and such disposal has, in our opinion,not affected the going concern status of the Company.

iii) In respect of its inventory:

a) As explained to us, the inventories were physically verified during the year by theManagement at reasonable intervals.

b) In our opinion and according to the information and explanation given to us, theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

iv) The Company has neither granted nor taken any loans, secured or unsecured, to/fromcompanies, firms or other parties listed in the Register maintained under Section 301 ofthe Companies Act, 1956.

v) In our opinion and according to the information and explanations given to us, havingregard to the explanations that some of the items purchased are of special nature andsuitable alternative sources are not readily available for obtaining comparablequotations, there is an adequate internal control system commensurate with the size of theCompany and the nature of its business with regard to purchases of inventory and fixedassets and the sale of goods and services. During the course of our audit, we have notobserved any major weakness in such internal control system.

vi) According to information and explanation given to us, there were no contracts orarrangement referred to in Section 301 of Companies Act, 1956 which were required to beentered in the register maintained under that section.

vii) According to the information and explanations given to us, the Company has notaccepted any deposit from the public during the year. In respect of unclaimed deposits,the Company has complied with the provisions of Sections 58A & 58AA or any otherrelevant provisions of the Companies Act, 1956.

viii) In our opinion, the internal audit functions carried out during the year by firmof Chartered Accountants appointed by the Management have been commensurate with the sizeof the Company and the nature of its business.

ix) We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under Section209(1) (d) of the Companies Act, 1956 in respect of textile division and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have, however, not made a detailed examination of the records with a viewto determining whether they are accurate or complete. To the best of our knowledge andaccording to the information and explanations given to us, the Central Government has notprescribed the maintenance of cost records for any other product of the Company.

x) According to the information and explanations given to us in respect of statutorydues:

a) The Company has generally been regular in depositing undisputed dues, includingProvident Fund, Investor Education and Protection Fund, Employees’ State Insurance,Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and othermaterial statutory dues applicable to it with the appropriate authorities.

b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax,Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31stMarch, 2010 for a period of more than six months from the date they became payable.

c) According to the information and explanations given to us, there are no dues ofIncome-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess whichhave not been deposited as on 31st March, 2010 on account of disputes.

xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in the repayment of dues to banks, financial institutions anddebenture holders.

xii) According to the information and explanations given to us, the Company has notgiven any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

xiii) In our opinion and according to the information and explanations given to us, theterms and conditions of the guarantees given by the Company for loans taken by others frombanks and financial institutions are not prima facie prejudicial to the interests of theCompany.

xiv) In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purposes for which they were obtained.

xv) In our opinion and according to the information and explanations given to us and onan overall examination of the Balance Sheet, we report that funds raised on short-termbasis have not been used during the year for long- term investment.

xvi) The Company has not made preferential allotment of shares to parties and companiescovered in the Register maintained under Section 301 of the Companies Act, 1956.

xvii) According to the information and explanation given to us, during the periodcovered by our audit report, the Company has not issued debentures. The Company hascreated security in respect of the debentures already issued.

xviii) The Management has disclosed the end use of money raised by FCCB issue and QIPissue and we have verified the same.

xix) To the best of our knowledge and according to the information and explanationsgiven to us, no fraud by the Company and no fraud on the Company has been noticed orreported during the year.