Tanfac Industries Ltd

We have audited the attached Balance Sheet of TANFAC INDUSTRIES LIMITED as at31st March, 2011 and the Profit and Loss Account and Cash Flow Statement for the yearended on that date annexed thereto. These financial statements are the responsibility ofthe Company'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 the 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 [as amended] issued by theCentral Government 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 paragraph 4 and 5 ofthe said order.

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

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

2. In our opinion, the Company has kept proper books of accounts as required by law sofar as appears from our examination of those books.

3. The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by thereport are in agreement with the books of account.

4. In our opinion, the Balance Sheet, Profit & 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.

5. On the basis of the 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 are disqualified as on 31st March, 2011 from being appointed as a Director interms of Clause [g] of subsection (1) of Section 274 of The Companies Act, 1956.

6. In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts, read together with the "NOTES" thereon, give theinformation required by The Companies Act, 1956 in the manner so required and give a trueand fair view in conformity with the Accounting principles generally accepted in India :

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

ii) In the case of the Profit and Loss Account, of the Profit of the Company for theyear ended on that date, and

iii) In the case of Cash Flow Statement of the Cash Flows of the Company for the yearended on that date.

For BHASKARAN & KRISHNAN

Chartered Accountants

Firm Regn. No. 00426S

(B.GOPALAKRISHNAN)

Partner

Membership No. 18702

For SINGHI & CO.,

Chartered Accountants

Firm Regn. No. 302049E

(SUDESH CHORARIA)

Partner

Membership No. 204936

Chennai,

Dated :21s1 May, 2011.

ANNEXURE TO AUDITORS' REPORT

[Referred to in our Report of even date on the Accounts of TANFAC INDUSTRIES LIMITED asat and for the year ended 31st March, 2011]

i) a) The Company has maintained proper records to show full particulars includingquantitative details and situation of its Fixed Assets.

b) The Fixed Assets of the Company have been physically verified by the management,wherever possible, at the close of the year as confirmed by the management. No materialdiscrepancy has come to notice on such physical verification.

c) The Company has not disposed off any substantial part of fixed assets during theyear.

ii) a) The management has conducted physical verification of inventories at all itslocations at reasonable intervals during the year;

b) The procedures of physical verification of stock followed by the Management are, inour opinion, reasonable and adequate in relation to the size of the Company and nature ofits business.

c) The Company is maintaining proper records of inventory. As far as we can ascertainand according to the information and the explanations given to us, the discrepanciesnoticed between the physical stocks and book stocks were not material and the same havebeen properly dealt with in the books of account.

iii) a) As per the information and explanations provided to us, the Company has notgranted any secured or unsecured loans to Companies, firms or other parties listed in theregister maintained under Section 301 of The Companies Act, 1956.

b) As per the information and explanations provided to us, the Company has not takenany secured or unsecured loans from companies, firms or other parties listed in theRegister maintained under Section 301 of The Companies Act, 1956.

iv) On the basis of checks carried out during the course of audit and as perexplanations given to us, in our opinion, there are adequate internal control procedurescommensurate with the size of the Company and the nature of its business for the purchaseof Inventory and Fixed Assets and for the sale of goods and services. During the course ofour audit, no major weakness has been noticed in the internal controls in these respects.

v) a) As per the information and explanations given to us, no transactions have beenundertaken during the year in pursuance of contracts or arrangements that need to beentered into the register maintained under Section 301 of The Companies Act, 1956.

b) As per the information and explanations given to us, there are no transactions ofpurchase and sale of goods, materials and services made in pursuance of contracts orarrangements entered in the Register maintained under Section 301 of The Companies Act,1956.

vi) The Company has not accepted any deposits from the public during the year, to whichthe provisions of Section 58-A, 58-AA or any other relevant provisions of The CompaniesAct, 1956 and the rules framed there under apply;

vii) In our opinion, the company has an Internal Audit System, which is commensuratewith the size and nature of its business;

viii) The company has maintained proper Cost records as prescribed by the CentralGovernment under Section 209 (1)(d) of the Companies Act 1956 for the manufacture ofSulphuric Acid, but no detailed examination of such records have been carried out by us.

ix) a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund, Investor Education and Protection Fund, Employees' StateInsurance, Income Tax, Customs Duty, Excise Duty, Cess and other material statutory dueswith the appropriate authorities;

b) According to the information and explanations given to us and the books and recordsexamined by us, there was no undisputed amount outstanding as on 31st March, 2011 inrespect of Provident Fund, Investor Education and Protection Fund, Employees' StateInsurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Customs Duty,Excise Duty, Cess and other statutory dues for a period of more than six months from thedate they became payable;

c) According to the records of the Company and as per the information and explanationsprovided to us, the dues outstanding [net of advances] in respect of Sales Tax, ValueAdded Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess etc.,onaccount of any dispute are given below :

x) The Company has accumulated losses of Rs. 512.57 Lacs and has not incurred cash lossin the current financial year but has incurred cash loss of Rs. 621.98 lacs in theimmediately preceding financial year.

xi) Based on our audit procedures, and as per the information and explanations given tous, by the management, the Company has not defaulted in repayment of dues to financialinstitutions and banks;

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

xiii) The provisions of any special statute applicable to chit fund, nidhi or mutualbenefit fund/societies are not applicable to the Company.

xiv) In our opinion, the Company is not dealing or trading in shares, securities,debentures and other investments and hence, the requirements of Para 4 (xiv) of the aboveorder are not applicable to the Company.

xv) According to the information and explanations given to us, the Company has notgiven any guarantee for loans taken by others from bank or financial institutions;

xvi) The term loans raised has been applied for the purpose for which it was obtained.

xvii) On the basis of our examination of the cash flow statement, it appears that thefunds raised on short term basis have been to the tune used for long term purposes of Rs.261.98 lacs.

xviii) During the year, the Company has not made any preferential allotment of share.

xix) The Company does not have any outstanding debentures during the year.

xx) The Company has not raised any money by way of public issue during the year.

xxi) Based on the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations given tous by the management, we report that no fraud on or by the company has been noticed orreported during the course of our audit.

For BHASKARAN & KRISHNAN

Chartered Accountants

Firm Regn. No. 00426S

(B.GOPALAKRISHNAN)

Partner

Membership No. 18702

For SINGHI & CO.,

Chartered Accountants

Firm Regn. No. 302049E

(SUDESH CHORARIA)

Partner

Membership No. 204936

Chennai,

Dated : 21st May, 2011.