Tirupati Foam Ltd

To,

The Members of

TIRUPATI FOAM LIMITED.

We have audited the attached Balance Sheet of TIRUPATI FOAM LIMITED as at 31stMarch, 2011 and also the Profit and Loss Account and the Cash Flow Statement of theCompany for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted inIndia. These 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.

2. As required by the Companies (Auditors' Report) Order, 2003 as amended by TheCompanies (Auditor’s Report) Amendment Order, 2004 issued by the Central Governmentof India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

3. Further to our comments in the annexure referred to in paragraph 2 above, we reportthat:

a. We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose 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 the books;

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

d. In our opinion, the Balance Sheet, Profit & Loss Account and the Cash FlowStatement dealt with by this report complies with the accounting standards referred to inSub – section 3 [c] of section 211 of the Companies Act, 1956 except AS-15(Revised-2005).

e. On the basis of written representations received from the Directors, and taken onrecord by Board of Directors, we report that none of the Directors are disqualified as on31st March 2011 from being appointed as 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 ourinformation and according to the explanations given to us, the said accounts, readtogether with the notes thereon and subject to Note No.5 (regarding Non Provision offuture liability of Gratuity) of Schedule-P give the information required by the CompaniesAct, 1956 in manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

(i). In case of Balance Sheet, of the state of affairs of the company as at 31st March2011.

(ii). In case of the Profit & Loss Account, of the profit for the year ended onthat date.

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

ANNEXURE TO THE AUDITORS' REPORT

(Annexure referred to in paragraph 2 of our Auditors Report of even date on financialstatements of Tirupati Foam Ltd for the year ended on 31/03/2011)

On the basis of such checks as we considered appropriate and in terms of theinformation and explanations given to us, we state that:-

1. a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) The fixed assets of the company have been physically verified by the Management atreasonable intervals and no material discrepancies have been noticed on such verification.

c) During the year, company has not disposed off any substantial/major part of FixedAssets.

2. a) As explained to us, the inventory has been physically verified during the year bythe management. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the company and the nature of its business.

c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of inventory, the company is maintainingproper records of inventory. The discrepancies noticed on physical verification ofinventory as compared to book records were not material and have been properly dealt within the books of account.

3. a) According to the information and explanations given to us, the company has notgranted any loans secured or unsecured to companies, firms or other parties covered in theregister maintained under Section 301 of the Act.

b) As the company has not granted any loans to parties covered in the registermaintained under section 301 of the Companies Act , the clause of rates of interest andother terms & condition is not applicable to the company.

c) As the Company has not granted any loans to parties covered in the registermaintained under section 301 of the Companies Act, the clause of repayment of principalamount is not applicable to the company.

d) According to the information and explanations given to us, the company had takenunsecured loans from 47 (forty seven) parties listed in the register under section 301 ofthe Companies Act, 1956. The maximum amount involved during the year was Rs.682.44 Lacsand year-end balance was Rs.505.81 Lacs.

e) According to the information and explanations given to us, the rate of interest andother terms and condition of loans taken by the company, secured or unsecured, are notprejudicial to the interest of the company. f) According to the information andexplanation given to us, repayment of the principal amount is as stipulated and paymentsof interest have been regular.

4. In our opinion and according to the information and explanation given to us, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business with regard to the purchase of inventory and fixed assets, and withregard to the sale of goods. During the course our audit, no major weakness has beennoticed in the internal controls.

5. To the best of our knowledge and belief and as explained to us the Company has notentered into any transactions required to be entered in the register maintained underSection 301 of the Companies Act.

6. In our opinion and according to the information and explanation given to us, thecompany has not accepted deposits from the public within the meaning of section 58A and58AA of the Companies Act, 1956 and the rules framed there under.

7. In our opinion, the company has internal audit system commensurate with the size andnature of its business.

8. We have been informed that the Central Government has not prescribed maintenance ofcost records under Section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records of the company and information and explanations given tous the company is generally regular in depositing undisputed statutory dues includingProvident Fund, Employees State Insurance, Income Tax, Excise Duty, Custom Duty ServiceTax, Cess, and any other statutory dues as applicable to it, except Investor Education andProtection Fund with the appropriate authorities during the year. As explained to us,undisputed statutory dues in respect of Investor Education and Protection Fund payablewere in arrears as at 31^st March, 2011 for a period of more than six monthsfrom the date they become payable are as follows :

b) According to the records of the company and information and explanation given to usthere is no disputed statutory dues payable by the company.

10. The company has no accumulated losses at the end of the financial year and it hasnot incurred cash losses during current and immediately preceding financial year.

11. According to the information and explanations given to us, the Company has notdefaulted in repayment of dues to banks. The Company had no transaction with financialinstitution and held no debentures outstanding during the year.

12. According to the information and explanation given to us the company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

13. The Company is not a chit fund or a nidhi / mutual benefit fund or society.Therefore clause 4 (xiii) is not applicable to the company.

14. The Company is not dealing or trading in shares or securities, debentures and otherinvestments. Therefore clause 4(xiv) is not applicable to the Company.

15. According to the information & explanations given to us the Company has notgiven guarantee for loans taken by others from banks or financial institutions.

16. To the best of our knowledge and belief and according to the information andexplanations given to us, in our opinion, the term loans raised during the year were primafacie been utilized for the purposes for which they were obtained.

17. According to the information and explanation given to us and on an overallexamination of the Balance Sheet of the company we report that no funds raised onshort-term basis have been used for long-term investment by the company.

18. The Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company did not have any outstanding debentures during the year.

20. The company has not raised money by any public issues during the year and hence thequestion of disclosure and verification of end use of such money does not arise.

21. During the course of our examination of the books of account and records of thecompany, carried out in accordance with the generally accepted auditing practices inIndia, and according to the information and explanation given to us, we have neither comeacross any instance of material fraud on or by the Company, noticed or reported during theyear, nor have we been informed of such case by the management.