AUDITORS REPORT

To

The Members

MIDFIELD INDUSTRIES LTD.

Hyderabad

We have audited the attached Balance Sheet of M/s MIDFIELD INDUSTRIES LIMITED asat 31st March, 2009 and the Profit & Loss Account and the Cash FlowStatement 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.

We conducted our audit in accordance with the 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 basis for our opinion.

1. 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 the paragraphs 4 and 5of the said order.

2. Further to our comments in the Annexure referred in the paragraph 1 above, we reportthat:

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 & Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of accounts.

iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash FlowStatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of section 211 of the Companies Act, 1956; to the extent applicable.

v) On the basis of the written representations received from the directors, as on 31stMarch, 2009 and taken on record by the Board of Directors, we report that none of theDirector is disqualified as on 31st March, 2009 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 with the notes thereon give the information requiredby the Companies Act, 1956, in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India;

a) In so far as relates to Balance Sheet, of the state of affairs of the Company as on31st March, 2009.

b) In so far as relates to Profit and Loss account of the Profit of the Company for theyear ended on that date.

c) In so far as relates to Cash Flow Statement, of the cash flows of the company forthe year ended 31st March, 2009.

For SAMPATH & RAMESH
Chartered Accountants
Sd/-
PLACE : HYDERABAD (A. KRISHNA REDDY)
DATE : 18.08.2009 Partner M No. 204755

ANNEXURE TO THE AUDITORS' REPORT

Referred to as in Paragraph (1) of our report of even date

1. In Respect of Its Fixed Assets

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

b) As explained to us, the fixed assets have been physically verified by the managementduring the year in a phased periodical manner, which in our opinion is responsible, havingregard to the size of the company and the nature of its assets. No material discrepancieswere noticed on such physical verification.

c) During the year, the company has not disposed of substantial part of the Assets.According to the information and explanations given to us, we are of the opinion that notransactions are effected involving disposal of assets so as to affects going concernstatus company.

2. In respect of its Inventories :

a) As explained to us, inventories have been physically verified during the year by themanagement at regular intervals. In our opinion, the frequency of verification isreasonable.

b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.

c) The company had maintained proper records of inventories. In our opinion andaccording to the information and explanations given to us, the discrepancies noticed onverification between the physical stocks and the book records were not significant, havebeen properly dealt with in the books of accounts.

3. In respect of Loans secured or unsecured, granted or taken by the company to/ fromcompanies, firms or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956:

a) During the year the company has not taken loans from parties covered in the registermaintained under section 301 of the Companies act, 1956. the Company has not granted anyloans to the parties covered in the register maintained under section 301 of the companiesact, 1956.

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, for the purchase of inventory, fixed assets and for the sale ofgoods. During the course of our audit, based on our audit procedures applied, we have notobserved any continuing failure to correct major weakness in internal controls.

5. As explained to us, and based on our verification and examination of the books ofaccounts we are of the view that there are no transactions that need to be entered intothe register in pursuance of section 301 of the act. In view of this, in our view, nocomment under clause (v) (b) in considered necessary

6. In our opinion, and according to the information and explanations given to us, theCompany has not accepted any Deposits for which the previsions of section 58A or 58AA ofthe Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules 1975 apply.

7. In our opinion, the Company has independent internal audit system commensurate withthe size and nature of its business.

8. We were explained that the maintenance of cost records has not been prescribed bythe Central Government under Section 209 (1) (d) of the Companies Act, 1956 for theproducts manufactured of the Company.

9. In respect of statutory dues:

a) According to the records of the company and as per the information and explanationsgiven to us, the company is generally regular in depositing with appropriate authoritiesundisputed Statutory dues including, Provident fund, Employee's state insurance, Customduty, Income tax, Excise duty, Cess and other material statutory dues applicable to itbarring few instances.

b) According to the information and explanations given to us, no disputed amountspayable in respect of Income tax, Sales tax. Custom duty, Excise duty and Cess wereoutstanding, as at 31, March 2009 for the period more than six months from the date theybecame payable.

10. In our opinion, the company neither has accumulated losses at the end of the yearproceeding fifty percent of its net worth, nor incurred cash losses during the financialyear covered by our audit in the immediately preceding financial year.

11. As per the records of the Company and according to the information and explanationsgiven to us, we are of the opinion the Company has not defaulted in repayment of dues tofinancial institution, banks or debenture holders.

12. 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.

13. In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund/society. Accordingly the provisions of clause 4 (xiii) of the Companies (Auditor's Report)Order, 2003 are not applicable to the company.

14. In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly the provisions of clause 4 (xiv) of theCompanies (Auditor's Report) Order, 2003 are not applicable to the company.

15. In our opinion, according to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions.

16. In our opinion and according to the information and explanations given to us, theloans taken for Projects were applied for the purpose for which the loans were obtained.

17. In our opinion, and according to the information and explanations given to us andon an overall examination of statements and records of the company, that the funds raisedon short-term basis have, prima facie, not been used during the year for long-terminvestment.

18. In our opinion, the Company has made preferential allotment of shares/securitiesduring the year to parties and companies covered in the register maintained under section301 of the Companies act, 1956.

19. In our opinion, the company has not raised money by way of public issue for anyspecific purpose during the year.

20. According to the information and explanations given to us the Company has notissued debentures during the period covered by our report Hence, the Company is notrequired to create/register/modify and Security/Charge.

21. According to the information and explanations given to us and based on auditprocedures performed, no fraud on or by the Company has been noticed during the year.

For SAMPATH & RAMESH
Chartered Accountants
Sd/-
PLACE : HYDERABAD (A. KRISHNA REDDY)
DATE : 18.08.2009 Partner M No. 204755