Konkan Tyres Ltd Auditor Reports

To,

The Members,

M/S. KONKAN TYRES LIMITED

1. We have audited the attached Balance Sheet of KONKAN TYRES LTD. as at 31st March, 2012 and also the attached Profit and Loss Account of the Company for the year ended on that date. The financial statements are responsibility of the Company Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our Audit in accordance with Auditing Standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement an audit includes examining, on test basis, evidence supporting the amounts and disclosures in financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit.

4. In our opinion, proper books of account, as required by law, have been kept by the company, so far as it appears from our examination of the book of accounts.

5. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by the report are in agreement with the Books of accounts.

6. In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards (Subject to our notes to Accounts) referred to in sub-section (3C) of section 211 of the Companies Act 1956 subject to our notes of Accounts.

7. According to the written representations given to us, no Director disqualified from being appointed a Director under clause (g) of sub-section (1) to Section 274 of the Companies Act, 1956.

8. In our opinion and to the best of our information and according to the explanations given to us the said accounts (read together with the notes thereon - Annexure IV) give the information required by the Companies Act, 1956. In the manner so required and give a true and fair view in. Conformity with the accounting principles generally accepted in India.

9.

a) In case of Balance Sheet of the State of affairs of the company as at 31st March, 2012.

b) In the case of Profit & Loss account of the Profit for the year ended on that date.

c) In the case of cash Flow Statement of the cash Flows for the year ended on that date.

As required by Companies (Auditor’s Report) order, 2003 issued by the Central Government under Section 227 (4-A) of the Company’s Act 1956, we give below a statement on the matters specified in paragraph 4 & 5 of the said order.

1a. The Company has maintained proper records to show full particulars including quantitative details and situation of Fixed Assets.

1b we are informed that there Assets have been physically verified by the Management during the year and no serious discrepancies were noticed on such verification.

1c the bank has auctioned all the fixed assets of the company including Building, Plant & Machinery & other assets & Auction under SRFA.

2a. The Stocks of Trading goods have been physically verified by the management during the year. In our opinion the frequency of verifications reasonable.

2b. The procedure of physical verification of stocks followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business.

2c. There were no material discrepancies noticed on physical verification of stocks as compared to book records as informed by Management.

3a The Company had taken any loans Secured or Unsecured from companies, and other parties listed in the Register maintained u/s. 301 of the Company Act 1956. The Company had granted Unsecured Loan to a Company listed in above stated Register. The maximum balance outstanding during the year is Rs. 23.51 lacs No repaying is received during the year.

3b. No interest is charged on this loan and to that extend it is prejudicial to the interest of the Company. In our opinion and according to the information and explanation given to us, the management has taken steps to recover the amount.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of Company and the nature of its business with regards to purchase of stores raw materials including components, plants and machinery, equipment and the other assets.

5a. Based on the Audit Procedures applied by us and according to information and explanation provided to us by the management we are of the opinion that all transactions need to be entered into the register in pursuance of section 301 of the Act have been so entered.

6. The Company had not accepted Deposits from the public as covered under provisions of Section 58A and 58AA of the Companies Act 1956 and the framed there under.

7. In our opinion the company does not have an internal Audit System Commensurate with the size and nature of its business.

8. The maintenance of cost records has not been prescribed by Central Govt. under section 209 (I) (d) of the Company’s Act 1956 in respect of the activities carried on by the company.

9. The Company has so far not applied for registration under the Provident Fund and Employees State Insurance Act. It has not deducted any P.F. or ESI from salary and wages. As per information given by management there are disputed. Income Tax amounting to Rs. 120 Lakhs and Company as preferred appeal.

10. The Company has accumulated losses at the end of the financial year a) During Financial Year 2011-2012 it has incurred loss of Rs. 38,900.00/- and b) During Financial Year 2010-2011 it has incurred loss of Rs. 50,435.52/-.

11. The Company has defaulted its repayment of dues to Bank and the account has become N.P.A. the bank has auction the assets under SRFA.

12. The Company has granted Loans and Advances without any security.

13. In our opinion and according to information given to us nature of the activities of the company does not attract any special statute applicable to Chit Fund / Mutual Fund / Societies.

14. The Company is not dealing or trading in Shares, Securities, Debentures and other investments.

15. The Company has given Guarantee for Rs.50 Lakhs to other Company. The terms and conditions are not prejudicial to the interest of the Company.

16. The Company not taken the Term Loan in previous year for fixed Assets and also utilized for same purpose.

17. The Bank Cash Credit Facility has not been used for long term investments. On the basis of examination of the Balance Sheet and Cash Flows of the Company and the information and explanation given to us we report that the Company has not utilized any funds raised on Short Term basis for Long Term Investment and wise versa.

18. The Company has not made any preferential allotment of shares to parties or companies covered u/s. 301 of the Act.

19. The Company does not have debenture issue.

20. The Company has not raised any money through a Public Issue during the year.

21. Based upon the audit procedures performed and the information and explanation given by the management we report that there is no fraud on or by Company.

22. The Income Tax Liability for the following Assessment years are pending in appeal.