We have audited the attached Balance sheet of Agarwal Industrial
 Corporation Limited (the Company) as at 31st March, 2010, and also the
 Profit and Loss account and the Cash Flow Statement for the year ended
 on that date annexed thereto.  These Financial statements are the
 responsibility of the Companys management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 We conducted our audit in accordance with auditing standards generally
 accepted in India. Those 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
 disclosure in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 As required by the Companies (Auditors Report) Order, 2003 (CARO)
 issued by the Central Government of India in terms of Section 227 (4A)
 of the Companies Act, 1956, we enclosed in the Annexure, a statement on
 the matters specified in paragraphs 4 and 5 of the said order.
 
 Further to our comments in the Annexure referred to in paragraphs 3
 above, we report that:
 
 a) We have obtained all the information and explanations which, to the
 best of our knowledge and belief, were necessary for the purpose of the
 audit;
 
 b) In our opinion, proper books of accounts as required by law have
 been kept by the Company, so far as it appears from our examination of
 these books;
 
 c) The Balance Sheet and Profit & Loss Accounts and Cash Flow Statement
 dealt with by this report are in agreement with the books of account.
 
 d) In our opinion, the Balance sheet and Profit & Loss Account and cash
 flow statement dealt with by this report comply with the Accounting
 Standards referred in sub-section (3C) of section 211 of the Companies
 Act, 1956.
 
 e) On the basis of written representations received from the directors
 of the Companies as at 31st March 2010, and taken on record by the
 Board of Directors, we report that no director is disqualified as on
 31st March 2010 from being appointed as a Director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956; and
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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:
 
 (i) In the case of the Balance Sheet, of the State of Affairs of the
 Company as at 31st March, 2010.
 
 (ii) In the case of the Profit & Loss Account, of the Profit for the
 year ended on that date; and
 
 (iii) In the Case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our
 Report of even date)
 
 1.  Fixed Assets :
 
 a) The Company has maintained proper records showing full particulars,
 including quantitative details and situations of fixed assets.
 
 b) Fixed assets are physically verified by the management at reasonable
 intervals having regard to size of the company and nature of its
 assets. No material discrepancies were noticed during such verification
 during year.
 
 c) The company has not disposed off any part of fixed assets during the
 year and accordingly going concern is not affected.
 
 2.  Inventories :
 
 a) As explained to us, physical verification of inventory was carried
 out at reasonable intervals by the management.
 
 b) In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventory
 followed by the management, are reasonable and adequate, in relation to
 size of the company and the nature of its business.
 
 b) In our opinion, and according to the information and explanation
 given to us, the company has maintained proper records of its
 inventory, and the discrepancies noticed on physical verification of
 inventory as compared to the book records were not material and have
 been properly dealt with in the books of account.
 
 3.  Loans & Advances :
 
 The Company has not taken/granted any loans secured or unsecured from
 to companies, firms or other parties listed in the register maintained
 under Section 301 of the Companies Act, 1956, and therefore the clauses
 b, c, d, e, f and g of para (iii) of the Companies (Auditors report)
 Order 2003 are not applicable.
 
 4.  Internal Controls :
 
 In our opinion and according to the information and explanations given
 to us, the internal control system needs to be strengthened with the
 size of the Company and the nature of its business for the purchase of
 inventory and fixed assets and for the sale of goods and services,
 during the course of Audit, no major weakness has been noticed in the
 internal controls.
 
 5.  Contracts & Arrangements with parties Covered under section 301 of
 the Act :
 
 a) In our opinion and according to the information and explanation
 given to us, the particulars of contracts or arrangements referred to
 in section 301 of the Companies Act, 1956 have been entered in the
 register required to be maintained under that section.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of Rs.5 lakh in respect
 of any party during the year, have been made at prices which is prima
 facie reasonable having regard to prevailing market prices at the
 relevant time.
 
 6.  Deposits :
 
 According to the information and explanations given to us the company
 has not accepted any deposits from the public to which the directives
 issued by the Reserve Bank of India and the provisions of section 58A
 and 58AA of the Companies Act, 1956 and the rules framed therein.
 
 7.  Internal Audit System :
 
 In our opinion, the internal audit functions carried out during the
 year by a firm Chartered Accountants appointed by the management have
 been commensurate with the size of the Company and nature of its
 business.
 
 8.  Cost records :
 
 As explained to us the Central Government has not prescribed
 maintenance of cost records under section 209(1) (d) of the Companies
 Act,1956, for any of the products of the company.
 
 9.  Statutory Dues :
 
 a) According to records of the company and information and explanation
 given to us the company has been regular depositing undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees State Insurance, Income-tax, Sales Tax,
 Wealth Tax, Custom Duty, Excise Duty, cess and other material statutory
 dues applicable to it with appropriate authorities during the year.
 According to the information and explanation giving to us no undisputed
 amount payable in respect of above were in arrears, as at 31st March,
 2010 for a period of more than six months from the date they became
 payable.
 
 b) According to the information and explanations given to us, there
 were no dues of sales tax, Income Tax / Customs Duty / Wealth Tax /
 Excise duty/Cess which have not been deposited by the company on
 account any dispute.
 
 c) According to the records of the company, the dues of sales tax,
 Income-Tax, Customs, Wealth-Tax, Service Tax, Exice Duty, Cess, Which
 have not been deposited an account of disputes and the forum where the
 dispute is pending are as under:
 
 Sr. 
 No. Nature of the 
      Statute         Nature of the Dues    Amount Pending     Forum
                                                               Where
                                             (Rs in Lacs)      Dispute 
                                                              is pending
 
 1.  Income Tax Act   Income Tax Demand        20.25            ITAT
                                                      (Ass. Year 2003-04)
 
 2.  Income Tax Act   Income Tax Demand        17.50      Rectification
                                                      (Ass. Year 2004-05)
 
 Other Matters :
 
 10.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses during the financial
 year covered by our audit and immediately preceding financial year.
 
 11.  On the basis of our examination and according to the information
 and explanation given to us, the company has not defaulted in repayment
 of dues to any bank or financial institution .The Company has not
 obtained any borrowing buy way of debentures.
 
 12.  Based on our examination of records & the information and
 explanation given to us, the company has not granted 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. Therefore, the provision of clause 4(xiii) of the
 order are not applicable.
 
 14.  In our opinion the Company is not dealing in or trading in shares,
 securities, debentures and other investments.  Accordingly, the
 provision of clause 4 (XIV) of the Order relating to maintenance of
 proper records, timely entries and holding investment in own name are
 not applicable.
 
 15.  According to the information and explanation given to us and
 examined by us, the Company has not given any guarantee for loans taken
 by others from banks or financial institutions, the terms and
 conditions whereof are prejudicial to the interest of the Company.
 
 16.  In our opinion and according to the information and explanation
 given to us, the company has applied the term loans for the purpose for
 which they were obtained.
 
 17.  In our opinion, and on the basis of our examination and according
 to the information and explanation given to us, and on an overall
 examination of the balance sheet of the Company, we report that the
 company has not, prima facie used the funds borrowed on short term
 basis during the year for long term investment and vice versa.
 
 18.  In our opinion considering the nature of activities carried on by
 the company during the year, the provision of any special statute
 applicable to chit fund! nidhi/mutual benefit fund! societies are not
 applicable to it.
 
 19. On the basis of san overall examination of the balance sheet of the
 company, in our opinion and according to the information and
 explanation given to us, there are no funds on short terms basis which
 have been used for long term investment.
 
 20.  The company has not made any preferential allotment of shares or
 issued debentures or public issue during the year and according clauses
 (xviii),(xix) and (xx) of the order are not applicable.
 
 21.  To the best of our knowledge and belief and according to
 information and explanations given to us, there have been no cases of
 fraud on or by the company noticed or reported during the year.
 
                                              For RASHMI AGARWAL
 
                                           Chartered Accountants
 
                                                  RASHMI AGARWAL
 
 Place: Mumbai                                        Proprietor
 
 Date : August 28th , 2010                        M.B. No.104517