1.  We have audited the attached Balance Sheet of ARROW COATED PRODUCTS
 LIMITED as at 31st March, 2012 and Statement of Profit and Loss and
 Cash Flow Statement for the year ended on that date annexed thereto.
 These financial statements are the responsibility of the Company''s
 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. 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 a test basis, evidence supporting the amounts
 and disclosures 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.
 
 3.  As required by the Companies (Auditors'' Report) Order, 2003 (as
 amended) issued by the Central Government of India in term of Section
 227(4A) of the Companies Act, 1956(The Act) and on the basis of such
 examination of the books and records of the Company as we consider
 proper and the information and explanation given to us during the
 course of our audit, we annex a statement on the Matters specified in
 paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the annexure referred to above, we state
 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 our
 audit;
 
 b) In our opinion, proper books of account as required by the law have
 been kept by the Company so far as appears from our examination of the
 books;
 
 c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
 Cash Flow Statement dealt with by this report comply with the
 Accounting standard except Accounting Standard 24 Discontinuing
 Operations and Accounting Standard 15 Employee Benefits (refer note 35)
 referred to in sub-section (3C) of section 211 of the Companies Act,
 1956;
 
 e) On the basis of written representation received from directors of
 the Company as at 31st March, 2012 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified from
 being appointed as director of the Company in terms of clause (g) of
 sub-section (1) of section 274 of companies Act, 1956;
 
 f) The Company has not made provisions for overdue debts aggregating to
 Rs. 39867.16 (''000) and advances aggregating to Rs. 31500.92(''000). Had
 this observation made by us been considered Loss after Tax would have
 been Rs. 80674.84(''000) (as against the reported figure of Loss of Rs.
 9306.77 (''000) ; reserves and surplus would have been deficit of Rs.
 29512.17(''000) (as against the reported figure of surplus of Rs.
 41855.91 (''000); trade receivable would have been Rs. 6018.84 (''000)
 (as against the reported figure of Rs. 45885.99 (''000); long term loans
 and advances would have been Rs. 29719.53 (''000) (as against reported
 figure of Rs. 61220.45 (''000),
 
 g) In our opinion, and to the best of our information and according to
 the explanation given to us the said accounts subject to para (d) and
 (f) above and read together with the notes thereon and attached thereto
 give the information required by the Companies Act, 1956, in the manner
 so required and give a true and fair view in conformity with accounting
 principles generally accepted principle in India:
 
 i) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2012;
 
 ii) In the case of the Statement of Profit and Loss , of the loss 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 REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE
 
 i) In respect of it''s Fixed Assets.
 
 The Company is maintaining proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 Some of the fixed Assets were physically verified during the period by
 the management in accordance with a program of verification, which in
 our opinion provides for physical verification of all the fixed assets
 at reasonable intervals. The reconciliation work with the available
 records is in progress and necessary entries will be passed in the
 accounts to give to material discrepancies if any, observed on such
 reconciliation.
 
 In our opinion and according to the information and explanations given
 to us, the Company has not made any substantial disposal of Fixed
 Assets during the period.
 
 ii) In respect of it''s Inventories.
 
 As explained to us, inventories were been physically verified during
 the period by the management at reasonable intervals
 
 In our opinion and according to the information and explanations given
 to us, the procedures of physical verification of inventories followed
 by the management are reasonable and adequate in relation to size of
 the Company and the nature of its business.
 
 In our opinion and according to the information and explanations given
 to us, the Company has maintained proper records of its inventories and
 no material discrepancies were noticed on physical verification.
 
 iii) According to the information and explanation given to us:
 
 The Company has not granted any loans, secured or unsecured to
 companies, firms or other parties covered in register maintained u/s
 301 of the Companies Act 1956.
 
 During the period Company has taken loan from four party aggregating to
 Rs 6912.26 (''000) and the balance of loan taken from such six parties
 was 65009.36 (''000).
 
 In our opinion, the rate of interest and otherterms and condition on
 which loan has been taken from companies, firms or other parties listed
 in the register maintained under section 301 of the Companies Act, 1956
 are not, prima facie, prejudicial to the interest of the Company.
 
 The Company has taken loans from parties covered under section 301 of
 the Companies Act, 1956 that are interest free and no due date for
 repayment are stipulated. Hence, commenting on regularity of repayment
 of principal / interest does not arise.
 
 iv) In our opinion and according to the information and explanation
 given to us, the Company has internal control system commensurate with
 the size of the Company and the nature of its business with regards to
 purchase of inventories, fixed assets and with regards to the sale of
 the goods and services. During the course of our audit, we have neither
 come across nor have been informed of any continuing failure to correct
 major weaknesses in internal controls system.
 
 v) To the best of our knowledge and belief and according to the
 information and explanation given to us particulars of contracts or
 arrangements referred to in section 301 that need to be entered in the
 register have been so entered.
 
 In our opinion and according to the information and explanation given
 to us, the transaction made in pursuance of contracts or arrangements
 entered in the register maintained under section 301 of the Companies
 Act, 1956 and exceeding the value of rupees five lakhs in respect of
 any party during the period have been made at prices which are
 reasonable having regard to prevailing market prices at the relevant
 time.
 
 vi) In our opinion and according to the information and explanation
 given to us, the Company has accepted deposits from the public as such
 within the meaning of Section 58A of the Actfrom relatives of director
 during the year .In respect of which the provisions of sections 58Aand
 58AA of the Act and rules framed there under have not been complied
 with. We have been informed that no order has been passed by the
 Company Law Board or National Company Law Board Tribunal or Reserve
 Bank of India or any other Tribunal in India.
 
 vii) In our opinion, there is a scope of strengthening the internal
 audit system, commensurate with the size and nature of its business.
 
 viii) We have broadly reviewed the books of accounts maintained by the
 Company in respect of products where , pursuant to the rules made by
 the central government of India , the maintenance of Cost records under
 section 209(1) (d) of the Companies Act 1956 , and are of the opinion
 that, prima facie , the prescribed accounts and records have been made
 and maintained . We have not, however, made a detailed examination of
 the records with a view to determine whetherthey are accurate or
 complete.
 
 ix) According to the record of the Company, the Company is generally
 regular in depositing undisputed statutory dues including Provident
 Fund, Investor Education Protection Fund, Employees''State Insurance,
 Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and
 other statutory dues applicable to it with appropriate authorities
 though there has been delay in major cases.
 
 According to the information and explanations given to us, except for
 the cases stated below, there are no undisputed amount payable in
 respect of income tax, wealth tax, custom duty, excise duty and cess
 which were outstanding, at the end for the period of more than six
 months from the date they became payable:-
 
 Nature of the Dues              Amount (Rs. in ''000)
 
 Central Sales Tax                    157.78
 
 Local Sales Tax                      252.01
 
 Income Tax                           321.77
 
 Provident Fund                        22.80
 
 Service Tax                          109.64
 
 According to the information and explanations given to us, there are no
 dues of sales tax, income tax, custom duty, wealth tax, excise duty and
 cess which have not been deposited on account of any dispute except
 for:-
 
 Nature of the 
 Dues             Amount (Rs. in 
                  ''000)           Period      Authority Before which
                                                in Appeal
 
 Local Sales Tax  2838.79         F.Y.2003-04   Assistant Commissioner 
                                                of Sales Tax, Mumbai
 
 Central Sales 
 Tax               441.87         F.Y.2003-04   Assistant Commissioner 
                                                of Sales Tax, Mumbai
 
 Local Sales Tax  3677.77         F.Y.2004-05   Assistant Commissioner 
                                                of Sales Tax, Mumbai
 
 Central Sales 
 Tax              3520.70         F.Y.2004-05   Assistant Commissioner
                                                of Sales Tax, Mumbai
 
 x) Accumulated losses of the Company are less then fifty percent of the
 Company''s net worth. Company incurred cash loss of Rs. 78434.47
 (''000) during the period covered by our audit. In the immediately
 preceding financial year, the Company had made cash loss of Rs.52247.60
 (''000)
 
 xi) According to the information and explanations given to us, the
 Company has defaulted in payment of Interestdue to Indusind Bank Ltd.
 amounting to Rs. 1231.01 (''000).
 
 xii) According to the information and explanation given to us , the
 Company has notgranted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 xiii) Clause (xiii) of the order is not applicable to the Company, as
 the Company is not chit fund Company or Nidhi / Mutual benefit fund /
 Society.
 
 xiv) In our opinion the Company is not dealing in or trading in shares,
 securities, debentures and other investment, accordingly clause (xiv)
 of the order is not applicable.
 
 xv) According to information and explanation given to us the Company
 has not given guarantees for loan taken by others from banks or
 financial institutions.
 
 xvi) The Company has not taken any term loan during the year.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that the no funds raised on short-term basis have been used for
 long-term investment.
 
 xviii) According to the information and explanations given to us, the
 Company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under section 301 of the
 Companies Act 1956.
 
 xix) According to information and explanation given to us Debentures
 have not been issued by the Company during the year.
 
 xx) During the year the Company has raised money by public issue and we
 have verified the disclosure made in note 45 to the financial
 statement.
 
 xxi) According to the information and explanation given to us, no fraud
 on or by the Company has been noticed or reported during the course of
 our audit.
 
                                      As per our report of even date.
 
                                                 For J.A.Rajani & Co.
 
                                               Chartered Accountants
 
                                                          P.J.Rajani
 
                                                          Proprietor 
 
                                               Membership No. 116740 
 
                                                Firm Reg. No.108331W
 
 Place: Mumbai
 
 Date: 30th May ,2012