We have audited the attached Balance Sheet of Bee Electronic Machines
 Limited as at 31st March, 2012 and also the annexed Profit and Loss
 Account and the Cash flow statement of the Company for the year ended
 on that date annexed thereto. These financial statements are
 responsibility of the Company''s Management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 We conduct our audit in accordance with auditing standards generally
 accepted in India. Those standards require that we plan & 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 reasonable
 basis for our opinion.
 
 1.  As required by the Companies (Auditors Report) order, 2003 issued
 by Central Government of India in terms of Section 227 (4A) of the
 Companies Act, 1956, we annex hereto a statement on the specified in
 paragraph 4 and 5 of the said order to the extent applicable to the
 Company.
 
 2.  Further to our comments referred to in paragraph (1) 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 book of accounts as required by law have been
 kept by the company, so far as appears, from our examination of the
 book;
 
 c) The Balance Sheet, Profit and Loss Account and cash flow statement
 dealt with by this report are in agreement with the books of accounts:
 
 d) In our opinion, the attached balance Sheet, profit and loss account
 and the cash flow statement comply with the Accounting Standards
 referred to in section 211 (3C) of the Companies Act, 1956, except
 AS-15, regarding non provision of gratuity and leave encashment, being,
 accounted for on cash basis, amount unascertained as referred in clause
 no. 1, and AS-2 regarding valuation of inventories as referred to
 Clause no 8 of notes to the accounts.
 
 e) On the basis of the written representation received from all the
 directors as on 31.03.2012 and taken on record by the Board of
 Directors, we report that none of the directors are disqualified as on
 31.03.2012 from being appointed as directors 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 our information and according to
 the explanations given to us, the accounts read with other notes to
 accounts, subject to the following;
 
 Clause 1 regarding non-provision of gratuity, leave travel assistance,
 Leave encashment and Medical reimbursement, amount being unascertained;
 
 Clause 2 (a) regarding non-provision of excise duty on finished goods
 of Rs. 196,892 being accounted for on
 
 clearance basis;
 
 Clause No. 2(b) A/on provision of interest on Excise duty payable of
 Rs. 48,300 (up to PY Rs. 338,100)
 
 Clause No. 2(c) Non provision of property tax of Rs. 67,751 (up to PY
 Rs. 427,165)
 
 Clause No. 4(b) regarding disclosure of overdue debentures due to this,
 the secured loan is overstated by Rs.  131.25 lacs.
 
 Clause No. 4(d) regarding non-provision of interest on debentures of
 UTI of Rs. 18.75 lacs and writing back interest provided in books up to
 March 2005 amounting to Rs. 138.70 lacs
 
 Clause No. 4(e) regarding non-provision of interest on premium payable
 of Rs. 93,750/-
 
 Clause No. 5 regarding unconfirmed balance of debtors, creditors,
 loans, advances and secured loans from financial Institutions and
 Bankers;
 
 Clause No. 6 regarding non-provision of loans and advances of Rs.
 626,279;
 
 Clause No. 7 (b) regarding non-provision of interest of Rs. 171.88
 lacs; and writing back interest provided in books up to March 2005 of
 Rs. 1176.26 lacs
 
 Clause No. 8 regarding non-provision of loss of Rs. 400 lacs
 approximately on obsolete and slow moving stocks;
 
 3. We further inform that without considering the items mentioned for
 clause no 1, 4 (b) and 5 of notes to the accounts, effect of which
 cannot be determined, had the observations been made by us in clause
 nos. 2(b), 2(c), 4(d), 4(e), 6, 7(b) and 8 of the note to the accounts
 been considered, the loss for the year would have been Rs.
 6,07,10,243/- as against the reported profit figure of Rs.
 13,06,84,612/- and the accumulated loss would have been Rs.
 31,38,51,261 as against the reported figure of Rs. 12,24,56,406 the
 information required by the Companies Act, 1956 in the manner so
 required, give a true and fair view:-
 
 (1) in the case of balance Sheet, of the state of affairs of the
 Company as at 31st March, 2012;
 
 (2) in the case of the profit and loss account, of the profit of the
 Company for the year ended on that date:
 
 (3) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
                                   
 The Annexure referred to in the Auditors'' Report to the Members of Bee
 Electronic Machines Limited for the year ended 31st March, 2012.
 
 We report that:
 
 1.1.  The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 1.2.  According to the information and explanations furnished to us,
 the Company has not physically verified all the fixed assets during the
 year.
 
 1.3.  There were no fixed assets disposed off during the year and
 therefore do not affect the going concern status of the Company.
 
 2.1.  According to the information and explanations furnished to us,
 the Company has physically verified its inventories during the year. In
 our opinion, and the frequency of verification is reasonable.
 
 2.2.  In your opinion, the procedures of physically verification of
 inventories following by the management are reasonable and adequate In
 relation to the size of the Company and the nature of its business.
 
 2.3 According to information furnished to us, the company is
 maintaining proper records of inventory and the discrepancies; if any
 noticed on verification between the physical stock and book records
 were not material and have been properly dealt with in the books of
 account.
 
 3. According to the information and explanations furnished to us, the
 Company has taken interest free loans from companies, parties and
 director listed in the register maintained under section 301 of the
 Companies Act, 1956. Other terms and conditions are not prima facie
 prejudicial to the interest of the company. The company has not given
 any loans to companies, parties and director listed in the register
 maintained under section 301 of the Companies Act, 1956 or to company
 under same management within the meaning of section 370 (1-B) of the
 companies Act, 1956. Loan taken to the extent of Rs. 54, 61,000/- from
 one party
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business with regard to purchases of inventory, fixed assets and with
 regard to the sale of goods and services. Further during the course of
 our audit, we have not come across any instances of major weaknesses in
 internal control that in our opinion, require correction but have so
 continued without correction.
 
 05 a. Based on the information and explanations given to us, we are of
 the opinion that the transactions that are needed to be entered in the
 register in pursuance of section 301 of the Company Act, 1956 have been
 entered.
 
 05 b.  In our opinion and according to the information and explanations
 given to us, there were no transactions which were made in pursuance of
 contracts entered in the register maintained under Section 301 of the
 Companies Act, 1956 in respect of any party during the year.
 
 06.  The Company has not accepted any deposits from public therefore,
 the provisions of sections 58 A and 58 AA of the Companies Act, and the
 rules framed thereunder are not applicable.
 
 07.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business. However, it
 needs to be strengthened.
 
 08.  We are informed that the Central Government has not prescribed the
 maintenance of cost records under section 209(1) (d) of the Companies
 Act, 1956 for any of the products of the company.
 
 9.1 According to information furnished to us, the company is regular in
 depositing with appropriate authorities, the undisputed
 
 statutory dues including Provident Fund, Investor Education Protection
 Fund, and Employees State Insurance, Income Tax, Sales Tax, Service
 tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material
 statutory dues applicable to it and there were no undisputed statutory
 dues in arrears, as at the date of the Balance Sheet under report, for
 a period of more than six months from the date they became payable
 except Sales tax of Rs. 3,18,793/-, service tax of Rs. 24,663
 profession tax Rs. 7,768/-, and Excise duty Rs. 3,22,000/-
 
 9.2 According to the information furnished to us, the following amounts
 of Excise Duty and Sales Tax, have been, disputed by the Company, and
 hence, were not deposited to the concerned authorities at date of the
 Balance Sheet under report.
 
 Name of Statute    Nature of           Amount    Period to 
                    dues                          which the
                                                  amount relates
 
 Central Excise     Excise duty    4,34,16,614    1991 to 1994
 Act, 1944 
 
 Central Excise     Excise duty      7,476,179    1983 to 1987
 Act, 1944
 
 Sales Tax Act      Sales tax        1,349,432    1997-98
 
 Sales Tax Act      Sales tax        1,303,600    1998-99
 
 Sales Tax Act      Sales tax          923,772    1999-00
 
 Sales Tax Act      CST                 31,115    1999-00
 
 Sales Tax Act      Sales tax           43,688    1992-93
 
 Sales Tax Act      CST                 58,547    1992-93
 
 Sales Tax Act      Sales tax           42,697    1999-2000 
 
 Sales Tax Act      Sales tax           66,211    1999-2000
 
 Sales Tax Act      CST                104,942    1999-2000
 
 Sales Tax Act      CST                 97,381    2001-2002
 
 
 
 
 Name of Statute    Forum where the dispute Is pending 
 
 Central Excise     CESTAT
 Act, 1944 
 
 Central Excise     CESTAT
 Act, 1944
 
 Sales Tax Act      Gujarat Sales Tax Tribunal Ahmedabad
 
 Sales Tax Act      Gujarat Sales Tax Tribunal Ahmedabad
 
 Sales Tax Act      Gujarat Sales Tax Tribunal Ahmedabad
 
 Sales Tax Act      Asst Commissioner of sales Tax (Appeal 1), 
                    Ahmedabad
 
 Sales Tax Act      Dy Commissioner - Commercial taxes, Kolkata,
                    (South) circle
 
 Sales Tax Act      Dy Commissioner - Commercial taxes, Kolkata, 
                    (South) circle
 
 Sales Tax Act      Dy Commissioner - Commercial taxes, Kolkata,
                    (South) circle
 
 Sales Tax Act      Dy Commissioner (CT)-Appellate Secunderabad Div
 
 Sales Tax Act      Dy Commissioner (CT)- Appellate Secunderabad Div
 
 Sales Tax Act      The Joint Commissioner (Appeal) - 6, Trade tax 
                    Lucknow
 
 10.  According to the information and explanations furnished to us
 
 a) It has accumulated losses at the end of the financial year of Rs.
 12,24,56,406
 
 b) Neither during the year the company has not incurred any cash loss
 nor in the immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 furnished to us by the Company, there were defaults in repayment of its
 dues to financial institutions and banks at the date of the Balance
 Sheet and the company has defaulted in repayment of dues of Rs.
 3,138.51 lacs to the financial institutions and banks. (Including Rs.
 1,913.95 lacs un-provided interest accrued & due)
 
 12.  According to the information and explanation given to us, the
 Company has not granted any loans or advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13.  The Company is not chit fund, nidhi, mutual benefit fund or a
 society. Accordingly, the provisions of clause 4 (xiii) of the Order,
 is not applicable to the company.
 
 14.  According to the information and explanation given to us, the
 Company is not dealing in or trading in shares, securities, debentures
 and other investments. Accordingly, clause (xiv) of the order is not
 applicable to the company.
 
 15.  According to the information and explanation given to us, the
 Company has not given any guarantees for loans taken by others from
 banks or financial institutions.
 
 16.  The Company has not taken any term loan during the year.
 
 17.  According to the information and explanation given to us and on an
 overall examination of the Balance Sheet of the Company, we report that
 no funds raised during the year on short - term basis have been used
 for long - term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Act. Accordingly, the provisions of clause 4 (xviii) of the
 order are not applicable to the company.
 
 19.  The Company has not issued any debentures during the year.
 However, the company had taken money from UTI for issuing debentures of
 Rs. 125 lacs in the year 1991 for which securities are yet to be
 created.
 
 20.  The Company has not raised any money the public issues during the
 year.
 
 21.  During the course of our examination of the accounts of the
 Company in accordance with generally accepted auditing practices, we
 have not come across any instances of fraud on or by the Company, nor
 have we been informed by the management, of any such instance being
 noticed or reported during the year.
 
 
                                  For SHANKARLAL JAIN AND ASSOCIATES
                                                Chartered Accountants
                                     Firm Registration Number 109901W
 
                                                                 Sd/-
 
                                                        S. L. Agrawal
                                                              Partner
                                                 Membership No. 72184
 
 Place : Mumbai
 Date: June 8, 2012