1.  We have audited the attached Balance Sheet of Druckgrafen India
 Limited as at 31st March, 2010, the related Profit & 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.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan and
 preform the audit to abtain 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 includs
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statements
 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 by the Companies (Auditors Report) (Amendment) Order, 2004
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of The Companies Act, 1956 and on the basis of such
 checks of the books and records of the Company as we considered
 appropriate and according to the information and explanations given to
 us, we give in the Annexure 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 in paragraph 3
 above, we report that :
 
 a) We have obtained all the information and explantions, which to the
 best of our knowledge and belief, were necessary for the purpose of our
 audit.
 
 b) In our opinion, proper books of accounts as required by Law have
 been kept by the Company so for as apperas from our examination of
 those books.
 
 c) The balance sheet, Profit & Loss account and Cash Flow Statement,
 dealt with by this report, are in agreement with the books of account.
 
 d) In our opinion, Balance Sheet, Profit & Loss Account and Cash Flow
 Statement, dealt with by this report, comply with the Accounting
 Standards referred to in sub section (3C) of section 211 of the
 Companies Act, 1956, to the extent applicable.
 
 e) Pursuant to the orders passed by the Honble BIFR the Company has
 written off /repaid fixed deposits aggregating to Rs. 4,615,000/- and
 Rs. 2,824,500/- respectively. The Company, during the year under
 review, did not accept or renew fixed deposits, keeping in view the
 terms and conditions stipulated in the order passed by the Honble
 BIFR; accordingly the Company has filed form DDC with the Registrar of
 Companies for removal of disqualification under Section 274(l)(g) of
 the Companies Act, 1956.
 
 f) Attention is invited to the following notes of Schedule L
 
 i) Note no. B.5 regarding proceedings initiated, by the Registrar of
 Companies, Jalandhar against the Directors of the Company
 
 ii) Note no. B.6 relating to revival/rehabilitation scheme duly
 sanctioned by BIFR vide its order no 127/98 dated 18th June, 2008.
 
 Hi) Note no B.7 regarding repayment of dues (principal & interest) of
 financial institution.
 
 iv) Note no. B.8 regarding preparation of accounts of the Company on a
 going concern basis; however its ability to continue as such is
 dependent upon future performance and profitability and presently we
 are unable to express an opinion on the same.
 
 v) Note no B.9 regarding non-provision of depreciation on fixed assets.
 
 g) Subject to the foregoing, in our opinion and to the best of our
 information and according to the expla- nations given to us the said
 accounts, read with notes thereon and schedules annexed thereto, give
 in the prescribed manner 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.
 
 iii) in the case of the Cash Flow Statement of the cash flows for the
 year ended on that date.
 
 (Referred to in paragraph 3 of our report of even date on accounts of
 Druckgrafen India Limited for the year ended 31st March 2010)
 
 1.  In respect of its Fixed Assets :
 
 a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 b) As explained to us, some of the fixed assets were physically
 verified during the year, by the management and no material
 discrepancies have been reported on such verification.
 
 c) The company has not disposed off substantial part of the fixed
 assets, during the year, thus there is no effect on the going concern
 status of the Company.
 
 2. (a) In our opinion and according to the information and explanations
 given to us, the Company has not taken any loans, secured or unsecured
 from firms covered in the register maintained under Section 301 of the
 Companies Act, 1956
 
 b) The company has taken, interest free, inter-corporate deposit from a
 Company & one parry (the maximum balance outstanding during the year
 and at the end of the year was Rs. 9.88 lacs & Rs. 13.03 lacs), covered
 in the register maintained under Section 301 of the Companies Act, 1956
 pursuant to the stipulation imposed by banks/financial institutions at
 the time of sanction of loans; the terms and conditions of repayment
 etc., though not determined are, prima facie, not prejudicial to the
 interest of the Company.
 
 c) The Company has not granted any loans, secured or unsecured to
 Companies/firms or other parties covered in the register .maintained
 under section 301 of the Companies Act, 1956; accordingly clauses (iii-
 b) to (iii-d) are not applicable and have, therefore, not been
 commented upon.
 
 3.  According to the information and explanations provided by the
 management, the particulars of contracts or arrangements that need to
 be entered in the register maintained under Section 301 of the
 Companies Act, 1956 have been so entered and there are no transactions
 that need to be entered into the register main- tained under Section
 301 of the Companies Act, 1956, hence para (vb) of the order is not
 applicable.
 
 4.  According to the information & explanations given to us, the
 Company, during the year, has not accepted deposits from public;
 consequent to the withdrawal of appeal filed by PSIDC with AAIFR. the
 company has written off public deposits (Rs. 46.15 lacs) and others
 (Rs. 17.40 lacs) in accordance with the revival/ rehabilitaion scheme
 sanctioned by BIFR.
 
 5.  In respect of its Statutory dues:
 
 a) According to the information and explanaions given and the records
 of the Company produced before us, the Company is generally been
 regular in depositing undisputed statutory dues in respect of CST/ VAT,
 Income Tax and other statutory dues, as applicable, with the
 appropriate authorities.  There were no undisputed amounts outstanding
 at the year end for a period of more than six months from the date they
 became payable.
 
 b) As informed, there were no disputed dues which remained unpaid as at
 31st March, 2010.
 
 6.  The accumulated losses of the Company as at 31st March, 2010 have
 exceeded its net worth. The Company has not incurred cash losses during
 the financial year ended on that date; however the Com- pany had
 incurred cash losses in the immediately preceding financial year.
 
 7.  The Company does not have any formal internal audit system.
 However, the internal checks and controls, exercised by the management,
 appear to be adequate for the size and nature of operation of the
 Company.
 
 8 a) According to the information & explanations given to us, the
 Company, consequent upon withdrawal of appeal filed by PSIDC with
 AAIFR, has fully discharged its commitments under the settlement scheme
 and accordingly agreed dues of PSIDC were paid in full & final
 settlement of their accounts.
 
 b) PSIDC accepted the repayment and issued the no due certificate.
 
 9.  According to the information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debuntures and other securities.
 
 10.  According to the information and explanations given to us, the
 provisions of any special statute appli- cable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 11.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 12.  According to the information & explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments; accordingly the provisions of clause 4(xiv) of the
 order are not applicable to the Company.
 
 13 According to the information and explanations given to us, and no an
 overall examination of the Balance Sheet of the Company as at 31st
 March, 2010, we report that no significant funds raised on short-term
 basis have, prima-facie, been used for long-term investment by the
 Company.
 
 14.  Based on the information & explanations furnished by the
 management, which have been relied upon by us, we report that no case
 of fraud on or by the Company has been noticed or reported during the
 year under audit.
 
 15.  The remaining clauses of the order are either not applicable to
 the Company or are not relevant in the current year and accordingly we
 have not reported thereon.
 
 
                                          For VASUDEVA & ASSOCIATES 
 
                                              CHARTERED ACCOUNTANTS
 
                                                               Sd/- 
 
 Dated : 05th August. 2010                         (NITI M. LATAWA)
 
 Place: Gholumajra Distt Mohali, Punjab                     PARTNER