Everest Kanto Cylinder

We have audited the attached Balance Sheet of EVEREST KANTO CYLINDER
 LIMITED, as at 31st March, 2009, the annexed Profit and Loss Account
 and the Cash Flow Statement for the year ended on that date. 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.
 
 1.  We conducted our audit in accordance with the 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 from any 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 management, as well as evaluating the overall presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 2.  As required by the Companies (Auditors Report) Order, 2003 and the
 Companies (Auditors Report) (Amendment) Order, 2004 issued by the
 Central Government in terms of Section 227(4A) of the Companies Act,
 1956, we annex hereto a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 3.  Further to our comments in the Annexure referred to above, we
 report that:
 
 (i) We have obtained all the information and explanations, which, to
 the best of our knowledge and belief were necessary for the purposes of
 our audit;
 
 (ii) In our opinion, proper books of account as required by law, have
 been kept by the Company so far as appears from our examination of the
 books of the Company. The Branch Auditors Report forwarded to us has
 been appropriately dealt with in this Report;
 
 (iii) The Balance Sheet, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account of the Company;
 
 (iv) In our opinion, the Balance Sheet, Profit and 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;
 
 (v) Based on the representations made by the Directors and taken on
 record by the Board of Directors of the Company and the information and
 explanations given to us, none of the Directors is, as at 31st March,
 2009, prima-facie disqualified from being appointed as a Director in
 terms of clause (g) of sub-section (1) of Section 274 of the Companies
 Act, 1956;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements, read
 together with the notes thereon, give the information required by the
 Companies Act, 1956, in the manner so required and present a true and
 fair view in conformity with the accounting principles generally
 accepted in India:
 
 (a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 (b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE REFERREDTO IN PARAGRAPH 2 OF OUR AUDITORS REPORT OF EVEN DATE
 ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2009 OF EVEREST KANTO
 CYLINDER LIMITED
 
 On the basis of such checks as we considered appropriate and in terms
 of the information and explanations given to us, we state that:
 
 i. (a) The Company has generally maintained proper records showing
 particulars, including quantitative details and situation of its fixed
 assets;
 
 (b) The fixed assets have been verified in accordance with the phased
 verification - programme, which, in our opinion, is reasonable, looking
 to the size of the Company and the nature of its business. As explained
 to us, reconciliation with asset records is in progress and in the
 opinion of the management, discrepancies are not expected to be
 material;
 
 (c) The Company has not disposed off any substantial part of its fixed
 assets so as to affect its going concern;
 
 ii. (a) As explained to us, inventories have been physically verified
 by the Management, at intervals which, in our opinion, are reasonable
 in relation to the size of the Company and the nature of its business;
 
 (b) The procedures, as explained to us, which are followed by the
 Management for physical verification of inventories, are, in our
 opinion, reasonable and adequate in relation to the size of the Company
 and the nature of its business;
 
 (c) On the basis of our examination of the inventory records of the
 Company, we are of the opinion that, the Company is maintaining proper
 records of its inventories. Discrepancies noticed on physical
 verification of inventory as compared to book records, have been
 properly dealt with in the books of account;
 
 iii. (a) According to the information and explanations given to us, the
 Company has, during the year, renewed unsecured loans granted to a
 company covered in the register maintained under Section 301 of the
 Companies Act, 1956 (maximum balance outstanding during the year Rs.
 1,500 Lac). An amount of Rs. 500 Lac is outstanding at the close of the
 year. The Company has not granted any other loan, secured or unsecured,
 to any other party covered in the said register;
 
 (b) According to the information and explanations given to us, the
 terms and conditions of the aforesaid loan, including the rate of
 interest, are, in our opinion, not prima-facie prejudicial to the
 interest of the Company;
 
 (c) The receipt of principal and interest of the said loans are
 regular;
 
 (d) According to the information and explanations given to us, the
 Company has not taken any loan, secured or unsecured, from companies,
 firms or other parties covered in the register maintained under section
 301 of the Companies Act, 1956;
 
 iv. In our opinion and according to the information and explanations
 given to us, there are generally adequate internal control systems
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory and fixed assets and for
 sale of goods and services. During the course of our audit, no major
 weakness in internal control, had come to our notice;
 
 v. (a) On the basis of the audit procedures performed by us and
 according to the information, explanations and representations given to
 us, we are of the opinion that, the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956 and
 which were required to be entered in the register maintained under the
 said section, have been so entered;
 
 (b) In our opinion and according to the information and explanations
 given to us, we have to state that, the transactions made in pursuance
 of contracts or arrangements referred to in para (v) (a) above,
 exceeding the value of Rupees five lac in respect of any party during
 the year, have been made at prices which are reasonable having regard
 to market prices prevailing at that time;
 
 vi. The Company has not accepted any deposits from the public, during
 the year;
 
 vii. In our opinion, the Company has an internal audit system which is
 commensurate with the size of the Company and the nature of its
 business;
 
 viii. We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1 )(d) of the Companies
 Act, 1956 in respect of the Companys products to which the said rules
 are applicable and are of the opinion that, prima-facie, the prescribed
 records have been made and maintained. We have, however, not made a
 detailed examination of the records with a view to determine whether
 they are accurate;
 
 ix. (a) According to the records of the Company, it has been generally
 regular in depositing undisputed statutory dues including provident
 fund, investor education and protection fund, employees state
 insurance, income tax, sales tax, wealth tax, service tax, custom duty,
 excise duty, cess and other statutory dues with the appropriate
 authorities;
 
 (b) On the basis of our examination of the documents and records of the
 Company, there were no disputed dues in respect of income tax, sales
 tax, service tax, customs duty, excise duty and cess. Sale tax (lease
 tax) dues amounting to Rs. 16 Lac and wealth tax dues amounting to Rs.
 0.23 Lac have not been deposited on account of disputes pending with
 the sales tax departmental authority and the income tax tribunal,
 respectively;
 
 x. The Company, neither has accumulated losses at the end of the
 financial year nor has incurred cash losses, both, in the financial
 year under report and in the immediately preceding financial year;
 
 xi. According to the records examined by us and the information and
 explanations given to us, we have to state that, the Company has not
 defaulted in re-payment of dues to Banks.  There were no dues to
 financial institutions or debenture holders;
 
 xii. Based on the records examined by us, we have to state that, the
 Company has maintained adequate documents and records in case of loans
 granted against shares pledged by the borrowers;
 
 xiii. In respect of shares, securities, debentures or other investments
 dealt in or traded by the Company, proper records are maintained in
 respect of transactions and contracts and timely entries have been made
 therein. All the investments are held by the Company in its own name;
 
 xiv. According to the information and explanations given to us and the
 representations made by the Management, the
 
 Company has given guarantees to banks for loans taken by wholly owned
 subsidiaries. In our opinion, the terms and conditions of these
 guarantees, are not, prima-facie, prejudicial to the interest of the
 Company;
 
 xv. On the basis of the records examined by us, we have to state that,
 the Company has, prima-facie, applied the term loans for the purposes
 for which they were obtained. Out of proceeds of term loan of Rs. 5,029
 Lac received at the close of the year and deposited in cash credit
 account with banks, Rs. 4,960 Lac is pending to be utilised for the
 purpose for which obtained;
 
 xvi. According to the information and explanations given to us and on
 an overall examination of the financial statements of the Company and
 after placing reliance on the reasonable assumptions made by the
 Company for classification of long term and short term usage of funds,
 we are of the opinion that, prima facie, as at the close of the year,
 short term loan amounting to Rs. 1,980 Lac stands utilised for
 acquiring specific fixed assets;
 
 xvii. The Company has not made any preferential allotment of shares to
 any party or company covered in the register maintained under Section
 301 of the Companies Act, 1956;
 
 xviii. The Company has not issued any debentures during the year;
 
 xix. The Company has not raised any money by public issue during the
 year;
 
 xx. According to the information and explanations given to us and the
 representations made by the Management and to the best of our knowledge
 and belief, no significant fraud on or by the Company, has been noticed
 or reported by the Company during the year.
 
 Looking to the nature of activities being carried on at present by the
 Company and also considering the nature of the matters referred to in
 the various clauses of the Companies (Auditors Report) Order, 2003 and
 the Companies (Auditors Report) (Amendment) Order, 2004, clauses
 (iii)(d), (iii)(f), (iii)(g) and (xiii) of Paragraph 4 of the aforesaid
 Order, are, in our opinion, not applicable to the Company.
 
                                         For and on behalf of
                                              Dalai & Shah
                                        Chartered Accountants
 
                                            Venkatesh Subramanian
 Place: Mumbai                                        Partner
 Date: 15th May, 2009                          Membership No.: 37942