1.  We have audited the attached Balance Sheet of Fulford (India)
 Limited (the ''company''), as at 31st December, 2012, and the related
 Statement of Profit and Loss and Cash Flow Statement for the year ended
 on that date annexed thereto, which we have signed under reference to
 this report.  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 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 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 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 (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (together the ''Order'') issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1956''
 of India (the ''Act'') 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 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 explanations which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (b) 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
 those 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 standards referred to in sub-section (3C) of Section 211 of
 the Act;
 
 (e) On the basis of written representations received from the
 directors, as on 31st December, 2012 and taken on record by the Board
 of Directors, none of the directors is disqualified as on 31st
 December, 2012 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act 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 31 st December, 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.
 
 [Referred to in paragraph 3 of the Auditors'' Report of even date to
 the members of Fulford (India) Limited on the financial statements as
 of and for the year ended 31st December, 2012]
 
 1.  (a) The company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets are physically verified by the management
 according to a phased programme designed to cover all the items over a
 period of three years which, in our opinion, is reasonable having
 regard to the size of the company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the management during the year and no material
 discrepancies have been noticed on such verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the company during the year.
 
 2.  (a) The inventory has been physically verified by the management
 during the year. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management are 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, in our
 opinion, the company is maintaining proper records of inventory. In our
 opinion, the discrepancies noticed on physical verification of
 inventory as compared to book records were not material.
 
 3.  (a) 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 Act. Accordingly, the provisions of Clauses
 4(iii)(b) to 4(iii)(d) of the Order are not applicable to the company.
 
 (b) The company has not taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act. Accordingly, the provisions of Clauses
 4(iii)(f) and 4(iii)(g) of the Order are not applicable to the company.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that except for certain
 items of inventory purchased which are of special/proprietary nature
 for which suitable alternative sources do not exist, there is an
 adequate internal control system commensurate 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. Further, on the basis of
 our examination of the books and records of the company and according
 to the information and explanations given to us, we have neither come
 across nor have we been informed of any continuing failure to correct
 major weaknesses in the aforesaid internal control system.
 
 5.  (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of all contracts or
 arrangements that need to be entered into the register maintained under
 Section 301 of the Act have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, in respect of the transactions made in pursuance of such
 contracts or arrangements and exceeding the value of Rupees Five Lakhs
 in respect of any party during the year, we are unable to comment
 whether these transactions have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time as there are no comparable market prices available since
 these transactions are of specialised/proprietary nature.
 
 6.  The company has not accepted any deposits from the public within
 the meaning of Section 58A of the Act and the rules framed there under.
 
 7.  In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 company in respect of the products where, pursuant to the Rules made by
 the Central Government of India, the maintenance of cost records has
 been prescribed under clause (d) of sub-section (1) of Section 209 of
 the Act 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 whether they are accurate or complete.
 
 9.  (a) According to the information and explanations given to us and
 the records of the company examined by us, in our opinion, the company
 is generally regular in depositing undisputed statutory dues in respect
 of provident fund, investor education and protection fund, income- tax,
 sales tax and service tax though there has been a delay in a few cases
 and is regular in depositing undisputed statutory dues including
 employees'' state insurance, wealth tax, customs duty, excise duty and
 other material statutory dues, as applicable, with the appropriate
 authorities.  The extent of the arrears of provident fund outstanding
 as at 31st December, 2012, for a period of more than six months from
 the date they became payable are as follows -
 
 Name of the              Nature of dues        Amount 
 statute                                          Rs.
 
 The Employees''         Provident Fund         6,324
 Provident
 Funds and
 Miscellaneous
 Provisions Act,
 1952
 
 Name of the Statute    Period to which    Due date     Date of
                        the amount                      payment
                        relates
 
 The Employees          July 2012          16th August, 16th February,
 Provident                                 2012         2013
 Funds and
 Miscellaneous
 Provisions Act,
 1952
 
 
 (b) According to the information and explanations given to us and the
 records of the company examined by us, there are no dues of wealth-tax,
 service tax, customs duty and excise duty which have not been deposited
 on account of any dispute. The particulars of dues of income- tax and
 sales tax as at 31st December, 2012 which have not been deposited on
 account of a dispute, are as follows -
 
 Name of the           Nature of                           Amount*
 statute               dues                                 Rs.
 
 The Income-tax        Income-tax                        29,654,169 
 Act, 1961             including interest, as 
                       applicable
 
                                                        130,696,878
 
 The Central           Sales tax                         18,677,968 
 Sales Tax Act,        including
 1956 and Local        interest, as 
 Sales Tax Acts        applicable
 
                                                            771,484
 
 Name of the Statute    Period to which the       Forum where the 
                        amount relates            dispute is pending
 
 The Income-tax Act,
 1961                   Assessment Years          Appellate Authority -
                        2002-2003 and             up to Commissioner''s
                        2006-2007                 level
 
                        Assessment Years          Tribunal 
                        1997-1998, 1999-2000,
                        2004-2005, 2005-2006,
                        2007-2008 and 2008-2009
 
 The Central Sales
 Tax Act,1956 and 
 Local Sales Tax Acts   Several demands           Appellate Authority -
                        pertaining to the         up to Commissioner''s
                        period 1992-1993 to       level 
                        1995-1996, 2000-2001, 
                        2003-2004, 2005-2006,
                        2007-2008, 2008-2009 
                        and 2009-2010
 
                        Several demands           Tribunal
                        pertaining to the period
                        2001-2002 and 2004-2005
 
 * Net of amounts paid including under protest.
 
 10.  The company has no accumulated losses as at the end of the
 financial year and it has incurred cash losses in the financial year
 ended on that date but has not incurred any cash losses in the
 immediately preceding financial year.
 
 11.  As the company does not have any borrowings from any financial
 institution or bank nor has it issued any debentures as at the Balance
 Sheet date, the provisions of Clause 4(xi) of the Order are not
 applicable to the company.
 
 12.  The company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 Accordingly, the provisions of Clause 4(xii) of the Order are not
 applicable to the company.
 
 13.  As the provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 company, the provisions of Clause 4(xiii) of the Order are not
 applicable to the company.
 
 14.  In our opinion, the company is not dealing in 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.
 
 15.  According to the information and explanations given to us, the
 company has not given any guarantee for loans taken by others from
 banks or financial institutions during the year. Accordingly, the
 provisions of Clause 4(xv) of the Order are not applicable to the
 company.
 
 16.  The company has not raised any term loans. Accordingly, the
 provisions of Clause 4(xvi) of the Order are not applicable to the
 company.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the company, we report
 that no funds raised 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 during the year. 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 and does
 not have any debentures outstanding as at the beginning of the year and
 at the year end. Accordingly, the provisions of Clause 4 (xix) of the
 Order are not applicable to the company.
 
 20.  The company has not raised any money by public issues during the
 year. Accordingly, the provisions of Clause 4(xx) of the Order are not
 applicable to the company.
 
 21.  During the course of our examination of the books and records of
 the company, carried out in accordance with the generally accepted
 auditing practices in India and according to the information and
 explanations given to us, we have neither come across any instance of
 material fraud on or by the company, noticed or reported during the
 year, nor have we been informed of any such case by the management.
 
                                                For Lovelock & Lewes
 
                                       Firm Registration No. 301056E 
 
                                               Chartered Accountants
 
                                                    Himanshu Goradia 
 
                                                             Partner
 
 Mumbai, 25th February, 2013                    Membership No. 45668