1.  We have audited the attached Balance Sheet of Garg Furnace Limited,
 Kanganwal Road, V.P.O. Jugiana, G. T. Road, Ludhiana, as at 31st March
 2012, the Profit and Loss Statement and also the 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 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 basisfor
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003
 issued by the Central Government of India in terms of sub-section (4A)
 of section 227 of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 & 5 of the said
 Order.
 
 4.  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
 those books.
 
 iii) The Balance Sheet, Profit and Loss Statement and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account.
 
 iv) In our opinion, the Balance Sheet, Profit and Loss Statement 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) On the basis of written representations received from the directors,
 as on 31st March 2012 and taken on record by the Board of Directors, We
 report that none of the directors is disqualified as on 31 st March
 2012 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 accounts read together with
 notes thereon give 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.
 
 a).  In the case of the Balance Sheet, of the state of affairs of the
 company as at 31st March, 2012.
 
 b).  In the case of the Profit and Loss Statement, 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 TO THE AUDITOR REPORT
 
 (REFERED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE ON THE 
 STATEMENT OF ACCOUNTS FOR GARG FURNACE LIMITED AS AT AND FOR THE 
 YEAR ENDED 31st MARCH, 2012)
 
 (I) a).The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b).  All the assets have not been physically verified by the management
 during the year but there is a regular programme of verification which,
 in our opinion, is reasonable having regard to the size of the company
 and the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 c).  During the year, the company has not disposed off substantial part
 of its plant & machinery and hence the going concern status of the
 company has not been affected.
 
 (ii) a).The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 b).  The procedures of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the company and the nature of its business.
 
 c).  The company is maintaining proper records of inventory.
 
 The discrepancies noticed on verification between
 
 physical stocks and the book records ware not material.
 
 (iii) a). The company has not granted secured or unsecured loan to the
 companies, firms or other parties covered in the
 
 register maintained under section 301 of the companies Act 1956.
 Therefore the provisions of Paragraph 4 (iii) (b) (c) and (d) of the
 above said order are not applicable to the company.
 
 b).  The company has taken an interest free unsecured loan from one
 party covered in the register maintained under section 301 of the
 Companies Act, 1956. The amount involved in the transaction and balance
 outstanding at the end of the year is Rs. 1.74 Crores .
 
 c).  In our opinion, the terms and conditions on which loan has been
 taken are not prima facie prejudicial to the interest of the company.
 
 d). In our opinion and according to the information and explanation
 given to us, the payment of principal amount as agreed are regular.
 
 (iv) In our opinion and according to the information and '' explanations
 given to us, there is adequate internal
 
 control system commensurate with the size of the company and the nature
 of its business for purchases of inventory, fixed assets and for sale
 of goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control system.
 
 (v) a). In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in section 301 of the Companies Act, 1956, have been
 entered in the register maintained underthat section.
 
 b). In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding Rs. five lacs or more in respect
 of each party during the year, have been made at prices which are
 reasonable having regard to the prevalent market prices at the relevant
 time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the provisions of sections 58A and 58AA or any other
 relevant provisions of the Companies Act, 1956 and the companies
 (Acceptance of Deposits) Rules, 1975 are not applicable to Company. No
 order has been passed by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any other court or any other
 Tribunal.
 
 (vii) In our opinion, the company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account relating to
 materials, labour and other items of cost 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 and we are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained. We have however not
 made a detailed examination of the record with a view to determine
 whether they are accurate or complete.
 
 (ix) a).The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 employees'' state insurance, income tax, sales tax, custom duty, excise
 duty, cess, service tax and other material statutory dues applicable to
 it.
 
 b) .According to the information and explanation given to us, there are
 no dues of sale tax, income tax, customs duty, excise duty, cess and
 service tax which have not been deposited on account of any dispute.
 
 (x) The Company does not have any accumulated losses, further it has
 not incurred cash losses during the financial year covered by our audit
 and in the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to
 bank.
 
 (xii) The company has not granted loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities
 
 (xiii) In our opinion, the company is not a chit fund or a nidhi/mutual
 benefit fund/society.
 
 (xiv) In our opinion, the company has not dealt or traded in shares,
 securities, debentures and other investments
 
 (xv) The Company has not given guarantees for loan taken by others from
 banks. Therefore provisions of 4(XV) of above said order are not
 applicable to Company.
 
 (xvi) In our opinion and according to the information and explanation
 given to us, the term loans have been applied for the purpose forwhich
 they were obtained.
 
 (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 any preferential allotment of shares during the
 year to parties and companies covered in the register maintained under
 section 301 oftheAct.
 
 (xix) According to the information and explanations given to us,
 -during the period cowarad by our audit report, the company has not
 issued any debentures.
 
 (xx) The company has not raised money through Public Issue during the
 period covered by our audit.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 course of our audit except additional income of Rs. 250.04 Lacs
 surrendered during survey proceedings conducted by Income Tax
 Department.
 
 
 
                                                For Dass Khanna & Co.
 
                                               Chartered Accountants 
 
                                          (Registration No. 000402 N)
 
                                                        (RAKESH SONI)
 
 Place: LUDHIANA.                                            PARTNER
 
 Date : 31-08-2012                                      M. No. 83142