1.  We have audited the attached balance sheet of Gujarat Craft
 Industries Limited as at March 31, 2012, the statement of profit & loss
 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 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 (Auditors'' 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 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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.
 
 (iii) 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.
 
 (iv) In our opinion, the balance sheet, statement of profit & loss and
 cash flow statement dealt with by this report comply with accounting
 standards referred to in sub-section (3C) of section 211 of the
 Companies Act, 1956.
 
 (v) On the basis of the written representations received from
 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
 31st 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, on
 the said date.
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and
 subject to non-provision of doubtful debts of Rs. 868 (in Rs.000), (refer
 note 32) and its consequential effects on profit and loss statement and
 reserves, 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 statement of profit & loss, of the ''Profit'' of
 the company for the year ended on that date;
 
 (c) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR AUDITORS'' REPORT TO THE
 MEMBERS OF GUJARAT CRAFT INDUSTRIES LIMITED, ON THE FINANCIAL
 STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2012.
 
 (i) Fixed Assets register is under compilation. We are informed by the
 management that they have verified the fixed assets during the year.
 However, in absence of proper fixed assets register material
 discrepancies if any, could not be noticed between physical
 verification and book records. Hence, the fixed assets as appearing in
 books of account are carried in financial statements.
 
 The company has not disposed off substantial part of fixed assets
 during the year.
 
 (ii) (a) As explained to us, the inventory have been physically
 verified during the year by the management.  In our opinion, the
 frequency of verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, 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) In our opinion and according to the information and explanations
 given to us, the company has maintained proper records of inventory and
 the discrepancies noticed on such physical verification between
 physical stocks and book records were not material and have been
 adequately dealt with in the books of account.
 
 (iii) (a) The company has granted as well as taken unsecured, interest
 free demand loans, to and from companies listed in the register
 maintained under section 301 of the Act. The number of companies to
 whom loans granted during the year is one. The maximum amount involved
 during the year was Rs. 515 (in Rs.000) and year-end balance of loans given
 to such companies is Nil. The number of companies from whom loans taken
 during the year is ten. The maximum amount involved during the year was
 95,642 (in Rs.000) and the year-end balance of loans taken from such
 companies is 68,811 (in Rs.000).
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans taken by the company, are prima facie not prejudicial to
 the interest of the company. The principal amount is repayable by the
 company as agreed in contract.
 
 (iv) 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 purchase of inventory, fixed assets and for the
 sale of goods. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal controls.
 
 (v) According to the information and explanations given to us, we are
 of the opinion that there are no contracts or arrangements that need to
 be entered into the register maintained under section 301 of the
 Companies Act during the year.
 
 (vi) According to the information and explanations given to us, the
 company has not accepted any deposits from the public falling within
 the purview of section 58A of the Companies Act, 1956 and the rules
 framed there under.
 
 (vii) In our opinion, the company has an internal audit system
 commensurate with the size of the company and the nature of its
 business.
 
 (viii) We have broadly reviewed the cost records maintained by the
 company pursuant to the rules made by the Central Government for
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 records have been made and maintained. We have not, however made a
 detailed examination of records with a view to determine whether they
 are accurate or complete.
 
 (ix) (a) The company is generally regular in depositing undisputed
 provident fund, investor education & protection fund, employees state
 insurance, income tax, sales tax, wealth tax, service tax, custom duty,
 excise duty, cess and other material statutory dues, wherever
 applicable, have been generally regularly deposited with the
 appropriate authorities, except Income Tax under the Income Tax Act
 1961.
 
 (b) According to the information and explanations given to us, no
 undisputed amount in respect of aforesaid statutory dues were
 outstanding except for Income tax amounting to 410 (in Rs.000) as at 31st
 March, 2012 for a period of more than six months from the date they
 become payable.
 
 (c) According to the information and explanations given to us, as at
 the balance sheet date there were no dues of sales tax, income tax,
 custom duty, wealth tax, service tax, excise duty and cess which have
 not been deposited on account of dispute.
 
 (x) The company has no accumulated losses and has not incurred any cash
 losses during the current financial year or for 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
 banks. The company has not obtained any borrowings from financial
 institutions or by way of debentures.
 
 (xii) In our opinion and according to the information and explanation
 given to us, no loans and advances have been granted on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 (xiii) According to information and explanation given to us, the
 company has not given guarantee for loans taken by others from banks or
 financial institutions.
 
 (xiv) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, the term
 loans raised during the year were prima facie been used for the purpose
 for which they were raised.
 
 (xv) 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.
 
 (xvi) During the year, the company has not made any preferential
 allotment of shares to parties and companies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 (xvii)The company has not issued any debentures during the year.
 
 (xviii) The company has not raised any money by way of public issue
 during the year.
 
 (xix) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the company
 was noticed or reported during the year.
 
 (xx) In our opinion and according to the information and explanations
 given to us, the nature of the company''s business/activities during the
 year are such that clause; 4(xiii) provisions of any special statute applicable to chit fund, 4(xiv) dealing
or trading in shares, 
 securities, debentures and other investments of Company (Auditors''
 Report) Order, 2003 are not applicable to the company.
 
 
 
                                             For KANTILAL PATEL & Co.
                                                Chartered Accountants
                                        Firm Registration No. 104744W
 
                                                     (Gopal S. Baldi)
                                                              Partner 
                                               Membership No.: 125930
 
 Place : Ahmedabad 
 Date : 30th May, 2012