1.  We have audited the attached Balance Sheet of ISMT Limited as at
 March 31, 2011, the Profit and Loss account and also 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 accounting 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 the 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 Companies (Auditor''s 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 the
 information and explanation given to us and the books and records
 examined by us in the normal course of audit and to the best of our
 knowledge and belief, we give in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comment in the Annexure referred to above, we report
 that:
 
 a) We have obtained all the information and explanation, which to the
 best of our knowledge and belief were necessary for the purpose 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, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 d) 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 to the extent applicable;
 
 e) On the basis of written representation received from the directors,
 as on March 31, 2011 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 f) In our opinion and to the best of our information and according to
 the explanation 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 ;
 
 i) In the case of Balance Sheet, of the state of affairs of the Company
 as at March 31, 2011;
 
 ii) In the case of Profit and Loss account, of the Profit for the year
 ended on that date; and
 
 iii) In the case of Cash Flow statement, of the cash flow for the year
 ended on that date.
 
 Annexure to the Auditor''s Report
 (as referred to in paragraph 3 of our report of even date)
 
 1) a) The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) These fixed assets have been physically verified by the management
 at regular interval considering the size of the company and nature of
 asset. As informed to us, no material discrepancies have been noticed
 on such verification.
 
 c) No disposal of a substantial part of fixed assets of the company has
 taken place during the year.
 
 2) a) As explained to us, the inventories including majority of the
 goods lying with third parties have been physically verified by the
 management at reasonable intervals during the year.
 
 b) In our opinion and according to the information and explanation
 given to us, 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) In our opinion and according to the information and explanation
 given to us, the Company has maintained proper records of its
 inventories and the discrepancies noticed on such physical verification
 between physical stock and the book records were not material and have
 been properly dealt with in the books of account.
 
 3) As per the records of the company, it has not granted any loans
 secured / unsecured to companies, firms or other parties covered in the
 register maintained u/s 301 of the Companies Act, 1956.
 
 4) As per the records of the Company, it has not taken any loans
 secured / unsecured from companies, firms or other parties covered in
 the register maintained u/s 301 of the Companies Act, 1956.
 
 5) In our opinion and according to the information and explanation
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and nature of its business with regard to
 purchase of inventory and fixed assets and for sale of goods and
 services. During the course of audit, we have not observed any
 continuing failure to correct major weakness in internal control
 systems.
 
 6) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion there were no
 contracts or arrangements whose particular are needed to be entered in
 the register maintained in pursuance of section 301 of the Companies
 Act, 1956.
 
 7) The company has not accepted / nor there are any outstanding Fixed
 Deposit from the public.
 
 8) The Company has an internal audit department to carry out its
 internal audit function. In our opinion, the internal audit system is
 commensurate with the size of the Company and nature of its business.
 
 9) 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 and are of the opinion that prima facie the prescribed
 accounts and records have generally been maintained. We have not,
 however, made a detailed examination of the records with a view to
 determine whether they are accurate or complete.
 
 10) a) According to the records of the company, the company is regular
 in depositing undisputed statutory dues including Provident Fund,
 Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth
 Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the
 appropriate authorities. According to the information and explanation
 given to us, there are no undisputed amounts payable in respect of such
 statutory dues which have remained outstanding as at March 31, 2011 for
 a period of more than six months from the day they become payable.
 
 b) The disputed statutory dues that have not been deposited on account
 of disputes pending before the appropriate authorities are as mentioned
 in the Annexure I to this report.
 
 11) The Company has no accumulated losses as at 31st March, 2011 and it
 has not incurred cash loss during the year or in the immediately
 preceding financial year.
 
 12) According to the information and explanation given to us, the
 company has not defaulted in repayment of dues to financial
 institutions, banks and debenture holders.
 
 13) According to the information and explanation given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures or other securities.
 
 14) In our opinion, the Company is not a Chit Fund or a Nidhi or Mutual
 benefit Fund / Society, Therefore, the provision of clause 4 (xiii) of
 the Companies (Auditor Report) Order, 2003 is not applicable to the
 Company.
 
 15) The Company is not dealing in or trading in Shares, Securities,
 Debenture, or other investments and hence, provision of clause 4 (xiv)
 of the Companies (Auditor Report) Order, 2003 is not applicable to the
 Company.
 
 16) According to the information and explanations given to us, the
 Company has given guarantees for loans taken by others from banks. The
 terms and conditions whereof, in our opinion, based on the management
 representation, are not prima-facie prejudicial to the interest of the
 Company.
 
 17) According to the information and explanation given to us, the term
 loans taken by the Company during the year have been utilised for the
 purpose for which the said loans were obtained.
 
 18) According to the Cash Flow Statement and other records examined by
 us and on the basis of information and explanation given to us, on an
 overall basis, funds raised on Short Term basis have, prima facie, not
 been used during the year for Long Term investment.
 
 19) 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.
 
 20) The company did not have any outstanding debentures during the
 year.
 
 21) The Company has not made any Public Issue during the year to raise
 money. Accordingly the provision of clause 4 (xx) of the Companies
 (Auditor Report) Order, 2003 is not applicable.
 
 22) 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 course of our audit that causes the
 financial statement to be materially misstated.
 
 
                                                          Rs. in Crore
 
 Name of Statue  Nature of Dues   Amount 
                                  Disputed Forum Where Dispute is Pending
 
 Central Sales 
 Tax Act, 1956   Sales Tax         0.10    Tribunal
 
                                   6.53    Deputy Commissioner of Sales
                                           Tax (Appeals)
 
 Maharashtra 
 Sales Tax 
 Act, 1959       Sales Tax         0.02    Tribunal
 
                                   0.48    High Court
 
                                   5.65    Deputy Commissioner of  
                                           Sales Tax (Appeals)
 
                 Purchase Tax      0.01    Tribunal
 
 Central Excise 
 Act, 1944       Excise Duty      23.11    CEGAT
 
                                   0.16    High Court, Bombay
 
                                   1.51    Commissioner (Appeal)
 
                                   2.47    Commissioner (Adjud.)
 
                                   0.21    Joint Commissioner
 
                                   1.34    Asst. Commissioner
 
 Income Tax 
 Act, 1961        Income Tax       0.09    ITAT (Mumbai)
 
 
 
 
 
 For M/s P.G. BHAGWAT                              For J.K. SHAH & CO.
 
 Firm Registration No. 101118W          Firm Registration No. 109606W
 
 Chartered Accountants                          Chartered Accountants
 
 Sandeep Rao                                           Sanjay  Dhruva
 
 Partner                                                      Partner
 
 Membership No. 47235                            Membership No. 38480