1.  We have audited the attached Balance Sheet of KOKUYO CAMLIN LIMITED
 as at 31st March, 2012 and the statement of Profit and Loss and Cash
 Flow Statement for the year ended on that date and a summary of
 significant accounting policies and other explanatory information.
 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, issued
 by the Central Government in terms of Section 227(4A) of the Companies
 Act, 1956, 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 enclose in the Annexure, a
 statement on the matters specified in paragraph 4 & 5 of the said
 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 the law have
 been kept by the Company so far as appears from our examination of
 these books and proper returns adequate for the purposes of our
 
 audit have been received from branches not visited by us.
 
 (c) The Balance Sheet, the 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 said Balance Sheet, the statement of Profit
 Loss and Cash Flow Statement comply with the Accounting Standards
 referred to in sub-section (3C) of Section 211 of the Companies Act,
 1956.
 
 (e) On the basis of written representations received from the directors
 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.
 
 (f) In our opinion, and to the best of our information and according to
 the explanations given to us, they said accounts 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) i n the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2012;
 
 (ii) in the case of the statement of Profit and Loss, of the Profit for
 the year ended on that date; and
 
 (iii) i n the case of the Cash Flow Statement, of the cash flow for the
 year ended on that date.
 
 (i) Fixed Assets:
 
 (a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 (b) The fixed assets have been physically verified by the management
 during the year. No material discrepancies between the book records and
 physical inventory are noticed.
 
 (c) The Company has not disposed off substantial part of its fixed
 assets during the year.
 
 (ii) Inventories:
 
 (a) Physical verification of inventory was conducted by the Management
 at reasonable intervals during the year. In respect of materials sent
 for job work and finished goods with third parties, certificates of
 closing stock have been obtained from third parties in respect of
 substantial portion of the stocks held.
 
 (b) I n our opinion, the procedure of physical verification of stocks
 followed by the management is reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion, the Company is maintaining proper records of
 inventory. Having regard to the size of the operations of the Company
 and the nature of stocks held, the discrepancies noticed on
 verification between physical stocks and book records were not material
 and have been properly dealt with in the books of accounts.
 
 (iii) Loans and Advances granted / taken from certain entities:
 
 Loans, secured or unsecured, granted or taken by the company to/from
 companies, firms or other parties are covered in the Register
 maintained under Section 301 of the Companies Act, 1956:
 
 The Company has neither granted nor taken any loans, secured or
 unsecured, to or from such entities.
 
 (iv) Internal Control System:
 
 In our opinion and according to the information and explanations given
 to us, having regard to the explanation that some of the items are of a
 special nature and their prices cannot be compared with alternate
 quotations, there are adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchases of inventory, fixed asset and with regard to the sale of
 goods and services.  During the course of our audit, and according to
 the information and explanation given to us, we have neither come
 across nor have been informed of any continuing failure to correct
 major weaknesses in the internal control system.
 
 (v) Contracts or arrangement referred to in this Section 301 of the
 Companies Act,1956:
 
 (a) Based on audit procedures applied by us, to the best of our
 knowledge and belief and according to the information and explanations
 given to us, we are of the opinion that the contracts or arrangements
 referred to in Section 301 of the Act have been entered in the register
 required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, and having regard to the fact that some of the items
 purchased are of special nature, and suitable alternative sources do
 not exist for obtaining comparative quotations, the transactions for
 purchase/ sale of goods and materials, made in pursuance of contracts
 or arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 and exceeding the value of Rs 5,00,000/- in
 respect of any party during the year have been made at prices which are
 reasonable having regard to prevailing market prices as available with
 the Company for such goods and materials, or the prices at which such
 transactions for similar goods and materials were made with other
 parties.
 
 (vi) Public Deposits:
 
 Company has complied with the provisions of Section 58A, 58AA or any
 other relevant provisions of the Companies Act, 1956 and the Companies
 (Acceptance of Deposit) Rules 1975, with regard to the deposits
 accepted from the public. We are further informed that no order has
 been passed by the Company Law Board or National Company Law Tribunal
 or Reserve Bank of India or any Court or any other Tribunal intimating
 the contravention of said provisions.
 
 (vii) Internal Audit System:
 
 I n our opinion, the Company has an internal audit system commensurate
 with the size and nature of its business.
 
 (viii) Cost records:
 
 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.
 
 (ix) Statutory Dues:
 
 (a) Company is generally regular in depositing with appropriate
 authorities undisputed statutory dues including Provident Fund,
 Investor Education and Protection Fund, Employees State Insurance,
 Income tax, VAT, Wealth tax, Service tax, Customs duty, Excise duty,
 Cess and other material statutory dues applicable to it.
 
 (b) No undisputed amounts payable in respect of Income Tax, VAT, Wealth
 Tax, Service Tax, Customs duty, Excise duty and Cess are in arrears, as
 on 31st March 2012 for a period of more than six months from the date
 they became payable.
 
 (c) There are no dues of Income Tax, Wealth Tax, Service Tax, Custom
 duty, Excise duty and Cess which have not been deposited on account of
 dispute except in respect of (i) excise duty of Rs 41.10 lacs under the
 Central Excise Act, 1956 out of which dispute in respect of Rs 20.63
 lacs is pending before Bombay High Court, Rs 18.14 lacs is pending
 before the Central Excise and Service Tax Tribunal and Rs 2.33 lacs with
 Commissioner (Appeal),
 
 (ii) dispute in respect of Service Tax of Rs 1.89 lacs under the Finance
 Act, 1994 which is pending before the Assistant Commissioner, (iii)
 dispute in respect of Income Tax of Rs 112.61 lacs under the Income Tax
 Act, 1961 pending before the Commissioner of Income Tax (Appeals),
 
 (iv) dispute in respect of Sales Tax of Rs 105.38 lacs under the State
 Sales Tax Laws and Rs 37.03 lacs under the Central Sales Tax Act, of
 which the dues involved in the proceedings pending before the Dy.
 Commissioner (Appeals) are Rs 142.18 lacs and those before the Central
 Sales Tax Tribunal are Rs 0.23 lacs .
 
 (x) Accumulated Losses:
 
 The Company does not have accumulated losses as at the end of the year.
 Company has not incurred cash loss during the financial year covered by
 our audit and in the immediately preceding financial year.
 
 (xi) Dues to Financial Institutions, Banks and Debenture holders:
 
 Based on our audit procedures and on the basis of information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in the repayment of dues to Financial
 Institutions and Banks.
 
 (xii) Security for Loans & Advances Granted:
 
 Company has not granted any loans or advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 (xiii) Special Statute:
 
 The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/society are not applicable to the
 Company.
 
 (xiv) Dealings/Trading in Shares, Securities, Debentures and other
 investments:
 
 The Company is not dealing in or trading in shares, securities,
 debentures and other investments.
 
 (xv) Guarantees given:
 
 According to the information and explanation given to us, the Company
 has given a corporate guarantee of Rs 150 lacs in respect of the loan
 availed by its associate M/s. ColArt Camlin Canvas Pvt. Ltd. which, in
 our opinion, prima facie, is not prejudicial to the interest of the
 Company.
 
 (xvi) Term Loans:
 
 Term loans availed by the Company have been applied by the Company for
 the purposes for which they are obtained.
 
 (xvii) Utilization of Funds:
 
 According to the information and explanations given to us and on an
 overall examination of the Balance Sheet of the Company, we report that
 funds raised on short-term basis have not been used for long-term
 investment.
 
 (xviii) Preferential Allotment of Shares:
 
 During the year, the Company has not made any preferential allotment of
 shares to the parties and companies covered in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 (xix) Security for Debentures Issued:
 
 The Company has not issued any Debentures.
 
 (xx) Public Issue of Equity Shares:
 
 During the year, the Company has not raised any money by public issue
 of Equity Shares.
 
 (xxi) Frauds Noticed:
 
 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 fraud on or by
 the Company, noticed or reported during the year, nor have we been
 informed of such case by the management.
 
                                          For B. K. KHARE & COMPANY
 
                                              Chartered Accountants 
 
                                       Firm Registration No 105102W
 
                                                        DILIP BAPAT
 
                                                            Partner
 
                                                      (M. No. 30388)
 
 Place : Mumbai 
 
 Dated : 10th May, 2012