Lakshmi Machine Works

1.  We have audited the attached Balance Sheet of LAKSHMI MACHINE WORKS
 LIMITED as at 31st March 2009, the Profit & Loss Account and also the
 Cash Flow Statement for the year ended on that date annexed thereto.
 These financial statements are the responsibility of the Companys
 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 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 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 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 & 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 mandatory
 Accounting Standards referred to in Section 211(3C) of the Companies
 Act, 1956.
 
 e) On the basis of the written representations received from the
 Directors, as on 31st March, 2009 and taken on record by the Board of
 Directors, we report that none of the Directors, is disqualified as on
 31st March, 2009 from being appointed as a Director in terms of Clause
 (g) of subsection (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, the said accounts read with the
 significant accounting policies and the 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
 
 1) in the case of the Balance Sheet of the state of affairs of the
 Company as at 31 st March, 2009 and
 
 2) in the case of Profit & Loss Account, of the Profit of the Company
 for the year ended on that date.
 
 3) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
 
 ANNEXURE TO THE AUDITORS REPORT
 
 [Referred to in Para 3 of our Audit Report of even date]
 
 1.  In respect of its Fixed Assets:
 
 a.  The company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 b.  The company has physically verified certain fixed assets during the
 year in accordance with a regular programme of verification, which in
 our opinion provides for physical verification of all the fixed assets
 at reasonable intervals having regard to the size of the company and
 nature of its assets. According to the information and explanations
 given to us no material discrepancies were noticed on such
 verification.
 
 c.  The company has not disposed off any substantial part of fixed
 assets during the year that affects the going concern assumption.
 
 2.  In respect of its inventories:
 
 a.  As explained to us, inventories have been physically verified by
 the management at regular intervals during the year.
 
 b.  In our opinion and according to the information and explanations
 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 explanations
 given to us, the company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification as compared to the book records.
 
 3.  (a) 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 Companies Act, 1956.
 
 (b) The company has given a secured loan amounting to Rs. 3,60,00,000
 to one party covered in the register maintained under Section 301 of
 the Companies Act, 1956. The maximum amount outstanding during the year
 and also the year end balance was Rs.  3,60,00,000.
 
 (c) In our opinion, the rate of interest and other terms and conditions
 on which loans have been given are not prima facie, prejudicial to the
 interests of the company.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the company and nature of its business for the
 purchase of inventory, fixed assets and also for the sale of goods and
 services. We have not observed any major weaknesses in internal control
 systems during the course of our audit.
 
 5.  In respect of contracts or arrangements referred to in Sec. 301 of
 the Companies Act, 1956:
 
 a.  In our opinion and according to the information and explanations
 given to us, particulars of such contracts or arrangements have been
 entered in the register required to be maintained under Sec. 301 of the
 Companies Act, 1956.
 
 b.  In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements have been made at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 6.  The company has not accepted any deposits from the public and as
 such clause (vi) of the Order is not applicable.
 
 7.  In our opinion, the company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of account and records
 maintained by the company as applicable to it pursuant to Sec. 209(1
 )(d) of the Companies Act, 1956 and 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 these records.
 
 9.  According to the information and explanations given to us in
 respect of the statutory dues:
 
 a.  The company is regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and protection Fund,
 Employees State insurance, Income tax, Wealth tax, Service Tax, Sales
 Tax, Customs
 
 b.  The details of disputed statutory dues are as under: duty, Excise
 Duty, Cess and any other statutory dues with the appropriate
 authorities during the year. According to the information and
 explanations given to us, no undisputed amounts payable in respect of
 the aforesaid dues were outstanding as at 31st March 2009 for a period
 of more than six months from the date they became payable.
 
 Name of          Nature of       Amount        Amount paid/
 the Statute      the dues    [Rs. In lakhs]     adjusted
 
 Central Excise   Excise Duty     250.53          NIL
 Act, 1944          & Penalty
 
 Forum where dispute is pending
 
 Appellate authorities
 Upto Commissioners
 Level        -Rs. 158.03 lakhs
 CESTAT       -Rs.   66.45 lakhs
 High Court   - Rs.   26.05 lakhs
 
 10.  The company has no accumulated losses and has not incurred any
 cash losses during the financial year covered by our audit and in the
 immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the company has not defaulted in the repayment of dues to
 financial institutions, banks and debenture holders.
 
 12.  In our opinion and according to the information and explanation
 given to us, no loans and advances have been granted by the company on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 13.  The company is not a Chit Fund or a Nidhi/Mutual Benefit
 Fund/society and as such reporting under clause (xiii) of the Order is
 not applicable to the company.
 
 14.  The company is not dealing or trading in shares, securities,
 debentures and other investments and as such clause (xiv) of the Order
 is 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.
 
 16.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no term loans were availed by
 the company during the year.
 
 17.  The company has not raised any funds on short terms basis.
 
 18.  The company has not made any preferential allotment of shares
 during the year.
 
 19.  The company has not issued any debentures during the year.
 
 20.  The company has not raised any money by public issue during the
 year.
 
 21.  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 that causes the financial
 statements to be materially misstated.
 
 
                                        For Subbachar & Srinivasan
                                   Chartered Accountants, Auditors
 
                                                   T S V Rajagopal
                                                         (Partner)
                                             Membership No. 200380
 
 For M S Jagannathan & Visvanathan
 Chartered Accountants, Auditors
 
 M J Vijayaraaghavan
 (Partner)
 Membership No.7534
 
 Coimbatore
 20th May, 2009