1.  We have audited the attached Balance Sheet of MADHUR INDUSTRIES
 LTD., as at 31 March 2012/ and the statement of Profit and Loss Account
 and also the cash flow statement for the year ended on the date annexed
 thereto, in which are incorporated accounts of the Branch audited by
 the Branch Auditor whose reports have been considered in preparing this
 report. These financial statements are the I 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. These standards require that we plan and
 perform the aiidit to obtain reasonable assurance aboutr whether the
 financial statements are free of material misstatements. An audit
 includes examining, on 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 (Auditor''s Report) Order, 2003 and as
 amended by the Companies (Auditor''s Report)(Amendment) Order, 2004
 issued by 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 said order,
 
 4. Further to our comments in the Annexure xeferred to above, we report
 that:  
 
 a. We have obtained all the mformation 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 appearsfrom om examination of those
 books and proper returnsadequate for the purposes of our audithavebeen
 received fromthe branch not visited by us;
 
 c.  The Reports on the accounts of Mumbai Branch audited by the branch
 auditor has been forwarded to us & have been appropriately dealt with
 while preparing our Report;
 
 d.  The Balance Sheet , the Profit and Loss Account and cash flow
 statement dealt with by this report are in agreement with the books 
 of account.
 
 e.  In our opinion, the Balance Sheet ,Profit & Loss Account and cash 
 flow statement dealt with by this report comply with the i Accounting
 Standards referred to in sub-section 3C of Section 211 of the Companies
 Act, 1956;
 
 Except Accounting Standard -15 on Retirement benefits as no provision
 has been made for retkement benefits , The effect of the same can not
 be quantified, to that extent loss for the year and balance of Profit &
 Loss account and balance of current liabilities is understated.
 
 f.  On the basis of written representations received from the directors
 as at 31 March, 2012 and taken on record by the Board of Directors and
 in accordance with the information and explanations as made available,
 the directors of the company do not have prima - facie
 have any disqualification as at 31March, 2012 from being appointed
 as a director in terms of clause (g) of sub-section (1) of section
 274 of the Companies Act, 1956.
 
 g.  TheBankaccounts of the Company was frizzed by the CBI BS&FC, Mumbai
 in the financial year 2001-02, therefore no provision has   been made
 for bank balance of Rs. 32,56,783, DD in Transit of Rs.32,372 ,
 doubtful sundry debtors of Rs. 34.07 lacs & doubtful advance of Rs.
 82J21 lacs exceeding six months . The Consequential effect of 
 this is not ascertainable.
 
 h. Note in Schedule relating to non provision of interest on fixed
 deposit (accepted in previous year u/s 58A) for the year ending on 3lst
 March, 2012 and matured/encashed Fixed Deposits for which the* cheques
 are issued frorn separate bank account (which is freezedCBI BS &FC,
 Mumbai) but not cleared due to suspension of banking operation of
 Madhavpura Mercantile Co, Op. Bank Ltd. Consquently the loss 
 and liability are understated to the extent.                          
 
 1 Subject to the above ,In our opinion and to the best of our 
 information and according to the explanations given to us, the said
 accounts, read in conjunction with the significant Accounting policies
 (Note-25), Notes to Fmancial Statements (Notes 1-24) give the
 information required by the Companies Act/1956, in the mariner 
 so required and give a true and fair view in conformity with the 
 accounting principles generally accepted in India: 
 
 
 
 i In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 March, 2012.
 
 
 ii In the case of the Profit and Loss Account, of the profit of the
 Company for the period ended on that date.  
 
 iii In the case of Cash Flow Statement, of the Cash Flow of the Company
 for the year ended on that date.
 
 Date:-     28/05/2012                      For Purushottam Khandelwal & Co.
 
 Place: - Ahmedabad                           Chartered Accountants
 
                                            Sd/-
 
                                               (P.H. Khandelwal)
                                                  Proprietor
 
 ANNEXURE TO THE AUDrrdRS''REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  (a) As per the information and explanation given to us, the Company
 has maintained proper records showing full particulars, including
 quantitative details and situation of fixed assets.
 
 (b) As per the information and explanation given to us, the assets have
 been physically verified by the management during the regular interval.
 However the details regarding the same are not available for  our
 verification.  
 
 (c) The Company has not disposed of any substantial part of its fixed 
 assets during the year as would affect its going concern status.
 
 
 2.  (a) As per the information and explanations given to us , the
 inventories has been psically verified during the year by the
 management.  
 
 (b) In our opinion and according to the mfprrnation and explanation
 given to us, the procedure of physical verification of inventories
 followed by the management is reasonable and adequate in relation to me
 size of the company and me nature of its business.
 
 (c) The company has maintained proper records of inventories. As
 explained to us, there were no material discrepancies that have been
 noticed on physical verification of inventories as compared to books
 records.
 
 3.  (a) As per the information and explanations given to us, the
 Company has granted unsecured loans to six parties covered in the
 register maintained u/s 301 of the Companies Act, 1956. 
 The maximum balance  outstanding during the year was 
 Rs. 23,52,971.34 
 
 (b) In our opinion, the rate of interest and other terms and
 conditions of such loan are not, prime facie, prejudicial to the
 interest of the Company.  
 
 (c): The company is neither regular in making recovery of the 
 principal amount nor its interest. 
 
 (d) There is overdue amount  of loans granted exceeding one 
 lacs in case of three parties  and company is in process of 
 recovery of the amount to the. Partiesi covered in the register 
 maintamed under section 301 of the Companies Act, 1956.
 
 (e) As per the information and explanations given to us, the Company
 has taken unsecured loans from three parties covered in the Register 
 maintained u/s. 301 of the Companies Act, 1956. The maximum 
 balance outstanding during the year was Rs. 33,43,494 
 
 (f) The terms and conditions of the above loans are prima facie not 
 prejudicial to me interest of the company.  
 
 (g) The company is neither regular in making repayment of the principal
 amount nor its interest 
 
 
 4.  In our opinion and according to information and explanation given
 to us;  there is adequate internal control system commensurate with
 the size of the  Company and the nature of its business, for the
 purchase of inventory and f fixed assets, and for the sale of goods and
 services. Further on the basis of J our examination of books and
 records of the company, and according to  the information and
 explanations given to us, we have neither come across  nor have been
 informed of any continuing failure to correct major  weaknesses in the
 aforesaid internal control system.  
 
 
 5.  In our opinion and according to the information and explanations
 given to us, there is no transaction made m pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the companies act 1956 exceedingthe value ofRupees five lakhs in
 respect of any party during the Year.
 
 6.  In our opinion and according to the information and explanations
 given to  us, the company has not accepted/renewed the deposits
 falling within  preview of Section 58 A / 58 A A of the Companies Act,
 1956 during the  financial year. However the honorable Company Law
 Board (CLB) western  region bench fvtfumbai, by its order dated 29th
 April,2002 in company  petition no 58AA/58A(9)/CLB/WR/2002/494 has
 order that there is a  default on the part of the company to repay the
 small depositors their  deposits as per terms and condition of
 acceptance of deposits. However  considering the submission made by
 the company that the company is  already having a separate Bank
 account for accepting and repaying fixed  deposits with Madhavpura
 Mercantile Co. Op. Banjk Ltd.  thecompany and has tiansferred
 fund s to me  said amount (Which is frizzed by CBIBS & FC Murhbai)
 for repayment of S depositors and since the clearing of the Madhavpura
 Mercantile Co. Op.   Bank Ltd., the banker of the company has been
 suspended w.e.f. 13th  March,2001 the company is unable to repay to
 depositors whose FD''s stand  matured & for repayment of thepremature
 FD''s Hon''ble Company Law  Board has given directions to the company as
 contained in order. One of  prime direction of the order is that 
 
 The Company shall make repayment of deposits along with interest at the
 contracted rate till the date of payment to depositors whose deposits
 become matured and also to depositors who have requested the company
 for repayment of their premature fixed deposits within 30 days of start
 of clearing of Madhavpura Mercantile Co. Op. Bank Ltd. However
 clearance of Bank already has been started but the above bank account
 has been freezed by CBI BS & FC Mumbaihence company could not paid
 deposits.
 
 7.  In our opinion and according to the inforrnation and explanation
 given to us, the Company has no internal audit system commensurate with
 size and nature of its business.
 
 8.  In our opinion and according to the information and explanations
 given to us, the central government has not prescribed maintenance of
 cost records under section 209(1) (d) of the Companies Act, 1956.
 
 9.  (a)According to the information given to us, the Company is
 generally regular in depositing with appropriate authorities undisputed
 statutory dues including income tax, sales tax, excise duty, cess and
 other material statutory dues applicable to it. And the Company had no
 arrears of such outstanding statutory dues as at 31st March, 2012 for a
 period more than six months; from the date they became payable .
 
 , (b) According to the information and explanation given to us, and
 details produced for verification, there are dues of Income tax of Rs.
 6,74,762which have not been deposited as the said dispute is pending
 before CIT (Appeal).
 
 10. In our opinion and according to the information and explanations
 given to us, the company has not incurred any cash losses during the
 financial year under review. Moreover, the company has accumulated
 losses of Rs. 3,18,41,232 at the end of the financial year.
 
 11.  According to the records of the company examined by us and on the
 basis of information and explanations given to us, the company has
 issued cheques of Rs. 2,10,07,851/- from its current account for
 repayment of Term Loaii to Madhavpura Mercantile Co. Op. Bank Ltd by
 way of transfer of funds. We are unable to express our opinion because
 necessary documents are not available by bank to us whether same have
 been credited or not.
 
 12.  The company has not granted any loans and advances on the basis of
 securities by way pledge of shares, debentures and other securities.
 
 13.  In our opinion, the company is not a chit fund or a nidhi mutual
 benefit fund/society. Therefore, the provisions of clause 4(xiii) 
 of the Cornpanies (Auditor''s Report) Order, 2003 are not 
 applicable to the company.  
 
 14.  According to the informationand explanation given to us, the
 company is I not dealing or trading in shares, securities, Debentures
 and other  Securities.   
 
 15.  In our opinion and according to the information and explanation
 given to  us, the company has not given any guarantee for loans taken 
 by others from banks and financial institutions during the year.  
 
 16. As per the Information made available to us, there are no Term
 Loans taken by the Company.  
 
 17.  In our opinion and according to the information and explanations
 given to j I us, the Company has not used any funds raised on short
 term basis for long term mveslment.   
 
 18.  The Conipany has not made any preferential allotment during the
 Year.  
 
 19.  During the period covered by our audit report, the company has not
 issued  any debentures.  
 
 20.  As the company has not raised money by making Public issue during
 the  Financial year.  
 
 21.  As represented to us by the Management and based on our
 examination of  the books and records of the Company in accordance
 with the generally  accepted auditing practices in India, we have
 neither come across any  material fraud in or by the company noticed
 or reported during the year   nor we have been informed of any such
 case by the management that  causes the financial statements to be
 materially misstated.   
 
                                    For, Purushottam Khandelwal & Co.  
 
                                               Chartered Accountants 
 
                                               Purushottam Khandelwal   
 
                                                           Proprietor 
 
 Place: Ahmedabad.  
 
 Date : 28/05/2012