1. We have audited the attached Balance Sheet of Madhusudan Industries
 Limited as at 31st March 2012, the Profit and Loss Account and the Cash
 Flow Statement of the Company 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 (Auditor''s Report) Order, 2003, issued
 by the Central Government of India in terms of section 227 (4A) of the
 Companies Act, 1956, we annex hereto 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 with
 the 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, the Profit and Loss Account and
 the 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.
 
 (e) On the basis of the written representation received from the
 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.
 
 (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 notes
 thereon, give the information required by the Companies Act, 1956, in
 the manner so required and give a true and fair view in the 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 31st March, 2012;
 
 (ii) in the case of Profit and Loss Account, of the profit of the
 Company for the year on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
                                        
 Annexure referred to in paragraph 3 of our report of even date
 
 i. (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets on the basis of available information, other than furniture and
 fixtures.
 
 (b) As explained to us, the fixed assets have been physically verified
 by the management during the year in a phase periodical Manner, which
 in our opinion, is reasonable having regard to the size of the company
 and the nature of its assets. No material discrepancies between the
 book records and the physical inventory have been noticed in respect of
 the assets physically verified.
 
 (c) In our opinion, there was no substantial disposal of fixed assets
 during the year which would affect the going concern of the company.
 
 ii.  In respect of inventories:
 
 (a) As explained to us, inventories have been physically verified by
 the management at reasonable 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) The Company has maintained proper records of inventories. As
 explained to us, there were no material discrepancies noticed on such
 physical verification.
 
 iii. In respect of loans, secured or unsecured, granted or taken by the
 Company to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies act. 1956:
 
 a.  The Company had taken unsecured loan of Rs. 45 lacs from a company
 covered in the register maintained under section 301 of the Act. The
 maximum amount involved during the year was Rs. 45 lacs and at the year
 end balance of loan taken from such a company was Rs. 45 lacs.
 
 b.  In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions are
 not prima facie prejudicial to the interest of the Company.
 
 c.  The payment of principal amounts and interest have been regular as
 per stipulations.
 
 d.  There were no overdue amounts remaining outstanding as at the year
 end.
 
 e. The Company has not granted any loans, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under section 301 of the Act.
 
 iv. In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory, Sale of goods, fixed assets and scrap of
 fixed assets. During the course of our audit, no major weakness has
 been noticed in the internal control system in respect of these areas.
 
 v. (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act transactions that
 need to be entered into the register maintained under section 301 have
 been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, there are no transactions of purchase and sale exceeding
 the value of Rupees five lacs entered into during the financial year.
 
 vi. In respect of the deposits, in our opinion and accordingly to the
 information and explanations given to us, directives issued by the
 Reserve Bank of India and the provisions of sections 58A, 58AA or any
 other relevant provisions of the companies Act, 1956 and the rules
 framed there under, to the extent applicable, have been complied with.
 We are informed by the management that no order has been passed by the
 Company Law Board, National Company Law Tribunal or Reserve Bank of
 India or any court or any other Tribunal.
 
 vii. In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 viii. According to the information and explanations given to us, The
 Central Government has not prescribed the maintenance of cost records
 for the Company under section 209(1 )(d) of the Companies Act, 1956, in
 respect of business activities of the Company in previous year.
 
 ix. (a) The company has generally been regular in depositing undisputed
 dues of Provident Fund, Investors Education and Protection Fund,
 Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom
 Duty, Excise Duty, Cess and other material statutory dues with the
 appropriate authorities.
 
 (b) There are no undisputed amounts outstanding as at 31st March, 2012
 for a period of morethan six months from the date of becoming payable.
 
 (c ) Dues relating to items as listed below which have not been
 deposited as on 31st March, 2012 on account of disputes with related
 authorities :
 
 Sl.  Name of           Nature of      Forum where        Amount
 No.  the Statute       the Dues       dispute is       (Rs.) In
                                       pending              Lacs
 
 1.   Gujarat Sales     Sales-tax      Gujarat Sales      139.34
      Tax Act           Tax Tribunal
  
 2.   Central Excise    Central        CESTAT              97.76
      Act               Excise Duty
 
 3.   Income Tax        Income Tax     Commissioner         0.45 
      Act                              of Appeal
 
 x. The Company has no accumulated losses at the end of the financial
 year. The Company had not incurred cash loss in the immediately
 preceding financial year.
 
 xi. As per the books and records maintained by the company and
 according to the information and explanations given to us, we are of
 the opinion that the company has not defaulted in repayment of dues to
 Banks.
 
 xii. According to the information and explanations given to us and
 based on the documents and records produced, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 xiii. 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 Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the company.
 
 xiv In our opinion, the Company is not dealing or trading in shares,
 securities and other investments. Accordingly, the provisions of clause
 4 (xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended)
 are not applicable to the company.
 
 xv. According to the information and explanations given to us, the
 Company has not given guarantee for loans taken by others from banks or
 financial institutions.
 
 xvi. On the basis of the records examined by us and according to
 information and explanations given to us, in our opinion, term loan
 availed by the Company was, prima facie, applied by the company during
 the year for the purpose for which the loan was obtained.
 
 xvii. According to the information and explanations given to us and on
 the basis of an overall examination of the balance sheet of the
 company, we report that funds raised on short- term basis have, prima
 facie, not been used for long-term investment.
 
 xviii. 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.
 
 xix. The company did not have any outstanding debentures at the end of
 the year.
 
 xx. The Company has not raised any money by way of public issue during
 the year.
 
 xxi. Based upon the audit procedures performed and on the basis of
 information and explanations given by the management, we report that no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 
 
                                                 For H. V. Vasa & Co.
                                                Chartered Accountants
                                        Firm Registration No. 131054W
 
                                                     (Tushar H. Vasa)
                                                           Proprietor
                                                 Membership No. 16831
 
 Place : Ahmedabad 
 Date : 30th May, 2012