Mahalaxmi Rubtech

1.  We have audited the attached balance sheet of MAHALAXMI RUBTECH
 LIMITED, as at 31st March, 2008, the profit and 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 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 (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:
 
 (i) 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.
 
 (ii) 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.
 
 (iii) The balance sheet, profit and loss account and cash flow
 statement dealt with by this report are in agreement with the books of
 account.
 
 (iv) In our opinion, the balance sheet, profit and loss account and
 cash flow statement dealt with by this report comply with the
 accounting .
 
 standardsreferredtoinsub-section(3C)ofsection211 of the Companies Act,
 1956.
 
 (v) On the basis of written
 representationsreceivedfromthedirectors,ason31st March 2008 and take
 non record by the Board of Directors, we report that none of the
 directors is disqualified as on 31stMarch, 2008 from being appointed as
 a director in terms of clause (g) of sub- section (1) of section 274 of
 the Companies Act, 1956.
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the 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:
 
 a) In the case of the balance sheet, of the state of affairs of the
 company as at 31st March, 2008.
 
 b) In the case of the profit and loss account of the profit for the
 year ended on that date and
 
 c) In the case of the cash flow statement of the cashflows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (i) (a 1 Referred to the paragraph 3 of our main report of even date
 
 (b) The comPany has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 As explained to us, the fixed assets have been physically verified by
 the management during the year. In our opinion, the frequency of 
 
 (c) verification is reasonable having regard to the size of the
 company. No material discrepancies were noticed on such verification.  
 
 (ii) During the year, in our opinion, a substantial part of fixed
 assets has not been disposed off by the company.
 
 As explained to us, the inventory has been physically verified during
 the year by the management. In our opinion, the frequency of
 
 b) verification is reasonable.
 
 According to the information and explanation given to us, the
 procedures of physical verification of inventories followed by the
 
 (c).  management are reasonable and adequate in relation to the size of
 the company and the nature of its business.  On the basis of our
 examination of records of inventory, the company has maintained proper
 records of inventory and the
 
 (iii) (a) discrepancies noted on physical verification were not
 material, having regard to the size of the company.  According to the
 information and explanation given to us, the company has not granted
 any loans, secured or unsecured to the companies, firms or other
 parties covered in register maintained under section 301 of the
 Companies Act, 1956.
 
 (b)As the company has not granted any loans, secured or unsecured to
 the companies, firms or other parties covered in register maintained
 under section 301 of the Companies Act, 1956, the Para 4(iii) (b),
 4(iii) (c 4(iii) (d), 4(iii) (f) and 4(iii) (g) of the Companies,
 Auditors (c) Report) Order, 2003 are not applicable.
 
 (c) According to the information and explanation given to us company
 has taken loans, secured or unsecured from three companies, firms or
 other parties covered in register maintained under section 301 of the
 Companies Act, 1956.The maximum amount involved during the year
 
 (d) was Rs.456.19 lakhs and the year end balance of the loan taken from
 such parties was Rs. 407.46 lakhs.
 
 In our opinion, the rate of interest and other terms and conditions on
 which loans have been taken from companies, firms or other parties
 listed in the register maintained under section 301 of the Companies
 Act, 1956 are not, prima facie, prejudicial to the interest of the
 company 
 
 (e)The company is regular in repaying the principal amounts as
 stipulated and has been regular in the payment of interest.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control system commensurate
 with the size of the company and the nature of its business for the
 purchases of inventory and fixed assets and for the sale of goods and
 services. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal
 
 (v) (a) control system.
 
 According to the information and explanations given to us, the
 particulars of contracts or arrangements referred to in section 301 of
 the
 
 (b) Companies Act, 1956 have been entered in the register required to
 be maintained under that section.
 
 In our opinion and according to the information and explanations given
 to us, the transactions exceeding the value of rupees five lakhs
 
 during the year in respect of any party under section 301 of the
 Companies Act,1956 have been made at prices which are reasonable having
 regard to prevailing market prices at the relevant time.
 
 (v)a.  According to the information and explanations given to us, the
 company has not accepted any deposits during the year from the public
 within the meaning of the provisions of section 58A, 58AA or any other
 relevant provisions of the Companies Act, 1956 and rules made there
 under.
 
 (vii) The company has an internal audit system during the year which in
 our opinion is in commensurate with the size and its nature of
 business.
 
 (viii) As explained to us, the Central Government has prescribed the
 maintenance of cost records under section 209 (1) (d) of the Companies
 Act, 1956 in respect of the textile products of the company and the
 same have been maintained by the company. We have, however, not made a
 detailed examination of these records with a view to determine whether
 they are accurate and complete.
 
 Ix) a. According to the information and explanations given to us, in
 our opinion, undisputed statutory dues including provident fund,
 investor education protection fund, employees state insurance, income
 tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess
 and other material statutory dues, applicable to the company have
 generally been regularly deposited with the appropriate authorities.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of income tax, wealth tax, sales
 tax, custom duty, excise duty and cess were in arrears as at 31
 March,2008 for a period of more than six months from when they became
 payable.
 
 b.According to the information and explanation given to us, there are
 no dues of income tax, sales tax, wealth tax, service tax, customs duty
 and excise duty which have not been deposited on account of any
 dispute.
 
 (x)There are no accumulated losses of the company as on 31st March,2008.
 The company has not incurred cash losses during the financial , year
 covered by our audit and in the immediately preceding financial year.
 
 (xii)in our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to a
 financial institution or banks during the year.
 
 In our opinion and according to the information and explanations given
 to us, the company has not granted any loans and advances on
 
 (xiii) The basis of security by way of piedge of shares, debentures or
 other securities.
 
 (xiv) The Provisions of any special statute as specified under clause 4
 of the Order are not applicable to the company.
 
 According to the information and explanation given to us, the company
 is not dealing in or trading in shares, securities, debentures and (xv)
 other investments. Accordingly, the provisions of clause 4 (xiv) of the
 Order are not applicable to the company.
 
 (xv)According to the information and explanation given to us, the
 company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 (xvi)According to the information and explanation given to us, the term
 loans raised during the year have been applied for the purpose for
 (xvii) which they were raised.
 
 (xvii)According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, we report
 that the no funds raised on short-term basis have been used for
 long-term investment by the company.
 
 (xix) The company has not made any preferential allotment of shares
 during the year.
 
 (xx) The company has not issued any debentures during the year.
 
 (xxi) The comPany has not raised any money by way of public issues
 during the year.
 
 (xxi)According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 year.
 
                                             For BHANWAR JAIN & CO.,
                                             Chartered Accountants.
                                                       (B.M.JAIN)
                                                          Partner.
 AHMEDABAD: 23rd June,2008.