1.  We have audited the attached Balance Sheet of MAHAN INDUSTRIES
 LIMITED for the year ended 31st March, 2009 and the Profit & Loss 
 Account and 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 over-all 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 is sued
 by the Company Law Board in terms of Section 227 (4A) of the Companies
 Act, 1956 we enclose in the Annexure a statement on the matter
 specified in paragraphs 4 & 5 of the said order.
 
 4.  Further, 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 the
 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 and Profit and Loss Account dealt
 with by this report comply with the Accounting Standards referred to in
 Sub Section (3C) of Section 211 of the Companies Act, 1956 except for:
 
 -AS-15 (Revised) and Disclosure requirements as required by the said AS
 are not complied with
 
 -AS-9 where sale purchase transaction of traded shares are not
 recorded, though records are maintained and only Profit/Loss on such
 trading are taken in the Profit & Loss Account. This, of course does
 not affect the Profit / Loss of the year.
 
 (e) On the basis of written representations received from the Directors
 of the company as at March 31,2008 and taken on record by the board of
 directors, we report that no director is disqualified from being
 appointed as director of the company under clause (g) of sub-section
 (1) of section 274 of the Companies Act, 1956.
 
 (fj The company has not provided for interest on bank borrowings for
 the earlier years and since the bank from whom the company has borrowed
 the money is closed the further interest till date is not ascertainable
 and the same is not provided and to that extent loss is understated. In
 absence of any account confirmation the amount of payment made during
 the year has been adjusted towards the principal.
 
 Subject to the above and read together with Notes to Accounts the said
 Statements of Account, in our opinion and to the best of our
 information and according to the explanations given to us, give the
 information required by the Companies Act, 1956, in the man ner so
 required and give a true & fair view in accordance with the accounting
 principles generally accepted in India:
 
 (I) in case of the Balance Sheet, of the state of Affairs of the
 company as at 31st March, 2009.
 
 (II) in case of the Profit & Loss Account, of the Loss for the year
 ended on that date and
 
 (III) in case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (1) (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) All the assets have been physically verified by the management
 during the year. There is a regular program of verification which in
 our opinion is reasonable having regard to the size of the company and
 the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 (c) None of the Fixed Assets has been disposed off during the year,
 which has bearing on the going concern assumption.
 
 (2) (a) Physical verification of inventory have been conducted at
 reasonable intervals during the year by the management.
 
 (b) In our opinion, 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 the business.
 
 (c) The company has maintained proper records of inventory. No material
 discrepancies were noticed on physical verification.
 
 (3) (a) The company has not granted any loans, secured or unsecured, to
 companies, firms or other parties listed in the register maintained
 under section 301 of the Companies Act, 1956. As the company has not
 granted any loans, secured or unsecured, to parties listed in the
 register maintained under section 301 of the Companies Act, 1956
 paragraphs (iii)(b), (c) and (d) of the Order, are not applicable.
 
 (b) According to the information and explanations given to us, the
 company has taken unsecured loan from one covered in the register
 maintained under section 301 of the Companies Act, 1956. Maximum amount
 involved during the year is Rs.. 77.71 lacs and the year end balance of
 such loan taken is Rs.11.67 lacs .
 
 (c) As per the information given to us the loan taken by the company
 are interest free and there are no specific terms and conditions and as
 such the loans are prima facie not prejudicial to the interest of the
 company.
 
 (d) The loans taken are interest free without any stipulation as to
 repayment.
 
 (4) In our opinion and according to the information and explanation
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business with regard to the purchase of inventory, fixed assets and
 with regard to the sale of goods. During the course of our audit, no
 major weakness has been noticed in the internal controls.
 
 (5) (a) According to the information and explanations given to us, we
 are of the opinion that the transactions that
 
 need to be entered into the register maintained under section 301 of
 the Companies Act, 1956 have been so entered.
 
 (b) In our Opinion & according to the information & explanations given
 to us , the transaction made with the parties during the year in
 pursuance of contract & arrangement entered in the register maintained
 under 301 of the Companies act, 1956 have been made at prices which are
 reasonable, having regard to the prevailing market prices at the
 relevant time, where such comparative market price are available.
 
 (6) The company has not accepted any deposits from the public which
 falls within the provisions of section 58 A and 58 AA of the Companies
 Act, 1956.
 
 (7) In our opinion, the company has an internal audit system
 commensurate with the size and nature of its business.
 
 (8) To the best of knowledge and according to the information given to
 us, the Central
 
 Government has not prescribed maintenance of cost record under section
 209 (1) (d) of the Companies Act, 1956.
 
 (9) (a) According to the information and explanations given to us and
 on the basis of our examination of the books of accounts, the company
 is regular in depositing undisputed statutory dues including Provident
 Fund, Investor education protection fund, Employee State Insurance,
 Income Tax, Sales Tax, Wealth Tax , Service Tax, Custom Duty, Excise
 Duty, Cess and other statutory dues with the appropriate authorities.
 
 (b) According to information and explanation given to us, details of
 dues in respect of income tax were in arrears, on account of dispute is
 as follows:
 
 Particulars  Financial Year, For which the Forum where dispute to Amount
                                                                      Rs.
              matter for pertains pending
 
 Income Tax   2000-01                        ITAT set aside
                                             for CIT            22,25,639
                                             Appeals
             2004-05                         CIT Appeals           34,988
 
 (10) The company has accumulated losses exceeding 50% of its net worth
 and has also incurred cash losses during the financial year and also in
 the immediately preceding financial year.
 
 (11) In our opinion and according to the information and explanation
 given to us, the company has defaulted in repayment of dues to a
 financial institution / bank. Since the bank is closed and the account
 confirmation is not available the entire amount is considered as
 overdue.
 
 (12) According to the information & explanation given to us, the
 company has not granted loans and advances on the basis of security by
 way of 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 provision of clause 4(xiii) of the companies (Auditors
 Report) order, 2003 are not applicable to the company.
 
 (14) In our opinion, proper records have been maintained of the
 transactions and contracts of trading in shares, securities, debentures
 and other investments and timely entries have been made therein. All
 stocks of trading shares have been held by the company except to the
 extent of exemption if any granted under section 49 of the Act.
 
 (15) According to the information & explanations given to us, the
 company has not given any guarantees for the loans taken by others from
 banks or financial institutions
 
 (16) In our opinion, the term loan has been applied for the purpose for
 which it was raised.
 
 (17) 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.
 
 (18) According to the information and explanation given to us, the
 company has not made
 
 Preferential allotment of shares to parties and companies covered in
 the register maintained under section 301 of the Act.
 
 (19) According to the information and explanations given to us, Company
 has not issued any debenture during the year. Hence reporting on the
 question of secuterisation does not arise.
 
 (20) The company has not raised any fund by way of public issue during
 the year.
 
 (21) Based upon the audit procedures performed and on the basis of
 information and explanation provided by the management, we report that
 no fraud on or by the company has been noticed or reported during the
 year.
 
 For DJNV&Co.  
 
 Chartered Accountants
 
 (Jayesh Parikh)
 Partner
 
 Ahmedabad: 03.09.2009