Man Industries (India)

1.  We have audited the attached Balance Sheet of Man Industries
 (India) Limited as at 31st March, 2008 and also the Profit and 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 have conducted our audit in accordance with auditing standards
 generally accepted in India. These 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 the management, as well as evaluating the overall financial
 statements presentation.  The audited financial statements of the
 Company incorporate the audited financial statements of the Dubai
 branch, which have been audited by another auditor reflecting the total
 capital employed of Rs. 1274.36/- Lakhs as at 31s March 2008, and
 total revenues amounting to Rs.  30803.39/- Lakhs for the year ended on
 that date and that we have relied on the report of the other auditor.
 Further we believe that our audit provides a reasonable basis for our
 opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003
 (CARO) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, (the Act)
 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:
 
 1) 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;
 
 2) In our opinion, proper books of account as required by law have been
 kept by die Company so far as appears from our examination of those
 books;
 
 3) The Balance Sheet, Profit and Loss Account and Cash Flow statement
 dealt with by this report are in agreement with the books of account;
 
 4) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of section 211 of the Act.
 
 5) On the basis of the written representations received from the
 directors as on March 31, 2008 and taken on record by the Board of
 Directors, we report that none of die directors is disqualified as on
 March 31, 2008 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Act.
 
 6) Subject to the above, in our opinion and to the best of our
 information and according to the information and according to the
 explanations given to us, the said accounts read together with the
 Notes thereon, give the information required by the Act in the manner
 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 31st March, 2008;
 
 (ii) In the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) In the case of the Cash Flow statement, of die cash flows for the
 year ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date
 
 1.  (i) The Company is in the process of updating its records showing
 full particulars including quantitative details and situation of fixed
 assets at their plant at Pithampur and at Anjar.
 
 (ii) The fixed assets of the Company have not been physically verified.
 
 
 (iii) The Company has not disposed off substantial part of the fixed
 assets during the year and going concern status is not effected.
 
 2.  (i) The inventories have been physically verified during the year
 by the management. In our opinion, the frequency of verification is
 reasonable.
 
 (ii) The procedure of physical verification of inventories followed by
 the management is reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (iii) The Company is maintaining proper records of inventories. The
 discrepancies noticed on verification between the physical stocks and
 book stocks were not material having regard to the size of the
 operations.
 
 3.  (i) The Company has granted loans to 2 (Two) parties covered in the
 registered maintained under section 301 of the Companies Act, 1956 the
 amount to Rs. 10078.55 Lakhs. The amount outstanding at year end was
 Rs. 9909.86 Lakhs.
 
 (ii) In our opinion and according to explanation and information given
 to us, the rate of interest and other terms and conditions on which the
 loans have been granted by the Company are not, prima facie,
 prejudicial to the interest of the Company.
 
 (iii) In our opinion and according to explanation and information given
 to us, the receipt of the principal amount and interest thereon are
 regular.
 
 (iv) In respect of Loans granted, the Company has taken reasonable
 steps for recovery of the principal and interest thereon in respect of
 amount overdue of more than one Lakh.
 
 (v) The Company has taken Loans from 11 (Eleven) parties covered in the
 register maintained under section 301 of the Companies Act, 1956
 amounting to Rs.630.79 Lakhs. The amount outstanding at the year end
 was Rs. 125.44 Lakhs.
 
 (vi) In our opinion and according to explanation and information given
 to us, the rate of interest and other terms and conditions on which the
 loans have been taken by the Company are not, prima facie, prejudicial
 to the interest of the Company.
 
 (vii) In our opinion and according to explanation and information given
 to us, the payment of the principal amount and interest thereon are
 regular.
 
 4.  In our opinion and 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 and fixed assets and for the sale of goods. During the
 course of our audit, no major weakness has been noticed in the internal
 control system in respect of these area.
 
 5.  (i) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Act have been entered in the Register
 required to be maintained under that Section.
 
 (ii) In our opinion and according to the information and explanations
 given to us, the transactions, made in pursuance of contracts or
 arrangements entered in the Register maintained under Section 301 and
 exceeding the value of Rupees Five Lakhs during the year, have been
 made at prices which are reasonable having regard to the prevailing
 market prices at the relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 58A and 58AA of the Act and rules there under, to the extent
 applicable, have been complied with. The management further informs us
 that no order has been passed by the Company Law Board or National
 Company Law Tribunal or Reserve Bank of India or any Court or any other
 Tribunal on the Company in respect of the aforesaid deposit.
 
 7.  During the year, the Company has taken steps to strengthen the
 internal audit system. In our opinion it needs to be further
 strengthening.
 
 8.  We have broadly reviewed the books of account and records
 maintained pursuant to the order made by the Central Government for
 maintenance of cost records under section 209(1 )(d) of the Act and are
 of the opinion that prima facie, the prescribed accounts and record
 have been made and maintained. We, however, have not made a detailed
 examination of such accounts and record with view to determine whether
 they are accurate or complete.
 
 9.  (i) According to the information and explanations given to us and
 the records examined by us, the Company is regular in depositing with
 the appropriate authorities undisputed statutory dues including
 provident fund, investor education and protection fund, employees state
 insurance, income-tax, sales-tax, wealth -tax, customs duty,
 excise-duty, service tax, cess and other statutory dues wherever
 applicable with the appropriate authorities. However in few cases the
 statutory dues have been delayed for few days.
 
 (ii) According to the records of the Company, there are no dues
 outstanding of sales tax, income-tax, customs duty, wealth tax, excise
 duty, service tax or cess on account of any dispute, other than the
 following:
 
 Name of die Statue        Amount (Rs. In Lakhs)  Forum where dispute
 
 Central Excise Act, 1944.        321.89          CESTAT
 
 Sales Tax, CST, Entry Tax         48.96          Commissioner Appeals
 
 Income Tax Act, 1961               8.04          Commissioner Appeals
 
 10.  The Company has no accumulated losses as at 31st March 2008 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank, as may be
 applicable at the balance sheet date.
 
 12.  The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any Special Statute applicable to Chit Fund,
 Nidhi or Mutual Benefit Fund/ Societies are not applicable to the
 Company.
 
 14.  The Company has maintained proper records of transactions and
 contracts in respect of dealing and trading in shares, securities,
 debentures and other investment and timely entries have generally been
 made therein. All shares, debentures and other securities have been
 held by the Company, in its own name.
 
 15.  In our opinion, and according to the information and explanations
 given to us, the Company has given guarantee for loans taken by others
 from banks or financial institutions during the year. Further the terms
 and conditions of the guarantee are not prejudicial to the interest of
 the Company.
 
 16.  In our opinion, and according to the information and explanations
 given to us, no Term Loan was raised during the year.
 
 17.  On the basis of an overall examination of the Balance Sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 18.  The Company has not issued any debentures during the year.
 
 19.  The Company has not raised money through a public issue.
 
 20.  Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the 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 Rohira Mehta & Associates
                                     Chartered Accountants
 
                                      (Nirav B. Mehta)
                                         Partner
 Place : Mumbai Membership             No. 106294
 Dated : 281st June, 2008.