We have audited the attached Balance Sheet of M/s.MIC Electronics
 Limited, as at 30th June 2011 and also the Profit and Loss Account and
 the Cash Flow Statement of the Company for the year ended on that date
 annexed hereto.  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.
 
 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.
 
 1. As required by the Company''s (Auditors Report) Order, 2003 issued by
 the Department of Company Affairs, in terms of Section 227(4A) of the
 Companies Act, 1956, we give in the annexure a statement on the matters
 specified in Paragraphs 4 and 5 of the said order.
 
 2.  Further 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 accounts as required by law have
 been kept by the company so far, as appears from our examination of
 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 comply with the accounting standards referred to in
 sub-section (3C) of section 211 of the Companies Act, 1956.
 
 v. Based on information and explanations given to us and
 representations received from the directors of the Company, as on 30th
 June 2011 and taken on record by the Board of Directors, we report that
 none of the directors is disqualified as on 30th June 2011 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 30th June, 2011 and
 
 (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 cash flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 Referred to in Paragraph (1) in our Report of even date for the year
 ended 30.06.2011.
 
 1.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets. The fixed assets have been physically verified by the
 management. There is annual verification of fixed assets, which in our
 opinion is reasonable having regard to the size of the company and the
 nature of its assets. No material discrepancies have been noticed on
 such verification.
 
 (b) During the year the company has not disposed off substantial part
 of the assets.  According to the information and explanations given to
 us, we are of the opinion that no transactions are effected involving
 disposal of assets so as to effect going concern status of the company.
 
 2.  (a) The stocks of finished goods , stores , spare parts and raw
 materials have been physically verified during the year by the
 management. In our opinion, the frequency of the verification is
 reasonable.
 
 (b) The procedures of physical verification of stocks followed by the
 management are reasonable and adequate in relation to the size of the
 Company and the nature of its business.
 
 (c) The discrepancies noticed on verification between the physical
 stocks and book records , which have been properly dealt with in the
 books of account , were not material.
 
 (d) On the basis of our examination of stock records, we are of the
 opinion that the valuation of stocks is fair and proper in accordance
 with the normally accepted accounting principles and is on the same
 basis as in the preceding year.
 
 3.  (a) The Company has taken loans from Companies, Firms or other
 parties listed in the registers maintained under Section 301 or from
 Companies under the same management within the meaning of Section 370
 (1B) of the Companies Act, 1956. According to the information and
 explanations given to us the terms and conditions of these loans are
 not prima facie prejudicial to the interests of the Company.
 
 (b) The Company has granted loans, secured or unsecured to Companies,
 firms or other parties listed in the registers maintained under Section
 301 or to Companies under the same management within the meaning of
 Section 370(1B) of the Companies Act, 1956. According to the
 information and explanations given to us the terms and conditions of
 these loans are not prima facie prejudicial to the interests of the
 Company.
 
 (c) Parties to whom loans and advances (Interest free/Interest bearing)
 in the nature of loans have been given by the company are generally
 repaying the principal amounts and have also been generally regular in
 repayment of interest where ever applicable.
 
 (d) There is no overdue amount of loans taken from or granted to
 Companies, firms or other parties listed in the Register maintained
 under Section 301 of the Companies Act, 1956
 
 4.  In our opinion and according to the information and explanations
 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 purchases of the stores, raw materials
 including components, plants and machinery, equipment and other assets
 and with regard to the sale of goods.
 
 5.  In our opinion and according to the information and explanations
 given to us, the transactions of purchase of goods and materials and
 sale of goods, materials and services, made in pursuance of contracts
 or arrangements entered in the registers maintained under Section 301
 of the Companies Act, 1956 and aggregating during the year to
 Rs.5,00,000/- or more in respect of each party, have been made at
 prices which are reasonable having regard to prevailing market prices
 for such goods , materials or services or the prices at which
 transactions for similar goods, materials or services have been made
 with other parties.
 
 6.  In our opinion and according to the information and explanations
 given to us, the provisions of Section 58-A of the Companies Act, 1956
 and the Companies (Acceptance of Deposits) Rules, 1975, do not apply to
 this Company, as it has not accepted deposits from the public other
 than corporate bodies and directors of the company.
 
 7.  The Company has an adequate internal Audit system commensurate with
 the size and nature of the business.
 
 8.  As per the information 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 and explanations given to us, the
 company is not regular in depositing with appropriate authorities
 undisputed statutory dues including Provident Fund, Employees State
 Insurance and Income Tax.
 
 (b) According to the information and explanations given to us, there
 are no
 
 Name of the 
 Statue         Nature of the    Amount     Period to 
                                            which the    Forum where the
                                                         dispute is
                Dispute                     amounts 
                                            relate 
                                           (F.Y)         pending and 
                                                         amount deposited
 
 Central
 Excise Act, 
 1944          Excise Duty    21,223,
                              061/-         2002-2003    Customs, Excise
                                                         & Service Tax 
                                                         Appellate
                                                         tribunal, south
                                                         zonal bench,
                                                         Bangalore vide
                                                         Appeal 
                                                         No.20/2009
 
 Central 
 Excise Act, 
 1944         Excise Duty    3,896,
                             982/-          2008-2009    Customs, Excise
                                                         & Service Tax 
                                                         Appellate 
                                                         tribunal, south
                                                         zonal bench,
                                                         Bangalore vide 
                                                         appeal
                                                         no.C/2303 of
                                                         2010
                                                         Amt. deposited
                                                         : 2,896,982/-
 
 Central 
 Excise Act, 
 1944         Excise Duty   7,297,
                            400/-         2008-2009      Commissioner
                                                        (Appeals), 
                                                         Customs & 
                                                         Central Excise,
                                                         Basheerbagh,
                                                         Hyderabad vide
                                                         appeal
                                                         No.E/720/2001
 
 Central 
 Excise Act,
 1944         Service Tax   4,352,
                            240/-        Sep05-Mar08     O/o. The
                                                         Commissioner
                                                         of Customs,
                                                         Central 
                                                         Excise and
                                                         Service Tax,
                                                         Hyderabad III
 
                                                         Commissioner ate
                                                         vide Show cause
                                                         notice OR 
                                                         No.55/2011 
                                                         Hyd III Adjn.
 
 Central 
 Excise Act, 
 1944         Service Tax   755,521/-    09.05-30.04.06  O/o.The 
                                                         Commissioner of
                                                         Customs, 
                                                         Central Excise
                                                         and Service Tax,
                                                         Hyderabad III
 
                                                         Commissioner ate
                                                         vide Show Cause
                                                         Notice OR No.57
                                                        /2011 Hyd III
                                                         Adjn.
 
 Customs 
 Act, 1962   Customs Duty   1,801,
                            111/-        2008-2009       O/o.The
                                                         Commissioner
                                                         of Customs,
                                                         Central Excise
                                                         and Service Tax,
                                                         Hyderabad III
 
                                                         Commissionerate
                                                         vide Appeal
                                                         No.C/2302 of
                                                         2010
 
 The A.P.
 VAT Act, 
 2005        APVAT         840,705/-    2008-2009        Appelate Deputy
                                                         Commissioner 
                                                        (CT),
                                                         Secunderabad
                                                         Division vide 
                                                         Appeal No.S/23
                                                        /09-10/V
 
                                                         Amt. deposited
                                                         : 840,705/-
 The A.P.
 VAT Act, 
 2005       APVAT          545,677/-   2007-2008         Appellate Deputy
                                                         Commissioner
                                                        (CT), 
                                                         Secunderabad
                                                         Division
 
                                                         Amt. deposited 
                                                         : 545,677/-
 
 The A.P.
 VAT Act,
 2005      APVAT          1,809,
                          145/-       2005-2006          WP No.14764/2009
                                                         filed with High
                                                         Court, AP
                                                         Amt. deposited
                                                         : Rs.1,809,145/-
 
 The A.P.
 VAT Act, 
 2005      APVAT          127,666/-   2007-2008          Appellate Deputy
                                                         Commissioner
                                                        (CT) vide Appeal
                                                         No.S/101/10-11/V
 
                                                         Amt.deposited
                                                         : Rs.127,666/-
 The A.P.
 VAT Act, 
 2005     APVAT           483,509/-  2008-2009           Appellate Deputy
                                                         Commissioner
                                                        (CT) vide Appeal
                                                         No.S/102/10-11/V
                                                         Amt.deposited
                                                         : Rs.483,509/-
 The A.P.
 VAT Act, 
 2005     APVAT          1,496,
                         129/-      2009-2010            Appellate Deputy
                                                         Commissioner
                                                        (CT) vide Appeal
                                                         No.S/103/10-11/V
                                                         Amt.deposited 
                                                         : Rs.1,496,129/-
 
 undisputed amounts of Income Tax, Wealth Tax, Customs Duty, Sales Tax
 and Excise Duty outstanding as at 30th June, 2011 for a period of more
 than 6 months from the
 
 10.  In our opinion, the company neither accumulated losses at the end
 of the year exceeding fifty percent of its net worth, nor incurred cash
 losses during the financial year covered by our audit and in the
 immediately preceding financial year.
 
 11.  As per the records of 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 financial institutions, banks
 or debenture holders however some delays are occurred in servicing the
 installment and interest of the loans.
 
 12.  According to the information and explanations given to us, the
 company has not given any 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.  Accordingly the provisions of clause 4 (xiii)
 of the Companies (Auditor''s Report) Order, 2003 are not applicable to
 the company.
 
 14.  In our opinion, the company is not dealing in or trading in
 shares, securities, and debentures and other investments. Accordingly,
 the provisions of clause 4 (xiv) of the Companies (Auditor''s Report)
 Order, 2003 are not applicable to the company.
 
 15.  In our opinion, the terms and conditions on which the company has
 given guarantees for loans taken by the subsidiaries/associates from
 banks or financial institutions are not prejudicial to the interest of
 the company.
 
 16.  In our opinion, the term loans taken by the company were applied
 for the purpose for which they were taken.
 
 17.  In our opinion, according to the information and explanations
 given to us and on an overall examination of statements and records of
 the company, that the funds raised on short-term basis have, prima
 facie, not been used during the year for long-term investment. No long
 term funds have been used to finance short term assets except permanent
 working capital.
 
 18.  According to the information and explanations given to us, the
 company has not made preferential allotment of shares/warrants during
 the year to parties covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 19.  In our opinion, according to the information and explanations
 given to us, the company has not issued debentures during the period
 covered by our report.
 
 20.  According to the information and explanation given to us, the
 company has not raised money by way of public issue during the year.
 
 21.  According to the information and explanations given to us and
 based on audit procedures performed, no fraud on or by the Company has
 been noticed during the year.
 
 
 Place : Hyderabad 
 
 Date: 29.11.2011                                  for PINNAMANENI & CO.,
                                                  Chartered Accountants
 
                                                                    Sd/-
 
                                                 (P.V.V. SATYANARAYANA)
 
                                                               Partner.
                                               Membership No. : 026600