We have audited the attached Balance Sheet of MICRO FORGE (INDIA)
 LIMITED, as at 31st March, 2009 and also the profit and Loss Account of
 the Company for the year ended on that date annexed thereto. This
 financial statement are the responsibility of the companys management.
 Our responsibility is to express as opinion on these financial
 statement based on our audit.
 
 1.  We conducted 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 misstatements. 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 estimate made
 by management as well as evaluating the overall financial statement
 presentations. We believe that our audit provides a reasonable basis
 for our opinion.
 
 2.  As required by the Companies (Auditors Report) Order, 2003 issued
 by the Central Govt.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 matter specified in paragraph 4 and 5 of the said Order.
 
 3.  We were not able to verify Bank Balances As on 31st March 2009,
 because of non availability of the Bank Statements.
 
 4.  Further to our comments in the Annexure referred to in paragraph 1
 &2 above.
 
 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 it appears from our examination of the
 books.
 
 c) The Balance Sheet and Profit and Loss Account referred to in this
 Report are in agreement with the Books of Account.
 
 d) In our opinion, the Profit and Loss Account and Balance Sheet comply
 with the mandatory accounting standard referred accounting Section
 211(3C) of the Companies Act,1956 to the extent applicable.
 
 e) Based on information and explanations given to us, none of the
 directors are disqualified as on 31st March, 2009 from being appointed
 as directors in terms of clause (g) of sub section (1) of section 274
 of the Companies Act, 1956.
 
 f) Subject to Para no.3, In 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:
 
 i) in the case of the balance sheet, of the state of affairs of the
 company as at 31st March, 2009; ii) in the case of the profit and loss,
 of the Loss of the company for the year ended on that date;
 
 ANNEXURE TO THE AUDITORS REPORT TO THE MEMBER OF MICRO FORGE (INDIA)
 LTD.
 
 (i) (a) As per information provided, the company has maintained proper
 records showing full particulars including quantitative details and
 situation of fixed assets on the basis of information available.
 
 (b) According to the information and explanations given to us, the
 fixed assets have been physically verified by the management during the
 year in a phased 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 were noticed on such verification.
 
 (c) During the year, the Company has not disposed off substantial part
 of its fixed assets.
 
 (ii) (a) As explained to us, the inventories have been physically
 verified by the management at 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 and no
 discrepancies were notice on physical verification as compared with the
 books of accounts
 
 (iii) (a) As per the information and records made available, the
 Company has not granted any unsecured loans to company listed in the
 register maintained under section 301 of the Companies Act, 1956.
 
 (b) The Company has not accepted unsecured loans from company covered
 in the register maintained under section 301of the Companies Act, 1956.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the company and the nature of its business for the
 purchase of inventory.fixed assets and for the sale of goods and
 services. Further, on the basis of our examinations and according to
 the information and explanations given to us, we have neither come
 across nor we have been informed of any instance of major weaknesses in
 the aforesaid internal control systems.
 
 (v) a) The transaction that requires to be entered into the register in
 pursuance to the section 301 of the Act have been so entered.
 
 b) The transactions of purchase and sales of goods and material made in
 pursuance of contracts or arrangement entered in the register maintain
 under section 301 of the companies Act 1956 and exceeding the value of
 Rs.five lacs in respect of any party during the year have been made at
 the prices which are reasonable having regard to the prevailing market
 prices at the relevant time as explanation and information provided to
 us.
 
 (vi) In our opinion & according to the information and explanation
 given to us, The Company has neither invited nor accepted deposit from
 public.
 
 (vii) In our opinion, the company has not an internal audit system but
 it needs to be established both in terms of coverage and periodicity to
 be commensurate with the size and nature of its business.
 
 (viii) We have informed that the maintenance of cost records Under
 Section 209(1) (d) of the Companies Act, 1956 is not required by the
 Company.
 
 (ix) (a) According to the explanation, company is regular in depositing
 with appropriate authorities undisputed statutory dues including
 Provident Fund, Sales Tax, Income Tax, Customs duty excise duty, cess
 and other material statutory dues as applicable with the appropriate
 authorities. Except Professional tax which payable since year 2007-08
 of Rs.43090, Fringe Benefit Tax of Rs. 125217 of the year 2007-08
 
 (b)There are disputed amounts of statutory dues, Disputed Income Tax
 Rs. 70 Lacs , Disputed Sales Tax Rs. 55 Lacs, Disputed Providend Fund
 Approx Rs.10 Lacs.
 
 (x) The Company has accumulated loss of Rs 22,32,94,968. at the end of
 the financial year and has incurred loss of Rs.9,44,93,184 during the
 year and the Net worth of the company is negative by 14,74,71,653
 therefore company is sick within the meaning of Sick Industrial company
 (Special Provision) Act 1985
 
 (xi) Based on our audit procedures and according to the information and
 explanation given to us, we are of the opinion that the Company has
 defaulted in repayment of dues to banks and accordingly bank has filed
 a suit against company during the year.
 
 (xii) In our opinion and according to the information and explanation
 given to us, no loans and advances have been granted by the Company 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, clause 4(xiii) of the
 Companies (Auditors Report) Order 2003 is not applicable to the
 Company.
 
 (xiv) The Company has not entered into any transactions and contracts
 in respect of trading in securities, debentures and other investments.
 
 (xv) The Company has given a corporate guarantees to the banks for
 loans given to related company.
 
 (xvi) The Company has not raised new unsecured loans during the year.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the financial statements of the Company, we
 are of the opinion that the Company has not utilised any short term
 fund for long term investments.
 
 (xviii) During the year, 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 has not issued any debenture during the year.
 
 (xx) The company has not raised money by public issue during the year.
 
 (xxi) In our opinion and according to the information and explanation
 given to us, no fraud on or by the Company has been noticed or reported
 during the year.
 
 FOR M. B.  SARDHARA & ASSOCIATES 
 
 Chartered Accountants 
 
 
 
 (Mahendra Sardhara) 
 
 Proprietor 
 
 M/NO. 120837 
 
 Date : 6th August,2009
 
 Place : Rajkot