Nava Bharat Ventures

1.  We have audited the attached Balance Sheet of NAVA BHARAT VENTURES
 LIMITED, HYDERABAD (A.P) as at March 31, 2009 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 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 (as
 amended), 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
 standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 v) On the basis of written representations received from the Directors,
 as on March 31, 2009 and taken on record by the Board of Directors, we
 report that, none of the Directors is disqualified as on March 31, 2009
 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 read in conjunction
 with the Schedules annexed therewith 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 March 31, 2009;
 
 b) in the case of the profit and loss account, of the Profit of the
 Company for the year ended on that date; and
 
 c) In the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 Annexure to the Auditors Report: referred to in paragraph 3 of our
 Report of even date
 
 Re: Nava Bharat Ventures Limited. Hyderabad,
 
 1.  a) The Company has maintained proper records showing full
 
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) As explained to us, the management has physically verified most of
 the fixed assets during the year and there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of the assets. As informed, no
 material discrepancies were noticed on such verification.
 
 c) The plant and machinery disposed off during the year by the Company
 is not substantial and hence, it has not affected the going concern
 status of the Company
 
 2.  a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 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 its business.
 
 c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification between the physical
 stocks and book records were not material.
 
 3.  a) During the year, the Company has granted unsecured loan to a
 
 Company covered in the register maintained under Section 301 of the
 Companies Act, 1956.The maximum amount involved during the year was Rs.
 60.03 Crores and the year end balance of the said loan granted to such
 Company was Rs. 60.61 Crores.
 
 b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions of the
 above loan are not prima facie prejudicial to the interest of the
 Company.
 
 c) In our opinion and according to the information and explanations
 given to us, the principal amount and interest due thereon are received
 as per the stipulations.
 
 d) There is no over due amount of loans granted to Companies, Firms or
 other Parties listed in the register maintained under Section 301 of
 the Companies Act, 1956.
 
 e) During the year, the Company has not taken any loans, secured or
 unsecured from Companies, Firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, the provisions of (Ill) (f) and (g) of paragraph 4 of the
 aforesaid order are not applicable to the Company.
 
 4.  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 with regard
 to purchase of inventory and fixed assets and with regard to sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control system.
 
 5.  a) According to the information and explanations given to us by the
 
 Management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956 have
 been entered in the register to be maintained under that section.  b)
 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 of the Companies
 Act, 1956 have been made at prices which are reasonable having regard
 to 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 Sections
 58A and 58AA and other relevant provisions of the Companies Act, 1956
 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to
 the deposits accepted from the public.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account relating to
 materials, labour and other items of cost maintained by the Company
 pursuant to the Rules made by the Central Government for the
 maintenance of cost records under Section 209 (1) (d) of the Companies
 Act, 1956 in respect of sugar, distillery, power and ferro chrome and
 are of the opinion that prime facie the prescribed accounts and records
 have been made and maintained. The Central Government has not
 prescribed the maintenance of cost records under Section 209 (1) (d) of
 the Companies Act, 1956 for any other products of the Company.
 
 9.  a) According to the records, the Company is generally regular in
 
 depositing with appropriate authorities undisputed statutory dues
 including Provident Fund, Investor Education and 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 it.  b) According to the information and explanations
 given to us, no undisputed amounts payable in respect of Income Tax,
 Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in
 arrears as at March 31, 2009 for a period of more than six months from
 the date they became payable except the following
 
 Name of the Statute        Nature of the dues        Amount
                                                        Rs.
 The A. P. Electricity Duty   Electricity Duty      72,60,282
 Act, 1939, (as amended)
                                                     4,07,520
 
 Period to which the        Due Date          Date of
 amount relates                               payment
 
 2003-04 to 2007-08         15-04-2008       Not yet paid
 April 2008                 30-04-2008       Not yet paid
 
 c) According to the records of the Company and the information and
 explanations given to us, the dues of Sales Tax, Income Tax, Custom
 Duty, Wealth Tax, Service Tax, Excise Duty and Cess, which have not
 been deposited on account of any dispute are as follows:
 
 Name of the Statute          Nature of the dues       Amount
                                                        Rs.
 
 Various State Sales Tax Acts Orissa Sales tax        2,43,040
                              Central Sales Tax       6,33,286
                                                        49,089
                                                      2,20,135
                                                     14,30,850
                              Central Sales Tax      44,53,693
                                                     70,16,426
                                                     12,23,356
                              AP GST                 45,99,974
                             Central Sales Tax       14,40,936
 AP Value Added Tax Act, 
 2005                         VAT                    23,86,997
 Income Tax Act, 1961         Income Tax           4,68,50,844
                                                  10,24,93,112
 AP (Agriculture Produce 
 & Live                       Agricultural           28,15,396
 
 Stock) Marketing Act, 1966   Market Cess
 Central Excise Act, 1944     Excise Duty             2,31,456
                                                     55,29,064
 AP State Excise &          Establishment charges    28,56,867
 Prohibition Act, 1972        under State Excise
 The AP Non-Agricultural      NALA Tax               12,25,116
 Land Assessment Act, 1963                            1,49,952
 
 AP Municipalities Act, 1965  Property Tax            2,00,798
 Customs Act, 1962            Customs Duty           17,61,860
 
 The AP Electricity Duty Act, Electricity Duty     1,53,90,033
 1939 (as amended)
 
 Period to which the   Forum where dispute is pending
 amount relates
 
 2001-02              Asst. Commissioner of Sales Tax, Range II, Cuttack
 2000-01              Asst. Commissioner of Sales Tax, Range II, Cuttack
 2002-03              Asst. Commissioner of Sales Tax, Range II, Cuttack
 2004-05              Asst. Commissioner of Sales Tax, Range II, Cuttack
 2005-06              Asst. Commissioner of Sales Tax, Range II, Cuttack
 2000-01              Sales Tax Appellate Tribunal, Hyderabad
 2000-01              Sales Tax Appellate Tribunal, Hyderabad
 2000-01              Sales Tax Appellate Tribunal, Hyderabad
 2002-03              Asst. Commissioner of Commercial Taxes, Warangal
 1998-99              Sales Tax Appellate Tribunal, Hyderabad
 2005-06              Honble High Court of Andhra Pradesh
 Asst. year 2005-06   ITAT, Hyderabad
 Asst. year 2006-07   Commissioner of Income Tax (Appeals) – V, Hyderabad
 1980-81 to 1989-90   The Secretary, Agricultural Marketing Committee,
                      Visakhapatnam
 2006-07         Commissioner of Central Excise (Appeals), Visakhapatnam
 1997-98     Customs, Excise & Service Tax Appellate Tribunal, New Delhi
 1968-69 to 
 1987-88           Commissioner of State Excise & Prohibition, Hyderabad
 1993-94 to 
 1998-99              Honble High Court of Andhra Pradesh
 1995-96 to 2000-01   Honble High Court of Andhra Pradesh
 1995-96 to 2000-01   Honble High Court of Andhra Pradesh
 1985 to 1987         Deputy Commissioner of Customs, Visakhapatnam
 2003-04 to 2008-09   Honble High Court of Andhra Pradesh
 
 10.  The Company has no accumulated losses as at the end of the
 financial year. The Company has not incurred any cash losses during the
 financial year covered by our audit and the immediately preceding
 financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to any
 financial institutions and Banks.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The Company is not a chit fund or a nidhi/Mutual benefit
 fund/society.  Therefore, the provisions of clause 4(xiii) of the
 Companies (Auditors Report) Order, 2003 are not applicable to the
 Company.
 
 14.  The Company is not dealing or trading in shares, securities,
 debentures and other investments. Therefore, the provisions of clause
 4(xiv) of the Companies (Auditors Report) Order, 2003 are not
 applicable to the Company.
 
 15.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 16.  In our opinion and according to the information and explanations
 given to us the term loans were applied for the purpose for which the
 loans were 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 no funds raised on short-term basis have been used for long-term
 investment.
 
 18.  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.
 
 19.  During the year, the Company has not issued any debentures,
 therefore the question of creating security or charge in respect
 thereof does not arise
 
 20.  During the year, the Company has not made any public issue and
 therefore the question of disclosing the end use of money raised by
 public issue does not arise.
 
 21.  Based upon the audit procedures performed and according to the
 information and explanations given to us, we report that no fraud on or
 by the Company has been noticed or reported during the year,
 
                                           for Brahmayya & Co.  
                                         Chartered Accountants
                                            ( P. Chandramouli)
 Place: Hyderabad                                     Partner
 Date : May 30, 2009                      Membership No. 25211