1. We have audited the attached Balance Sheet of M/s Onida Savak Ltd.,
 as at 31st March 2003 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 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 Manufacturing and other Companies (Auditors
 Report) Order, 1988 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 in paragraph 3
 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 the
 books;
 
 (iii) The Balance Sheet and 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 (AS) referred to in sub-section (3C) of section
 211 of the Companies Act, 1956 to the extent applicable except AS-13 on
 valuation of Investments.
 
 (v) On the basis of written representations received from the
 directors, as on 31st March, 2003, and taken on record by the Board of
 Directors, we report that all directors are disqualified as on 31st
 March 2003 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 (vi) We report that had the observation made by us in note no. 6 (i), 7
 ,9 &11 given in schedule 23 been considered, the Loss for the year
 would have been Rs. 974.34 lacs (as against the reported Loss of Rs.
 215.10 lacs), accumulated losses would have been Rs. 9037.85 lacs (as
 against the reported figure of Rs. 3244.11 lacs). We further report
 that impact of our observations given in note no. 2, 6(ii) in schedule
 23 can not be ascertained.
 
 (vii) In our opinion and to the best of our information and according
 to the explanations given to us, the Balance Sheet and Profit and Loss
 Account together with notes given in schedule no 23 and subject to
 notes no. 2 regarding various balances, no. 6 regarding non provision
 of interest, no. 7 regarding restructuring reserve, no.8 regarding
 diminution in the value of Investment, no.9 regarding non provision of
 doubtful debts, no. 10 regarding adjustments and no. 11 regarding
 Debenture redemption reserve gives in the prescribed manner the
 information required by the Companies Act, 1956, and also give
 respectively 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 31st March 2003 and
 
 (b) in the case of the Profit and Loss Account, of the loss for the
 year ended on that date.
 
 (c) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
                                                     For GOEL GARG & CO.
                                                   Chartered Accountants
 Place: New Delhi                                              S.C. GARG
 Date: June 26, 2003                                           (PARTNER)
 
 ANNEXURE TO AUDITORS REPORT
 
 (Referred to in Paragraph 3 of our report of even date)
 
 1. The company has maintained proper record showing full particulars
 including quantitative details and situation of its Fixed Assets. Fixed
 Assets have been physically verified by the management at the end of
 financial year.. We are informed that no material discrepancies were
 noticed on such verification.
 
 2. None of the fixed Assets have been revalued during the year.
 
 3. The stock of finished goods, stores, spare parts, packing material
 and raw material have been physically verified by the management at the
 end of the financial year.
 
 4. In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of stocks followed
 by the management is reasonable and adequate in relation to the size of
 company and the nature of business.
 
 5. The discrepancies noticed on physical verification of stocks, which
 were not material as compared to the stock record/statement, have
 been properly dealt with in the accounts.
 
 6. In our opinion and on the basis of our examination of the valuation
 of stocks such valuation is fair and proper in accordance with the
 normally accepted accounting principles and is on the same basis as in
 the previous year.
 
 7. The company has not taken loans from the companies, Firms, or
 other parties as listed in the register maintained under section 301 of
 the company Act, 1956 or companies under the same management within the
 meaning of section 370 (1-B) of the Companies Act, 1956.
 
 8. Loans and Advances in the nature of Loans have not been given to
 companies, Firms and other parties listed in the register maintained
 under section 301 of the companies Act 1956 and/or to the companies
 under the same management.
 
 9. In the respect of interest free Loans and Advances given to the
 employees, they are repaying the principle amounts as stipulated.
 
 10. 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 for the purchase of the stores, raw materials including
 components, plant & machinery, equipment and other assets, and for sale
 of goods.
 
 11. In our opinion and according to the information and explanation
 given to us, the transactions for the purchase and sale of goods,
 materials and services made in pursuance of contract or arrangements
 entered in the register maintained under section 301 and aggregating
 during the year to Rs 50,000/- or more in respect of each party, have
 been made at prices, which in our opinion, are reasonable having
 regard to prevailing market prices for such goods, material or services
 or the prices at which similar transactions have been made with other
 parties and the Companys business needs and exigencies.
 
 12. According to information and explanation given to us, the Company
 has a procedure for determination of unserviceable or damaged stores,
 raw materials and finished goods and necessary provision for loss
 arising on the items so determined have been made in books of account
 of the company.
 
 13. According to the information and explanation given to us, during
 the year the Company has not accepted deposit with regard to provision
 of Section 58 A in respect of deposits accepted from the public.
 
 14. In our opinion, the company maintains reasonable records for the
 sale of scrap. We are informed that the company does not have any by
 products.
 
 15. In our opinion, the company has an adequate Internal Audit System
 commensurate with the size of the company and the nature of its
 business.
 
 16. We have broadly reviewed the books of accounts maintained by the
 company pursuant to the Rules made by the Central Government for
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956 and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained. We have not,
 however, made a detailed examination of the same.
 
 17. According to the records of the Company, Provident Fund and
 Employees State Insurance dues have been regularly deposited during the
 year with the appropriate authorities.
 
 18. According to the information and explanation given to us, no,
 undisputed amounts payable in respect of Income Tax, Wealth Tax, Custom
 Duty, Excise Duty, except for Sales Tax Rs 220.21 lacs were outstanding
 as at 31st March 2003 for a period of more than six month from the date
 they became payable.
 
 19. The company has become a Sick Industrial Company within the meaning
 of clause (o) of sub section (1) of section 3 of the Sick Industrial
 Companies (Special Provision) Act, 1985.
 
 20. According to the information and explanation given to us on the
 basis of books of account of the company examined by us, no-personal
 expenses have been charged to revenue account, other than those payable
 under contractual obligation or in accordance with generally accepted
 business practices.
 
 21. In respect of trading activities of the company, according to the
 information given to us there are no damaged goods.
 
                                                     For GOEL GARG & CO.
                                                   Chartered Accountants
 Place: New Delhi                                              S.C. GARG
 Date: June 26, 2003                                             Partner