We have audited the attached Balance Sheet of M/s POCHIRAJU INDUSTRIES
 LIMITED (the Company), as at 31st March, 2012 and also the Profit
 and Loss Account and Cash Flow Statement for the year ended on that
 date annexed thereto. 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. These Standards require that we plan and perform the
 audit to obtain reasonable assurance about whether the financial
 statements are free from 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 companies (Auditor''s Report) Order, 2003(CARO)
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act,1956, we enclose in the Annexure hereto a Statement on
 the matters specified in paragraphs 4 and 5 of the said order, to the
 extent applicable to the Company.
 
 2.  Further to our comments in the Annexure referred to in paragraph
 (1) above, we state that:
 
 a) 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;
 
 b) 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;
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of account.
 
 d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this Report, complies with the Accounting
 Standards referred to in Section 211 (3C) of Companies Act, 1956;
 
 e) On the basis of written representations received from the directors
 as on 27th August, 2012 and taken on record by the Board of Directors,
 none of the directors of the Company are disqualified as on 31st March,
 2012 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon, 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, 2012
 
 (ii) In the case of the Profit and Loss Account, of the Profit, of the
 Company for the year ended on that date; and
 
 (iii) In the case of the Cash Flow Statement, of the Cash Flow for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 With reference to the annexure referred to in Para No. 3 of the
 Auditor''s Report to the members of M/s POCHIRAJU INDUSTRIES LIMITED
 (the Company) on the financial statement for the year ended as on
 31st March, 2012 we report that:
 
 In respect of its fixed assets:
 
 a) The company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 b) As explained to us, all the fixed assets have been physical verified
 by the management in a phased periodical manner, which in our opinion
 is reasonable, having regards to the size of the company and the nature
 of its assets. No material discrepancies were noticed on such physical
 verification.
 
 c) As per information and explanations given to us, during the year,
 the company has not disposed off any substantial part of fixed assets
 that would affect the going concern.
 
 2) In respect of its inventories:
 
 a) As explained to us, inventories have been physically verified by the
 management at reasonable intervals.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedure for 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.
 
 c) As explained to us, no material discrepancies have been noticed on
 physical verification of inventories as compared to book records.
 
 3) The company has neither granted nor taken any loans, secured or
 unsecured, to/from companies, firms or other parties listed in the
 Register maintained under section 301 of the Companies Act,1956. During
 the year from the parties mentioned above.
 
 4) According to the information and explanations given to us, there are
 adequate internal control procedures commensurate with the size of the
 company and nature of its business for the purchase of inventory and
 fixed assets, sales of goods and services, we have not observed any
 major weakness in such internal control system.
 
 5) (a) According to information and explanations given to us, we are of
 the opinion that the transactions, if any, made in pursuance of
 contracts or arrangements that needed to be entered in the register
 maintained under section 301 of the Companies Act, 1956 have been so
 entered.
 
 (b) Where each of such transaction is in excess of Rs 5 lakhs in
 respect of any party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time.
 
 (c) According to the information and explanations given to us, the
 company has not accepted any deposits from the public during the year.
 
 6) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 7) The Central Government has not prescribed maintenance of cost
 records under section 209 (1) (d) of the Companies Act, 1956 in respect
 of activities carried on by the company. Hence the provisions of clause
 4 (viii) of the companies (Auditor''s Report) order, 2003 are not
 applicable to the company.
 
 8) (a) According to the records of the company, the company has been
 regular in depositing with appropriate authorities undisputed statutory
 dues including, Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Custom
 Duty, Excise Duty and other statutory dues.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of such statutory dues were
 outstanding as at 31st March, 2012 for a period of more than six months
 from the date they became payable.
 
 9) The Company neither has accumulated losses nor has it incurred any
 cash losses during the current financial year and in the immediately
 preceding financial year.
 
 10) In our opinion and according to the information and explanation
 given to us , the company has not defaulted in repayment of dues to
 banks and financial institutions.
 
 11) In our opinion, the company is not a chit fund, a nidhi or a mutual
 benefit society. Therefore, the provisions of clause 4 (xiii) of the
 Companies (Auditor''s Report) Order, 2003 are not applicable to the
 Company.
 
 12) Term loans obtained by the company were applied for the purpose for
 which the loans were obtained, other than temporary deployment pending
 application.
 
 13) According to Cash Flow Statement and other records examined by us
 and the information and explanation given to us, on an overall basis,
 funds raised on short term basis have not, prima facie, been used
 during the year been used for long term investment.
 
 14) According to the information and explanation given to us, the
 company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 15) During the year the Company has not made any preferential allotment
 of equity shares to a Company, covered in the register maintained under
 section 301 of the Companies Act, 1956, at price which is prejudicial
 to the interest of the Company.
 
 16) The Company has not issued any debentures during the year ending on
 31.03.2012.
 
 17) The company has not raised any money by public issues during the
 year.
 
 18) To the best of our knowledge and belief, and according to the
 information and explanations given to us, no fraud on or by the company
 was noticed or reported during the year.
  
                                                  For M M REDDY & CO.,
 
                                               Chartered Accountants
                                  Firm Registration Number : 010371S
 
 Place: Hyderabad                                          Sd/-
 
 Date: 27-08-2012                              M. MADHUSUDHANA REDDY
 
                                                         Partner
 
                                               Membership No. 213077