We have audited the attached Balance Sheet of Praj Industries Limited,
 as at 31st March, 2011 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 fi
 -nancial statements based on our audit.
 
 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 fi
 -nancial statements are free of material misstatement. An audit includes
 examining, on test basis, evidence supporting the amounts and
 disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and signifi cant 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 (Auditors Report) Order,2003 (the
 Order) issued by the Central Government of India, in terms of
 sub-section (4A) of Section 227 of the Companies Act,1956, (the Act)
 we enclose in the Annexure a statement on the matters specifi ed in the
 paragraphs 4 and 5 of the said Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 above, we report 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 the
 books;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by 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 comply with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 e) On the basis of the written representations received from the
 Directors as on 31st March, 2011 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualifi ed as on
 31st March, 2011 from being appointed as Director in terms of Clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the
 said date;
 
 f) In our opinion, and to the best of our information and according to
 the explanations given to us, the said accounts, read together with the
 Companys Accounting Policies and the Notes thereto, 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 case of the Balance Sheet, of the state of affairs of the
 Company as on 31st March, 2011
 
 ii.  in the case of the Profit and Loss Account, of the Profit for
 the year ended on that date; and
 
 iii.  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 1 of our Report of even date:
 
 i. (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verifi cation of fi
 -xed assets by which major fixed assets are verifi ed by the management
 at reasonable intervals. In our opinion, this periodicity of physical
 verifi cation is reasonable having regards to the size of the Company
 and the nature of its assets. No material discrepancies were noticed on
 such verifi cation.
 
 (c) Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 ii. (a) The inventory, except goods-in-transit and stocks lying with
 the third parties, has been physically verifi ed by the management
 during the year. In our opinion, the frequency of such verifi cation is
 reasonable. For stocks lying with the third parties at the year end,
 written confi rmations have been obtained.
 
 (b) The procedures for the physical verifi cation 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) In our opinion and according to information and explanations given
 to us and on the basis of our examination of the records of the
 inventory, the Company is maintaining proper records of inventory.
 Discrepancies noticed on verifi cation between the physical stocks and
 the book records were not material and have been appropriately dealt
 with in the books of account.
 
 iii. The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, fi rms or other parties covered in the
 registered maintained under Section 301 of the Companies Act, 1956
 (the Act). Therefore, the provisions of sub-clause (b), (c), (d),
 (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not
 applicable.
 
 iv. 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 purchase of inventories and fixed assets and
 with regard to the sale of goods and services. In our opinion and
 according to the information and explanations given to us, there is no
 continuing failure to correct major weakness in internal control
 system.
 
 v. In our opinion and according to information and explanations given
 to us, there are no contracts and arrangements the particulars of which
 need to be entered into the register maintained under Section 301 of
 the Act.
 
 vi. The Company has not accepted any deposits from the public.
 Therefore, the provisions of Section 58A and 58AA and any other
 relevant provisions of the Companies Act, 1956 and rules framed
 thereunder are not applicable.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with the size of the Company and nature of its business.
 
 viii. According to the information and explanations given to us, the
 Central Government has not prescribed the maintenance of cost records
 under Section 209(1) (d) of the Act for any of the products
 manufactured / services rendered by the Company.
 
 ix. (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, the
 Company has been regular in depositing amounts deducted / accrued in
 the books of account in respect of undisputed statutory dues including
 Provident Fund, Investor Education and Protection Fund, Employees
 State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service-Tax,
 Customs Duty, Excise Duty, Cess and other material statutory dues with
 the appropriate authorities.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees State Insurance, Income-Tax,
 Sales-Tax, Wealth-Tax, Service-Tax, Customs Duty, Excise Duty, Cess and
 other material statutory dues were in arrears as at 31st March, 2011
 for the period of more than six months from the date they became
 payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
 Duty and Excise Duty, which have not been deposited with the
 appropriate authorities on account of disputes other than those
 mentioned below:
 
 Name of statute    Nature of dues  Amount    Period to 
                                                which      Forum where
                                                             pending
                                 (in millions) the amount
                                                 relates
 
 Central Sales Tax  Demand on 
                      account         1.19     F.Y. 2003-04  Deputy 
                                                           Commissioner
 Act, 1956           of non-
                   submission of                             (Appeals)
                    statutory 
                    declaration
                    forms
 
 x. The Company does not have accumulated losses at the end of the fi
 nancial year and has not incurred any cash losses in the financial
 year and the immediately preceding financial year.
 
 xi. In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in payment of dues to its
 bankers or to any financial institutions. The Company did not have any
 outstanding debentures during the year.
 
 xii. The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii. In our opinion and according to the information and explanations
 given to us, the nature of activities of the Company does not attract
 any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefi t
 Fund / Society.
 
 xiv. According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments. However, in respect of transactions relating to
 investment in securities, the Company has maintained proper records of
 transactions and contracts during the year and timely entries have been
 made therein. Further, such securities have been held by the Company in
 its own name.
 
 xv. According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 xvi.  The Company did not have any term loans outstanding during the
 year.
 
 xvii. According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we are of
 the opinion that funds raised on short-term basis have not been used
 for long-term investment.
 
 xviii. According to the information and explanations given to us,
 during the year, the Company has not made preferential allotment of
 shares to parties covered in the register maintained under Section 301
 of the Act.
 
 xix.  The Company did not have any outstanding debentures during the
 year.
 
 xx.  The Company has not raised any money by public issues.
 
 xxi. Based on the audit procedures performed and as per the information
 and explanations given by the management, we report that no fraud on or
 by the Company has been noticed or reported during the year.
 
                                                   For and on behalf of
 
                                                      B. K. Khare & Co.
 
                                                  Chartered Accountants
                                          Firm Registration No. 105102W
 
                                                  Padmini Khare Kaicker
 
 Place : Pune                                                   Partner
 
 Date : 24th May, 2011                            Membership No. 044784