1.  We have audited the attached Balance Sheet of Prakash Industries
 Ltd.  as at 31st March, 2011 and the Profit & Loss Account and the Cash
 Flow Statement of the Company 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.
 
 2.  We have 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 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 the 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, issued
 by the Government of India in terms of section 227(4A) of the Companies
 Act, 1956 and on the basis of such checks of the books and records of
 the Company as we considered appropriate and according to the
 information and explanations given to us, we annex here to a statement
 on the matters specified in paragraphs 4 & 5 of the said order.
 
 4.  As stated in Note No.6, in terms of a Court order, the deferred tax
 liability for the year has been adjusted against Securities Premium
 account. Had the deferred tax liabilities for the year been accounted
 for pursuant to Accounting Standard-22‘Accounting for Taxes on Income‘,
 profit after tax for the year would have been lower by Rs. 302.30 lacs;
 
 5.  As stated in Note No.1(l), the provision of tax made by the Company
 is subject to assessment by the tax authorities and set off of MAT
 credit entitlement is subject to availability of taxable income of the
 Company in future, as per the provisions of the Income Tax Act, 1961.
 
 6.  Further to our comments in the Annexure referred to in Paragraph 3
 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 those
 books;
 
 c) The Balance Sheet, the Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) Subject to our comments in para 4 above, in our opinion, the Balance
 Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this
 report, comply with the mandatory Accounting Standards, referred to in
 sub-section (3C) of Section 211 of the Companies Act, 1956, to the
 extent applicable.
 
 e) On the basis of 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 disqualified as on 31st March,
 2011 from being appointed as a Director in terms of Clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956.
 
 Subject to our comments in para 4 above and their consequential impact
 on the profit for the year, 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 significant accounting policies and 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, 2011;
 
 (ii) in the case of the Profit & Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS‘
 REPORT OF EVEN DATE TO THE MEMBERS OF PRAKASH
 INDUSTRIES LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED
 31ST MARCH, 2011.
 
 1.  (a) The Company has maintained proper records showing all
 
 particularsincluding quantitative details and situation of fixed assets
 on the basis of available information.
 
 (b) As explained to us, the fixed assets have been physically verified
 by the management in accordance with a phased programme, which in our
 opinion is reasonable having regard to the size of the company and the
 nature of its assets. During the year, no material discrepancies were
 noticed by the management on such verification.
 
 (c) Fixed assets disposed off during the year, in our opinion, do not
 constitute a substantial part of the fixed assets of the Company and
 going concern status of the Company is not affected.
 
 2.  (a) The inventory, except stock in transit or lying with the third
 
 parties has been physically verified by the management during the year.
 For stocks lying with the third parties at the year end, written
 confirmations have been obtained. In our opinion, the frequency of
 verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 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 the information and explanations
 given to us, the Company is maintaining proper records of inventory.
 The discrepancies noticed on physical verification of inventory as
 compared to the book records were not material and have been properly
 dealt with in the books of account.
 
 3.  The Company has neither granted nor taken any loan, secured or
 unsecured, to / from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchases of inventory and fixed assets and for the sale of goods.
 During the course of our audit, we have not come across any continuing
 failure to correct major weaknesses in the internal control system.
 
 5.  Based upon the audit procedures applied by us and according to the
 information and explanations given to us, there are no transactions
 which are required to be entered in the register maintained under
 Section 301 of the Companies Act,1956.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 during the year within the meaning of the provisions of Section 58A and
 58AA of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules, 1975.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  The Central Government has prescribed maintenance of cost records
 under Section 209(1)(d) of the Companies Act,1956 in respect of certain
 manufacturing activities of the Company. We have been informed that
 such accounts and records have been maintained by the Company.
 
 9.  (a) As per records of the Company and according to the information
 
 and explainations given to us and further read together with Note
 No.1(l)(i) regarding payment of MAT, in our opinion, the Company is
 generally regular in depositing the undisputed statutory dues including
 Provident Fund, Investor Education and Protection Fund, Employees‘
 State Insurance, Income Tax, Sales Tax, Entry Tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty, Cess or any other material statutory
 dues applicable to it with the appropriate authorities. There are no
 undisputed statutory dues at the year end outstanding for a period of
 more than six months.
 
 (b) According to the information and explanations given by the
 management and relied upon by us, there are following statutory dues
 which have not been deposited by the Company on account of some dispute
 and same are pending before appropriate authorities:-
 
 Nature of            Amount   Forum where the dispute is pending
 
 the dues      (Rs. in lacs)
 
 Excise Duty          189.93   Appellate Authority- Commissioner
 
                      6.29     Appellate Authority- Dy. Commissioner
 
                      0.11     Appellate Authority- Asst. Commissioner
 
                      33.95    CESTAT, New Delhi
 
                      5.09     Appellate Authority- Jt. Commissioner
 
                      28.56    Appellate Authority- Commissioner
 
 Energy Cess          531.00   Supreme Court of India
 
 10.  The Company has no accumulated losses as at 31st March, 2011.  The
 Company has not incurred cash losses during the financial year covered
 by our audit and in the immediately preceding financial year.
 
 11.  Based on our audit procedures and according to the information and
 explanations given to us, we are of the opinion that the Company has
 not defaulted in repayment of dues to any financial institution or bank
 during the year.
 
 12.  According to the information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 13.  In our opinion and according to the information and explanations
 given to us, the provisions of any special statute applicable to chit
 fund / nidhi / mutual benefit fund/ societies are not applicable to the
 Company.
 
 14.  In our opinion and according to the information and explanations
 given to us, proper records have been maintained of the transactions
 and contracts and timely entries have been made in respect of Company''s
 dealings in its investments. The investments held by the Company as at
 31st March, 2011 are in its own name.
 
 15.  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 during the year.
 
 16.  In our opinion and according to the information and explanations
 given to us, on an overall basis, the term loans taken by the Company
 during the year have been applied for the purpose for which they were
 obtained, other than temporary deployment pending application.
 
 17.  According to the information and explanations given to us and on
 an overall examination of Balance Sheet of the Company, we are of the
 opinion that the Company has not raised any funds on short-term basis,
 which have been used for long-term investments.
 
 18.  The Company has not made any preferential allotment of shares
 during the year to the parties and companies covered in the Register
 maintained under Section 301 of the Company Act,1956.
 
 19.  The Company has not issued any debentures during the year under
 review.
 
 20.  The Company has not raised any money by way of public issue during
 the year under review.
 
 21.  During the course of our examination of the books and records of
 the Company carried out in accordance with the generally accepted
 auditing practices in India and according to the information and
 explanations given to us, we have neither come across any instance of
 material fraud on or by the Company, noticed or reported during the
 year, nor have we been informed of such case by the management.
 
                                         for CHATURVEDI & PARTNERS 
                                         Chartered Accountants
 
                                         Registration No. 307068E 
 
 New Delhi                                            (L.N. Jain)
 
 30 th May, 2011                                       Partner
 
                                                       M.No. 72579