Prakash Industries

1.  We have audited the attached Balance Sheet of Prakash Industries
 Ltd.  as at 31st March, 2009 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
 Companys 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-22Accounting for Taxes on Income,
 profit after tax for the year would have been lower by Rs.  7027.45
 lacs;
 
 5.  Subject to the 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 purpose of our
 audit;
 
 b) In our opinion, proper books of accounts 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 the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d) Subject to our comments in above para 4, /n our opinion, the Balance
 Sheet, the Profit & Loss Account and the 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 written representations received from the Directors
 as on 31st March, 2009, and taken on record by the Board of Directors,
 we report that none of the Directors is disqualified as on 31st March,
 2009 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, 2009;
 
 (ii) in the case of the Profit & 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 Flows of the
 Company 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, 2009.
 
 1.  (a) The Company is maintaining proper records showing all
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) 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 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
 such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 2.  (a) The inventory, except stock in transit or lying with third
 parties has been physically verified by the management during the year.
 For stocks lying with 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 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 loans, 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
 qjven to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory and fixed assets and for the sale of goods.
 Further, on the basis of our examination of the books and records of
 the Company, and according to the information and explanations given to
 us, we have neither come across nor have been informed of any
 continuing failure to correct any major weakness 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 Act.
 
 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 sections 58A
 and 58AA of the Companies Act, 1956. As per the information and
 explanations given to us, the Company Law Board has passed no order
 under the aforesaid sections on the Company.
 
 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 broadly reviewed the
 books of account maintained by the Company pursuant to the order 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 such accounts and records with a view to determine
 whether they are accurate or complete.
 
 9.  (a) According to the information and explanations given to us and
 the records of the company examined by us, the Company is generally
 regular in depositing the undisputed statutory dues including Provident
 Fund, Investor Education and Protection Fund, Employees State
 Insurance, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise
 Duty, Cess or any other material statutory dues applicable to it with
 the appropriate authorities.
 
 (b) According to the information and explanations given to us, there
 are following statutory dues which have not been deposited by the
 Company on account of dispute with the concerned authorities and same
 is being contested by the Company:-
 
 Nature of      Amount      Forum where the dispute is pending
 the dues    (Rs. in lacs)
 
 Excise Duty     6.29      Appellate Authority- Dy. Commissioner
                 0.11    Appellate Authority- Asst. Commissioner
                33.94    CESTAT, New Delhi
                 5.09    Appellate Authority- Jt. Commissioner
 
 Entry Tax    1934.27    High Court, Bilaspur (Chattishgarh)
 Sales Tax      18.89    High Court, Chandigarh (Punjab & Haryana)
 Energy Cess   315.00    Supreme Court of India
 
 10.  The Company has no accumulated losses as at 31st March, 2009.  The
 Company has not incurred cash losses during the financial year covered
 by our audit and immediately preceding financial year.
 
 11.  Based on our audit procedures and on the information and
 explanations given by the management, the Company has not defaulted in
 repayment of dues to financial institutions, banks and debenture
 holders 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.  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 Companys dealings in its
 investments. The investments have been held by the Company 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.  According to the information and explanations given to us, the
 term loans taken by the Company during the year have been applied for
 the purpose for which they were obtained.
 
 17.  Based on the information and explanations given to us and on an
 overall examination of Balance Sheet of the Company, the Company has
 not raised any funds on short-term basis, which have been used for
 long-term investment.
 
 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 Act.
 
 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 issues
 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
 
 Place  : New Delhi                                    (L.N. Jain)
 Dated : 28th  May, 2009                                   Partner