We have audited the attached Balance Sheet of RADIX INDUSTRIES (INDIA)
 LIMITED, as at 31st March 2012 and its Profit and Loss Statement and
 its cash-flow statement for the 9 months period 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 the auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance that 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.
 
 As required by the Companies (Auditors'' Report) Order, 2003 issued by
 the 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.
 
 Further to our comments in the Annexure referred to 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 such
 books;
 
 c) The Balance Sheet and the Profit and Loss Statement and the
 Cash-flow statement dealt with by this report are in agreement with the
 books of account
 
 d) In our opinion, the Balance Sheet and Profit and Loss Statement 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 written representations received from the Directors,
 as on March 31, 2012 and taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on March 31, 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 read with the statement
 of Accounting Policies and Notes to financial statements 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 Statement, of the Loss for the
 9 months period ended on that date
 
 and
 
 iii. In the case of the Cash-flow statement, of the cash-flows of the
 company for the 9 months period ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date
 
 1.1 According to the information and explanations furnished to us, the
 company has maintained proper records showing full particulars
 including quantitative details and situation of its fixed assets.
 
 1.2 According to the information and explanations furnished to us, the
 company has physically verified its fixed assets during the period and
 no material discrepancies were noticed on such verification carried out
 during the period.
 
 1.3 According to the information and explanations furnished to us, the
 company has not disposed of a substantial part of its fixed assets
 during the period under report.
 
 2.1 According to the information and explanations furnished to us, the
 company has physically verified its inventories during the period under
 report. In our opinion, the frequency and extent of such verification
 is reasonable.
 
 2.2 In our opinion the procedures of physical verification of
 inventories followed by the management are reasonable and adequate in
 relation to the size of the company and the nature of its business.
 
 2.3 According to the information furnished to us, the company is
 maintaining proper records of its inventory. The discrepancies if any
 noticed on verification of inventories between the physical stocks and
 the book records were not material, and have been properly dealt with
 in the books of account.
 
 3.1 According to the information and explanations furnished to us, the
 company has not granted any loans to companies, firms or other parties
 covered by the register maintained under Section 301 of the Companies
 Act 1956, at the beginning of the period under report or during the
 period under report, and consequently reporting under sub-clauses b, c
 and d of clause 4 (iii) of the Order does not arise during the period
 under report.
 
 3.2 According to the information and explanations furnished to us, the
 company has not taken any loans from directors or from the parties who
 is covered by the register maintained under section 301 of the
 Companies Act, 1956. Hence the reporting requirement in terms of clause
 e,f,g of 4 (iii) of the said order does not arise.
 
 4.  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 inventory, fixed assets and with
 regard to the sale of goods and services. Further, during the course of
 our audit, we have not come across any instances of major weaknesses in
 internal control system that in our opinion require correction but have
 so continued without correction
 
 5.  In our opinion and according to the information and explanations
 given to us, the transactions which have been entered into, pursuant to
 contracts that have been entered in register maintained under section
 301 of the companies Act, 1956, during the year under report, have been
 made at prices which are reasonable having regard to prevailing market
 prices at the relevant time.
 
 6.  According to the information and explanations given to us, the
 company has not accepted any deposits covered under the provisions of
 section 58A, 58AA or any other relevant provisions of the Act. Further,
 according to the information furnished to us, no order has been passed
 on the company by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any Court or any other Tribunal
 for non-compliance with the provisions of Sections 58A and 58AA of the
 Companies Act, 1956.
 
 7.  In our opinion, the company did not have an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of accounts and records
 maintained by the company pursuant to the rules made by the Central
 Government for the maintenance of cost records under section 209(1) (d)
 of the Companies Act,1956, wherever prescribed and we are of the
 opinion that prima facie the prescribed accounts and records have been
 made and maintained. However, we are not required to and have not
 carried out a detailed audit of the same.
 
 9.1 According to the information and explanations furnished to us and
 according to the books and records produced for our examination, in our
 opinion, the company is regular in depositing with the appropriate
 authorities, the undisputed statutory dues including Provident Fund,
 Employees'' State insurance, Income Tax, Sales Tax, Wealth Tax,
 Service Tax, Custom Duty and other material statutory dues wherever
 applicable to it and further there are no undisputed statutory dues
 that were outstanding, as at the date of the Balance Sheet, for a
 period of more than six months from the date they became payable.
 
 9.2 According to the information and explanations furnished to us and
 according to the records of the company, the company has no disputed
 dues on account of Income Tax, Wealth Tax, Service Tax, Sales Tax,
 Customs Duty, Excise Duty or Cess pending remittance as at March 31,
 2012
 
 10 The company has accumulated losses of - 132.75 lacs at the end of
 the 9 months period ended 31st March, 2012 and it did not incur cash
 losses during the 9 months period ended covered under report and the
 company had made a cash losses in the immediately preceding previous 15
 months period ended 30th June, 2011.
 
 11.  According to the information and explanations given to us, there
 were no defaults in repayment of dues to financial institutions, banks
 or debenture holders at the date of balance sheet.
 
 12.  According to the information and explanations given to us, the
 company has not granted any loans or 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
 furnished to us, the company is not a chit fund or a nidhi / mutual
 benefit fund / society and hence, the requirements of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 are not applicable to
 the company during the period under report.
 
 14.  In our opinion and according to the information and explanations
 furnished to us, the company is not dealing in or trading in shares,
 securities, debentures and other investments. Accordingly, the
 requirements of clause 4(xiv) of the Companies (Auditor''s Report)
 Order, 2003 are not applicable to the company during the period under
 report under report.
 
 15.  According to the information and explanations furnished to us, the
 company has not given any guarantee for loans taken by others from any
 banks or financial institutions during the period and also there are no
 such outstanding guarantees as on date of balance sheet.
 
 16.  The company has not obtained any term loans from Banks and
 Financial Institutions.  Hence reporting requirement in terms of
 Clauses (xvi) does not arise during the period under report.
 
 17.  In our opinion and according to the information and explanations
 furnished to us, and on an overall examination of Balance Sheet of the
 company, we are of the opinion that considering the internal accruals
 of the company during the period under report, funds raised by the
 company on short term basis have prima facie not been used for long
 term applications, except for permanent working capital.
 
 18.1 According to the information and explanations furnished to us,
 upon consequent to the sanction of the composite scheme of arrangement
 by the Hon''ble High Court of Andhra Pradesh vide its order dt.
 12-12-11 the unsecured loans of the company aggregating amount of -
 2,65,00,000 have been converted into 26,50,000 Equity shares of - 10/-
 each on preferential basis, of which 19,85,000 Equity shares allotted
 to two related parties covered by the register maintained under section
 301 of the Companies Act, 1956 and 6,65,000 Equity shares allotted to
 six other parties
 
 18.2 Further according to the information and explanation furnished to
 us, the price of - 10/- per share at which preferential allotment of
 shares has been made is not prejudicial to the interest of the company.
 
 19.  According to the information and explanations given to us, the
 company has not issued any debentures during the period under report.
 
 20.  The company has not raised any monies through public issue of its
 securities during the period under report, and the question of end use
 of such monies did not arise during the period under report.
 
 21.  According to the information and explanations furnished to us, and
 based on the audit procedures generally adopted by us, we report that,
 during the period, no fraud on or by the company has been noticed or
 reported that is either significant or could have caused a material
 misstatement in the financial statements.
 
                                   For CHEVUTURI ASSOCIATES
 
                                     CHARTERED ACCOUNTANTS
 
                                      Firm Reg.no.000632S
 
                                              Sd/-
 
                                    (CA.Ch.Srinivasa Rao)
 
 Place : Tanuku                             Partner
 
 Date : 07.05.2012                        M.No.209237