We have audited the attached Balance Sheet of SHRI NIRANJAN AYURVED
 BHAWAN LIMITED, as at 31st March, 2002, and the Profit and Loss Account
 of the Company for the year ended on that date and report as follows:-
 
 (1) As required by the Manufacturing and other Companies (Auditors
 Report) Order, 1988 issued by the Company Law Board in terms of Section
 227(4A) of the Companies Act, 1956, we enclose in the Annexure a
 statements on the matters specified in paragraphs 4 and 5 of the said
 order, on the basis of such checks of the book and records of the
 Company as we considered appropriate and the information and
 explanation given to us during the course of our audit.
 
 (2) We are unable to comment on
 
 (i) No provision is made in respect of Gratuity and Leave encashment
 benefit as the same is accounted on cash basis.
 
 (ii) Refer Note No: II (I)(3), III & IV of Schedule M to the balance
 sheet in respect of non-provision of interest due to which losses and
 liabilities are under stated Amount unascertainable.
 
 (3) FURTHER TO OUR COMMENTS REFERRED TO IN PARAGRAPH (1) ABOVE WE
 REPORT THAT:
 
 A. Subject to the forgoing remarks in paragraphs (2) above and
 consequential cumulative effect thereof on the Companys net worth
 liabilities and losses for the period which are not capable of
 quantification at present and also subject to our comments in the
 Annexure referred to in paragraphs 1 above.
 
 B. (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 accounts are required by law have
 been kept by the Company, so far as appears from our examination of the
 books.
 
 (c) The Balance Sheet and the Profit, and Loss Account dealt with by
 this Report are in agreement with the books of accounts.
 
 (d) In our opinion, the Balance Sheet and Profit & Loss Account comply
 with the Accounting Standards referred to in sub-section (3C) of
 Section 211 of the Companies Act, 1956 to the extent applicable. Except
 in the case of accounting for the Retirement benefits as per AS -
 issued by Institute of Chartered Accountants of India
 
 (e) On the basis of the written representation received from the
 directors and taken on the records by the Board of Directors, we report
 that none of the directors is disqualified as on March, 31st, 2002 from
 being appointed as 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 accounts give the information
 required by the Companies Acts, 1956 in the manner so required and
 subject to note no II (2), 11(3), III & IV of schedule `M to the
 balance sheet regarding non-provision of liability of gratuity of staff
 and non-provision of Bank Interest give a true and fair view.
 
 In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2002.
 
 In the case of the Profit and Loss Account, of the LOSS of the Company
 for the year ended on 31st March, 2002.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (* Referred to in paragraph 1 of our Report of even date on the
 accounts of SHRI NIRANJAN AYURVED BHAWAN LIMITED, for the Year Ended
 31st March, 2002).
 
 1. The Company has maintained proper records to show full particulars
 including quantitative details and situations of the Fixed Assets. We
 are informed by the Management the fixed assets of the Company have
 been physically verified and there were no serious discrepancies on
 such verification. None of the fixed assets have been revalued during
 the year.
 
 2. As explained to us, the stock of finished goods and raw material
 has been physically verified by the management at reasonable intervals
 during the year
 
 3. In our opinion and according to the information and explanation
 given to us the procedures of physical verification of stock followed
 by the management are reasonable and adequate in relation to the size
 of the Company and the nature of business:
 
 4. No material discrepancies have been noticed by management on
 physical verification of stocks as compared to book records.
 
 5. In our opinion and on the basis of our examination of the valuation
 of stocks such valuation is fair, proper and in accordance with the
 normally accepted accounting principle and is on the same basis as in
 the previous year.
 
 6. The Company has not taken loans from Companies, firms or other
 parties listed in the register maintained under section 301 of the
 Companies Act, 1956 and or from the Companies under the same management
 as defined under sub-section (1B) of Section 370 of the Companies Act,
 1956
 
 7. The Company has not given any, interest free loans or advances to
 Companies, firms and other parties listed in the register maintained
 under section 301 and 370(1-B) of the Companies Act 1956.
 
 8. Loans and advances free of interest have been given to the
 employees and they are repaying the amount as stipulated or as
 restipulated.
 
 9. According to the information and explanation given to us the
 Company has Internal Control procedure commensurate with the size of
 the Company and nature of its business for the purchases of stores, raw
 material including components, plant and machinery/equipment and other
 assets and for the sale of goods.
 
 10. The Company has purchased of stores, raw materials including
 components in excess of Rs. 50,000/- in value from firms, subsidiaries
 or Companies or other parties in which Directors are interested as
 listed in the register maintained under section 301 of the Companies
 Act, 1956. However, in the absence of details about comparative
 prices, we are not in a position to comment whether the rates at which
 they are purchased are prima facie prejudicial to the interest of the
 company.
 
 11. As explained to us, unserviceable or damaged stores, raw material
 of finished goods are determined by the Company and adequate provision
 for loss has been made in the accounts.
 
 12. The Company has not accepted deposits from the public during the
 year to which the provisions for Section 58-A of the Companies Act,
 1956 and the rules made thereunder are not applicable. Deposits
 accepted in the earlier years, (when the rules regarding Acceptance of
 Deposits were not applicable of the Company due to exemption available
 on account of Company being Small Scale Industrial Unit) have been
 adjusted and transferred to Share Application Account which are pending
 allotment.
 
 13. The Company has maintained reasonable records for the sale and
 disposal of scraps which is accounted for on realisation basis. The
 Company has no by product.
 
 14. The Company has an internal audit system commensurate with its size
 and nature of its business.
 
 15. During the year, the Company was not regular in depositing
 provident fund dues. The Company has not paid Provident Fund dues of
 the workers for the period February & March, 2002. The provision of
 Employees State Insurance Fund Scheme are not applicable to the Company
 as per information given to us.
 
 16. According to the information and explanations given to us, there
 are no undisputed amount payable in respect of Income Tax, Wealth Tax,
 Sales Tax, Custom Duty and Excise Duty as which are outstanding as on
 31.3.2002 for the period of more than six months from the date they
 became payable, except in the case of Professional Tax of Rs. 25,980/-
 which has not been paid.
 
 17. On the basis of our examination of the books and according to the
 information and explanations given to us, no personal expenses have
 been charged to Revenue Account other than those payable under
 contractual obligations or in accordance with generally accepted
 business practice.
 
 18. The Company is not a Sick Industrial Company within the meaning of
 clause (o) of sub-section (1) of section 3 of the Sick Industrial
 Companies (Special Provisions) Act, 1985.
 
 19. As explained to us, other clauses of the order are not applicable
 to the Company.
 
                                       For SUNIL VENKAWALA & ASSOCIATES
                                                  CHARTERED ACCOUNTANTS
 
                                                      (Sunil Vankawala)
                                                             Proprietor
 Mumbai, dated 3rd August, 2002