We have audited the attached Balance Sheet of M/s. SIV INDUSTRIES
 LIMITED, as .at 31st March, 2003 and also the Profit and Loss, Account
 for the year ended on that date annexed thereto and the cash flow
 statement for the year ended on that date. These financial statements
 are the responsibility of the Company's management. Our responsibility
 is to express an pinion on those financial statements leased on our
 audit.
 
 We conducted our audit in accordance with auditing standards generally
 accepted in India. Those standards require that we plan and perform the
 audit to obtain reasonable assurance about whether the financial
 statements are free of material misstatement. An audit includes
 examining, on a lest basis, evidences 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 overall financial statement
 presentation. We believe I hat our audit provides a reasonable basis
 lor our opinion.
 
 As required by the Manufacturing and other Companies (Auditor's Report)
 Order, 1988! issued by the Central Government of India in terms of
 sub-'section 4(A) of Section 227 of the Companies Act, we enclose in
 the Annexure a statement on the mailers specified in paragraphs 4 of
 the said Order.
 
 Further lo our comments in the Annexure referred to above,we' reporl
 that
 
 i) We have obtained all the information and explanation ions, which to
 the host of our knowledge and belief were necessary for the purpose of
 our audit.
 
 ii) 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 and proper returns adequate lor the purpose of our and it
 have been received from the branches not visited by us.
 
 iii) The Balance Sheet and Profit and Loss Account dealt willi by this
 report are in agreement with the books of account;
 
 iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt
 will by this reporl comply with the accounting standards referred to in
 sub-section (3c) of section 211 of the Companies Act, 1956
 
 v) On the basis of written rcpresenlalions received from the directors,
 as on 31 I st March 2003. and taken on record by the Board of
 Directors, we report dial all the directors except the government and
 nominee directors are disqualified as on .i 1 st March 2003 from being
 appointed as a director in terms of clause(g) of sub-section Dot
 section 2 74 of the Companies Act 1956,
 
 vi) In our opinion and the best of our information and according to the
 explanations given to us the said accounts give the information
 required by the. Companies Act, 1959 in the manner so required and give
 a true and lair view in conformity with the accounting principles
 generally accepted in India;
 
 a) in the case of the Ba lance Sheet of the state of affairs of the
 Company as at31 1st March, 2003; and
 
 b) in the case of the Profit and Loss Account of the LOSS for the year
 ended on that date.
 
 c) in the case of cash flow statement, of the flows for the year ended
 on that dale.
 
 Without qualifying our opinion, the accounts of the Company as given in
 Note No.13 of the Notes to the accounts havebeen prepared on the basis
 that the Company is a going concern. However pending finalisation the
 rehabilitation scheme to be filed will the Operating Agency and the
 relevant directions from BIFR, we are unable to express any opinion
 presently in this regard.
 
 ANNEXURE-TO THE AUDITOR'S REPORT
 
 1.  The Company has maintained proper records to show full particulars
 including quantitative details of its fixed assets. The fixed assets of
 the Company have not been physically verified by the management during
 the year. In the absence of verification of fixed assets we are unable
 to comment on discrepancies or otherwise between the book records and
 the physical inventory.
 
 2.  None of the fixed assets have been revalued during the year.
 
 3.  The stock-in-trade (including Raw-materials) and the stock of
 stores and spare parts have not been physically verified by the
 management during the year, hence we are unable to comment on
 verification and adequacy of the procedures followed by the management.
 In the absence of verification of stocks, we arc unable to comment on
 discrepancies or otherwise between physical stocks and book stocks. In
 our opinion, llio valuation of stock in trade and stores and spares
 parts has boon fair and proper in accordance with the normally accepted
 accounting principles and is on the same basis as in the earlier years.
 
 4.  In our opinion, the rate of interest and terms and conditions on
 which loans secured or unsecured have been obtained from companies,
 firms or other parties listed in the Register maintained under section
 301 of the Companies Act, 1956 and/or the companies under the same
 management as defined under section 3 70(1 -B) of the companies Act.
 1956. wherever applicable are not prima facie prejudicial to the
 interest of the Company.
 
 5.  The Company has not given any loans or advances in the nature of
 loans to any parties (Including Employees).
 
 6.  In view of the suspension of operation during the year, wo are
 unable to comment on the adequacy of Internal control procedures
 relating to purchase of stores, raw-materials including components,
 plant and machinery, equipment and other similar assets and also sale
 of goods which commensurate with I he its size and nature of business.
 
 7.  In our opinion, the- transaction of purchase of goods and
 materials, and sale of goods made in pursuance of contracts or
 arrangements entered in the Register maintained under section 301 o(
 the Companies Act, 1956, and aggregating during the year to Rs.50,000/-
 or more in rcspect of each party were made at price which were
 reasonable having regard to prevalent..  market prices for such goods
 or materials or the prices at which transactions tor similar goods or
 raw materials were made with other parties.  
 
 8.  In view.of-susponsionofoperationsdurrngt.hc year, we are unable to
 comment on the system of determining unserviceable or damaged stores,
 raw-materials and finished goods.  '
 
 9.  In our opinion and'according to the information and,explanation
 given to us, the company has complied with) the provision of section
 58-A of the Companies Act, 1956 and the rules framed there under.
 
 1O. In view of the suspension of operations during the year, we unable
 to comment on the adequacy of the records lor the sale and disposal of
 realisable scrap/by - Products have been. maintained by company.
 
 11. In our opinion, the companies internal audit system commensurate
 with its size and nature of its business.
 
 12. On the basis of the records produced, we are of the opinion that,
 prima facie, the cost Records and accounts prescribed by the Central
 government under scction 209(1 )(d) of the Companies Act, 1956 have
 beem ,maintained by the Company However, we are not required to carry
 out and have not carried out any detailed examination of such accounts
 and records.
 
 13 During (the year, company has remitted dues relating to Provident
 fund and Employees State Insurance with (the appropriate authorities
 with delays in respect of all months
 
 14. There was no amounts outstanding as on 31 st March 2003 in respect
 of undisputed Income - tax. Sales lax. Customs duty and Excise duty
 which were due for more than Six months from the date they become
 payable.  ,
 
 15. On the basis of examination of books, the vouchers produced to us
 for our verification and examined by us on a test chock basis,
 explanations given and representations made against oar inquires, and
 checks and controls relating to authorizing expenditure re on the
 biisis of contractual obligation with the employees/directors and
 accepted business practices having regard to the company's need and
 exgencies wo have not come across any expenses charged to revenue,
 which, in our opinion and judgement and to the best of our knowlcdge
 and belief, could be reported as personal expenses.
 
 16. The Company is a Sick Industrial Company wilhin the meaning of
 section 3(1) (0) of the Sick Industrial Company (Special Provisions)
 Act, 1985 vide Registered No.71/2002.
 
                                    For M.S JAGANNATHAN & VISVANATHAN,
 
                                                  M.J. VlJAYARAGHAVAN
 PLACE : Mumbai                                               Partner
 DATE : 25.06.2003                    CHARTERED ACCOUNTANTS, AUDITORS