We have audited the attached Balance Sheet of SKIP PLASTICS LIMITED as
 at 31st March,2002 and also the Profit and Loss Account 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.
 
 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 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 Manufacturing and Other Companies (Auditors Report)
 Order, 1988 issued by the Central Government of India in terms of
 sub-section (4A) of section 227 of the Companies Act, 1956, we enclose
 in the Annexure 2 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:
 
 i) 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;
 
 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.
 
 iii) The Balance Sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of account.
 
 iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt
 with by this report 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 representation received from the directors,
 as on 31st March,2002, and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31st
 March,2002 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 vi) 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
 notes in Schedule T thereon, and subject to note No. 13 and 1 (v) (a)
 to 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;
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March.2002; and
 
 b) in the case of the Profit and Loss Account, of the loss for the year
 ended on that date.
 
                                                  For T. M. Parikh & Co.
                                                   Chartered Accountants
                                                            T. M. Parikh
                                                              Proprietor
 Date: 27 th July 2002
 Place: Pune
 
 ANNEXURE TO THE AUDITORS REPORT
 
 Referred to in Paragraph 1 of our report of even date.
 
 1. The Company has maintained proper records showing full particulars
 including quantitative details and situation of all Fixed Assets. The
 Fixed Assets have been physically verified by the management during the
 year, as per its system of physical verification of all its Fixed
 Assets once in every year. No material discrepancies have been noticed
 on such verification. In our opinion the frequency of verification is
 reasonable.
 
 2. None of its Fixed Assets have been revalued during the year.
 
 3. The stock of Finished Goods, Work - in Progress, Spare Parts and
 Raw and Packing Materials have been physically verified during the year
 by the management. In our opinion, the frequency of verification is
 reasonable
 
 4. The procedure of physical verification of stocks followed by the
 management are reasonable and adequate in relation to the size of the
 Company and the nature of its business.
 
 5. The discrepancies noticed on verification between the physical
 stocks and the book records were not material and the same has been
 properly dealt with in the books of accounts.
 
 6. On the basis of our examination of stock records, We are of the
 opinion that valuation of stocks is fair and proper in accordance with
 the normally accepted accounting principles, and is on the same basis
 as in the preceding year.
 
 7. The Company has taken interest free unsecured loans from Directors
 and Shareholders, the terms and conditions of which are not prima facie
 prejudicial to the interest of the Company.
 
 8. The Company has not granted any loans to Companies listed in the
 register maintained under Section 301 of the Companies Act, 1956 or to
 the Companies under the same management as defined under Section 307
 (1B) of the Companies Act, 1956.
 
 9. In respect of loans and advances in the nature of interest free
 loans given to Employees of the Company, the same are being generally
 repaid as stipulated.
 
 10. In our opinion and according to information and explanations given
 to us, there is adequate internal control procedures commensurate with
 the size of the Company and the nature of its business with regards to
 purchase of stores, raw materials including components, Plant &
 Machinery, equipments and other assets and with regards to the Sale of
 Goods.
 
 11. In our opinion and according to information & explanations given to
 us, there are no transactions for purchase of goods and materials and
 sale of goods, materials and services, with parties entered in the
 registers maintained under section 301 and aggregating during the year
 to Rs.50,000/- or more in respect of each party have been made at
 prices which are reasonable having regard to prevailing market prices
 for such goods, materials or services or prices at which transactions
 for similar goods, materials or services have been made with other
 parties.
 
 12. As explained to us, the Company has a regular procedure for the
 determination of unserviceable or damaged stores, raw materials and
 finished goods. Adequate provision has been made in the accounts for
 the loss arising on the items so determined.
 
 13. The Company has not accepted any deposit from public.
 
 14. In our opinion, reasonable records have been maintained by the
 Company for the sale and disposal of realisable scrap. The Company has
 no By-Product.
 
 15. In our opinion the Company has an adequate Internal Audit System
 commensurate with the size of the business. The Company has appointed
 an Internal Auditor and we have received a report from Internal
 Auditor.
 
 16. We have been informed that no cost records are prescribed by the
 Central Government under Section 209(1) (d) of the Companies Act, 1956
 for the products of the Company.
 
 17. In our opinion and according to the information and explanations
 given to us, the Company is generally been regular in depositing
 Provident Fund and Employees State Insurance dues with the appro-
 priate authority.
 
 18. According to the information and explanations given to us, no
 undisputed amounts in respect of Income Tax, Wealth Tax, Customs Duty
 and Excise Duty is outstanding, as at 31st March, 2002, for the period
 of more than six months from the date they became payable. Except Sales
 Tax to the amount of Rs. 14.55 lacs & Excise Duty to the amount of Rs.
 16.24 Lacs is outstanding for the above period.
 
 19. According to the Information and explanations given to us, no
 personal expenses of employees or directors have been charged to the
 revenue account, other than those payable under contractual obligations
 or in accordance with the generally accepted business practice.
 
 20. The Company is a sick industrial company within the meanings of
 clause (0) sub-section (1) of section 3 of the Sick Industrial
 Companies (Special Provisions) Act,1985.
 
 21. In respect of trading activities of the Company which form an
 insignificant part of its income, there were no damaged goods during
 the year.
 
                                                    For T.M-Parikh & Co.
                                                   Chartered Accountants
 Place: Pune
 Date: 27 th July 2002                                        T.M.Parikh
                                                              Proprieter