We have audited the attached Balance Sheet of Somany Ceramics Limited
 as at 31st March 2012, the statement of Profit & Loss and also the Cash
 Flow Statement for the year 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 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.
 
 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 purposes of our
 audit;
 
 b) 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;
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) In our opinion, the Balance Sheet, Profit & Loss Account 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
 of the Company and taken on record by the Board of Directors, we report
 that none of the directors of the Company is disqualified as on 31st
 March 2012 from being appointed as a Director in terms of clause (g) of
 sub section (1) of section 274 of the Companies Act, 1956;
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said accounts read together with note no.
 
 2.5 and other 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:
 
 a) in the case of Balance Sheet, of the state of affairs of the Company
 as at 31st March, 2012;
 
 b) in the case of the statement of Profit & Loss, of the profit of the
 Company for the year ended on that date; and
 
 c) in the case of Cash Flow Statement, of the cash flows of the Company
 for the year ended on that date.
 
 f) As required by the Companies (Auditor''s Report) Order, 2003 (The
 Order) (as amended) issued by the Central Government of India in terms
 of Section 227(4A) of the Companies Act, 1956 (The Act), on the matters
 specified in paragraphs 4 and 5 of the said Order, We further report
 that:
 
 1.  (a) The company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets except in case of certain locations where records are in process
 of updation / compilation.
 
 (b) As per the information and explanations given to us, certain fixed
 assets have been physically verified by the management according to a
 regular programme of periodic verification in a phased manner which in
 our opinion is reasonable having regard to the size of the company and
 nature of fixed assets. The discrepancies noticed on such physical
 verification were not material.
 
 (c) As per records and information and explanation given to us, no
 substantial part of fixed assets has been disposed off during the year.
 
 2.  (a) As per the information and explanations given to us, the
 inventories (except stocks with third parties and in transit) have been
 physically verified by the management at reasonable intervals.
 
 (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) On the basis of our examination of the records of inventory, we are
 of the opinion that the company is maintaining proper records of
 inventory (in respect of process stock records are updated after
 physical verification). The discrepancies noticed on such physical
 verification of inventory as compared to book records were not material
 which have been properly dealt with.
 
 3A. (a) As per the information and records made available, the company
 has not granted any loans, secured or unsecured, to companies, firms or
 other parties except to one company in the register maintained under
 section 301 of the Act. The maximum amount involved during the year and
 the closing balance is Rs.23.47 lacs and Rs. NIL respectively.
 
 (b) In our opinion, the rate of interest and other terms and condition
 of loan granted are not prima facie prejudicial to the interest of the
 company.
 
 (c) In accordance with the information and explanations given to us in
 respect of the aforesaid loans, there is no as such stipulated schedule
 for recovery of principal and interest and the same are recovered on
 demand.
 
 B. (a) As per the information and records made available, the Company
 has not taken any loans secured or unsecured from companies, firms or
 other parties except from two companies covered in the register
 maintained under section 301 of the Act. The maximum amount involved
 during the year is Rs. 100 lacs and the year end balance of such 
 loans are Rs.75 lacs.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of loans taken are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In accordance with the information and explanations given to us in
 respect of the aforesaid loans, there in no as such stipulated schedule
 for repayment of principal and interest and the same are repayable on
 demand.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanations that certain items
 purchased/sold are of special nature for which, as explained, suitable
 alternatives sources do not exist for obtaining comparative quotations,
 taking in to consideration the quality, usage and such other factors,
 there are adequate internal control systems (read with note no. 2.6 &
 2.16) commensurate with the size of the company and nature of its
 business with regard to purchase of inventory, fixed assets and for the
 sale of goods. Further on the basis of examination of the books and
 records of the company, carried out in accordance with the generally
 accepted auditing principles in India, and according to the information
 and explanation given, we have neither come across nor have we been
 informed of any instance of major weakness in internal control systems
 of the company.
 
 5.  (a) Based on the audit procedures applied by us and according to
 the information and explanations provided by the management, we are of
 the opinion that particulars of contracts or arrangements referred to
 in section 301 of the Act have been entered in the register required to
 be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements (exceeding the value of Rs.5 lacs in respect of any party
 during the financial year) have been made at prices which are generally
 reasonable having regard to prevailing market prices at the relevant
 time (read with para 4 above).
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has not accepted any deposits from the public
 within the meaning of section 58A and 58AA or any other relevant
 provisions of the Act and rules framed there under. We have been
 informed that no order has been passed by Company Law Board or National
 Company Law Tribunal or Reserve Bank of India or any Court or any other
 Tribunal in this regard.
 
 7.  In our opinion, the company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of account 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 Act in
 respect of the Company''s products to which the said rules are made
 applicable and are of the opinion that prima facie, the prescribed
 records have been made and maintained. We have however not made a
 detailed examination of the said records with a view to determine
 whether they are accurate or complete.
 
 9.  (a) According to the records and information made available to us,
 the company is generally regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, employees'' state insurance,
 income-tax, sales tax, wealth tax, service tax, customs duty, excise
 duty, cess and other material statutory dues to the extent applicable
 to it and there are no undisputed statutory dues payable for a period
 of more than six months from the date they became payable as at 31st
 March 2012.
 
 (b) According to the records and information and explanations given to
 us, there are no dues in respect of income tax, wealth tax, service
 tax, custom duty, excise duty and cess that have not been deposited
 with appropriate authorities on account of disputes and the dues in
 respect of customs duty, excise duty, service tax and sales tax that
 have not been deposited with appropriate authorities on account of
 disputes and the forum where the dispute is pending are as given below:
 
 Name of 
 Statue        Nature of Dues     Period to 
                                  which         Amount    Forum where
                                                          dispute is
                                                          pending
                                  it relates   (Rs.in
                                                Lacs)
 
 Custom Act    Custom Duty        1997-1999      5.91     Deputy
                                                          Commissioner
                                                          of Customs,
                                                         (Import) 
                                                          Tughlakabad
 
                                  1999-2004    317.43     CESTAT, New
                                                          Delhi
 
                                  2005-2007     13.04     Commissioner
                                                         (A), Gurgaon
 
 Central 
 Excise Act    Excise duty/ 
               Cenvat Credit      1996-2000      9.33     CCE Appeals,
                                                          Ahemdabad
 
                                  1994-1995      0.07     Asst. 
                                                          Commissioner,
                                                          Kalol
 
                                  2008-2009      1.81     CCE Appeals
 
                                  2002-2003      5.15     Haryana Tax
                                                          Tribunal,
                                                          Chandigarh
 
                                  2006-2007     60.12     Supreme Court
                                                          of India
 
                                  2007-2008     76.40     Supreme Court
                                                          of India
 
 Sales 
 Tax Act       Local Area 
               Development Tax    2008-2009     89.27     Supreme Court
                                                          of India
 
                                  2009-2010     93.56     Supreme Court
                                                          of India
 
                                  2010-2011     59.62     Supreme Court
                                                          of India
 
                                  2011-2012     60.16     Supreme Court
                                                          of India
 
                                  1990-1993     45.83     Maharashtra
                                                          Sales Tax
                                                          Tribunal
 
                                  2006-2007     65.81     Asst. 
                                                          Commissioner,
                                                          Ahemdabad
 
               Turnover Tax       2007-2008     35.96     Joint.
                                                          Commissioner,
                                                          Commercial
                                                          Taxes, Banglore
 
                                  2006-2009     22.76     Joint. 
                                                          Commissioner,
                                                          Commercial 
                                                          Taxes, Banglore
 
                                  2008-09        0.33     Commissioner 
                                                          of Central
                                                          Excise,
                                                          Ahemdabad
 
                                                 0.43     Deputy
                                                          Commissioner 
                                                          of Central
                                                          Excise
 
 Finance 
 Act           Service Tax
               credit/            2007-2008      0.74     CESTAT, 
                                                          Ahemdabad
 
               abatement          2005-2007      6.72     Gujrat 
                                                          High Court
 
                                  2009           3.25     Asst. 
                                                          Commissioner
                                                          of Central
                                                          Excise, 
                                                          Ahemdabad
 
                                  2007-09       2.80      Asstt.
                                                          Commissioner,
                                                          Rohtak
 
                                  2004-05     113.79      CIT Appeals,
                                                          Kolkata
 
 Income 
 Tax Act*      Income Tax         2006-07       5.00      CIT Appeals,
                                                          Kolkata
 
                                  2008-09       5.55      CIT Appeals,
                                                          Kolkata
 
                                  2009-10      42.51      CIT Appeals,
                                                          Kolkata
 
 * Excluding penalty if any (Refer note no. 2.1)
 
 10.  The company does not have accumulated losses as at the end of the
 financial year and has not incurred cash losses in the current
 financial year and in the 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 institution, banks or debenture holders.
 
 12.  According to the information and explanations given to us, the
 Company has not granted any loans and/or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  Clause 4 (xiii) of the Order is not applicable to the Company as
 the Company is not a chit fund or a nidhi / mutual benefit fund /
 society.
 
 14.  In our opinion, the company is not dealing in or trading in
 shares, securities, debentures and other investments.
 
 15.  According to the information and explanations given to us, the
 terms and conditions on which Company has given guarantee aggregating
 to Rs.1230 lacs for loans taken by others from banks and financial
 institutions, are not prima facie prejudicial to the interest of the
 Company.
 
 16.  According to the information and explanations given to us, the
 term loans were applied for the purposes for which the loans were
 obtained.
 
 17.  On an overall examination of the financial statements of the
 Company and on the basis of information and explanations given to us,
 we are of the opinion that the company has not used funds raised on
 short-term basis for long-term investment.
 
 18.  According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to any
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19- On the basis of the records made available to us, the Company has
 no debentures outstanding during the year.
 
 20.  The company has not raised any money through public issue during
 the year.
 
 21.  During the course of our examination of the books and records of
 the company carried out in accordance with the auditing standards
 generally accepted in India, we have neither come across any material
 instance of fraud on or by the company, noticed or reported during the
 year nor we have been informed of such case by the management.
 
                                                 For LODHA & Co.
 
                                          Chartered Accountants
 
                                  Firm Registration No. 301051E
 
                                                    N. K. Lodha
 
 Place: New Delhi                                       Partner
 
 Date: The 19th day of May, 2012                    M.No. 85155