SPEL Semiconductor

1.  We have audited the attached Balance sheet of SPEL SEMICONDUCTOR
 LIMITED as at 31st March, 2009 and the Profit and Loss Account and the
 cash flow statement 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.
 
 2.  We conducted the 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.
 
 3.  As required by the Companies (Auditors Report) Order 2003, 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 a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  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 the Profit and Loss Account and cash flow
 statement dealt with by this Report are in agreement with the books of
 account;
 
 (iv) In our opinion, the Balance Sheet, Profit and 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 to the extent applicable;
 
 (v) On the basis of the written representations received from the
 directors as on 31st March 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2009 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 with the schedules
 and notes on accounts attached thereto 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 the affairs of
 the Company as at 31st March, 2009; and
 
 (b) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 (c) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
 
 Annexure referred to in paragraph 3 of the report of even date of the
 auditors to the Members of SPEL Semiconductor Limited on the Accounts
 for the year ended March 31, 2009.
 
 (i) (a) The company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets;
 
 (b) These fixed assets have been physically verified by the management
 at reasonable intervals; No material discrepancies were noticed on such
 verification.
 
 (c) No substantial part of fixed assets has been disposed off during
 the year.
 
 (ii) (a) The physical verification of inventory has been conducted at
 reasonable intervals by the management;
 
 (b) 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) The company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) The company has not granted any loans secured or unsecured to
 companies , firms or other parties covered in the register maintained
 under section 301 of the Act. The company had taken unsecured loan in
 the form of fixed deposit from companies, firms or other parties
 covered in the register maintained under section 301 of the companies
 Act, 1956. The maximum amount involved during the year was Rs.3.50
 crores.
 
 (b) In our opinion, the rate of Interest and other terms and conditions
 on which loans have been taken from companies , firms or other parties
 listed in the register maintained under section 301 of the Companies
 Act,1956 are not prima facie, prejudicial to the interest of the
 company.
 
 (c) The company is regular in repaying the principal amount as
 stipulated and has been regular in the payment of Interest.
 
 (d) There is no overdue amount of loans taken from companies, firms or
 other parties listed in the register maintained under Section 301 of
 the companies Act, 1956
 
 (iv) In our opinion and according to information and explanation given
 to us, there are adequate internal control procedures commensurate with
 the size of the company and the nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods.
 
 (v) (a) According to information and explanation given to us, the
 transactions that need to be entered into a register in pursuance of
 Section 301 of the Act have been so entered;
 
 (b) In our opinion and according to information and explanation given
 to us, these transactions in pursuance of contracts or arrangements
 entered in the register maintained under section 301 of the Companies
 Act, 1956 and exceeding the value of Rupees five lacs in respect of any
 party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time;
 
 (vi) In our opinion and according to information and explanation given
 to us, the company has not accepted inter-corporate deposits and has
 complied with the directives issued by the Reserve Bank of India and
 the provisions of sections 58A and 58AA of the Act and the rules framed
 there under, wherever applicable. No order has been passed by the
 Company Law Board.
 
 (vii) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 (viii) We are of the opinion that, prima facie, the Company is
 maintaining Cost Records as applicable under Section 209 (1) (d) of the
 Companies Act, 1956.
 
 (ix) (a) The company is regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom
 Duty, Excise Duty, and other statutory dues with the appropriate
 authorities.
 
 (b) In our opinion and according to information and explanation given
 to us, no undisputed amounts payable in respect of income tax, wealth
 tax, sales tax, customs duty, excise duty and cess were in arrears as
 at 31st March 2009 for a period of more than six months from the date
 they became payable.  *
 
 (c) The dues of Customs have not been deposited on account of dispute
 amounting to Rs. 19.50 lakhs.
 
 (x) The Company does not have any accumulated losses as at the end of
 the financial year and the company has not incurred cash losses in this
 financial year and in the financial year immediately preceding this
 financial year also.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to
 financial institutions.
 
 (xii) This clause is not applicable as the company has not granted
 loans and advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 (xiii) In our opinion, the company is not a chit fund or nidhi/ mutual
 benefit fund/society. Therefore, the provisions of Clause 4(xiii) of
 the Companies (Auditors Report) Order, 2003 are not applicable to the
 company.
 
 (xiv) In our opinion, the company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
 2003 are not applicable to the company.
 
 (xv) According to information and explanations given to us, the company
 has given guarantee to the extent of Rs. 5.20 crores to Southern
 Petrochemicals Industries Corporation Limited.
 
 (xvi) Term loans were applied for the purpose for which the loans were
 obtained;
 
 (xvii) According to information and explanations given to us, the funds
 raised on short-term basis have not been used for long term investment
 and vice versa.
 
 (xviii)According to information and explanations given to us, the
 company has not made any preferential allotment of shares to companies
 covered in the register maintained under Section 301 of the Act.
 
 (xix) No debentures have been issued.
 
 (xx) There was no public issue during the year.
 
 (xxi) No fraud on or by the company has been noticed or reported during
 the year.
 
                                             For Natarajan & Co.,
                                            Chartered Accountants,
                                                      A. Baskar
                                                      Partner
                                                    M.No:211721
 
 Chennai
 Jun 2, 2009