1.  We have audited the attached Balance Sheet of STERLING STRIPS
 LIMITED, as at 31st March, 2012. and the Profit and Loss Account 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.
 
 2.  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 from any 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 requiredby the Companies (Auditor''s Report) Order, 2003 issued
 by the Company Law Board in terms of section 227 (4A) of the Companies
 Act, 1956, and on the basis of such checks of books and records as we
 considered appropriate and in terms of explanations given to us we
 enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order to the extent applicable.
 
 4.  On the basis of representation received from the Directors, as on
 31st March 2012 and taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on 31st March,
 2012 from being appointed as Directors under Section 274(l)(g) of
 Companies Act, 1956.;
 
 5.  i. The job card maintained by the company for manufacturing work
 carried out do not provide the full details of materials received,
 consumed and direct overheads Incurred on the respective jobs.
 
 ii.  Payments received, made and adjusted in the parties accounts
 consisting debtors, creditors, loans, advances, deposits are generally
 not supported with the corresponding receipts of such payments received
 or made to or from the respective party and authenticity of the same
 couldn''t be verified for want of appropriate evidence.
 
 iii. Company is subject to interest liability on unpaid statutory dues
 and on other dues same has neither been paid nor provided or
 quantified.
 
 iv.  Loans & Advances to and from suppliers, others, sundry debtors,
 sundry creditors for goods & expenses are unconfirmed and in our
 opinion substantially unrealizable /payable.
 
 v.  The company has not received information from vendors regarding
 their status under the Micro, Small and Medium Enterprises Development
 Act,2006 and hence disclosure relating to amount unpaid as at the year
 and together with interest paid /payable under this Act have not been
 given.
 
 vi.  We are unable to quantify the effect of above facts in sub para
 (i) to (v) for want of relevant information and the effect thereof on
 the profit for the year ended or on the state of affairs of the company
 as at 31st March, 2012.
 
 Subject to what is stated above:
 
 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 for as appears from our examination of the
 books;
 
 c) The Balance Sheet and the 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) In our opinion and to the best of our information and according to
 the explanations given to us the said accounts subject to our
 observations above and else where in this report and annexure to it,
 the accounts, read together with notes thereon, give the information
 required by the Companies Act, 1956 in the manner, so required and give
 a true and fair view :
 
 i.  in the case of the Balance Sheet, of the state of the affairs of
 the company as at 31st March, 2012 and,
 
 II.  in the case of the Profit and Loss Account, of the profit for the
 year ended that date, iii. in the case of the Cash flow statement, of
 the cash flow for the year ended on that date.
 
 ANNEXURE TO THE AUDITOR''S REPORTOF EVEN DATE REFFERED IN PARA NO.3
 
 On the basis of information & explanation given to us, we report that:
 -
 
 1 a The Company has maintained records showing particulars including
 quantitative details and situation of fixed assets which is required to
 be updated.
 
 b.  .  Management has informed that they have verified fixed assets and
 no material discrepancy was noticed by them, which requires any
 adjustment in accounts.
 
 c.  Substantial part of fixed assets have not been disposed off during
 the year, therefore there is no effect of this on concept of going
 concern.
 
 2 a.  As informed to us, the stocks of finished goods, stores, spare
 parts and raw materials have been physically verified by the management
 at reasonable intervals.
 
 On the basis of information and explanations furnished to us, in our
 opinion the procedures of physical verification of stocks followed by
 the management, wherever it is carried out, are reasonable in relation
 to the size of the Company and thenatureof its business, however, the
 same is required to be further strengthened.  c As informed to us, no
 major discrepancies have been noticed by the management on their
 physical verification of stock as compared to the book records and the
 same is properly accounted.
 
 3 a The Company has not granted any loans, secured or unsecured to
 companies, firms or other parties listed in the Register maintained
 under Section 301 of the Companies Act, 1956..  
 
 b i) The Company has taken loans; secured or unsecured from companies,
 firms or other parties, free of interest, listed in the Register
 maintained under Section 301 of the Companies Act, 1956,
 
 No. of Parties     Loan taken during the year  Maximum amount 
                                                outstanding During 
                                                the year
 
      2                  52,67,000/-             1,55,13,000/-
 
 ii) The terms & conditions of such loan taken have not been laid down
 in writing, however, as informed to us, the same are not prejudicial to
 the interest of the company.
 
 iii) The terms of repayments of principal have not been laid down in
 writing hence, we cannot comment on regularity or otherwise of the
 same.
 
 4.  There is adequate internal control system commensurate with the
 size of the company & the nature of its business, for the purchase of
 inventory and fixed assets and for sale of Goods & Services. However,
 as informed to us, the purchase of stores, raw material including
 components, plant and machinery, equipment and other assets are being
 personally supervised by the management, therefore much documentation
 for subsequent verification are not available,
 
 5 As have been informed to us Company has maintained the register in
 pursuance of section 301 of the Companies Act, 1956, however during the
 year there are no such transactions,
 
 6.  The Company has not accepted any deposits during the year from the
 public under Section 58-A or 58AA of the Companies Act,1956, in
 contravention of rules made thereunder.
 
 7 The Company has a formal internal audit system commensurate with the
 size and nature of its business.
 
 8 Maintenance of cost records for the manufacturing activities of the
 Company has not been prescribed by the Central Government under Section
 209 (1) (d) Companies Act, 1956.
 
 9 a.  Most of the undisputed statutory dues, investor Education and
 Protection Fund, income Tax, Sales Tax etc. have not been deposited
 during the year the details of such arrears excluding interest payable
 thereon, which is not ascertainable, as at the last day of the
 financial year for a period of more than six months are as under.
 
 The above amount of Sales Tax arrears do not include the amount due for
 payment, quantum not ascertained, under deferral scheme where the total
 outstanding amount of Rs 2.44,46,488/- have been shown as loan against
 Sates Tax Collection, b.  Following dues are disputed by the company
 and the dispute are pending as under
 
 SI 
 No.   Nature of    Amount     Period to which    Forum where dispute
                                                  ending 
       Dispute      Rs.        amount relate 
 
 1     BST         2,58,423/-  1994-95            Maharashtra Sales Tax 
                                                  Tribunal
 
 2     CST         3,13,811/-  1994-95            Maharashtra Sales Tax 
                                                  Tribunal
 
 3     BST        12,78,212/-  1995-96            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 4     CST         3,99,738/-  1995-96            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 5     BST        24,93,119/-  1996-97            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 6     CST         1,94,375/-  1996-97            Deputy Commissioner.
                                                  Sales Tax (Appeal)
 
 7     BST        10,10,488/-  1997-98            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 8     CST        13,43,443/-  1997-98            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 9     CST        10,40,000/-  1998-99            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 10    BST         2,18,235/-  1998-99            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 11    BST           25,456/-  1999-00            Deputy Commissioner, 
                                                  Sales Tax (Appeal)
 
 12    CST         2,94,689/-  1999-00            Deputy Commissioner.
                                                  Sales Tax (Appeal)
 
 13    CST         2,34,529/-  2000-01            Deputy Commissioner.
                                                  Sales Tax (Appeal)
 
 14    BST         1,59,096/-  2001-02            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 15    CST         1,77,712/-  2001-02            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 16    BST           74,168/-  2002-03            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 17    CST           60,500/-  2002-03            Deputy Commissioner. 
                                                  Sales Tax (Appeal)
 
 Regarding SI no. 3 to 17 stay for recovery has been granted in view of
 decision in P.V.Textiles case read with section 33(4)(c) of the BST
 Act, 1959 pending decision of the Bombay High Court.
 
 10 The accumulated losses at the end of the financial year is Rs.
 5,83,01,523/- (previous year Rs 6,58,17,887) The company has not
 incurred any cash losses during the year and in the immediately
 preceding financial year.
 
 11.  There are no dues to any financial institutions.
 
 12 Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13 In our opinion, the Company is not a chit fund or a nldhi/mutual
 benefit fund/society. Therefore the provisions of clause 4 (xiii) of
 the Companies (Auditor''s Report) Order, 2003 are not applicable to the
 Company.
 
 14 In our opinion, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. Therefore the provisions
 of clause 4 (xiv) of the Companies (Auditor''s Report) Order, 2003 are
 not applicable to the Company.
 
 15 Company has not given guarantees for loans taken by others from bank
 or financial institutions.
 
 16.  The Company has not raised any term loan during the year.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that no funds raised during the year on short term basis have been used
 for long term investment.
 
 18.  According to the information and explanations given to us, the
 Company has made preferential allotment of 10,00,000 Equity shares of
 Rs 10 each to the promoters and their associates in compliance of BIFR
 sanctioned scheme.
 
 19 According to the information and explanations given to us, the
 Company has not issued any debentures.
 
 20 The Company has not raised money by public issues during the year.
 
 21 According to the information and explanations given to us, no fraud
 on or by the Company has been notice or reported during the course of
 our audit.
 
                                          For D.C.BOTHRA & CO.,
 
                                          CHARTERED ACCOUNTANTS,
 
                                          FIRM REGN. NO. 1122S7W
 
 PLACE : MUMBAI
 
 DATED: 28.05.2012                        SEEMA RAISONI, M.No. 107730)
 
                                          PARTNER