We have audited the attached Balance Sheet of STI India Limited as at
 31st March, 2012, the Profit and Loss Account and the Cash Flow
 Statement of the Company 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.
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended issued by the Central Government in terms of sub-Section (4A)
 of Section 227 of the Companies Act, 1956. We enclose in the annexure
 hereto a Statement on the matters specified in paragraphs 4 and 5 of the
 said Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 above, 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 and 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 and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards as referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 e) On the basis of written representations received from directors as
 on March 31, 2012 and taken on record by the Board of Directors, we
 report that none of the Directors are disqualified as on March 31, 2012
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with notes thereon and attached thereto give in the prescribed manner
 the information required by the Companies Act, 1956, required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 i) In so far as it relates to the Balance Sheet of the state of affairs
 of the Company as at March 31, 2012.
 
 ii) In so far as it relates to the Profit & Loss Account of the PROFIT
 of the company for the year ended on that date, and
 
 iii) In so far as it related to the Cash Flow Statement, of the Cash
 Flows for the year ended on that date.
 
 1.  In respect of Fixed Assets:
 
 a) The Company has maintained proper records showing full particulars,
 quantitative details and situation of its fixed assets.
 
 b) The fixed assets have been physically verified by the management at
 reasonable intervals during the year. We are informed that no material
 discrepancies were noticed by the management on such verification.
 
 c) Based on our scrutiny of the records of the company and the
 information & explanation received by us, we report that there were
 sale of fixed assets during the year but the fixed assets disposed off
 did not constitute a substantial part of the fixed assets of the company.
 
 2.  In respect of Inventories:
 
 a) As explained to us physical verification of inventories has been
 conducted during the year by the management at reasonable intervals.
 
 b) In our opinion, the procedures of physical verification of
 inventories followed by the management are reasonable and adequate in
 relation to the size of the company and nature of its business.
 
 c) In our opinion and according to the information and explanation
 given to us, the Company is maintaining proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 3.  In respect of loans, secured or unsecured granted or taken by
 the Company to/from the companies, firms or other parties covered in 
 the register maintained under Section 301 of the companies Act, 1956:
 
 a) During the year Company has not granted any loans to parties covered
 in the register maintained under Section 301 of the Companies Act, 1956.
 
 b) In view of our comments above, clause 4 (iii) (b), (c) & (d) of the
 said order is not applicable to the company.
 
 c) During the year Company has taken loans from 1 party covered in the
 register maintained under Section 301 of the Companies Act, 1956 and
 the maximum amount outstanding during the year is Rs 15.90 crores and
 the year- end balance is Rs 7.25 crores.
 
 d) In our opinion and according to the information and explanations
 given to us, the rate of interest, where applicable and other terms and
 conditions, are not prima facie prejudicial to the interest of the
 Company.
 
 e) In respect of the said loans, the same are repayable on demand and
 there is no repayments schedule.
 
 f) In respect of the said loans, the same are repayable on demand and
 therefore the question of overdue amounts does not arise. In respect of
 interest, where applicable there are no overdue amounts.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control system 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 and
 fixed assets. Further, on the basis of our examination of the books and
 records of the company, carried out in accordance with the auditing
 standards generally accepted in India and according to the information
 and explanations given to us, we have neither come across nor have we
 been informed of any continuing failure to correct weaknesses in the
 aforesaid internal control system.
 
 5.  In respect of the contracts or arrangements referred to in Section
 301 of the Companies Act, 1956:
 
 a) In our opinion and according to the information and explanations
 given to us the particulars of contracts or arrangements referred to in
 Section 301 of the Act have been entered in to the register required to
 be maintained under that section.
 
 b) In our opinion and according to the information and explanations
 given to us, transactions made in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Act and exceeding the value of Rupees Five Lakhs in respect of any
 party during the year, have been made at prices, which are prima facie
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  According to the information and explanations given to us, the
 Company has not accepted any deposits from public.
 
 7.  In our opinion the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  As per the information and explanations provided to us, we are the
 opinion that in pursuant to the prescribed rules by Central Government,
 the company had maintained cost records u/s. 209(1) (d) of the
 Companies Act, 1956, however we have not done a detailed examination
 of the same.
 
 9.  In respect of Statutory Dues:
 
 a) According to record of the Company produced before 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
 statutory dues applicable to it.
 
 b) According to the information and explanations given, no undisputed
 amounts payable in respect of Income-Tax, sales tax, wealth tax,
 service tax, customs duty, excise duty/cess were outstanding as at
 31.03.2012 for a period of more than six months from the date they
 became payable except as given below:-
 
 Statement of Arrears of statutory dues outstanding for more than six
 months as at 31st March 2012:
 
 Sl.  Nature of the Dues     Amount          Period to which
 
 No.                       (Rs  in lacs)     amount relates
 
 1 Central Sales Tax        3.87            1995-96
 
 2 Central Sales Tax       12.65            1997-98
 
 3 Entry Tax               11.40            1996-97
 
 4 Entry Tax                4.04            1997-98
 
 5 Madhya Pradesh Sales 
  Tax (M.P.S.T)             8.39            1997-98
 
 Total                     40.35              _
 
 Interest amount on the above dues (S. No 1 to 5) as on 31st March 2012
 is Rs 65.41 lacs.
 
 (c) According to the records of the company there are no dues of
 Income-Tax, sales tax, wealth tax, service tax, customs duty, excise
 duty/cess which have not been deposited on account of any dispute
 except as given below.
 
 Nature of the Act Nature of the Dues Amount  Period to which Forum 
                                                              where
                                                              dispute is
 
                                     (RsIn Lacs) the amount
                                                              pending
 
                                                 relates
 
 Central Sales     Central Sales Tax 63.00       1995-96      Writ 
                                                              Petition 
                                                              filed in
 
 Tax Act,1956                                                 M.P High
                                                              Court.
 
 State Sales Tax   State Sales Tax    2.88       1997-98      Writ 
                                                              Petition 
                                                              No.
 
 Act                                                          1068 / 
                                                              2003 
                                                              pending
 
                                                              before 
                                                              M.P High
                                                              Court
 
 Central Sales Tax Central Sales Tax  1.43       2004-05      Appeal 
                                                              filed 
                                                              in M.P.
 
 Act,1956                                                     Commercial 
                                                              Tax
 
                                                              Appellate 
                                                              Board
                                                              Bhopal
 
 M. P. Vat         Vat                0.45       2009-10      Additional
 
 Act, 2002                                                  Commissioner      
                                                            of
 
 Tax                                                        Appeals, 
                                                            Indore
 
 Central Excise    Excise Duty     2129.07    March 2004    Commissioner   
                                                            of
 
 Act, 1944                                   to September   Customs &
                                                            Central
 
                                              2008          Excise
 
 Central Excise    Excise Duty       27.03   September      CESTAT, 
                                                            New Delhi
 
 Act, 1944                                   2004
 
 Central Excise    Excise Duty       65.49   March 2004     In the 
                                                            High court
 
 Act, 1944                                   to September of M.P
 
                                             2004
 
 Central Excise    Excise Duty       11.02   2007-08 &     Additional
 
 Act, 1944                                   2008-09       Commissioner,
                                                            of
 
                                                          Central Excise
                                                           Indore
 
 Income Tax        Income Tax         7.00   2004-05      CIT (Appeals)
 
 Act, 1961                                                 Indore
 
 Total                             2307.37
 
 10.  In our opinion, the accumulated losses of the Company are more
 than its net worth reflecting erosion of its entire net worth. The
 company has not incurred cash loss during the financial year covered by
 our audit and in the immediately preceding financial year.
 
 11.  As per the information and explanations given to us the company is
 generally regular in making the repayments due to banks & financial
 institution and as at March 31, 2012 there is no overdue amount.
 
 12.  According to the information and explanations given to us the
 company has not granted any loans and / or advances on the security by
 way of pledge of shares, debentures and other securities.
 
 13.  In our opinion, and to the best of our information and according
 to the explanations provided by the management, we are of the opinion
 that the company is neither a Chit Fund nor a nidhi/mutual benefit
 society. Hence, in our opinion, the requirements of para 4 (xiii) of
 the Order do not apply to the company.
 
 14.  As per records of the company and information and explanations
 given to us by the management, company is not dealing or trading in
 shares, securities, debentures and other investments.
 
 15.  According to the information and explanations given to us the
 company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16.  According to the records of the Company, the Company has not
 obtained any term loans during the year. Hence, comments under the
 clause are not called for.
 
 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 on short-term basis have been used for long-term
 investment by the company.
 
 18.  The company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19.  During the period covered by audit report the company has not
 issued any debentures.
 
 20.  During the year the company has not raised any money by way of
 public issue.
 
 21.  Based upon the audit procedures performed and information and
 explanations given by the management, we report that no fraud on or by
 the Company has been noticed or reported during the course of our
 audit.
 
                                     For V.K. Beswal & Associates
 
                                     Chartered Accountants
 
                                     CA R.P. Laddha
 
                                     Partner
 
 Place: Mumbai M.                    No. 48195
 
 Date : 04.05.2012                   Firm Registration No.: 101083W