We have audited the attached Balance Sheet of M/s. SYBLY INDUSTRIES
 LIMITED, Muradnagar, as at 31st March 2011, 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.
 
 We have conducted our audit in accordance with the Auditing Standards
 generally accepted in India. These 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 Companies (Auditor''s Report) Order,
 2003 as amended by Companies (Auditor''s Report) (Amendment) Order, 2004
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of the Companies Act, 1956, we report that:
 
 (i) (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets.
 
 (b) The assets have been physically verified by the management during
 the year according to the regular program of verification which, in our
 opinion, is reasonable having regard to the size of the company and the
 nature of its fixed assets. The discrepancies noticed on such physical
 verification were not material.
 
 (c) During the year, the Company has not disposed off any substantial
 part of its fixed assets.
 
 (ii) (a) The inventories of the company at all its locations (except
 stocks lying with third parties and in transit, confirmation/subsequent
 receipts have been obtained in respect of such inventory) have been
 physically verified by the management during the year at reasonable
 intervals.
 
 (b) The procedures of physical verification of Inventories, 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. The
 discrepancies between the physical stocks as compared to book records
 were not material.
 
 (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 3 01 of the Act.
 
 (b) The Company has taken Unsecured loans from 16 (Sixteen) parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956 as further explained in Point No. (vi) below. The year-end
 balance of loans taken from such parties was Rs.229.29 Lacs.
 
 (c) As per information and explanation given to us, unsecured loans
 taken by the company from the parties covered in the register
 maintained under Section 301 of the Companies Act, 1956 are interest
 free and other terms and conditions of loan taken by the Company are
 prima facie not prejudicial to the interest of the Company.
 
 (d) As per information and explanation given to us, the company is
 regular in payment of Principal and being all such loans are interest
 free, thus no interest is being paid on the above loans.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchases of Inventory, Fixed Assets and for the sale of goods. During
 the course of our audit, we have not observed any continuing failure to
 correct major weaknesses in internal control system.
 
 (v)(a) According to the information and explanations given to us, there
 are no transactions that need to be entered into the register
 maintained under Section 301 of the Companies Act, 1956 and hence Para
 (v)(b) of the order is not applicable.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the company has accepted the unsecured loans from
 directors and their relatives and as explained to us that the same have
 been taken in compliance of the stipulation of financial institutions
 as explained in Note No. 3 in Schedule no. 20 and these are exempted
 deposits under the provision of Section 58A, 58(AA) or any other
 relevant provisions of the Act and Rules framed there under have been
 complied with.  Further, as we are informed that no order has been
 passed by the Company Law Board or National Company Law Tribunal or
 Reserve Bank of India or any Court or any other Tribunal.
 
 (vii) The company has an internal audit system commensurate with the
 size and nature of its business, but the same is required to be
 strengthened to commensurate with the size and nature of business.
 
 (viii) As informed by the management, the books of account relating to
 materials, labour and other items of cost 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 Companies
 Act, 1956 are maintained. We have, however, not made a detailed
 examination of the said records with a view to determine whether they
 are accurate or complete as the company is getting a cost audit
 conducted from a qualified person in this regard and will submit Cost
 Audit Report to the Central Government.
 
 (ix) (a)The company is regular in depositing with appropriate
 authorities undisputed statutory dues including Provident Fund,
 Investor Education Protection Fund, Income Tax, Sales Tax, Wealth Tax,
 Service Tax, Custom Duty, Excise Duty, Cess and other material
 statutory dues applicable to it. According to the information and
 explanation given to us, no undisputed amounts payable in respect of
 Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty and Cess
 were in arrears, as at 31st March, 2011 for a period of more than six
 months from the date they became payable.
 
 (b) According to the information and explanation given to us, there are
 no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax,
 Excise Duty and Cess, which have not been deposited on account of any
 dispute. However, there are certain disputed cases, the details of
 which are given below:
 
 Nature of Statute  Nature of Dues  Amount(Rs.)  Period to which Forum 
                                                 amount relates  where 
                                                                 dispute
                                                                 is pend
                                                                 -ing
 
 
 Income Tax Act     Demand          39,776/-     A. Y. 1998-99  ITAT
 
 Income Tax Act     Demand          2,43,034/-   A.Y.2001-02    ITAT
 
 
 (x) The Company has some accumulated losses as at the end of financial
 year. The company has not incurred cash losses during the financial
 year covered by our audit and the immediately preceding financial year.
 (xi) In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to a
 financial institution, bank or debenture holders.  
 
 (xii) According to information''s and explanations given to us, 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 a nidhi mutual benefit
 fund/ society. Therefore, the provisions of clause 4
 
 (xiii) of the Companies (Auditor''s Report) Order, 2003, as amended by
 Companies (Auditor''s Report) (Amendment) Order, 2004, 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.
 
 (xv) As we are informed the company has not given guarantees for loans
 taken by others from banks or financial institutions, the
 terms and conditions whereof are prejudicial to the interest of the
 company.  
 
 (xvi) In our opinion, the term loans have been applied for the purpose
 for which they were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, we report
 that company has not used funds raised on short term basis for long
 term investment.
 
 (xviii) According to the information and explanations given to us, the
 company has not made allotment of equity shares on preferential basis
 to parties and companies covered in the register maintained under
 Section 301 of the Act.
 
 (xix) According to the information and explanations given to us, during
 the period covered by our audit report, the company has not issued any
 debentures.
 
 (xx) The company has not raised any money from public during the year.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 course of our audit.  
 
 
 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 purposes 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, 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, except that the stock of finished goods have
 been valued at realizable value instead of lower of cost or realizable
 value in terms of AS-2;
 
 (v) On the basis of written representations received from the
 directors, as on 31st March, 2011 and taken in record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2011 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 subject to the remark
 as contained in notes forming part of accounts particularly Note No.5
 regarding non confirmation of balances; Note No. 8 regarding previous
 year expenditures; Note No.20 regarding non-disclosure of outstanding
 of small scale undertakings and read significant accounting policies
 and other notes forming part of the accounts appearing 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 the Balance Sheet, of the state of affairs of the
 company as at 31st March, 2011
 
 (b) In the case of the Profit and Loss Account, of the loss 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.
 
 
 
                                                For  V.S. Gupta & Co.,
 
                                               Chartered Accountants,
 
                                                                  Sd/-
 
 Camp: Muradnagar: 25th August, 2011             (Hemant Kumar Gupta)
 
                                                             Partner