1.  We have audited the attached Balance Sheet of M/s. VAMSHI RUBBER
 LIMITED as at 31st March, 2012, 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 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 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 (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of
 section 227 of the Companies Act, 1956 of India (the Act) and on the
 basis of such checks as we considered appropriate and according to the
 information and explanations given to us, we set out 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 in paragraph 3
 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;
 
 (v) On the basis of written representations received from the
 directors, as on 31s1 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 a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 (vi) In our opinion to the best of our information and according to the
 explanations given to us, the said accounts together with the notes
 thereon and attached thereto give in the prescribed manner the
 information required by the Companies Act, 1956 and give a true and
 fair viewin 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 2012;
 
 (b) In the case of the Profit and Loss account, of the Profit for the
 year ended on that date;
 
 (c) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
                                  
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in paragraph (3) of our report of even date)
 
 1.  (a) The company has maintained proper records showing full
 particulars including quantitative details
 
 and situation of fixed assets.
 
 (b) The fixed assets of the company have been physically verified by
 the management during the year as per a programme of verification,
 which in our opinion is reasonable having regard to the size of the
 company and the nature of its fixed assets. No material discrepancies
 were noticed on such verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, during the year, the company has not disposed off any
 substantial part of its fixed assets so as to affect its going concern.
 
 2.  (a) The stock of finished goods, raw materials and stores has been
 physically verified by the management
 
 during the year, in our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of stocks 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 records of stocks, in our
 opinion, the company has maintained proper records of stocks. The
 discrepancies noticed on physical verification between the physical
 stocks and the book records were not material.
 
 3.  (a) The company has not granted any loans secured or unsecured to
 companies, firm or other parties
 
 listed in the register maintained u/s.301 of the Act.  (b) The company
 has not taken any interest free loans from companies, firms or other
 parties listed in the register maintained u/s 301 of the Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control commensurate with the
 size of the company and the nature of its business, for the purchase of
 stores, raw materials, including components, plant and machinery,
 equipment and other assets with regard to the sale of goods and
 services. Further, on the basis of our examination and information and
 according to the explanations given to us, we have neither come across
 nor have we been informed of any instance of major weaknesses in the
 aforesaid internal control system.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of
 
 contracts or arrangements that need to be entered into the Register
 maintained under section 301 of Act, have been so entered.  (b) In our
 opinion, and according to the information and explanations given to us,
 the company has not made any contracts or arrangements that need to be
 entered in the register maintained under section 301 of the Act, and
 exceeding the value of five lakh rupees in respect of any party during
 the year.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has not accepted any deposits from the public
 to which the provisions of section 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 and the rules framed thereunder
 are applicable.
 
 7.  In our opinion, the internal audit system of company is
 commensurate with its size and nature of its business.
 
 8.  The maintenance of cost records has not been prescribed by the
 Central Government under clause (d) of sub-section (1) of section 209
 of the Companies Act, 1956 to this company.
 
 9.  (a) The company is regular in depositing with the appropriate
 authorities undisputed statutory dues
 
 including provident fund, investor education protection fund,
 employees'' state insurance, income tax, sales tax, wealth tax, Service
 tax, custom duty, excise duty, cess and other material statutory dues
 as applicable to it.  (b) According to the information and explanations
 given to us, no undisputed amounts payable in respect of income tax,
 wealth tax, service tax, sales tax, customs duty, excise duty and cess
 werein arrears, as at 31st March, 2012 for a period of more than six
 months from the date they became payable.  (c) According to the
 information and explanations given to us, there are no dues of sales
 tax, income tax, customs duty, wealth tax, service tax, excise duty and
 cess, which have not been deposited on account of any dispute except
 for the following dues outstanding of sales tax on account of disputes:
 
 Name of the       Nature of 
                   Dues        Amount    Period for 
                                         which           Forum where 
                                                         dispute
 is Statute                   (in Rs. 
                               Lakhs)    amount 
                                         relates         pending
 
 West 
 Bengal VAT        Sales Tax   7.44      2007-08         Commissioner of
 Act, 2003                                               Commercial
                                                         Taxes,
                                                         Behala, West
                                                         Bengal.
 
 AP VAT Act,
  2005             Sales Tax  13.52      2005-06   
                                         to              Appellate Dy.
                                         2009-10         Commissioner
                                                        (CT),
                                                         Secunderabad
                                                         Division,
                                                         Hyderabad.
 
 10.  The company has no accumulated lossesas on 31.03.2012 and has not
 incurred any cash losses during the financial year ended on that date
 and in the immediately preceding financial year.
 
 11.  The company has not defaulted in repayment of dues to any
 financial institution, bank or debenture holders.
 
 12.  The 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 nidhi mutual
 benefit fund/ society. Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 are not applicable to this
 company.
 
 14.  in our opinion, uie company is not dealing in or trading in
 shares, securities, debentures, and other investments.  Accordingly,
 the provisions of clause 4(xiv) of the companies (Auditor''s Report)
 Order, 2003 are not applicable to this company.
 
 15.  The company has not given any guarantees for loans taken by
 others, from banks or financial institutions, the terms and conditions,
 whereof, in our opinion, are prima facie prejudicial to the interest of
 the company.
 
 16.  In our opinion and according to the information and explanations
 given to us and on an overall examination, during the year the company
 has not availed any term loan.
 
 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.
 
 18.  According to the information and explanations given to us, 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, 1956.
 
 19.  According to the information and explanations given to us, during
 the period covered by our audit report, the company has not issued any
 debentures.
 
 20.  The company has not raised any money by public issue, during the
 year.
 
 21.  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.
 
                                        For RAMANA REDDY & ASSOCIATES
                                        CHARTERED ACCOUNTANTS
 
                                        Firm Regn. No.003246S
 
                                        (CA. RAMANA REDDY A.V.) 
 
 PLACE: HYDERABAD.                        PARTNER
 
 DATE : 30th May, 2012                  Membership No. 024329