We have audited the attached Balance Sheet of VASWANI INDUSTRIES LTD.
 (''The Company''), as at 31st March 2012 and also the Profit & 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.
 
 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 that 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 Including
 companies (Auditors 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 enclose In the Annexure a Statement on
 the matters specified In paragraphs 4 & 5 of the said order.
 
 Further to our comments In the Annexure referred to above, we report
 that:-
 
 1.  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.
 
 2.  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
 
 3.  The Balance sheet. Profit & loss Account and Cash Flow Statement
 dealt with this report are In agreement with the books of account.
 
 4.  In our opinion, subject to point no. 6 given below 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 211of the companies Act, 1956.
 
 5.  Based on the written representations made by all the Directors and
 taken on records by the Board, Director of the company do not prlma
 fade have any disqualification as referred to In clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956.
 
 6.  Attention of the members Is drawn to the following Notes:-
 
 Note No.31 of Notes on financial statements regarding certain
 disclosure relating to Micro / Small / Medium Enterprises.
 
 Note No.32 of Notes on financial statements regarding gratuity
 calculation.
 
 7.  In our opinion subject to point no. 6 and to the best of our
 Information and according to the explanations given to us, and the
 books and records examined by us In the normal course of audit, the
 said accounts, read together with notes on financial statements and
 Significant Accounting Policies appearing In Annexure -1 give a true
 and fair view In conformity with the accounting principles generally
 accepted In India.
 
 I.  In case of Balance Sheet, of the state of affairs of the company as
 at 31st March1 2012
 
 II.  In case of Profit & Loss Account, of the Profit of the company for
 the year ended on that date.
 
 III. In case of Cash Flow Statement, of the Cash Flow of the company
 for the year ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 I.  a.) The company has maintained proper records showing full
 particulars Including quantitative details and situation of Its fixed
 assets.
 
 b.) As explained to us, the fixed assets have been physical verified by
 the management with a phased program over a period of three year, which
 In our opinion. Is reasonable having regard to the size of the company
 and the nature of Its assets. No serious discrepancies were noticed on
 such verification conducted during the year as compared with the books
 records.
 
 c.) Fixed assets disposed off during the year were not substantial to
 affect Going Concern assumption of the Company.
 
 II.  a.) As explained to us, the Inventory has been physically verified
 during the year by the management. In our opinion, the frequency of
 verification Is reasonable.
 
 b.) The procedure of physical verification of Inventories followed by
 the management are reasonable, so as to cover all Inventories In a
 phased manner during the year, and adequate In relation to the size of
 the company and nature of Its business.
 
 c.) The company Is maintaining proper records of Inventory. No material
 discrepancy was found during the course of physical verification.
 
 III. a) The Company has granted unsecured loans to companies, firms or
 other parties listed In the Registers maintained U/S 301 of the
 Companies Act 1956 The total no. of Party are 6 and maximum amount
 outstanding during the year aggregates to 655.82 lakhs and year end
 balances In those accounts together was 4.75 lakhs.
 
 b) In our opinion & according to the Information given to us the rate
 of Interest & terms & condition of the loan given by the company are
 not prejudicial to the Interest of the company.
 
 c) As explained to us there Is no Irregularity In the receipt of the
 principal amount & Interest thereon.
 
 d) There Is no overdue amount of loan granted to parties covered In the
 register maintained U/S 301 of Companies Act 1956,so the question of
 overdue amount more than Rs. 1 lakh does not arise.
 
 e) Company has accepted unsecured loans from the parties covered In the
 Register maintained U/s 301 of the companies Act, 1956.The total no. of
 party are 2 and maximum amount outstanding during the year aggregates
 to 85.00 Lacs and year end balance In those accounts together was NIL.
 
 f) In our opinion & according to the Information given to us the rate
 of Interest & terms & condition of the loan taken by the company are
 not prejudicial to the Interest of the company.
 
 g) As explained to us there Is no such stipulation upon the company
 regarding the payment of the loan taken by the above party So the
 question relating to the regularity In payment of principle will not
 arise.
 
 h) As stated above there Is no stipulation upon the company to repay
 the loan hence the question of overdue amount does not arise at all.
 
 IV.  In our opinion and according to the Information and explanation
 give to us, there are adequate Internal control procedures commensurate
 with the size of the company and nature of Its business with regard to
 purchase of Inventory, fixed assets and with regard to sale of goods.
 
 During the course of our audit, we have not observed any major weakness
 In Internal control system.
 
 V.  a.  According to the Information and explanation given to us, we
 are of the opinion that the transaction that needs to be entered Into
 the register maintained U/s 301 of the companies Act, 1956 has been so
 entered.
 
 b.  In our opinion and accordingly to the Information and explanation
 give to us, the transactions made In pursuance of contracts or
 arrangements entered In the register maintained U/s 301 of the
 Companies Act, 1956 and exceeding the value of 5.00 Lacs (Rupees Five
 Lacs) In respect of any party during the year have been made at price,
 which are reasonable having regard to prevailing market price at the
 relevant point of time.
 
 VI.  Based on our scrutiny of the company''s records and according to
 the Information and explanation provided by the management. In our
 opinion, the company has not accepted any loans or deposits which are
 ''deposits'' within the meaning of Rule 2 (b) of the Companies
 (Acceptance of Deposit''s) Rules, 1975.
 
 VII . In our opinion, the company has an Internal audit system
 commensurate with the size and nature of Its business.
 
 VIII. According to the Information and explanation given to us
 maintenance of cost records has been prescribed by the Central
 Government under clause (d) of sub-section (1) of section 209 of the
 Act, such accounts and records has been made and maintained by the
 company. We have not, however, made a detailed examination of the
 records with a view to determine whether they are accurate or complete.
 
 IX.  a.) On the basis of our examination of records and according to
 the Information and explanation given to us, the company Is regular In
 depositing with appropriate authorities undisputed statutory dues
 Including provident fund. Investor education & protection fund,
 employees state Insurance, Income tax, sales tax, wealth tax, custom
 duty, excise duty, cess and other statutory dues applicable to It and
 there are no undisputed statutory dues as above which are outstanding
 as at the last day of the financial year concerned for a period of six
 months from the date they become payable.
 
 b.) As at 31st March 2012, according to the records of the Company and
 the Information and explanations given to us, the following are the
 statutory dues which have not been deposited with the concerned
 authorities on account of dispute are given below
 
                                       Period to which
 Name of the
 statute      Nature of the  Amount 
                            (Rs. In 
                             Lacs)     the amounts       Forum where 
                                       relate            pending
 
 Central 
 Excise Laws  Excise Duty     44.16    2005-06 & 06-07   Additional
                                                         Commissioner, 
                                                         central, 
                                                         Excise, Raipur 
                                                        (C.G)
 
                                                         Rejected From 
                                                         CESTAT- Delhi
                                                        (order
 Central 
 Excise Laws  Excise Duty    139.64    2005-06 & 06-07   dt-04.04.2012)
                                                         and yet to be 
                                                         filed In
                                                         High Court.
 
 Central 
 Excise Laws  Excise Duty     49.72    2004-09           Stay In CESTAT
 
 Central 
 Excise Laws  Excise Duty      3.17    2005-08           Stay In CESTAT
 
 Central 
 Excise Laws  Excise Duty      2.58    2008-09 & 09-10   Stay in CESTAT
 
 Income Tax   Penalty          1.01    2005-06           Commissioner 
                                                         Appeal Income 
                                                         Raipur (C.G)
 
 Sales tax    Entry tax,       0.57
              CST, & VAT      42.72    2007-08           Appeal is sales
                                                         tax authorities.
                               6.30
 
 x.  The company has no accumulated losses and has not Incurred any cash
 losses during the financial year covered by our audit.
 
 xi.  In our opinion and according to the Information and explanations
 given to us, the company has not defaulted In repayment of the dues to
 a financial Institution, banks.
 
 xii. In our opinion and according to the Information and explanations
 given to us, no loans and advances have been granted by the company on
 the basis of security by way of pledge of shares, debentures & other
 securities.
 
 xiii. The company is not a Chit Fund or a Nidhi / Mutal benefit fund /
 Society. Therefore, the provision 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
 provision of clause 4 (xlv) of the companies (Auditors Report) Order
 2003 are not applicable to the company.
 
 xv. As explained to us the company has not given guarantees for loan
 taken by other from bank or financial Institutions.
 
 xvi. According to the Information and explanation given to us, the
 company has availed / utilized term loan during the year and had
 applied for the purpose for which the loan was obtained.
 
 xvii. According to the Information and explanation 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.
 
 xviii.  According to the information and explanation given to us, the
 company has not made any preferential allotment of shares to parties
 covered In the register maintained U/s 301 of the Act.
 
 xix. The company does not have any issued debentures.
 
 xx.  Based on our audit procedures and on the information and
 explanations given to us, the management has disclosed on the end use
 of money raised by public Issue and the same has been duly verified.
 
 xxi. According to the Information & explanation given to us, no frauds
 on or by the company has been noticed or reported during the course of
 our audit.
 
                                           For SUNIL JOHRI & ASSOCIATES 
 
                                                  CHARTERED ACCOUNTANTS 
 
                                                  FIRM REG. NO. 005960C
 
                                                           (SUNIL JOHRI)
 
 RAIPUR                                                         PARTNER
 
 26th MAY 2012                                            Mem. No.74654