We have audited the attached Balance Sheet of VCCL LIMITED as at 31st
 March, 2011 and also 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 the 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 amount 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 statements
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 As required by the Companies (Auditors'' Report) Order, 2003, 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 and 5 of the said Order to the
 extent applicable.
 
 Further to our comments in the Annexure referred to in para above, we
 state 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 accounts as required by law have
 been kept by the Company so far as appears from our examination of
 those books.
 
 c) The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement referred to in this report are in agreement with the books of
 accounts.
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in Section 211(3C) of Companies Act,
 1956.
 
 e) On the basis of the written representations received from the
 directors, and taken on 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.
 
 f) Further to the above, we report that :
 
 [i] Custom Duty and Excise Duty on raw material, components and
 finished goods have not been provided and equivalent amounts have not
 been considered for inventory valuation, though having no impact on the
 loss for the year [Refer Note No.10 (iii) of Schedule 11].
 
 Subject to our remarks in para f) above, in our opinion and as per the
 information and according to the explanations given to us, the said
 Balance Sheet and the Profit and Loss Account, read together with the
 notes thereon and specifically Note No. 11 of Schedule 11 pertaining to
 Impairment of Assets, 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 :
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011.
 
 ii) in the case of the Profit and Loss account, of the Profit of the
 Company for the year ended on that date; and
 
 iii) in case of the Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure Referred to in the Auditors'' Report to the Members of VCCL
 Limited for the year ended 31st March, 2011
 
 1.  a) The Company has maintained a reconstructed record showing
 relevant particulars including quantitative details and location of the
 Fixed Assets.
 
 b) There is no regular program of physical verification in the
 circumstances of Company''s manufacturing operations having remained
 suspended for some years. No material discrepancies have been noticed
 in respect of the major items of Plant & Machinery physically verified
 at the year end.
 
 c) The Company has not disposed off substantial part of fixed assets
 during the year.
 
 2.  a) Inventories have been physically verified at the year end by the
 management. In our opinion, the frequency of verification is reasonable
 in the circumstances wherein Company''s manufacturing operations have
 remained suspended for some years.
 
 b) The procedures of physical verification of stocks followed by the
 Management are 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 noticed on verification between the physical stocks and
 book records were not material and have been properly dealt with in the
 books of account. Material in transit is subject to confirmation.
 
 3.  a) The Company has not accepted any loans during the year from the
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956.
 
 b) The Company has not granted any loans during the year to the parties
 covered in the register maintained under section 301 of the Companies
 Act, 1956
 
 4.  There has been no purchase / sale activity in the year and matters
 relating to internal control procedures are not applicable with regard
 to purchase/sale.
 
 5.  Based on the audit procedure applied by us and according to the
 information and explanations provided by the management, during the
 year, there has been no contract or arrangement that needed to be
 entered into the register maintained under section 301 of the Companies
 Act, 1956. Accordingly, clause 4 (v)(b) of the said order is not
 applicable.
 
 6.  The Company has not accepted any deposits from the public.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  In view of the suspension of own manufacturing operations
 continuing during the year at the plant, no records under Sec.
 209(1)(d) of the Companies Act, 1956 were required by the Central
 Government to be maintained by the Company.
 
 9.  The Company has been regular in depositing undisputed statutory
 dues pertaining to it, including Provident Fund, Sales Tax, Income Tax
 Deducted at Source and Custom Duty for part of the year. Arrears
 exceeding six months at the year-end were existent in respect of
 Provident Fund Rs. 76405. Fringe Benefit Tax of Rs. 8420 for 2006-07
 stands provided for and remains to be deposited.
 
 10.  Following dues are not deposited on account of disputes pending at
 various forums :
 
 Statute    Nature       Amount     Period to     Forum where
            of Dues      (Rs.)      which         dispute
                                    Amount        is pending
                                    Relates 
 
 Sales Tax 
 /           Tax         863320/-   1991-92       Deputy
 Trade Tax                                        Commissioner
                                                  (Ist Appeal) 
 
                         2545375    1992-93       Deputy
                                                  Commissioner 
                                                  (Ist Appeal) 
 
                         725260/-   1993-94       Tribunal
 
                         122065/-   1994-95       Tribunal
 
                          27597/-   1999-00       Tribunal
 
 11.  The accumulated losses at the end of the financial year are more
 than 50% of its Net Worth. Company has incurred cash losses in the
 current financial year and also in the immediately preceding financial
 year.
 
 12.  There are no dues outstanding to Financial Institutions/ Banks.
 
 13.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 14.  As the Company is not a chit fund, nidhi, mutual benefit fund or
 society the provisions of clause 4(xiii) of the Companies (Auditor''s
 Report) Order, 2003 is not applicable to the Company.
 
 15.  As the Company is not dealing or trading in shares, securities,
 debentures and other investments, the provision of clause 4(xiv) of the
 Companies (Auditor''s Report) Order, 2003 is not applicable to the
 Company.
 
 16.  The Company has not given any guarantees on behalf of others.
 
 17.  The Company has not taken any term loans during the year.
 
 18.  The Company has not made any short term borrowings during the
 year.
 
 19.  The Company has not made any preferential allotment of shares
 during the year.
 
 20.  The Company has not issued any debentures during the year.
 
 21.  The Company has not raised any money by way of public issue during
 the year.
 
 22.  As per the information and explanation given to us, no material
 fraud on or by the Company has been noticed during the year.
 
                                               For ONKAR TANDON & CO.
                                                Chartered Accountants
                                                          FRN-000953C
 
                                                         ONKAR TANDON
                                                              Partner
                                                          M.No. 17232
 
 Place : Kanpur 
 Dated : 18th May, 2011