V-Guard Industries

1.  We have audited the attached balance sheet of V-Guard Industries
 Limited (the Company) as at 31st March 2009, the profit and loss
 account and the cash flow statement for the year ended on that date,
 both annexed thereto. These financial statements are the responsibility
 of the Companys management. Our responsibility is to express an
 opinion on these financial statements based on our audit.
 
 2.  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 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 (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.
 
 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, the profit and loss account and the cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) 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 sub-section (3C) of Section 211 of
 the Companies Act, 1956;
 
 (v) on the basis of written representations received from the directors
 as on 31st
 
 March 2009 and taken on record by the Board of Directors, we report
 that none of the directors is disqualified as on 31st March 2009 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 read together with
 the notes 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 2009;
 
 (b) in the case of the profit and loss account, of the profit 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.
 
 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our
 report of even date)
 
 i) The nature of business of the Company during the year is such that
 the provisions of clauses (iv) with regard to sale of services, (vi),
 (x), (xii) to (xv), (xviii) and (xix) of paragraph 4 of the Companies
 (Auditors Report) Order, 2003, are not applicable to the Company for
 the year ended 31st March 2009.
 
 ii) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the Company has a programme of verification of
 assets and all assets, in accordance with the programme, were verified
 during the year. According to the information and explanations given to
 us, the discrepancies noticed on physical verification were not
 material and have been properly dealt with in the books of account.
 
 (c) In our opinion, the fixed assets disposed off during the year were
 not material so as to affect the going concern status of the Company.
 
 iii) (a) As explained to us, inventory was physically verified by the
 management at periodic intervals 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 inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion, and according to the information and explanations
 given to us, the Company is maintaining proper records of inventory and
 no material discrepancies were noticed on physical verification.
 
 iv) The Company has neither granted nor taken any loans, secured or
 unsecured, to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 v) In our opinion, and according to the information and explanations
 given to us, the Company has an adequate internal control system
 commensurate with the size and nature of its business for the purchase
 of inventory and fixed assets, and sale of goods.  During the course of
 our audit, we have not observed any continuing failure to correct major
 weaknesses in the internal control system.
 
 vi) (a) To the best of our knowledge and belief, and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts or arrangements referred to in section 301
 of the Companies Act, 1956 have been entered in the register required
 to be maintained under that section.
 
 (b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956, and exceeding the value of rupees five lakhs
 in respect of any party during the year, have been made at prices which
 are reasonable having regard to prevailing market prices at the
 relevant time.
 
 vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii) We have broadly reviewed the books of account and records
 maintained by the Company relating to the manufacture of PVC insulated
 electrical cables, pursuant to the Rules made by the Central Government
 for the maintenance of cost records under Section 209(l)(d) of the
 Companies Act, 1956, and are of the opinion that, prima facie, the
 prescribed accounts and records have been made and maintained.  We
 have, however, not made a detailed examination of those accounts and
 records with a view to determining whether they are accurate or
 complete. To the best of our knowledge, and according to the
 information and explanations given to us, the Central Government has
 not prescribed the maintenance of cost records for any other products
 of the Company.
 
 ix) (a) According to the information and explanations given to us, the
 Company has generally been regular in depositing undisputed statutory
 dues including Provident Fund, Investor Education Protection Fund,
 Employees State Insurance, Income tax, Sales Tax, Wealth Tax, Service
 Tax, Customs Duty, Excise Duty, Cess and other material statutory dues
 applicable to it with appropriate authorities during the year and no
 undisputed amounts were in arrears, as at 31st March 2009, for a period
 of more than six months from the date they became payable.
 
 (b) According to the information and explanations given to us, except
 for the following disputed Sales Tax demands, there are no disputed
 dues in respect of Income tax, Wealth Tax, Service Tax, Customs Duty,
 Excise Duty or Cess, which have not been deposited as at the Balance
 Sheet date:
 
 Name of Statutes    Peroid to Which     Amount        Forum 
                     the amount relates  disputed      where is pending 
                                         (Rs. Lakhs) 
 
 Kerala General Sales 1988-89 to 1994-     31.16       Supreme Court of
 Tax Act_95India              95                       India 
 
 -do-                     1997-98          10.55       High Court of
                                                       Kerala_
 
 - do -                   1998-99           3.78       Dy. Commissioner
                                                      (Appeals), Cochin
 
 Andhra Pradesh VAT       2005-06           0.75       Addl. Dy.
 Act                                                   Commissioner
                                                       (CT), Hyderabad
 
 x) In our opinion, and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 a financial institution and banks from which loans have been availed.
 
 xi) In our opinion, and according to the information and explanations
 given to us, the term loans have been applied for the purpose for which
 they were obtained.
 
 xii) In our opinion, and according to the information and explanations
 given to us, and on an overall examination of the Balance Sheet of the
 Company, we report that funds raised on short-term basis have, prima
 facie, not been used for long-term investment.
 
 xiii) In our opinion, and according to the information and explanations
 given to us, the management has disclosed the end use of moneys raised
 by public issue and have been verified by us.
 
 xiv) According to the information and explanations given to us, no
 fraud on or by the Company was noticed or reported during the year.
 
                                           For Deloitte Haskins & Sells
                                           Chartered Accountants
 
                                                   Sd/-
                                            C. R. Rajagopal
 Place: Coimbatore                          Partner
 Date:  29th May 2009                      Membership No.23418