1.  We have audited the attached Balance Sheet of Visaka Industries
 Limited, as at 31st March, 2011, the Profit & 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.
 
 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 in terms of Section 227(4A) of the Companies
 Act, 1956, we annex hereto 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;
 
 a) We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 Audit;
 
 b) 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 such
 books;
 
 c) The Balance Sheet, Profit and Loss account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) In our opinion the Balance Sheet, Profit and Loss account and Cash
 Flow Statement dealt by this report comply with the accounting
 standards referred to in Section 211(3C) of the Companies Act, 1956;
 
 e) On the basis of written representations received from the directors,
 as on 31st March, 2011 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) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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 & Loss account, of the Profit of the
 Company for the year ended on that date; and
 
 iii. in the case of the Cash Flow statement, of the Cash Flows for the
 year ended on that date.
 
 Annexure Re: Visaka Industries Limited
 Referred to in Paragraph 3 of our report of even date
 
 i. a. The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b.  According to the information and explanations given to us, the
 company has a phased programme of verification of fixed assets that is
 reasonable having regard to the size of the company and the nature of
 its business.
 
 c.  The Company has not disposed of any substantial part of its fixed
 assets so as to affect its going concern status.
 
 ii. a. The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 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 has maintained proper records of its inventories. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 iii. a. The Company has taken an unsecured loans from two parties
 covered in the register maintained under section 301 of the Companies
 Act, 1956. The maximum amount involved during the year was Rs.1082.50
 Lakhs and the year-end balance of loans taken is Rs.467.06 Lakhs. The
 Company has not granted loan to any party covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 b. b. In our opinion, the rate of interest and other terms and
 conditions on which loans have been taken from the parties covered in
 the register maintained under section 301 of the Companies Act, 1956
 are not, prima facie prejudicial to the interest of the Company.
 
 c.  The Company is regular in repaying the principal amounts as
 stipulated and has been regular in the payment of interest.
 
 d.  There is no overdue amount of loans taken from the Company listed
 in the register maintained under section 301 of the Companies Act,
 1956.
 
 iv. In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory, fixed assets and for the sale of goods. During
 the course of our audit, no major weakness has been noticed in the
 internal control system in respect of these areas.
 
 v. a. According to the information and explanations given to us, we are
 of the opinion that the transactions that need to be entered into the
 register maintained under section 301 of the Companies Act, 1956 have
 been so entered.
 
 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 the prevailing market prices at the
 relevant time.
 
 vi. i. In our opinion and according to the information and explanations
 given to us, the company has complied with the directives issued by the
 Reserve Bank of India and the provisions of Section 58A, 58AA or any
 other relevant provisions of the Companies Act, 1956 and the rules
 framed there under, where applicable have been complied with. 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. In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii. In our opinion and according to the information and explanations
 given to us, the Company has made and maintained accounts and records
 prescribed by the Central Government under section 209(1) (d) of the
 Companies Act, 1956 in respect of textile division.
 
 ix. a. According to the information and explanations given to us and
 the records of the company examined by us, the Company is regular in
 depositing undisputed statutory dues including provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 wealth-tax, service tax, sales tax, custom duty, excise duty, cess and
 other statutory dues as applicable with the appropriates authorities
 and there were no arrears of outstanding statutory dues as at the last
 day of the financial year concerned for a period of more than six
 months from the date they became payable.
 
 b. According to the information and explanations given to us and
 records of the Company examined by us, the particulars of sales tax,
 income tax, customs duty, excise duty, service tax and wealth tax, as
 at 31st March, 2011 which have not been deposited on account of dispute
 pending, are as under:
 
 Name of the Statute             Nature of                Amount
                                 the Dues         (Rs. in lakhs)
 
 Income-Tax Act, 1961            Income Tax                 2.34
 
 Income-Tax Act, 1961            Income Tax                39.41
 
 Central Excise Act, 1944        Excise Duty             1323.85
 
 Central Excise Act, 1944        Penalty                 1323.85
 
 Sales Tax Act – State of Bihar  VAT/Interest/             10.93
                                 Penalty
 
 Central Sales Tax Act, 1956     Central Sales Tax          3.23
 
 Service Tax (Finance Act, 1994) Service Tax                1.76
 
 Service Tax (Finance Act, 1994) Service Tax                1.67
 
 Service Tax (Finance Act, 1994) Service Tax                2.09
 
 Service Tax                     Service Tax                1.64 
 (Finance Act, 1994)
 
 Name of the Statute             Period to which     Forum where dispute
                                 the amount relates  is pending
 
 Income-Tax Act, 1961            F.Y 2002-2003       DCIT
 
 Income-Tax Act, 1961            F.Y 2007-08         CIT (Appeals)
 
 Central Excise Act, 1944        F.Y 2003-04 & 
                                 2004-05             CESTAT, Chennai
 
 Central Excise Act, 1944        F.Y 2003-04 & 
                                 2004-05             CESTAT, Chennai
 
 Sales Tax Act - State of Bihar  F.Y 2005-06         Joint Commissioner
                                                     (Appeals)
 
 Central Sales Tax Act, 1956     F.Y 2008-09         Deputy Commissioner
                                                     (CT) Hyderabad
 
 Service Tax (Finance Act, 1994) January 2005 To     High Court 
                                 September 2005
 
 Service Tax (Finance Act, 1994) October 2005 To     High Court 
                                 March 2006
 
 Service Tax (Finance Act, 1994) April 2006 To       Bhandara Division,
                                 September 2006      Nagpur
 
 Service Tax (Finance Act, 1994) October 2006 to     Bhandara Division,
                                 February 2007       Nagpur
 
 x. The company has no accumulated losses and it has not incurred any
 cash losses during the financial year covered by our audit or in 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 any
 financial institution, bank or debenture holders.
 
 xii. According to information and explanations given to us and based on
 the documents and records produced to us, the Company has maintained
 adequate documents and records in respect of loans and advances granted
 by the Company 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. Accordingly the provisions of clause 4(xiii) if
 the Companies (Auditors'' Report) Order, 2003 are not applicable to the
 Company.
 
 xiv. In our opinion and according to the information and explanation
 given to us, the Company is not dealing in shares, securities,
 debentures and other investments.  Accordingly, the provisions of
 clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003 are not
 applicable to the Company.
 
 xv. In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loan taken by
 others from banks or financial institutions. Accordingly, the
 provisions of clause 4(xv) of the Companies (Auditors'' Report) Order,
 2003 are not applicable to the Company.
 
 xvi. In our opinion and according to the information and explanation
 given to us, the term loans have been applied for the purpose for which
 they were raised other than amounts temporarily invested pending
 utilization of the funds for the intended use.
 
 xvii. In our opinion and according to the information and explanation
 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 investments.
 
 xviii. The Company has not made any preferential allotment of shares
 during the year to parties or companies covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 xix.  The Company has not issued any debentures during the year.
 
 xx. The Company has not raised any funds on public issue and hence
 disclosure on the end use of money raised by the public issue is not
 applicable to the Company.
 
 xxi. To the best of our knowledge and belief and according to the
 information and explanations given to us, financial misappropriation of
 Rs.16 Lakhs by an employee of the Company has been brought to the
 notice of the Company during the year under audit and the amount
 recovered through possession of employee''s property which is estimated
 to cover the misappropriation.
 
 
                                                 For M. Anandam & Co., 
                                                 Chartered Accountants
 
                                                          A.V.Sadasiva
                                                               Partner
                                                            M.No.18404
                                                 Firm Regn. No.000125S
 
 Place: Secunderabad 
 Date : 27th May, 2011