BIL Continental Ltd.

We have audited the attached Balance Sheet of M/s BHOLANATH INTERNATIONAL LIMITED as at 31st March, 2010signed by us under reference to this report and also the annexed Profit and Loss Account of the company for the year ended on that date. 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. 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. 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 and on the basis of such checks of the books and records as we considered necessary and appropriate and according to the information and explanation given to us during the course of the audit, 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 above, we report that: a) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose 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 and Profit & Loss Account dealt with by this report are in agreement with the books of account produced before us. d) Subject to valuation of stock of wool waste taken otherwise than at cost, and disclosures in respect of related party transactions claims to be not applicable to this company, in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956. e) On the basis of written representations received from the directors, as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 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 accounts read with 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: (I) In the case of Balance Sheet of the state of Affairs of the Company as at 31st March, 2010 and; (II) In the case of Profit & Loss Account, of the profit of the Company for the year ended on that date. ANNEXURE TO THE AUDITORS REPORT (In reference to paragraph 3 of our report of even date to the members of M/S. BHOLANATH INTERNATIONAL LIMITED on the financial statements for the year ended 31.03.2010) 1 a. The company has maintained proper records to show full particulars including quantitative details and situation of its fixed assets on the basis of available information. b. The fixed assets have been physically verified during the year by the management and no material discrepancies were noticed on such Physical verification. c. Based on scrutiny of the records of the company and the information & explanations received by us, we report that there was no sale of fixed assets during the financial year ended 31st March 2010 substantial or otherwise. Hence the question of reporting whether the sale of any substantial part of fixed assets has affected the going concern of the company does not arise. 2 a. As per consistence practice, the inventory has been physically verified by the management at the year end. In our opinion the frequency of verification needs to be improved having regard to the size of the Company and nature of its business. b. In our opinion and according to the information and explanations given by the management, the procedures followed are reasonable and adequate in relation to size of the company and nature of its business. c. In our opinion the company is maintaining proper records of inventory. As explained to us, no material discrepancies were noticed on physical verification of inventory as compared to the book records. 3. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under Section 301 of the companies act, 1956; a. The company has taken loans. Rs 2 Lakh The company has not granted any loans to any such party. b. The loans taken are interest free and other terms & conditions on which loans have been taken are not prima facie, prejudicial to the interest of the company. c. In respect of loan taken by the company, the principal is repayable on demand. d. There are no overdue amount in respect of loan taken by the company. 4. In our opinion and according to information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of Inventory, Fixed Assets and with regard to the sale of goods. During the course of our audit, no major weakness has been observed in the internal controls. 5. Based on the Audit procedures applied by us and the information & explanations provided by the management, we are of the opinion that there were no transactions during the year that need to be entered in the register maintained under section 301 of the companies Act, 1956. 6. The company has not accepted any deposits from the Public. 7. In our opinion the company has an adequate Internal Audit System commensurate with the size and nature of its business. 8. We have been informed by the management, no cost records have been prescribed under section 209 (1) (d) of the Companies Act, 1956 in respect of products manufactured by the company. 9. a. According to the records of the company, 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. b. According to the information & explanations given to us, no un-disputed amount payable in respect of income tax, wealth tax, sales tax, custom duty and excise duty were outstanding as at 31 st March 2010 for a period of more than six months from the date they became payable. c. According to the records of the company there are no dues of sales tax, income tax, customs tax/ wealth tax, excise duty/cess, which have not been deposited on account of any dispute. 10. The company does not have accumulated losses and has not incurred cash loss in the preceding financial year. 11. According to information & explanations given to us and on the basis of our audit, we are of the opinion that the company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. 12. According to the records of the company, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or other securities. 13. In our opinion company is neither a chit fund nor a nidhi/ mutual benefit society. Hence in our opinion Para-4(xiii) of the Companies (Auditors Report) Order, 2003 is not applicable. 14. As per the records of the company and according to information and explanations given to us by the management, company is not dealing or trading in shares, securities, and debentures and other investments. 15. As per the records of the company and according to information and explanations given to us by the management, the company has not given any guarantee for loans taken by others from bank or financial institutions. 16. The company has not obtained any term loan from any institution or bank during the year. 17. According to information and explanations given to us, and on overall examination of the Balance Sheet of the Company, we are of the opinion that no funds raised on short-term basis have been used for long-term investment by the company. 18. As per the records of the company and according to 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. 19. As per the records of the company, the company has not issued any debentures. 20. The company has not raised any money by public issues during the period covered by our audit report 21. In our opinion and according to information & explanations given to us, no fraud on or by the company have been noticed or reported during the course of our audit. For O.P. TULSYAN & CO., Chartered Accountants, Sd/- (PARTNER) PLACE: VARANASI. DATED: 13.08.2010