V-Guard Industries Ltd.

1. We have audited the attached Balance Sheet of V-Guard Industries Limited (�the Company�) as at 31st March 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both 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 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the 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 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give 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 in paragraph 3 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 are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (v) 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: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010; (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. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 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 Section 274(1)(g) of the Companies Act, 1956. ANNEXURE TO THE AUDITORS� REPORT (Referred to in paragraph 3 of our report of even date) i) Having regard to the nature of the Company�s business, clauses (iii) (b) to (d), (f) and (g), (vi), (x), (xii), (xiii), (xv), (xviii), and (xix) of paragraph 4 of the Companies (Auditor�s Report) Order, 2003, are not applicable to the Company for the year ended 31st March, 2010. ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. iii) In respect of its inventory: (a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. (b) In our opinion, and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were 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 has maintained proper records of its inventories 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 listed 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, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered. (b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time. vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of PVC insulated electrical cables 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 the 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 product of the Company. ix) According to the information and explanations given to us, in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees� State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees� State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31st March, 2010 on account of disputes are given below: Statute Nature of Dues Forum where dispute is pending Kerala General Supreme Court Sales Tax Act, 1963 Sales Tax of India Kerala General Dy. Commissioner Sales Tax Act, 1963 Value Added Tax (Appeals), Cochin Kerala General Dy. Commissioner Sales Tax Act, 1963 Sales Tax (Appeals), Cochin Kerala General Sales Tax Act, 1963 Sales Tax High Court of Kerala Kerala General Interest Dy. Commissioner Sales Tax Act, 1963 on Sales Tax (Appeals), Cochin Central Sales Dy. Commissioner Tax Act Central Sales Tax (Appeals), Cochin Kerala General Dy. Commissioner Sales Tax Act, 1963 Sales Tax (Appeals), Cochin Andhra Pradesh Addl. Dy. Commissioner VAT Act Value Added Tax (CT), Hyderabad Statue Period to which Amount the amount involved relates (Rs. in lakhs) Kerala General Sales Tax Act, 1963 1988-89 to 1994-95 32.33 Kerala General Sales Tax Act, 1963 1994-95 & 1995-96 6.66 Kerala General Sales Tax Act, 1963 1996-97 & 1997-98 1.04 Kerala General Sales Tax Act, 1963 1997-98 10.55 Kerala General Sales Tax Act, 1963 1998-99 3.78 Central Sales Tax Act 1998-99 23.36 Kerala General Sales Tax Act, 1963 2003-04 & 2004-05 1.91 Andhra Pradesh VAT Act 2005-06 0.75 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 banks and a financial institution from which loans have been availed. xi) Based on our examination of the records and evaluations of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in securities and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name. xii) 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. xiii) In our opinion, and according to the information and explanations given to us, and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used for long-term investment. xiv) The Management has disclosed the end use of money raised by public issues and we have verified the same. xv) To the best of our knowledge and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year. For Deloitte Haskins & Sells Chartered Accountants (Registration No.008072S) Sd/- M. RAMACHANDRAN Partner (Membership No.:16399) Kochi, 28th May, 2010