Management's Responsibility for the Financial Statements.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the Company in accordance with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis of Qualified Opinion

a. The Company has not evaluated the extent of impairment in the value of the fixed assets in accordance with the provisions of Accounting Standard-28-lmpairment of Assets.

b. The has ceased providing interest on term loan accepted frm PIPDIC from the date the loan becomes NPA. The same is not in accordance with Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets.

Qualified Opinion.

In our opinion and to the best of our information and according to the explanations given to us, the financial statement give the information required by the Act 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 September 30,2013;

b) in the case of the Profit and Loss Account, of the Profit forthe 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. Emphasis of Matter

Attention of the share holders is invited to the following:

a) Attention is invited to note No. 7 of Notes to the Balance Sheet and Profit and Loss A/c, wherein the company has settled the entire loan due to various banks / Financial institutions Under One Time Settlement scheme except loan due to PIPDIC.

b. Attention is invited to Note No. 1 of Notes to the Balance Sheet and Profit and Loss A/c wherein the company had been referred to the Board for Industrial and Financial Reconstruction due to suspension of operations and consequent erasion of Net -worth. The Company had been declared sick by Board for Industrial and Financial Reconstruction (BIFR) and has issued order for winding up. On appeal the AAIFR has remanded the matter to BIFR and the matter is pending before BIFR. In the meanwhile, the company has identified as investor who is willing to provide funds to settle the dues of all creditors and restart the Company and also brought in funds to settle the dues.

c) Attention is invited to Notes No.3 of notes to the Balance Sheet and Profit Loss A/c wherein the company has reached a settlement with workers union for payment of legal dues before the Labour Authorities. An Amount of Rs. 5.65 Crores has been provided for in the books of Accounts

d) Attention is invited to Note No 5 of notes to the Balance Sheet and Profit and Loss A/c. where by the deposits accepted from various parties have been by the promoters. Hence the entire amount has been classified as Unsecured Loan payable to Estate of Mr. V. Chidambaram.

e) The Balance amount of Rs. 39.176/- in Unclaimed Dividend account, which is outstanding from the period 1995-96 &1996-97 has been transferred to Central Government 'INVESTORS EDUCATION & PROTECTION FUND' account.

f) The reconciliation of the balance with excise authorities of Rs. 9,78,507/- at Puzhal and Perungudi Unit (vide note 4 (a) is pending.

Report on Other Legal and Regulatory Requirements

1... As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Sub-Section (4A) of section 227 of the Companies Act, we Give in the annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227 (3) of the Act, 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 purposes of our audit;

b) In our opinion, proper books of accounts as required by law have been kept by the Company in so far as appears from examination of those books;

c) the Balance Sheet, Statement of Profit and Loss dealt with by this report are in agreement with the books of account.

d) except for the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards referred to in sub-section (32)of section 711 of the act

e) Since the company has not repaid the deposits accepted and interest thereon, the directors attracts disqualification u/s 274 (1)(g).The company has notified Form DDB before ROC. However, it was informed to us that the said deposits have been settled by a promoter viz., Mr. V. Chidambaram and hence the disqualification does not arise.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has its issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE REFEREDTO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

(i) (a) The company is maintained records, which has in general not been updated for many years. In some cases quantitative particulars and location of Fixed Asset have not been mentioned.

(b) The management has a reasonable system of physical verification at periodic intervals. In the absence of physical verification of assets at Puzhal plant, we are unable to comment on discrepancies and impact, that may arise on physical verification.

(c) Non of the fixed assets has been disposed off during the year.

(ii) The inventories as per books of accounts are nil. Hence this clause does not arise.

(iii) During the year, the company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained U/s. 301 which are prima facie not prejudicial to the interest of the company.

(iv) The company has neither carried out commercial production during the year nor entered into transactions involving purchase of stores, raw materials including components, plant and machinery, equipment and other assets and with regard to sale of goods except on account of minor job works done during the year. Hence, we are unable to comment on the effectiveness of the internal control procedures.

(v) According to the information and explanation given to us, there were no purchase of goods, materials and services and sale of goods and materials made in purchase of contracts of arrangements to be entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits during the year. In respect of deposits accepted in the prior years, it was informed to us that the promoters had settled the dues with interest and the amount settled by promoters in the books of accounts.

(vii) According to the information and explanations given to us and based on the verification of books of accounts, there is no transaction except for same job works at Pondicherry. Hence, the company has not appointed any external audit firm or any staff to carry out the Internal Audit.

(viii) We are informed that the Central Government has not prescribed maintenance of Cost records under Section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

(ix) According to the information and explanations given to us, and the books and records examined by us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Excise Duty, Customs Duty and Sales Tax were outstanding as at 30.09.2013 for a period pf more than six months from the date they became payable excepting Rs. 22,79,963/- in respect of Dales Tax deducted at source on salaries, contractors and interest.

(x) The accumulated losses of the company as on 30th September 2013 have exceeded 50% of the Net worth of the company. The company has incurred cash loss during the ear. However, there is no cash loss during the immediately preceding previous year.

(xi) During the year, the company has settled the loans accepted from various banks under one time settlement. However, the company has defaulted in repayment of term loan of Rs. 89 Lakhs due to PIPDIC.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Clauses relating to Chit Fund is not applicable to the said Company.

(xiv) The Company does not deal with trading of shares or other securities.

(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) As per the written representation received from the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) As per the information and explanations given to us the funds raised on short-term basis have been used for long-term investment.

(xviii) During the year, The Company has not made any preferential allotment of shares tp the parties covered in the Register maintained U/s. 301 of the Company.

(xix) According to the information and explanations given to us and the records examined by us, the Company has not issued any debentures and so the question of creating securities in respect of the debentures does not arise.

(xx) The company has not raised money by any public issues during the year and hence the question of disclosure and verification of end use of such money does not arise.

(xxi) As represented to us by the management and based on our examination in the normal course of audit, no material frauds on or by the Company have been noticed or reported during the year.

                                         For P B Vijayaraghavan & Co.,

                                              Charatered Accountants

Place : Chennai                                Firm Reg. No. 004721S

                                                P.B.Santhanakrisrtnan

                                                             Partner,

                                                        M.No. 2C3774