We have conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. 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 statements presentation.

1. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraph 4 & 5 of the said order.

2. Subject to our comments in the paragraph (1 and 2) above we state 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 the 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 of the Company,

d) in our opinion, the Balance Sheet, Profit and Loss Account and 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 except Accounting Standard - AS - 1 Preparation of the Accounts on going concern basis in Note No. 3 in part B of the Notes on accounts to the financial statements.

e) in view of default in repayment of fixed deposit to the public by the company and as per the explanation given to us, all the directors, who were in the office as on 31st March 2012 are disqualified from being appointed / reappointed as director in other public company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) Attention is invited to the following notes forming part of notes to the accounts: -

i) Note No. 1B (2)

Regarding non-provision for differential liabilities of Rs 64,50,00,000 (approx.) towards Secured Lenders and appropriation of sale proceeds of Rs 19,00,00,000/- (approx) towards interest and non-provision of income tax liabilities, amount unascertained.

ii) Note No. 1B (3)

Regarding the preparation of the accounts on going concern basis, even though the Company is not having any definite source of income due to the sale of majority of the fixed assets by secured lenders

iii) Note No. 1B (4)

Regarding liability of Rs 24,63,00,000/- (approx.) to Global Trust Bank Limited, which is now merged and known as Oriental Bank of Commerce (OBC) in respect of unsecured Debentures after adjusting a credit of Rs 5,65,00,000/- (approx.) towards the amount received by them for which no details were provided by the Bank to the Company. No effect has been given in the accounts for the same.

Further no provision has been made in the accounts for interest thereon from the date of suit due to the said bank in respect of the aforesaid Debentures, amount unascertained. We are not expressing our opinion of its consequential impact on Company's Account, as the matter is subjudice.

iv) Note No. 1B (5)(a)

Regarding non-provision of disputed income tax liability of Rs 23,43,00,000/-(approx) and interest / Penalty thereon and tax liability pertaining to sale of fixed assets, for which details are not available.

v) Note No. 1B (5) (b)

Regarding non -provision of disputed sales tax liability of Rs 95,46,000/- (approx.)

vi) Note No. 1B (6)

Regarding non-provision and non-ascertainment of interest on Loan from MPSIDC, ADCB ICD and Overdue Fixed Deposits, and non-provision of differential amount of claim made by MPSIDC which is Rs 2,16,42,00,000/- (approx) as against liability provided in books of Rs 28,00,00,000/- (approx).

vii) Note No. 1B (7) (a)

Regarding non-payment of overdue fixed deposits and non- compliance of instructions issued by company law board u/s 58A (9) of the Companies Act, 1956

viii) Note No 1B (7) (b)

Regarding settlement of fixed deposit liability without approval of Company Law Board and writing back of interest provision and crediting short payment of fixed deposit to Reserves and Surplus.

ix) Note No. 9

Regarding non- availability of confirmation from debtors, creditors and loans & advances and unsecured loans.

x) Note No. 20

Regarding non-appointment of the Managing Director and payment of Director and Committees fees amounting to Rs 2,60,000/- lacs in addition to reimbursement of expenses for maintaining non executive chairman office & other expenses.

We are unable to express our opinion in respect of the impact of our observations stated in Para (f) above on the profitability for the year and its assets and consequential impact on the reserves of the Company.

g) Subject to the foregoing, we are unable to express our opinion on the accounts of the Company as for the year ended 31st March 2012 which gives 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 March, 2012 and

ii) in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date.

iii) in the case of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS' REPORT TO THE MEMBERS OF SIL BUSINESS ENTERPRISES LTD ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2012.

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph 1 of our Report of even date)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

(b) Most of the fixed Assets have been sold by the secured lenders, therefore the management, as informed, could not carry out the physical verification of the fixed assets.

(c) According to the information and explanations given to us, the going concern status of the Company has severely impacted due to sale of substantial fixed assets by the secured lenders. Reference is invited to note no.1B (3) annexed to the accounts.

(ii) The Company does not have any inventory during the year. Hence the procedure of maintenance and verification of the same is not applicable.

(iii) 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. Accordingly, sub clause (b), (c) and (d) are not applicable.

(iv) In our opinion and according to the 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 purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, the Company has not entered into any transactions during the year with parties entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion according to information and explanation given to us, the Company has not accepted any Fixed Deposit during the year as covered by under Section 58A and 58AA of the Companies Act, 1956. However, the Company has defaulted in payment of matured deposit of Rs 12,70,00,000/- (approx.) and interest thereon upto date of maturity. Moreover, the Company has also not provided for interest in respect of such matured Fixed Deposits from the date of maturity till date in the Accounts.

Some of Fixed Deposit holders had taken legal actions and obtained order from the Company law board in the matter. However, the Company could not fully comply with the said order. Further as informed to us, certain Fixed Deposit holders had approached the Company expressing their willingness to accept partial payment as referred in Note 1B (7) (b). As legally advised to the company, such settlement does not contravene the provision of section 58A and 58AA of the Companies Act, 1956.

(vii) In our opinion, the Company does not have a formal internal audit system.

(viii) According to the information and explanation given to us, Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956.

(ix) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amount payable in respect of above were in arrears, as at March 31, 2012 for more than six month from the date on which they become payable.

(x) According to information and explanation given to us, there are no
dues of sales tax, income tax, custom tax, wealth tax, excise duty /
cess which have not been deposited on account of any dispute except as
stated herein below:
 
                                                      Rs (approx)

Name of Statute /    Form where dispute is pending    Amount Of
Nature of Dues                                        Dues

Income Tax           Tribunal (s)                     985,79,000

                     Bombay High Court               1357,30,000

                     High Court/
Sales Tax            Commissioner (Appeals)            95,46,000

(xii) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues to the financial institutions or banks as following

Nature of Dues            Year                       Amount of Default
                                                    (As per Company's
                                                     Books of Accounts)

Term Loan                2002-2003 Onwards            67,911,250

Working Capital Loan           -                     343,944,917

Other Unsecured Loan         - Do -                  519,840,201

(xiii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiv) In our opinion, the Company is not a chit fund or a nidhi/mutul benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xvi) Based on our examination of the records and the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions.

(xvii) The company has not raised any new term loans during the year.

(xviii) The fund raised on short term basis during the year have not been used on long term investment and vice versa

(xix) The Company has not made any preferential allotment of shares during the year.

(xx) The Company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

(xxi) The company has not made any public issue of any securities during the year and therefore the question of disclosing the end-use of money does not arise.

(xxii) Based upon the audit procedure performed and the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For BHANGARIA & Co.

Chartered Accountants

ICAI Regn No. 129105W

(CA. Nikunj Govind Bhangaria)

Proprietor

Membership No. : 121369

Place: Mumbai

Dated: August 23, 2012.