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. 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.

Auditors' 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers 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.

Opinion

We report that the company has not complied with the following Accounting Standards :

i. Non- provision for depletion in value of Investments of Rs 64.99 lacs (PY Rs 64.99 lacs), held in the companies whose net worth has eroded, in terms of requirement of AS 13. In view of this loss for the year is understated and investments are overstated by that amount (refer note 13A).

ii. No provision being made for Retirement benefits payable to employees including Gratuity and leave encashment in terms of requirement of AS 15 resulting into overstatement of profit for the year and understatement of current liabilities to that extent. In view of non-availability of the relevant information, quantification of impact thereof could not be ascertained (refer note 2.XI).

iii. The company has neither identified nor provided for loss on impairment of assets as per the requirement of AS 28, resulting into overstatement of fixed assets and under statement of profit for the year. However due to non availability of required information, impact of same could not be quantified (refer note 2.IV).

We further invite attention to the following :

i. Note S.I.b, regarding the balances of Secured loans being subject to confirmation and reconciliation. In view of the non-availability of the relevant information, consequential impact thereof, on the state of affairs of the company remains to be ascertained,

ii. Note 5.II.b, regarding the balances stated under unsecured loans being subject to confirmation and reconciliation. In view of the non-availability of the relevant information, consequential impact thereof, on the state of affairs of the company remains to be ascertained,

iii. Note 6 & 9, regarding various long term liabilities to refund booking advances paid by members who cancelled their bookings as well as those in the nature of payable in respect of supplies, expenses being subject to confirmation and reconciliation. In view of the non-availability of the relevant information, consequential impact thereof, on the state of affairs of the company remains to be ascertained,

iv. Note 14, regarding non provision of doubtful advances and deposits out of long outstanding advances and deposits of Rs 620.24 lacs (PY Rs 620.52 lacs). However in view of non-availability of complete information in that respect, we are neither able to express our opinion on realisability thereof nor able to quantify its impact on the affairs of the company,

v. Note 15.a, regarding non-provision for doubtful debts out of long outstanding debtors of Rs 57.87 lacs (PY 54.21 lacs), in respect of the projects already completed. However in view of non-availability of complete information in that respect, we are neither able to express our opinion on realisability thereof nor able to quantify its impact on the affairs of the company,

vi. Note 15,b, regarding non-provision of Rs.6.50 lacs (PY Rs 6.50 lacs) out of Cash balance looted in the year 1995-96 and not recovered so far, due to which profit for the year and other non- current assets both are overstated by that amount,

vii. Note 25, regarding non provision of certain liabilities in the accounts. In view of the non-availability of the relevant information, consequential impact thereof, on the state of affairs of the company remains to be ascertained,

viii. Note 25, regarding financial as well as other impact on the state of affairs of the company due to delayed/ defective execution of contractual assignment as well as consequences of delayed payment of statutory dues and those to Secured lenders. In view of the non-availability of the relevant information, consequential impact thereof, on the state of affairs of the company remains to be ascertained, Subject to above,

In our opinion and to the best of our information and according to the explanations given to us, the financial statements 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 March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the Loss 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.

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 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 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 those books except the Statutory registers required to be maintained as per the relevant provisions of the Companies Act 1956 and certain items of income and expenditure not accounted on accrual basis as required by section 209 of the Companies Act 1956.

c) The Balance Sheet and Statement of Profit and Loss and Cash How statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the Balance Sheet and Statement of Profit and Loss and Cash Flow statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 except those specifically disclosed in the relevant notes to the Balance Sheet.

e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

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 it 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.

We further draw specific attention to violations of the following:

a) Proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 being initiated against the company by its secured creditors, the liability under which may exceed the amount provided by the company .

b) Various Recovery and other suits filed by secured and unsecured creditors, pending against the company in various courts, the liability under which may exceed the amount provided by the company on that account.

c) Violation of provisions of section 58-A of Companies Act, 1956, in respect of Public Deposits accepted by the Company,

d) Violation of section 370 of Companies Act, 1956 regarding advances made to associate companies and other entities

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of Labh Construction and Industries Limited. on the accounts of the company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

1. (a) The company has not maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, fixed assets have not been physically verified by the management at reasonable intervals having regard to the size of the company and nature of its assets.

(c) In our opinion and according to the information and explanations given to us, the company has not conducted any business since last three years.

2. The company did not hold any inventory, therefore clauses 4(ii)(a),(ii)(b) and (ii)(c) of the Companies (auditor's Report) Order,2003, are not applicable.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, The company has taken loan from one party being company,firm and other persons covered in the register required to be maintained under section 301 of the Companies Act 1956. The maximum balance involved during the year was Rs 113.53 lacs (PY Rs 40.15 lacs) and the year- end balance of such loans was Rs 113.53 lacs (Rs 34.71 lacs). The loan being interest free is in our opinion prima facie not prejudicial to the interests of the company.

(b) The Company has granted loan to five parties being company, firm and other persons covered in the register required to be maintained under Section 301 of The Companies Act, 1956. The maximum amount involved during the year was Rs. 157.35 lacs (PY RS 157.35 lacs) and the year end balance of such loans was Rs. 157.35 lacs (PY Rs 157.35 lacs). The loans being interest free are in our opinion prima facie prejudicial to the interests of the company.

(c) We are informed that such loans granted by the company, are repayable on demand and repayment thereof has not yet been demanded. However such loans granted are long outstanding.

4 As the company has not undertaken any transaction of purchase of assets or inventories we are unable to comment on adequacy of internal control procedure in that respect.

5 (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have not been updated to include the transactions that needed in the register required to be maintained under that section.

(b) As per information & explanations given to us and in our opinion, the company has not undertaken any transaction made in pursuance of contracts or arrangements required to be entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupee Five Lacs in respect of any party during the year.

6 According to the information and explanations given to us the Company had accepted deposits from the Public hence provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975 with regard to the deposits accepted from the public are applicable to it. However the company has contravened the said provisions.

7 As per information & explanations given by the management, the Company does not have an internal audit system.

8 As per information & explanation given by the management, maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

9 (a) According to the records of the company, undisputed statutory 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 to the extent applicable and any other statutory dues have not been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were Rs 11.86 lacs outstanding statutory dues as on 31st of March, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess not deposited on account of any dispute are as detailed here in below:

10 The Company has balance of accumulated losses of Rs.2099.18 lacs as at end of the year and it has incurred loss and cash loss of Rs 25.96 lacs and Rs 20.58 lacs respectively during the financial year covered by our audit while it had earned profit of Rs 5.81 lacs and cash profit Rs 12.35 lacs in the immediate preceding financial year. Accordingly the entire net worth of the company has been eroded.

11 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 a financial institutions and banks and the lenders have already initiated various actions against the company as disclosed in the Notes to the Audited Balance Sheet. Further that the company does not have any outstanding towards the debenture holders.

12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor's Report) Order, 2003 (as amended) is not applicable to the Company.

14 According to information and explanations given to us, the Company is not dealing in or trading in Shares, Mutual funds & accepts the shareholders investments accordingly; the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

15 According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16 Based on our audit procedures and on the information given by the management, we report that the company has not raised fresh term loans during the year.

17 Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term except that to finance loss.

18 Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19 The Company has no outstanding debentures during the period under audit.

20 The Company has not raised any money by public issue during the year.

21 Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

                                              For GATTANI & ASSOCIATES 
                                                 CHARTERED ACCOUNTANTS 
                                                           FRN:103097W

                                                        SHARAD GATTANI
Place: Ahmedabad	                                       PARTNER
Date : 30th May, 2014	                         Membership No.: 37999