MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company's Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. 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, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. 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 FOR QUALIFIED OPINION

Inventories : The company's inventories lying at branches etc. could neither be verified nor their net realisable is ascertainable. It was observed by the management that the stocks lying at the branches were not in saleable condition and the same was expired/damaged due to improper storage/moisture/pilferage etc. Same stock has been appearing in the books since previous years. The value of such stocks in books is Rs. 3,08,56,189/-. management has not stated the inventories at lower of cost and net realisable value, which constitutes a departure from the Accounting Standards referred to in subsection (3C) of Sec 211 of the Act. The company's records indicate that had the management stated the inventories at the lower of cost and net realisable value since it is not realisable the entire value needs to be written off, an amount of Rs. 3,08,56,189/- would have been required to write the inventories down to their net realisable value. Accordingly, cost of sales would have been increased by Rs. 3,08,56,189 and profit for the year, shareholders value and inventories, would have decreased by Rs. 3,08,56,189/- (profit would have turned into loss), income tax would have reduced by Rs. 1,49,000/-.

Patent and copyright : The management had to write off Rs. 97,92,507/- every year on patents and copyrights for 5 years and thus, total depreciation of Rs. 4,89,62,536/- would have been written off in a period of 5 years. So far management has not written off any amount on patents and copyright of Rs. 4,89,62,536/-, which is a departure from the Accounting Standards referred to in subsection (3C) of Sec 211 of the Act. The company's records indicate that had management written off patents and copyrights, then intangible fixed assets, net profit for the year and shareholders funds, would have been lower by Rs. 4,89,62,536/- or loss would have increased.

Deferred revenue Expenses : The management has not written off Deferred Revenue Expenses of Rs. 1,54,95,605/-, which is a departure from the Accounting Standards referred to in subsection (3C) of Sec. 211 of the Act. The company's records indicate that if the management had written off these deferred revenue expenses, the profit for the year, shareholders funds would have been lower by Rs. 1,54,95,605/- or loss would have increased.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified opinion paragraph, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view and are 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 31st, 2014;

(b) In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flows of the Company 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 Section 227(4A) 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.

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

d. Except for the effects of the matters described inbasis for qualified opinion paragraph, in our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. On the basis of the written representations received from the directors as on March 31, 2014, 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 Section 274(1)(g) of the Act.

Annexure referred to in the Auditor's Report to the members of M/S PANJON LTD., INDORE on the accounts of the Company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and in terms of the information and explanation given to us, we state that:-

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief we state that

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

(b) As explained to us, the fixed assets have been physically verified by the management during the year. There is a regular program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, the company has not disposed of substantial parts of fixed assets during the year and the going concern status of the company is not affected.

(ii) (a) The inventory has not been physically verified during the year by the management and were not made available for verification. In our opinion, the frequency of verification is not reasonable. Quantity, value and location of brought forward/carried forward stock has not been verified by us and it is not verifiable and not properly maintained. Also nature of the goods is expirable and cannot be consumed after lapse of certain time or if not stored properly, company has not taken stock quantity and value from that perspective and hence exact amount cannot be ascertained.

(b) The procedures of physical verification of inventories followed by the management are not reasonable and inadequate in relation to the size of the company and the nature of its business.

(c) The company is not maintaining proper records of inventory. As informed to us, the discrepancies noticed on verification between the physical stocks and the book records were material and not dealt with in the books of account.

(iii) (a) The Company has received Unsecured Loans and Trade Deposits from parties listed in the Register required to be maintained under section 301, which are treated as unsecured loan. The total No. of parties (directors and relative) are two and amount outstanding as on 31.03.14 is Rs. 105.54 lacs (Previous year R804.61) and maximum outstanding is Rs. 270.04 lacs. According to the information and explanation given to us, the rate of interest and other terms and conditions of the loan are prima-facie not prejudicial to the interest of the company. The Company is regular in repayment of deposits and there are no overdue.

(b) The company has not granted unsecured loans, advances to the Companies, Firms and Parties listed in the Register required to be maintained under section 301. The Total No. Of Parties are nil and amount outstanding as on 31.03.2014 is Rs. nil (Previous year Rs. 7.61 lacs) and maximum outstanding is Rs. nil. According to the information and explanations given to us, the rate of interest and other terms and conditions of the loan are prima-facie, prejudicial to the interest of the Company.

(c) The debtors are not regular in repaying the principal amounts as stipulated and also irregular in payment of interest.

(d) In our opinion the company has not taken reasonable steps to recover the loan amount.

(iv) In our opinion and according to the information and explanations given to us, the internal control is not adequate 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 and services. During the course of our audit, we have observed continuing failure to correct major weaknesses in internal controls.

(v) (A) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts of arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made but the reasonability of the prices having regard to prevailing market prices at that time cannot be ascertained.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted deposits hence provisions of section 58A and 58AA of the Companies Act are not applicable to company, except Business deposits and from directors.

(vii) In our opinion, the company does not have Internal audit system commensurate with the size and nature of its business.

(viii) As informed and explained to us, the Central Government has ordered for maintenance of cost records under section 209(1)(d) of the companies Act vide order dated 16/03/2006 of the Central Government but the cost audit has not been completed till date.

(ix) (a) The company is generally irregular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, ESIC, sales tax, income-tax TDS, service tax, cess and other material statutory dues applicable to it. Exact amount of dues is not known as relevant records could not be produced.

(b) According to the information and explanations given to us and records of the Company examined by us, the particulars of dues as at 31/3/2014, which have not been deposited on account of a dispute, are as follows.

Name of the  Nature of the   Amount under     Forum where
Statute      Dues            dispute not yet  dispute is pending
                             deposited

Excise Duty  2002-03         167530/-         Stayed from High Court

Income Tax   FY 1993-1994
             (A.Y. 1994-95)  142130/-         Rectification field

(x) The company does not have accumulated loss, as at the end of year the company more than fifty percent of its net worth subject to qualifications in the audit report. The company has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company is not in default of repayment of dues to financial institution/Bank as at 31.03.2014.

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

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

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

(xv) As informed and explained to us the company has not given guarantees for loans taken by others from banks or financial institutions.

(xvi) The Company has not raised any term loan during the year under review.

(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the company, we report that the no funds raised on short-term basis have been used for long-term investment.

(xviii) According to the information and explanations given to us, the company has made preferential allotment of 1,00,00,000 eq. shares of Rs. 10/- each for cash at par, out of which 65,00,000 equity shares of Rs. 10/- each for cash at par have been issued to parties and companies covered in the register required to be maintained under section 301 of the Act.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the company had not issued any debenture.

(xx) The company has not made any Public issue of shares during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

PLACE : INDORE                                   For Trilok Jain & Co.
DATE : 22nd September, 2014                      Chartered Accountants
                                                            FRN 00341C

                                                           (T.C. Jain)
                                                               Partner
                                                          M.No. 012712