We conducted our audit in accordance with 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 misstatement. 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(1) 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.

(2) In our opinion, proper Books of Accounts as required by law have been kept by the Company so far as appears from our examination of the Books.

(3) The Balance Sheet and Profit & Loss account dealt with by this report are in agreement with the hooks of account.

(4) In our opinion, the Profit & Loss Account and the Balance Sheet comply with Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

(5) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2002 for being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

(6) a) Balances of debtors, creditors, loans and advances are subject to confirmation and adjustments, if any.

b) The Company has during the year under audit sold out some of its machineries costing Rs. 28.09 lacs (WDV Rs. 22.21) for Rs. 10.61 lacs and incurred a loss of Rs. 11.60 lacs. The said loss is included in loss for the year.

c) Company has not carried-out any manufacturing activity during the year under audit.

(7) Subject to foregoing remarks, in our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit & Loss account read together with notes thereon give the information required by the Companies Act, 1956, in the manner so required and on such basis give a true and fair view

(a) In the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2002.

(b) In the case of the Profit & Loss account, of the loss for the year ended on that date.

As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks of the books of account and records as we considered appropriate during the course of the audit, we further state that

(i) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets but the same is not updated. These assets have been physically verified by the management during the year and as informed to us, no material discrepancy was noticed on such verification.

(ii) None of the fixed asset have been revalued during year.

(iii) As informed to us during the year physical verification has been conducted by the management in respect of Raw Materials, Finished Goods, Semi Finished Goods, Spares, Consumable Stores and Packing Materials. In our opinion, frequency of verification was reasonable and adequate in relation to the size of the Company, and nature of its business. However Company has no stock or inventory at the year

(iv) In our opinion, procedure of physical verification of Raw Material, Finished Goods, Semi Finished Goods, Spares and Consumable Stores followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. However Company has no stock or inventory at the year end.

(v) As informed to us, no material discrepancies noticed on verification between the physical stocks and the book records and the same have been properly dealt with in the Books of Accounts.

(vi) On the basis of our examination of stock records, we are of the opinion that the valuation of stock is fair and proper in accordance with the normally accepted accounting principles and practices followed by the Company. However Company has no stock or inventory at the year end.

(vii) As per the information and explanation given to us the Company has taken loan from the party listed in the Register maintained under section 301 of the Companies Act, 1956 by the Company.

(viii) The Company has not given any advances in the nature of loan to the party listed in the Register maintained under section 301 of the Act.

(ix) In respect of loans and advances in the nature of loan given by the Company, parties have repaid the principal amounts as stipulated.

(x) 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 purchase of stores, raw materials including components, plant and machineries, equipment and other assets and with regard to sale of goods.

(xi) According to the information and explanations given to us there are no transactions of purchase of goods and materials and sale of goods or services which are made in pursuance of contract or agreements during the year and which are required to be entered in register maintained u/s 301 of the Companies Act, 1956 aggregating Rs. 50,000/- or more.

(xii) Unserviceable or damaged goods, stores and/or materials are being determined and provision for loss, if any has been made in the accounts. As informed there was no damaged or unserviceable goods or stores.

(xiii) As informed to us, since the Company has not taken any loan/deposit from public as specified in the provisions of Section 58-A of the Companies Act, 1956 hence the provisions of Section 58-A of the Companies Act, 1956 and rules framed thereunder and directives issued are not applicable.

(xiv) In our opinion reasonable records have been kept by the Company tor sale and disposal of realisable by-product.

(xv) The company has not adopted internal, audit system. As per information and explanations given to us transactions during the year were under control and supervision, of Chairman and Managing Director. However in our opinion the system and procedure of control and supervision needs to be strengthened and enlarged.

(xvi) As informed to us, the Company was not required to maintain the books of account as prescribed by the Central Government for the maintenance of cost records under section 209 (1)(d) of the Companies Act, 1956.

(xvii) Company has not deposited dues of Provident Fund and Employees State Insurance of earlier years in due time allowed, with the appropriate authority. There was no expenses on Provident Fund and Employees State Insurance for the year under audit.

(xviii) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Custom Duty and Excise Duty were outstanding as at 31st March, 2002 for a period of more than six months from the date they become payable.

(xix) According to the information and explanations given to us, no personal expenses of employees or directors have been charged to revenue account other than those payable under contractual obligations or in accordance with generally accepted business practice.

(xx) The Company is not a sick industrial Company within the meaning of Clause (o) of Sub-Section (1) of Section 3 of Sick, Industrial Companies (Special Provisions) Act, 1985

                                                 For, B. K. PATEL & CO.
                                                  Chartered Accountants

AHMEDABAD                                                   B. K. Patel
02-09-2002.                                                     Partner