WE REPORT AS FOLLOWS ;

1. As required by the manufacturing and other Companies (Auditors Report) order 1988 issued by the company law Board in terms of section 227(4A) of the company Act, 1956 on the basis of such checks of the books and records as we considered appropriate and the information and explanation given to us during the course of audit. We annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our Comments in the annexure referred to in paragraph above, we report that:

A. We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit,

B. In our opinion, proper books of accounts as required by the Companies Act. 1956 (As amended) have been kept by the company so far as it appears from our examination of the books.

C. The Balance Sheet & Profit & Loss Account dealt with by this report are in agreement with the books of accounts.

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

E. On the basis of the representations from the directors, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2003 from being appointed as director under Section.274(1)(g) of the Companies Act. 1956.

P. In our opinion, to the best of our information and according to the explanation given to us, the said accounts give the information required by the companies Act, 1956 in the manner so required and give a true and fair view.

i. In the case of Balance Sheet of the state of affair of the company as at 31st March, 2003.

ii. In the case of profit & Loss account, Loss of the company the year ended on that date.

iii. In the case of cash flow statement of the cash flow for the year ended on that date.

                                                FOR B. M. JHAVERI & CO.
                                                  CHARTERED ACCOUNTANTS
Place: MUMBAI.                                    BHUPENDRA M. JHAVERI.
Date: 16-05-2003                                            Proprietor.
                                                  Membership No. 15855.

1. The company has maintained proper records showing full particulars including quantitative details and situations of fixed assets, according to the information and explanations given to us, no material discrepancies were reported to have been found in respect of assets verified as compared to book record.

2. None of the fixed assets have been revalued during the year.

3. Stock of finished goods, stores & spare parts and raw materials have been physically verified at reasonable intervals during the year by the management.

4. In our opinion, the procedure of physical verification of stock followed by the management is reasonable, and adequate in relation to the size of the company and the nature of its business.

5. According to the records produced to us, for our verification, there were no material discrepancies noticed on physical verification and stocks referred to in (iii) above, as compared to book records and the same have been properly dealt with in the books of Accounts.

6. On the basis of our examination of the stock records, we are satisfied that the valuation of the stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year.

7. The company has given loans to its Employees who are repaying the principal amount as stipulated and have also been regular in the payment of interest where applicable.

8. The company has not taken loans from companies, firms or other parties listed in the register maintained Under Section 301 of the companies Act. 1956., other than those payable under contractual obligation or in accordance with generally accepted business practices.

19. The Company is sick industrial company within the meaning of clause (0) of sub-Section (I) of section 3 of the sick industrial companies (Special provisions) Act. 1985 (1 of the 1980).

20. The Company does not have service activities.

21. The company does not have any trading activities.

                                                FOR B. M. JHAVERI & CO.
                                                  CHARTERED ACCOUNTANTS
Dated: 16-05-2003
Place: Mumbai.                                    BHUPENDRA M. JHAVERI.
                                                            Proprietor.
                                                  Membership No. 15855.

1. Secured Loans are from State Bank of India and are secured by Hypothecation of Inventories. Book Debts and Equitable mortgage of Fixed Assets.

2. Debentures are secured by second charge on fixed assets of the company and the Trust Deed is executed in favour of State Bank of India. Trust Deed is executed in favour of State Bank of India.

3. Debentures are redeemable at par in three equal instalments on 01.06.2006,01.06.2007 & 01.06.2008 for series I and 15.01.2007,15.01.2008 & 15.01.2009 for series II as per resolution passed at meeting of debenture holders on 31st march 2001.

4. Facilities from State Bank of India are further secured by the personal guarantee of Mr. C.J. Kamsinghani & Mrs. P.C. Ramsinghani.