ఆడిటర్ నివేదిక Hansaflon Plasto Chem Ltd.

Mar 31, 2011

1. We have audited the attached Balance Sheet of Hansaflon Plastochem Ltd, Gurgaon (HR). As at 31st March 2011 and also the Profit and Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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.

3. As required by the Companies (Auditors Report) Order,2003 and amendments thereto issued by the Central Government of India in terms of Sec 227(4A) of The Companies Act 1956, we annex hereto a statement on the matters specified in the paragraphs 4 and 5 of the said order, to the extent applicable to the Company.

4. We further report that :

(i) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) 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;

(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations 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 in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March 2011; and

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

Annexure to Auditors Report

Annexure referred to in paragraph 3 of the auditors report to the members of Hansaflon Plastochem Ltd, Gurgaon (HR) for the year ended 31st March, 2011

As required by the companies (Auditor Report) Order , 2003 and amendments thereto and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

(i) a) The company has maintained proper record showing full particulars including quantitative details and situations of fixed assets. However as reported by the management the Fixed Assets Register and other related files are found missing from office and the information for the same had been recorded in respective police station vide DD No. 30A dated 30/06/2011.

b) All the assets have not been physically verified by the management in accordance with a phased programme of verification, The frequency of verification is reasonable and as reported by management discrepancies noticed on such physical verification were not material.

c) The assets disposed during the year are not significant and therefore do not affect the going concern assumptions.

(ii)a) The inventories have been physically verified by the management during the year at reasonable intervals.

b) The procedure of physical verification of the inventories followed by the management is reasonable and adequate in relation to the size of the company and the nature of its business.

c) The Company has maintained proper records of inventories and discrepancies noticed on physical verification of inventories as compared to books records were duly adjusted.

(iii) a) The company has not granted unsecured loan to party covered in the register maintained under section 301 of the Companies Act, 1956. b) In view of our comments in Para (iii) (a) above, clauses 4 (iii) (b) to (d) of the said order are not applicable to the company.

e) The company has not taken unsecured loan from any parties covered in the register maintained under section 301 of the Companies Act, 1956.

f) In view of our comments in Para (iii) (e) above, clauses 4 (iii) (f) to (g) of the said order are not applicable to the company.

(iv) In our opinion and information given by the management to us, the company is yet to introduce adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods and services.

(v) The transactions made in pursuance of contract or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 has been recorded in the register. However register is not available for verification, as reported by the management the Contracts Register and other related files are found missing from office and the information for the same had been recorded in respective police station vide DD No. 30A dated 30/06/2011.

(vi) The company has not accepted any deposits from the public within the meaning of the sections 58A, 58AA or any other relevant provision of the Act and the rules framed there under any directives report issued by the Reserve Bank of India. No order in relation thereto has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) The Company has yet to establish formal internal audit system commensurate with its size and nature of its business.

(viii) The Central Government has not prescribed for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for the company.

(ix) a) According to the records available and information given to us by the company's management, the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty and Excise Duty, Cess have regularly deposited with the appropriate authorities. There are no undisputed amount payable in respect of such statutory which have remained outstanding as at 31st March, 2011 for a period more then six months from the date they became payable.

b) According to the records available and information given to us by the company's management, there are no amount in respect of any disputed income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess.

(x) The company is a sick industrial company since financial year 2008-09 and has accumulated losses of Rs.757.31 lakhs at the end of the financial year 2009-10 and it has incurred losses in current financial year of Rs. 316.61 lakhs before provision of any tax, cash loss during the year is Rs. 272.20 Lakhs, total accumulated loss as on 31st March 2011 is 1073.92 Lakhs which is more the 50% of its net worth.

(xi) According to the records available and information given to us by the company's management the Company has not defaulted in repayment of its dues to banks and financial institutions.

(xii) According to the records available and information given to us by the company's management the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) The provisions of any Special Statute applicable to Chit Fund, Nidhi Fund or Mutual Benefit Fund/Societies are not applicable to the company.

(xiv) In our opinion and according to the information and explanations given to us, the company is not a dealer or trader in shares, securities, debentures and other investments.

(xv) According to the records available and information given to us by the company's management the company has not given any guarantee for loan taken by others from banks and financial institutions.

(xvi) According to the records available and information given to us by the company's management, in our opinion, the term loan have not been applied for the purpose for which they were raised.

(xvii) According to the records available and information given to us by the company's management on an overall examination the Balance Sheet of the company, we report that no fund raised on short term basis have been used for long term investment.

(xviii) According to the records available and information given to us by the company's management the company has not issued any equity shares during the year.

(xix) According to the records available and information given to us by the company's management the company has not issued any debentures during the year and no charge has been created.

(xx) According to the records available and information given to us by the company's management has disclosed end use of money raised from public issues.

(xxi) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year.

Place : New Delhi For Naresh J Gupta & Co.

Dated : 15th July 2011 Chartered Accountants

(CA Naresh Gupta)

Partner

M. No. 075291

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Mar 31, 2009

We have audited the attached Balance Sheet of HANSAFLON PLASTOCHEM LTD as at 31st March 2009 and the Profit and Loss Account and also the cash statement for the year ended on that date annexed thereto. The financial statements are the responsibility to the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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.

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Sec. 227 (4A) of The Companies Act, 1956, we enclose in the

Annexure a statement on the matters specified in the paragraph 4 and 5 of the said order. -

Further to our comments in the annexure referred to in above paragraph, 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 the audit.

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from examination of the books;

c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account;

d) In our opinion the Profit & Loss Account and the Balance Sheet comply with the accounting standards specified by the Institute of Chartered Accountants of India referred to in sub section (3C) of section 211 of the Companies Act, 1956.

e) On the basis of written representation received from the directors as on 31.03.2009, none of the directors are disqualified as on 31st March 2009 from being appointed as - directors in terms of clause (g) of sub -section (1) of Section 274 of The Companies Act 1956.

i As stated in Note 6 of the Notes forming part of the Accounts, Debtors/Creditors/advances are subject to reconciliation/confirmation.

ii. As stated in Note 8 of the Notes forming part of the Accounts, company has not transferred Rs. 21,956.22 from the unpaid dividend account to the General Revenue Account of the Central Government in pursuance to sub section (5) of section 205A of the Companies Act 1956.

iii. Subject to the matters referred to the items f (i), (ii) , above, in our opinion, and to the best of our information and according to the explanation given to us, the 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, the state of the affairs of the Company as at 31st March, 2009;

ii) In the case of Profit & Loss account, of the Losses of the Company for the year ended on 31st March 2009.;and

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

ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of our report of even date.

(i) The Company has maintained proper records of fixed assets. All the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets.

(ii) The inventory has been physically verified during the year by the management. The company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material.

iii) The company not taken any loan from the parties listed in the Register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, the company is yet to introduce 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.

(v) 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 u/s 301 of the Companies Act, 1956 have been so entered.

(vi) The company has not accepted any public deposits, so clause (vi) is not applicable.

(vii) In our opinion, the company has yet to establish an internal audit system commensurate with the size and nature of its business.

(viii) The company is not required for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 so clause (viii) is not applicable.

(ix) (a) According to the record of the Company and as per BIFR order, the company has been asked to submit the Employees' share of contribution to Provident Fund dues to the respective department. The company is deducting and depositing employees' share with the respective department. The company is contributing its share of contribution of PF.

(b) According to the information and explanations given to us and the records of the Company examined by us, the Company has been regular in depositing undisputed statutory dues i.e. provident fund, investor education protection fund, income tax.

(x) The company is a sick industrial company from A.Y. 2009-10 as the accumulated losses of the company is more than 50% of its networth. It has incurred cash losses of Rs. 23.29 lacs during the financial year covered by our audit. However no cash losses incurred in immediately preceding financial year. The company has accumulated losses as at 31.03.2009 of Rs. 628.94 lacs and Rs.539.48 lacs in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues of banks and financial institutions.

(xii) According to the information and explanations given to us, company has granted no loans or advances on the basis of security by way of pledge of shares, debentures and other securities, so clause (xii) is not applicable.

(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) Based on records examined by us and according to the information and in our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. According, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(xv) In our opinion, the company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the company, we report that no fund 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 not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

(xix) The company has not issued any debentures.

(xx) The company has not raised any money by public issue during this year, so clause (xx) is not applicable.

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

For ALOK MITTAL & ASSOCIATES

CHARTERED ACCOUNTANTS

(ALOK MITTAL)

PARTNER

M No.71205 Place: New Delhi

Date: 10.08.2009

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Mar 31, 2008

We have audited the attached Balance Sheet of HANSAFLON PLASTOCHEM LTD as at 31st March and the Profit and Loss Account and also the cash statement for the year ended on that date annexed tl The financial statements are the responsibility of the Company's management. Our responsibility is to e: an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standard 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 supp the amounts and disclosures in the financial statements. An audit also includes assessing the account principles used and significant estimates made by management, as well as evaluating the overall fin statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in term Sec. 227 (4A) of The Companies Act, 1956, we enclose in the Annexure a statement on the matters special the paragraph 4 and 5 of the said order.

Further to our comments in the annexure referred to in above paragraph, we report that: '

a) We have obtained all the information and explanations, which to the best of our knowledge and were necessary for the purpose of the audit.

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far appears from examination of the books;

c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the of account;

d) In our opinion the Profit & Loss Account and the Balance Sheet comply with the accounting star specified by the Institute of Chartered Accountants of India referred to in sub section (3C) of section of the Companies Act, 1956.

e) On the basis of written representation received from the directors as on 31.03.2008, none of the dir are disqualified as on 31st March 2008 from being appointed as directors in terms of clause (g) of section (1) of Section 274 of The Companies Act 1956.

I As stated' in Note 6 of the Notes forming part of the Accounts, Debtors/Creditors/advances are s to reconciliation/confirmation.

ii. As stated in Note 8 of the Notes forming part of the Accounts, company has not transfers 21,956.22 from the unpaid dividend account to the General Revenue Account of the C Government in pursuance to sub section (5) of section 205A of the Companies Act 1956.

iii. Subject to the matters referred to the items f (i), (ii) , (iii) & (iv) above, in our opinion, the best of our information and according to the explanation given to us accounts given.

ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of our report of even date.

(i) The Company has maintained proper records of fixed assets. All the assets have not been physically verified by the management during the year but there is a regular programme of verification which , in our opinion ,is reasonable having regard to the size of the company and the nature of its assets.

(ii) The inventory has been physically verified during the year by the management. The company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material.

iii) The company not taken any from the parties listed in the Register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, the company is yet to introduce 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.

(v) 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 u/s 301 of the Companies Act,1956 have been so entered .

(vi) The company has not accepted any public deposits, so clause (vi) is not applicable.

(vii) In our opinion, the company has yet to establish an internal audit system commensurate with the size and nature of its business.

(viii) The company is not required for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 so clause (viii) is not applicable.

(ix) (a) According to the record of the Company and as per BIFR order, the company has been asked to submit the Employees' share of contribution to Provident Fund dues to the respective department. The company Is deducting and depositing employees' share with the respective department. The company is contributing its share of contribution of PF.

(b) According to the information and explanations given to us and the records of the Company examined by us, the Company has not been regular in depositing undisputed statutory dues i.e. provident fund, investor education protection fund, income tax, were in arrears as at 31st March ,2008 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, the company has not deposited sales tax amounting to Rs. 5.55 Lacs as it has applied for waiver/ deferment of sales tax. However, the approval is still waited.

(x) The company is not a sick industrial company from A.Y. 2007-08. It has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company is able to pay principal and interest amount on term loan from IDBI and cash credit from IDBI during the period under audit by making One Time Settlement with Banks, which are secured against all the assets of the company.

(xii) According to the information and explanations given to us, company has granted no loans or advances on the basis of security by way of pledge of shares, debentures and other securities, so clause (xii) is not applicable.

(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) Based on records examined by us and according to the information and in our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. According, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(xv) In our opinion, the company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the company, we report that no fund 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 of35, 00,000 shares @ Rs. 10 each to Higrow Industries, which is the party, covered in the register maintained under section 301 of the Act.

(xix) The company has not issued any debentures.

(xx) The company has not raised any money by public issue during this year, so clause (xx) is not applicable.

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

For ALOK MITTAL & ASSOCIATES

CHARTERED ACCOUNTANTS

(ALOK MITTAL)

PARTNER

M No.71205

Place : New Delhi

Date : 07.08.2008