2. 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.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956, of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above, we 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 it 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 representation received from the Directors, as on 31St March, 2009, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2009 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 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 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 31st March 2009, and

(b) in the case of the Profit and Loss Account, of the loss for the year ended on 31.03.2009.

(c) in the case of the cash flow statement of the cash flow for the year ended on that date

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date)

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

b. The fixed assets have been physically verified by the management during the year and no material discrepancy was noticed on such verification

c. The company has not disposed of any fixed assets during the year.

ii. Since there were no inventory, the questions regarding the physical verification of inventory and the procedures followed for physical verification, maintenance of proper records of inventory and accounting the discrepancies noticed on physical verification do not apply.

iii. a. In our opinion and according to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b. In our opinion and according to the information and explanations given to us, the Company has not taken any loan, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 except loans taken from directors and members. The balance as on 31.03.2009 of such loans was Rs. 9,196,415.02

c. In our opinion, the rate of interest and other terms and conditions on which loans have been taken from directors and members are not, prima facie, prejudicial to the interest of the company.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of stores, raw materials including components, equipments and other assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

v. a. According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangement that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. As per information and explanations given to us, to our opinion transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has not accepted during the year any deposit from the public and therefore the provisions of section 58Aand 58AAofthe Companies Act, 1956 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public are not applicable to the company.

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

viii. To the best of our knowledge and belief, the Central Government has not prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 for the products of the Company except customs duty of Rs. 6,00,829/-

ix. a. According to the information and explanation given to us, the company is regular in depositing with appropriate authorities undisputed statutory dues except delay in remittance of PF and ESI contributions on certain occasions.

b. As per information and explanations furnished to us there is no undisputed amount payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess outstanding as at the last day of the financial year for a period of more than six months from the date they became payable

c. According to the information and explanations given to us, there are no dues of sales tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute except Income Tax demand with interest of Rs. 14.40 lacs which is under appeal in High Court of Chennai for the Assessment Year 1994-95 and Customs duty interest of Rs.32,25,621.00 before the CESTAT, Bangalore (Refer note no. 13 to the notes attached to the Accounts of the Company for the year ended 31st March 2009)

x. The company has incurred cash loss during the financial year under audit. The company incurred cash loss in the preceding financial year. The accumulated loss of the company is more than 50% of its net worth.

xi. The company has not defaulted in repayment of dues to any financial institution and banks during the year under audit except amount payable to

a. Sundaram Finance Limited-Rs. 1,94,840/-

b. Concord Credit Limited - Rs. 1,14,959/-

xii. As per 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 and hence the question for maintenance of adequate records for the same are not applicable to the company.

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(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company

xv. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. Since the company does not have any term loan, the question of their application does not arise.

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 funds raised on short-term basis have not been used for long-term investment

xviii. The company has not made any preferential allotment of shares during the year under audit.

xix. The company has not issued any debentures hence the question for creation of securities in respect of the same does not arise.

xx. The company has not made any public issue 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 course of our audit.

                                                 For Kannan & Kassim 

                                                Chartered Accountants

                                                          Sd/-

Place: Emakulam                                   P. B. Vijayabhaskar

Date: 28/08/2009                                 Partner, M.No. 206038