We have audited the accompanying financial statements of Zyden Gentec Limited which comprise the Balance Sheet as at 31 March 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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 referred to in sub-Section (3C) of Section 211 of 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.

Auditor's 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements read together with the Significant Accounting Policies and notes thereon give the information required by the Companies Act, 1956 in the manner so required and;

1. The interest expense of Rs. 28,28,653/- have been reversed during the year and further not providing the interest payable in respect of Term loans and other facilities taken by the company which have been recalled by the banks and other financial institutions due to defaults by the company.

2. The Provision for Gratuity and Leave Encashment has not been provided by the Company.

Subject to above, the financial statements give a true and fair view in conformity with the accounting principles generally accepted in India.

a) In the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) In the case of Statement of Profit & Loss, of the loss of the Company for the year ended on that date and

c) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of the matter

We draw your attention to the following paras stated in Mote Mo. 28- other explanatory information:

1. Point No. (c) regarding not recognizing Deferred tax liability considering absence of virtual certainty.

2. Point No. (j) regarding not providing depreciation in respect of building, plant and Machinery and all other fixed assets installed at Hyderabad unit due to its being not in operation.

However, our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003, as amended, issued by the Central Government of India in terms of sub-Section (4A) of Section 227 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. In our opinion the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-Section (3C) of Section 211 of the Companies Act, 1956 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

e. On the basis written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2014, from being appointed as a director in terms of clause (g) of sub-Section (1) of Section 274 of the Companies Act, 1956.

ANNEXURES TO THE AUDITOR'S REPORT

(Referred to in paragraph 1 under the heading of "Report on other legal & Regulatory Requirements' of our report of even date)

1) In respect of fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information. However, such records showing full particulars including quantitative details and situations of certain fixed assets are being updated.

b) As explained to us, fixed assets have been physically verified by the management in a phased periodical manner 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, as per the explanations provided to us.

c) In our opinion and according to the information and explanation given to us, there is no substantial disposal of fixed assets during the year,

2) in respect of its inventories;

a) As explained to us, the inventories have been physically verified by the management during the year, in our opinion, the frequency of verification is reasonable having regard to the size of the company and the nature of its business.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion and according to the information and explanations given to us, the company has maintained proper records of its inventories. As explained to us no material discrepancies were noticed on verification between the physical stocks and the book records.

3) In respect of loans secured or unsecured loan, taken or granted by the company to/from companies, firms or other parties covered in the register maintained u/s 301 of the Companies Act, 1956:

a) As per information and explanations provided to us, the Company has granted unsecured loans to two Companies covered in the register maintained under section 301 of the Companies act, 1956. The maximum amount involved was Rs 138.48 lacs. The year end balance was Rs. 110.02 lacs.

b) Rates of interest and other terms and conditions of loans given by the Company, secured or unsecured, are not prima facie prejudicial to the interest of Company.

c) Receipt of principal and interest is also regular wherever stipulated.

d) There was no overdue amount and consequently question of taking reasonable steps for recovery of principal and interest when overdue amount is more than Rs. 1 lac does not arise.

e) According to the information and explanations given to us, the Company has taken unsecured loan parties covered under 301 register of the Companies Act, 1950. Numbers of parties involved were 2 and maximum outstanding during the year was Rs,170.02 lacs and amount outstanding as on 31.03.2014 is Rs. 57.66 lacs;

f) Rate of interest and other terms & conditions of loan taken by the Company, secured or unsecured are not prima facie prejudicial to the interest of the Company,

g) Payment of principal and interest is also regular wherever stipulated.

4) In our opinion and according to the information and explanation given to us, there are adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control system.

5) In respect of register maintained under section 301 of the companies act, 1956

a) Based on the information and explanation given to us, the transactions pertaining to contracts and arrangements that need to toe entered into a register in pursuance of section 301 of the Companies Act, 1956 have been so entered.

b) According to information and explanation given to us, there are no transactions of purchase and sales entered into the register maintained under section 301 of the Companies Act, 1956 and prices of such are reasonable having regard to the prevailing market prices at the relevant time as explained to us.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public, hence question of complying with the directions issued by the Reserve Bank of India and the provisions of Section 5SA and 53AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under in respect of deposits accepted from public does not arise. No order was passed by company law Board, or National Company Law Tribunal or Reserve Ban k of India or any other tribunal and hence question of its compliance does not arise.

7) As informed to us the Company has own internal audit system commensurate with the size and the nature of its business. No external auditor is engaged for the purpose of Internal Audit.

8) We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government of India, regarding maintenance of cost records under clause (d) of Sub-Section (1) of Section 209 of the Act and are of the opinion that prima facie the prescribed accounts and records have been maintained. We have however not carried out detailed examination of the same.

9) On the basis of the records produced to us, the company is irregular in depositing with appropriate authorities undisputed statutory dues of Provident Fund, Employee's State Insurance, TDS and Sales Tax(VAT). To the best of our knowledge and according to the information and explanations given to us there were arrears of undisputed outstanding statutory dues as at the last day of the financial year for a period of more than six months from the date they become payable such as Rs. 521371/- due towards PF, Rs. 26835/- due towards ITDS and Rs. 1270790/- due towards VAT and CST.

There were unpaid disputed dues of ESI of Rs. 210000/- The necessary documents as regards authority with whom appeal was filed could not be produced.

10) The Company has losses but do not have accumulated losses which are more than 50% of the net worth at the end of the Financial Year ended on 31st March, 2014. However, the Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

11) According to the information and explanations given to us, the Company has defaulted in repayment of dues to financial institutions and the banks of Rs. 9,25,55,990/- as on the balance sheet date after reversing the interest due to NPA of account. Please refer Note no. 3.1,5 and point (a) and (b) of note No.23- other explanatory information. Banks and financial institutions have recalled the loans and facilities.

12) On the basis of information and explanation given to us, the company has not granted any loan on the basis of security by way of pledge of shares, debenture and other securities. Therefore, the question of adequacy or otherwise of maintenance of documents and records in respect thereof does not arise.

13) The Company is not a chit fund/Nidhi/mutual benefit fund/society. Therefore, the provisions of the clause 4(xiii) of the order are not applicable on the Company.

14) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of the clause 4(xiv) of the order are not applicable on the Company.

15) 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.

16) According to our audit procedure and on the basis of information and explanation given to us the term loan was applied for the purpose for which that loan was obtained.

17) According to the information and explanation given to us, and on an overall examination of the balance sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that, prima facie, have been used for the long term investment nor the long term loan have been used to finance short term assets except for permanent working capital.

18) According to the information and explanations given to us, the company has not during the year made any preferential allotment of shares.

19) According to the information and explanation given to us, during the period covered by our audit report, the Company has not issued any debentures. Accordingly, no security/charge has been created in respect of debentures issued.

20) The Company has not raised any money by public issue during the year.

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

For Rajvanshi & Associates Chartered Accountants (Firm Registration No. 005069C)

Sd/- Vikas Rajvanshi (Partner) M.No: 073670 Place : JAIPUR Dated : 30th May 2014