We have audited the accompanying financial statements of Priyadarsini Limited ('the company'), which comprise the Balance Sheet as at June 30, 2013, the statement of Profit and loss of the Company and the cash flow Statement of the Company for the 15 months ended 30th June, 2013 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 flow 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'). 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. 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

Note 1:

Attention of the members is invited to note 2 to Notes 2.6 regarding interest on term loan and working capital not debited by banks amounting to Rs. 561 30 lakhs by virtue of which loss for the year and debit balance in profit and loss account stand reduced to that extent.

Subject to our comments in note 1 above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 June 30, 2013;

b. In the case of the Statement of Profit and Loss, of the Loss for the 15 months ended 30th June, 2013 on that date; and

c. In the case of the Cash Flow Statement, of the cash flows for the 15 months ended 30th June, 2013 on that date.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003, as amended (`the Order') issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act,1956(`the Act), we enclose in the Annexure a statement on the matters specified in Paragraphs 4 and 5 of the said 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 purposes of our audit;

b. 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 those books ;

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the Directors, as on 30th June, 2013 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30th June, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act,1956;

Referred to in Paragraph 1under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date.

1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

2. Some of the fixed assets were physically verified during the year by the management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

3. As per information and explanation given by the management during the year, the company has not disposed off a substantial part of its fixed assets and going concern assumption of the company is not affected.

4. As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

5. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

6. In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

7. According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintain under Section. 301 of the Companies Act, 1956.

8. As the company has not granted or taken loans to/ from companies, firms or other parties listed in the registers maintained under section 301 of the Companies Act, 1956 the clause relating to rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, which are prima facie prejudicial to the interest of the company is not applicable to the company.

9. As the company has not taken loans from/ granted to companies, firms or other parties listed in the registers maintained under section 301 of the Companies Act, 1956 the clause relating to the regular payment of principal amount and interest is not applicable to the company.

10. As the company has not taken loans from or granted to companies, firms or other parties listed in the registers maintained under section 301 of the Companies Act, 1956 the clause relating to steps taken for recovery/payment of the principal and interest on overdue amount of more than one lakh, is not applicable to the company.

11. 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 inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control.

12. a) Based on the audit procedure applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

13. In our opinion and according to the information and explanations given to us, the company has not entered into contracts or arrangements exceeding Rs. Five lakhs in value with companies in which directors are interested as listed in the register maintained under section 301 of the Companies Act, 1956

14. In our opinion and according to the information and explanations given to us, the company has not complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the National Company Law Tribunal.

15. In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

16. In our opinion and according to the information and explanations given to us, the company has made and maintained accounts and records prescribed by the Central Government under Section 209(1) (d) of the Companies Act,1956. However, we have not carried out any detailed examination of such records.

17. According to the records of the company, the Company is not regular in depositing with appropriate authorities undisputed statutory dues, including Provident fund, Employees' state insurance and CST dues. Provident fund dues amounting to Rs. 1,59,35,379/-,employees' state insurance dues amounting to Rs.31,56,371and CST amounting to Rs.15,33,907/- are due for more than six months as on 30th June , 2013.

18. The Company has accumulated losses which were more than 50% of its net worth and it has incurred cash losses during the period covered by our audit and in the immediately preceding financial year.

19. In our opinion and according to the information and explanations given to us, the company has defaulted in repayment of principal amounting to Rs.81,15,57,568/-and interest amounting to Rs.2,58,00,691/- to financial institutions and banks

20. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

21. The company is not a chit fund or nidhi or mutual fund/society and hence the provisions of clause 4(xiii) of the Companies (Auditor's Report) order, 2003 are not applicable to the company.

22. The company is not dealing in or trading in shares, securities, debentures and other investments and hence the provisions of clause 4(xiv) of the Companies (Auditor's Report) order, 2003 are not applicable to the company.

23. As the company has not given any guarantee for loans taken by others from banks or financial institutions, hence the provisions of clause 4(xv) of the Companies (Auditor's Report) order, 2003 are not applicable to the company.

24. In our opinion the term loans taken by the company have been applied for the purpose for which they were raised.

25. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short -term basis have been used for long -term investment. No long-term funds have been used for short-term assets.

26. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

27. According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

28. According to the information and explanations given to us, during the period covered by our audit report, the company has not raised any monies by public issue.

29. According to the information and explanations given to us and the books and records examined by us, no fraud on or by the company has been noticed or reported during the year.

                                   For P.Srinivasan & Co.,
       
                                   Chartered Accountants 

                                   Firm Regd No. 004055S

                                   K.RANGANATHAN 

Hyderabad                          Partner

August 26 , 2013                   Membership No. 010842