ಅಡಿಟರ್ಸ್ ರಿಪೋರ್ಟ್Bhagawati Gas Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of BHAGAWATI GAS LIMITED (''the Company'') which comprise the Balance sheet as at March 31, 2014, and the Statement of Profit and Loss and 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 notified under 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. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditors'' 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 entity''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 qualified audit opinion.

Basis for Qualified Opinion

1. Note 28 and 29 of the financial statements, wherein the management of the company has considered Trade Receivables of Rs. 5,77,31,233 Other Receivables of Rs. 8,19,20,827 and advances to Rs. 72,18,468 as good and recoverable. In the absence of external confirmation from the customer/parties from whom these amounts are due and having regard to the age of these balances, we are unable to comment the extent to which these balances are recoverable.

2. Note 31 the financial statements, in respect of expiry of Gas supply agreement and restoration of company''s operation being dependent upon the extension of gas supply agreement.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, 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:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014. ii. in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") 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 purposes 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 the Cash Flow Statement dealt with by this report are in agreement with the books of account.

d. Except for the effect of the matters described in the Basis for Qualified Opinion paragraph, 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 Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

i. a. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b. A major portion of the fixed assets has been physically verified by the management during the year pursuant to a programme for physical verification of fixed assets, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets.

c. Fixed Assets disposed off during the year were not substantial and therefore do not affect the going concern status of the company.

ii. a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c. The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records have been properly dealt with in the books of account.

iii. a. The company has granted interest free inter corporate loan to a company. The maximum amount involved during the year was Rs. 28,120,450 and yearend balance was Rs.17,964,928.

b. As stated in note to the financial statements, regarding proposal of conversion of interest free loan given, in to equity shares of the borrower company, we are unable to express an opinion as to whether the terms and conditions of the interest free loan are, prima facie, prejudicial to the interest of the company.

c. According to the information and explanations given to us, the principal is repayable on demand. Accordingly, we are unable to comment as to whether the party has been regular in payment of interest to the company.

d. According to the information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of the clause 4 (iii) (d), (iii) (e), (iii) (f) and (iii) (g) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the company.

iv. In our opinion and according to the information and explanations given to us, there exists an adequate internal control system 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 and services. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in internal control system of the company.

v. a. In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rs. 500,000 in respect of any party during the year have been made at prices which are reasonable with 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 any deposits under the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

viii. There being no manufacturing operations of the company during the year, the books of account required to be maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 in respect of manufacturing operations have not been maintained.

ix. a. According to the information and explanations given to us, the company is generally regular in depositing with the appropriate authorities undisputed statutory dues including investor education and protection fund, income-tax, sales-tax, wealth tax, custom duty, excise duty, cess and any other statutory dues applicable to it except for Tax Deducted at Source, Service Tax and Provident Fund where there have been regular delay.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, sales-tax, wealth tax, service tax, custom duty and excise duty were in arrear as at March 31, 2014 for a period of more than six months from the date they became payable except income tax deducted at source amounting Rs. 71,979 and Service tax amounting Rs. 60,392.

c. According to information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty or cess or any other statutory dues which have not been deposited on account of any dispute.

x. In our opinion, the accumulated losses of the Company at the end of the financial year are not more than fifty percent of its net worth. The company has incurred cash losses in the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to any financial institution or bank except the following dues:

Amount of Default Due date Period of default (in days) Principal Interest

3,94,583 1,48,652 30.04.2013 127

3,94,583 1,56,478 31.05.2013 96

3,94,583 1,45,429 30.06.2013 83

3,94,583 1,45,111 31.07.2013 149

3,94,583 91,930 31.08.2013 118

56,309 31.08.2013 209

3,94,583 1,29,602 30.09.2013 179

3,94,583 1,29,540 31.10.2013 148

3,94,583 23,493 30.11.2013 118

1,04,667 30.11.2013 121

2,41,666 1,23,601 31.12.2013 90

2,41,666 1,16,998 31.01.2014 59

2,41,666 1,06,414 28.02.2014 31

1,52,917 9,179 31.12.2013 87

1,52,917 5,050 31.01.2014 56

1,52,917 4,617 28.02.2014 28



xii. In our opinion and according to 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.

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 (Auditors'' Report) Order, 2003 are not applicable to the company.

xiv. 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 clause 4 (xiv) of the Companies (Auditors'' 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 bank or financial institutions.

xvi. In our opinion, and according to the information and explanations given to us, term loans have been applied for the purposes for which they were raised.

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 no funds raised on a short-term basis have been used for long- term investment.

xviii. 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 during the year. Accordingly, the provisions of clause 4 (xviii) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the company.

xix. The company has not issued any debentures during the year.

xx. The company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the company.

xxi. To the best of our knowledge and belief and 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 CHATURVEDI & PARTNERS Chartered Accountants Firm Registration No. 307068E

New Delhi R N CHATURVEDI Partner May 31, 2014 Membership No. 092087

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of Bhagawati Gas Limited, as at March 31, 2011, the Profit and Loss Account and also the Cash Flow Statement 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 conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance 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 the 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, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is drawn to Note 4 of Schedule 17 regarding income in respect of minimum off take charges and other claims recognised during the year ended March 31, 2011. The effects of the above on the accounts are indeterminate. We are unable to express an opinion as to when and to what extent said amount would be realised.

5. Attention is drawn to Note 5 of Schedule 17 regarding non-provision for doubtful advances and security deposits aggregating to Rs 24,211,431. The effects of the above on the accounts are indeterminate. We are unable to express an opinion as to when and to what extent said amount would be recovered.

6. Further to our comments in the Annexure referred to above, 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 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

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

g. In our opinion and to the best of our information and according to the explanations given to us, subject to what is stated in para 4 above, the ultimate effect which on the loss for the year is undeterminate. 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 March 31,2011,

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

iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

i. a. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b. A major portion of the fixed assets has been physically verified by the management during the year pursuant to a programme for physical verification of fixed assets, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets.

c. During the year, the company has disposed off a substantial part of the plant and machinery. According to the information and explanation given to us, we are of the opinion that the sale of the said plant and machinery has not affected the going concern status of the company.

ii. a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c. The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records have been properly dealt with in the books of account.

iii. a. The company has granted interest free inter corporate loan to a company. The maximum amount involved during the year was Rs. 79,051,622 and yearend balance was Rs. 44,022,524.

b. As stated in note 6 of Schedule 17, regarding proposal of conversion of interest free loan given, into equity shares of the borrower company, we are unable to express an opinion whether the terms and conditions of the interest free loan are, prima facie, prejudicial to the interest of the company.

c. According to the information and explanations given to us, the principal and interest accrued is repayable on demand. Accordingly, we are unable to comment as to whether the party has been regular in payment of interest to the company.

d. According to the information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of the clause 4 (iii)(d), (iii)(e) (iii) (f) and (iii)(g) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

iv. In our opinion and according to the information and explanations given to us, there exists an adequate internal control system 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 and services. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in internal control system of the company.

v. a. In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs 500,000 in respect of any party during the year have been made at prices which are reasonable with 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 any deposits under the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

viii. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are neither required to nor have we carried out any detailed examination of such accounts and records.

ix. a. According to the information and explanations given to us, the company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and any other statutory dues applicable to it except for income tax and provident fund where there have been delay in some cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, sales- tax, wealth tax, service tax, custom duty and excise duty were in arrear as at March 31, 2011 for a period of more than six months from the date they became payable.

c. According to information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty or cess or any other statutory dues which have not been deposited on account of any dispute.

x. In our opinion, the accumulated losses of the Company at the end of the financial year are not more than fifty percent of its net worth. The company has incurred cash losses in the financial year covered by our audit. However, it has not incurred cash losses in the immediately preceding financial year.

xi. In our opinion and according to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to any financial institution or bank except the following dues:

IDBI Bank Term Loan

Period of default Amount Due Due Date Amount of default Date of payment (in days)

9,97.486 01-04-2010 997,486 21-04-2010 20

15,03,000 30-06-2010 500,486 28-06-2010 1

22,24,000 01-10-2010 2,124,486 11-10-2010 10

22,24,000 01-11-2010 2,124,486 01-12-2010 30

22,24,000 01-12-2010 2,124,486 02-12-2010 1

99,514 02-12-2010 1

500,000 13-4-2011 102 22,24,000 01-01-2011

700,000 21-04-2011 110

924,486 03-05-2011 122

22,24,000 01-02-2011 99,514 03-05-2011 91

2,124,486 09-08-2011 189

22,24,514 01-03-2011 2,224,514 09-08-2011 161

86,689 01-03-2011 86,685 09-08-2011 161

xii. In our opinion and according to 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.

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 (Auditors' Report) Order, 2003 are not applicable to the company.

xiv. 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 clause 4 (xiv) of the Companies (Auditors' 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 bank or financial institutions.

xvi. In our opinion, and according to the information and explanations given to us, term loans have been applied for the purposes for which they were raised.

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 no funds raised on a short-term basis have been used for long-term investment.

xviii. 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 during the year. Accordingly, the provisions of clause 4 (xviii) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

xix. The company has not issued any debentures during the year.

xx. The company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

xxi. To the best of our knowledge and belief and 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 CHATURVEDI & PARTNERS

Chartered Accountants Firm Registration No. 307068E

New Delhi R N CHATURVEDI

August 11, 2011 Partner

Membership No. 092087

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Bhagawatl Gas Limited, as at March 31, 2010, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance 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 the 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 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is drawn to Note 6 of Schedule 17 regarding non-provision for doubtful advances, security deposits and sundry debtors aggregating to Rs. 34,190,286. The effects of the above on the accounts are indeterminate. We are unable to express an opinion as to when and to what extent said amount would be recovered.

5. Further to our comments in the Annexure referred to above, 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 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

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 March 31, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

g. In our opinion and to the best of our information and according to the explanations given to us, subject to what is stated in para 4 above, the ultimate effect which is undeterminate. 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 March 31,2010,

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

iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

i. a. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b. A major portion of the fixed assets has been physically verified by the management during the year pursuant to a programme for physical verification of fixed assets, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, the results of physical verification are being compared with financial records. Management does not expect any material discrepancies on completion of such comparison.

c. During the year, the company has disposed off a substantial part of the plant and machinery. According to the information and explanation given to us, we are of the opinion that the sale of the said plant and machinery has not affected the going concern status of the company.

ii. a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c. The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records have been properly dealt with in the books of account.

iii. a. The company has granted inter corporate loan to a company. The maximum amount involved during the year and year end balance was Rs. 64,919,344.

b. In our opinion, the rate of interest and other terms and conditions of the loan are not, prima facie, prejudicial to the interest of the company.

c. According to the information and explanations given to us, the principal and interest is repayable on demand. Accordingly, we are unable to comment as to whether the party has been regular in payment of interest to the company.

d. According to the information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of the clause 4 (iii)(d), (iii)(e) (iii) (f) and (iii)(g) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

iv. In our opinion and according to the information and explanations given to us, there exists an adequate internal control system 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 and services. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in internal control system of the company.

v. a. In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of f 500,000 in respect of any party during the year have been made at prices which are reasonable with 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 any deposits under the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

viii. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are neither required to nor have we carried out any detailed examination of such accounts and records.

ix. a. According to the information and explanations given to us, the company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and any other statutory dues applicable to it except for income tax and provident fund where there have been delay in some cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income- tax, sales-tax, wealth tax, service tax, custom duty and excise duty were in arrear as at March 31, 2010 for a period of more than six months from the date they became payable.

c. According to information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty or cess or any other statutory dues which have not been deposited on account of any dispute.

x. The company does not have accumulated losses at the end of the financial year. The company has not incurred cash losses in the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to any financial institution or bank except the following dues:

IDBI Term Loan

Amount Due Due Date Amount Date of payment Period of default (InRs.) (In days)

18,345,000 01.04.2009 225,000 29.06.2009 89

5,000,000 27.07.2009 117

2,500,000 07.08.2009 128

3,000,000 20.08.2009 141

2,000,000 27.08.2009 148

1,500,000 27.08.2009 148

1,000,000 05.09.2009 157

700,000 27.11.2009 240

2,000,000 30.12.2009 273

420,000 14.01.2010 288

18,345,000

xii. In our opinion and according to 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.

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 (Auditors Report) Order, 2003 are not applicable to the company.

xiv. 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 clause 4 (xiv) of the Companies (Auditors 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 bank or financial institutions.

xvi. In our opinion, and according to the information and explanations given to us, term loans have been applied for the purposes for which they were raised.

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 no funds raised on a short-term basis have been used for long-term investment.

xviii. 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 during the year. Accordingly, the provisions of clause 4 (xviii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

xix. The company has not issued any debentures during the year.

xx. The company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

xxi. To the best of our knowledge and belief and 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 CHATURVEDI & PARTNERS

Chartered Accountants

Firm Registration No. 307068E

Place: New Delhi R N CHATURVEDI

Date : August 14, 2010 Partner

Membership No. 092087

---

Mar 31, 2009

1. We have audited the attached Balance Sheet of Bhagawati Gases Limited, as at March 31, 2009, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance 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 the 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 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is drawn to Note 6 of Schedule 17 regarding doubtful advance and security deposits aggregating to Rs. 22,303,031. The effects of the above on the accounts are indeterminate. We are unable to express an opinion as to when and to what extent said amount would be recovered.

5. Further to our comments in the Annexure referred to above, 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 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

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 March 31, 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

g. In our opinion and to the best of our information and according to the explanations given to us, subject to what is stated in para 4 above, 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 March 31,2009,

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

iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

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

b. A major portion of the fixed assets has been physically verified by the management during the year pursuant to a programme for physical verification of fixed assets, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern status of the Company.

ii. a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and the same have been properly dealt with in the books of account.

iii. a. The Company has granted inter corporate loan to a Company. The maximum amount involved during the year and yearend balance was Rs 47,572,711.

b. In our opinion, the rate of interest and other terms and conditions of the loan are not, prima facie, prejudicial to the interest of the company.

c. The principal is repayable on demand. The party has been regular in payment of interest to the Company.

d. According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of the clause 4 (iii)(d), (iii)(e), (iii) (f) and (iii)(g) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, there exists an adequate internal control system 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 and services. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in internal control system of the Company.

v. a. In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b. In our opinion according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable with 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 any deposits under the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

viii. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are neither required to nor have we carried out any detailed examination of such accounts and records.

ix. a. According to the information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and any other statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income- tax, sales-tax, wealth tax, service tax, custom duty and excise duty were in arrear as at March 31, 2009 for a period of more than six months from the date they became payable.

c. According to information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty or cess or any other statutory dues which have not been deposited on account of any dispute.

x. The Company has accumulated losses at the end of the financial year. The Company has not incurred cash losses in the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the records of the company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank except the following dues:

IOBI Term Loan

Amount Due Due Date Amount Paid Date of payment

5,000,000 01.04.2008 5,000,000 24.06.2008

4,500,000 31.07.2008 2,000,000 01.08.2008

1,500,000 02.08.2008

1,000,000 23.08.2008

2,000,000 31.08.2008 1,000,000 10.09.2008

500,000 22.09.2008

500,000 06.10.2008

4,345,000 30.09,2008 700,000 31.12.2008

1,000,000 02.02.2009

2,645,000 27.02.2009

IFCI Term Loan

3,407,218 30.09.2008 500,000 04.10.2008

1,000,000 02.12.2008

1,800,000 24.12.2008

107,218 17.02.2009

xii. In our opinion and according to 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.

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 (Auditors Report) Order, 2003 are not applicable to the Company.

xiv. 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 clause 4 (xiv) of the Companies (Auditors 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 bank or financial institutions.

xvi. In our opinion, and according to the information and explanations given to us, term loans have been applied for the purposes for which they were raised.

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 no funds raised on a short-term basis have been used for long-term investment.

xviii. 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 during the year. Accordingly, the provisions of clause 4 (xviii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xxi. To the best of our knowledge and belief and 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 CHATURVEDI & PARTNERS

Chartered Accountants

Place : New Delhi R N CHATURVEDI

Date : July 31, 2009 Partner

Membership No. 092087

---

Mar 31, 2007

1. We have audited the attached Balance Sheet of Bhagawati Gases Limited, as at March 31, 2007, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance 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 the 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 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is drawn to Note 6 of Schedule 18 regarding doubtful advance and security deposits aggregating to Rs. 22,302,981. The management is hopeful of recovering the amount in due course of time and therefore provision there against is not considered necessary. The effects of the above on the accounts are indeterminate. We are unable to express an opinion as to when and to what extent said amount would be recovered.

5. Further to our comments in the Annexure referred to above, 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 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

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 March 31,2007 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31,2007 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f. In our opinion and to the best of our information and according to the explanations given to us, subject to what is stated in para 4 above, 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 March 31,2007,

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

iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

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

b. A major portion of the fixed assets has been physically verified by the management during the year pursuant to a programme for physical verification of fixed assets, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern status of the Company.

ii. a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and the same have been properly dealt with in the books of account.

iii. According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to / from companies firms or other parties covered 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, there exists an adequate internal control system 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 and services. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in internal control system of the Company.

v. a. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable with 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 any deposits under the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

viii. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are neither required to nor have we carried out any detailed examination of such accounts and records.

ix. a. According to the information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales- tax, wealth tax, service tax, custom duty, excise duty, cess and any other statutory dues applicable to it and there are no undisputed amounts payable in respect of these dues which have remained outstanding as at March 31, 2007 for a period of more than six months from the date they became payable.

b. According to information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty or cess or any other statutory dues which have not been deposited on account of any dispute.

x. The Company has accumulated losses at the end of the financial year. The Company has not incurred cash losses in the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the records of the company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank. Company has not issued any debentures.

xii. In our opinion and according to 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.

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 (Auditors Report) Order, 2003 are not applicable to the Company.

xiv. 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 clause 4 (xiv) of the Companies (Auditors 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 bank or financial institutions.

xvi. In our opinion, and according to the information and explanation given to us, term loans have been applied for the purposes for which they were raised.

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 no funds raised on a short-term basis have been used for long-term investment.

xviii. 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 during the year. Accordingly, the provisions of clause 4 (. AW) of the Companies (Auditors Report) Order, 2003 ire not applicable to the Company.

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xxi. To the best of our knowledge and belief and 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.

---

Mar 31, 2006

ANNUAL REPORT 2005-2006

AUDITORS' REPORT

TO, THE MEMBERS BHAGAWATI GASES LIMITED

1. We have audited the attached Balance Sheet of Bhagawati Gases Limited, as at March 31, 2006, the Profit and Loss Account and also the Cash Flow Statement 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 conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance 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 the 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 subsection (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Without qualifying our opinion, we draw attention to note 4 of Schedule 19 to the Financial Statements, the company had won an Arbitration award in respect of an amount aggregating to Rs. 23,083,887 recoverable from HCL. In view of favorable award/ order, amount recoverable is considered good and recoverable.

5. Attention is drawn to Note 5 of Schedule 19 to the Financial Statements. As indicated in the said note, no provision for doubtful advances, other current assets and security deposits aggregating to Rs. 24,002,981 have been considered doubtful of recovery. The management is hopeful of recovering the amount in due course of time and therefore provision there against is not considered necessary. We are unable to express an opinion as to when and to what extent said amount would be recovered.

6. Further to our comments in the Annexure referred to above, 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 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

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 March 31, 2006 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956;

g. In our opinion and to the best of our information and according to the explanations given to us, subject to what is stated in para 5 above, 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 March 31, 2006,

ii. In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

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

For CHATURVEDI & PARTNERS Chartered Accountants

R.N. CHATURVEDI Partner Membership No.: 92087 New Delhi September 1, 2006

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

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

b. A major portion of the fixed assets has been physically verified by the management during the year pursuant to a programme for physical verification of fixed assets, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern status of the Company.

ii. a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and the same have been properly dealt with in the books of account.

iii. According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/from companies firms or other parties covered 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, there exists an adequate internal control system 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 and services. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in internal control system of the Company.

v. a. In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b. In our opinion according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable with 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 any deposits under the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

viii. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are neither required to nor have we carried out any detailed examination of such accounts and records.

ix. a. According to the information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and any other statutory dues applicable to it and there are no undisputed amounts payable in respect of these dues which have remained outstanding as at March 31, 2006 for a period of more than six months from the date they became payable.

b. According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty or cess or any other statutory dues which have not been deposited on account of any dispute.

x. The Company has accumulated losses at the end of the financial year. The Company has not incurred cash losses in the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the records of the company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank as at the Balance Sheet date except repayment of Rs 19.89 Lacs to IIBI due on March 15, 2006. The Company has not issued any debentures.

xii. In our opinion and according to 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.

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 (Auditors' Report) Order, 2003 are not applicable to the Company.

xiv. 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 clause 4 (xiv) of the Companies (Auditors' 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 bank or financial institutions.

xvi. The Company has not raised any term loan during the year. Accordingly, the provisions of clause 4(xvi) of the Companies (Auditors' Report) Order, 2003 are not applicable to the Company.

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 no funds raised on a short-term basis have been used for long-term investment.

xviii. 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 during the year. Accordingly, the provisions of clause 4(xviii) of the Companies (Auditors' Report) Order, 2003 are not applicable to the Company.

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors' Report) Order, 2003 are not applicable to the Company.

xxi. To the best of our knowledge and belief and 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 CHATURVEDI & PARTNERS Chattered Accountants

New Delhi R.N. CHATURVEDI September 1, 2006 Partner Membership No.: 92087

---

Mar 31, 2005

1. We have audited the attached Balance Sheet of Bhagawati Gases Limited (the Company) as at March 31, 2005, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 rnlsstatement. 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. Attention is drawn to Note 8 of Schedule 18. As indicated in the said note; The Companys contract with its customer M/s Hindustan Copper Ltd (HCL) for supply of oxygen had expired on June 26, 2004.The Companys ability to continue its operation and as `going concern depended upon further renewal of the contract. HCL has entered into a new purchase agreement on May 5,2005 valid for a period of seven years. Accordingly, these financial statements have been prepared on the basis of going concern.

4. Attention is drawn to Notes 4 and 5 of Schedule 18. As indicated in the said note, no provision for doubtful debts recoverable from Hindustan Copper Limited (HCL) aggregating to Rs.4,33,54,836/- and claims of HCL aggregating to Rs. 6,18,00,689/- towards non supply of oxygen has been made in the accounts by the company.

5. Attention is drawn to Note 6 of Schedule 18. As indicated in the said note, no provision for doubtful overdue advances, other current assets and security deposits aggregating to Rs.2,89,32,981/- has been made in the accounts by the company.

6. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India, in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Said Order.

7. Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary tor the purposes 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, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, the Profit and Loss Account and the 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 March 31, 2005, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2005 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, subject to Para 3, 4 and 5 above, together with Notes in Schedule 18 thereon, 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 March 31,2005;

(ii) In the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and

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

For Chaturvedi & Partners Chartered Accountants Alok Chaturvedi Partner Membership No 93251 New Delhi July 30, 2005

Annexure to the auditors report

The Annexure referred to in the auditors report to the members of Bhagawati Gases Limited (the Company) for the year ended March 31, 2005.

I. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management during the year. The Company has a phased programme of physical verification of its fixed assets 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 physical verification.

c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern status of the company.

II. a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

III. a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, hence clauses (iii)(b), (iii)(c) and (iii)(d) of the Order are not applicable.

b) The Company has not taken any loans, secured or unsecured from companies, firms or parties covered in the register maintained under section 301 of the Companies Act, 1956, hence clauses iii (e) and iii (f) of the Order are not applicable. Advances taken from company covered in the register as stated above, are prima facie not 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 for the purchase of inventories, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

V. a) In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) In our opinion according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable with regard to the prevailing market prices at the relevant time.

VI. The Company has not accepted any deposits from the public and consequently, the directives issued by the Reserve Bank of India, the provisions of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable. No order against the Company 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. In our opinion the Company has an internal audit system commensurate with its size and the nature of its business.

VIII. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are neither required to nor have we carried out any detailed examination of such accounts and records.

IX. a) According to the information and explanations given to us, and according to the books and records as produced and examined by us, in our opinion, the Company has been generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and any other material statutory dues applicable to it. As informed to us, the Employees State Insurance Act is not applicable to the Company.

b) According to the information and explanations given to us, there are no dues in respect of sales tax, income tax, customs duty, wealth tax, service tax, excise duty, and cess that have not been deposited with the appropriate authorities on account of any dispute.

X. The accumulated losses of the Company as at March 31, 2005 are not more than 50% of its net worth at that date and has not incurred cash losses in the financial year covered by our audit and in the immediately preceding financial year.

XI. In view of settlement approved by the lenders in the previous years and as stated in Note 7 of Schedule 18 and according to the records of the company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank as at the Balance Sheet date. The Company has not issued any debentures.

XII. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clause 4(xii) of the Order is not applicable.

XIII. The Company is not a chit fund or a nidhi/mutual benefit fund or society. Accordingly, clause 4(xiii) of the Order is not applicable.

XIV. According to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the Order is not applicable.

XV. In our opinion and according to the information and explanation given to us, the term and conditions on which the Company has given corporate guarantee for the loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

XVI. The Company has not obtained any term loan during the year. Accordingly, clause (xvi) of the Order is not applicable.

XVII. On the basis of an overall examination of the balance sheet of the Company, In our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for longterm investment.

XVIII. 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 during the year. Accordingly, clause 4(xviii) of the Order is not applicable.

XIX. The Company has not issued any debentures during the year. Accordingly, clause 4(xix) of the Order is not applicable.

XX. The Company has not raised any money by public issues during the year. Accordingly, clause 4(xx) of the Order is not applicable.

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, and according to the information and explanations given to us, no fraud (i.e., intentional material misstatements resulting from fraudulent financial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the year.

For Chaturvedi & Partners Chartered Accountants Alok Chaturvedi Partner Membership No. 93251 Place: New Delhi Date : July 30,2005.

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Mar 31, 2004

1. We have audited the attached Balance Sheet of Bhagawati Gases Limited (the Company) as at March 31, 2004, the Profit and Loss Account and Cash Flow Statement of the Company 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 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. Attention is drawn to Note 8 of Schedule 18. As indicated in the said note, the contract for supply of Oxygen to its Customer (HCL) has expired on June 30, 2004. The Company's ability to continue its operations and as `going concern' dependent upon the further renewal of the Contract by HCL. The Company is pursuing the matter with HCL for renewal of contract. Accordingly these Financial Statements have been prepared on the basis of `going concern'.

4. Attention is drawn to Note 4 and 5 of Schedule 18. As indicated in the said note, no provision for doubtful debts recoverable from Hindustan Copper Limited (HCL) aggregating to Rs. 112,274,676 and claim of HCL aggregating to Rs.61,800,689 towards non supply of oxygen has been made in the accounts by the company

5. Attention is drawn to Note 6 of Schedule 18. As indicated in the said note, no provision for doubtful overdue advances, other current assets and security deposits aggregating to Rs. 29,272,981 has been made in the accounts by the company

6. As required by the Companies (Auditors' Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

7. Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the informations 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 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, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, the Profit and Loss Account and the 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 March 31, 2004, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2004 from being appointed as a Director in terms of Section 274(1)(g) of the Companies Act, 1956;

f) In our opinion and to the best of our informations and according to the explanations given to us, the said financial statements together with notes thereon, give the informations 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 March 31, 2004;

ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date;

iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

For CHATURVEDI & PARTNERS Chartered Accountants

R N Chaturvedi Partner Place : New Delhi Membership No 092087 Date : 20 August 2004

ANNEXURE TO THE AUDITORS' REPORT

THE ANNEXURE REFERRED TO IN THE AUDITORS' REPORT TO THE MEMBERS OF BHAGAWATI GASES LIMITED (THE COMPANY) FOR THE YEAR ENDED MARCH 31, 2004.

I. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management during the year. The Company has a phased programme of physical verification of its fixed assets 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 physical verification.

c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern status of the company.

II. a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

III. The Company has neither granted nor taken any loans, secured or unsecured to or from companies, firms or other parties covered 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, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventories, fixed assets and for the sale of goods. On the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures.

V. a) In our opinion and according to the information and explanations given to us, there are no transactions that need to be entered into the register in pursuance of Section 301 of the Companies Act, 1956.

b) In our opinion and according to the information and explanations given to us, there were no transactions with regard to Sale, Purchase or supply of goods, materials or services exceeding the value of rupees five lacs in respect of any party, during the year, covered by section 301 of the Companies Act, 1956.

VI. The Company has not accepted any deposits from the public and consequently, the directives issued by the Reserve Bank of India, the Provisions of Sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

VII. In our opinion the Company has an internal audit system commensurate with its size and the nature of its business.

VIII. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are neither required to nor have we carried out any detailed examination of such accounts and records.

IX. a) According to the information and explanations given to us, and on the basis of our examination of the books of account, the Company has been regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, Employees State Insurance, income-tax, sales-tax, wealth tax, custom duty, excise duty, cess and any other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed dues payable in respect of income-tax, sales tax, customs duty, wealth tax, excise duty and cess were outstanding as at March 31, 2004 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 in respect of sales tax, income tax, customs duty, wealth tax, excise duty, and cess that have not been deposited with the appropriate authorities on account of any dispute.

X. The accumulated losses of the Company as at March 31, 2004, are not more than fifty percent of its net worth as at that date and has not incurred cash losses in the financial year covered by our audit and the immediately preceding financial year.

XI. In view of the Negotiated Settlement (NS) approved by the lenders in previous year and also in current year as explained in note 7 of schedule"! 8 and according to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to any financial institution or bank as at the Balance Sheet date.

XII. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clause 4(xii) of the order is not applicable.

XIII. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund or a society. Accordingly, clause 4(xiii) of the order is not applicable.

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

XV. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given Corporate guarantee for the loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

XVI. The company has not obtained any fresh term loan during the year. Accordingly, clause 4(xvi) of the order is not applicable.

XVII. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment, and vice versa.

XVIII. 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. Accordingly, clause 4(xviii) of the order is not applicable.

XIX. The Company has not issued any debentures. Accordingly, clause 4(xix) of the order is not applicable.

XX. The Company has not raised any money by public issues during the year. Accordingly, clause 4(xx) of the order is not applicable.

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, and according to the information and explanations given to us, no fraud (i.e., intentional material misstatements resulting from fraudulent financial reporting and misappropriation of assets) on or by the company has been noticed or reported during the year by the Company.

For CHATURVEDI & PARTNERS Chartered Accountants

R N Chaturvedi Place : New Delhi Partner Date : August 20, 2004 Membership No. 092087

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Mar 31, 2003

1. We have audited the attached Balance Sheet of Bhagawati Gases Limited as at March 31,2003,the Profit & Loss Account of the Company for the year ended on that date annexed thereto and cash flow statement 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 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. Ap 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 Manufacturing and Other Companies (Auditors' Report) Order, 1988 issued by the Company Law Board in terms of section 227 (4A) of the Companies Act, 1956 we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order.

4. Attention is invited to Note 4 & 5 of Schedule 19 to the accompanying financial statements regarding non provision ol doubtful debts recoverable from Hindustan Copper Limited (HCL) aggregating to Rs. 11,22,74,676 and claim of HCL aggregating to Rs.6, 18,00,689 towards non supply of oxygen by the company.

5. Attention is invited to Note 6 of Schedule 19 to the accompanying financial statements regarding non-provision ol overdue advances, other current assets and security deposits aggregating to Rs. 29497981 as the Management is confident of recovery.

6. Attention is invited to Note 8 of Schedule 19 to the accompanying financial statements. One of the lender has filed a case for recovery of term loan of Rs 3,00,00,000 andoverdue interest and other charges payable up to March 31, 2003 Rs 7,08,26,259 before the debt recovery tribunal. The company is pursuing the matter with the lender for restructuring ol Dues and hopeful of amicable settlement of dues in line with other lender financial institutions.

7. Attention is invited to Note 9 of Schedule 19 to the accompanying financial statements, The contracts for supplies to a major customer are due to be renewed. The company is pursuing the matter with the customer for renewal of contracts and hopeful of renewal of contracts with the customer. Accordingly these financial statements have been prepared on the basis of' Going concern. '

8. Further to oar comments in the annexure referred to in Para 3 above, We report that:

a) We have obtained all the informations and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) Subject to Para 4, 5 and 6 above, 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 said Balance Sheet, Profit & Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion, Balance Sheet, Profit & 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 March 31, 2003, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2003 from being appointed as a Director in terms of Clause (g) of Sub-section (1) of section 274 of the Companies Act, 1956. As per clarification issued by the Department of Company Affairs, said provisions of section 274(1 )(g) are not applicable to the nominee Directors appointed on the Boards of assisted concerns.

f) In our opinion and to the best of our information and according to the explanations given to us, the Accounts read together with the Notes thereon, and subject to Para 4, 5 and 6 above, with corresponding effect on the loss for the year, year end Asset and Profit & Loss Account also, 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 March 31, 2003 ; and

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF BHAGAWATI GASES LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2003.

1) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. The fixed assets were physically verified by the Management at the end of the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of such verification is reasonable.

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

3) The stock of finished goods, stores, spares and raw materials have been physically verified by the Management during the year at reasonable intervals.

4) In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the Management are reasonable and adequate having regard to the size of the company and nature of its business.

5) The discrepancies noticed on physical verification of stocks as compared to the book records were not material and the same have been property dealt with in the books of account.

6) i In our opinion and according to the information and explanations given to us, the valuation of stocks is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as followed in the previous year.

7) The Company has not taken any loans, secured or unsecured from the Companies, Firms or other parties listed in the Register maintained under section 301 or from the Companies under the same Management as defined under sub- section (1B) of section 370 of the Companies Act, 1956.

8) The Company has not granted any loans, secured or unsecured, to the Companies, firms or other parties listed in the Register maintained under Section 301 or to the Companies under the same Management as defined under sub-section (1 B) of section 370 of the Companies Act, 1956.

9) As explained to us, in respect of loans & advances given by the Company, certain advances have no stipulations and repayable on demand. Where stipulations have been made, the parties are paying the amount as stipulated and also regular in payment of interest where applicable. Interest free loans & advances given to the employees are being recovered as per stipulation wherever made.

10) 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 for the purchase of stores & materials including components, plant and machinery, equipment and other assets and the sale of goods.

11) In our opinion and according to the information and explanations given to us, the purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and aggregating to Rs.50,000/- (Rupees Fifty thousand only) or more in value in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods and materials.

12) As explained to" us, the company has a reasonable system for the determination of unserviceable or damaged stores & materials. There were no unserviceable or damaged stores & materials as at the yearend.

13) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules framed thereunder.

14) As explained to us, Company's operations do not generate any by-product and scrap.

15) A firm of Chartered Accountants carries out internal Audit, which in our opinion is commensurate with the size and the nature of Company's business.

16) As explained to us, necessary cost records have been maintained by Company as prescribed by the Central Govern- meot under Section 209 (1) (d) of the Companies Act, 1956. However, no detailed examination of such records has been carried by us.

17) The Company has been generally regular in depositing Provident Fund dues with the appropriate authorities. As explained to us, the provisions of the Employees State Insurance Act are not applicable to the Company at present.

18) As explained to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Custom Duty, Sales Tax and Excise Duty were outstanding as at March 31, 2003, for a period of more than six months from the date they became payable.

19) According to the information and explanations given to us, no personal expenses have been charged to revenue account other than those payable under contractual obligations or in accordance with generally accepted business practices.

20) Subject to our comments in para 4,5, 6 and 7 of the main report, in our opinion, the Company is not a Sick Industrial Company within the meaning of clause (o) of sub-section (1) of section 3 of the Sick Industrial Companies (Special provisions) Act, 1985.

21) In respect of trading activities of the Company, as explained to us the Company has system for determination of damaged goods.

For CHATURVEDI & PARTNERS Chartered Accountants

Place : New Delhi Dated : August 19 ,2003 R.N. Chaturvedi Partner

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Mar 31, 2002

1. We have audited the attached Balance Sheet of Bhagawati Gases Limited as at March 31, 2002 and the Profit & Loss Account of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted 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 Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of section 227 (4A) of the Companies Act, 1956 we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order.

4. Attention is invited to Note 4 & 5 of Schedule 18 regarding non provision of doubtful debts recoverable from Hindustan Copper Limited (HCL) aggregating to Rs. 11,22,74,676 and claim of HCL aggregating to Rs. 6,18,00,689 towards non supply of oxygen by the company.

5. Attention is invited to Note 6 of Schedule 18, regarding non-provision of overdue advances aggregating to Rs. 2,31,91,252 as the Management is confident of recovery.

6. Attention is invited to Note 12 of Schedule 18, regarding non-provision of diminution of Rs 16,15,000 in the value of long-term quoted investments as in the opinion of the Management such diminution is temporary in nature.

7. Attention is invited to Note 7 of Schedule 18, regarding non-provision of depreciation of Rs 3,85,82,711 in the earlier years and consequential overstatement of reserves and surplus and fixed assets.

8. Further to our comments in the annexure referred to in Para 3 above, We report that:

a) We have obtained all the informations and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) Subject to Para 4, 5,6 and 7 above, 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 said Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

d) In our opinion, Balance Sheet and Profit & 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.

e) On the basis of written representations received from the Directors as on March 31, 2002, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2002 from being appointed as a Director in terms of Clause (g) of Sub-section (1) of section 274 of the Companies Act, 1956. As per clarification issued by the Department of Company Affairs, said provisions of section 274(1)(g) are not applicable to the nominee Directors appointed on the Boards of assisted concerns.

f) In our opinion and to the best of our information and according to the explanations given to us, the Accounts read together with the Notes thereon, and subject to Para 4, 5, 6 and 7 above, with corresponding effect on the loss for the year, year end Asset and Profit & Loss Account also 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 March 31, 2002; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF BHAGAWATI GASES LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2002.

1) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. The fixed assets were physically verified by the Management at the end of the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of such verification is reasonable.

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

3) The stock of finished goods, stores, spares and raw materials have been physically verified by the Management during the year at reasonable intervals.

4) In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the Management are reasonable and adequate having regard to the size of the company and nature of its business.

5) The discrepancies noticed on physical verification of stocks as compared to the book records were not material and the same have been properly dealt with in the books of account.

6) In our opinion and according to the information and explanations given to us, the valuation of stocks is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as followed in the previous year.

7) The Company has not taken any loans, secured or unsecured from the Companies, Firms or other parties listed in the Register maintained under section 301 or from the Companies under the same Management as defined under sub-section (1 B) of section 370 of the Companies Act, 1956.

8) The Company has not granted any loans, secured or unsecured, to the Companies, firms or other parties listed in the Register maintained under Section 301 or to the Companies under the same Management as defined under sub-section (1 B) of section 370 of the Companies Act, 1956.

9) As explained to us in respect of loans & advances given by the Company, certain advances have no stipulations and repayable on demand. Where stipulations have been made, the parties are paying the amount as stipulated and also regular in payment of interest where applicable. Interest free loans & advances given to the employees are being recovered as per stipulation wherever made.

10) 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 for the purchase of stores & materials including components, plant and machinery, equipment and other assets and the sale of goods.

11) In our opinion and according to the information and explanations given to us, the purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and aggregating to Rs. 50,000/- (Rupees Fifty thousand only) or more in value in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods and materials.

12) As explained to us, the company has a reasonable system for the determination of unserviceable or damaged stores & materials. Adequate provision has been made in the accounts for loss arising in respect of items so determined.

13) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules framed thereunder.

14) As Explained to, us companys operations do not generate any by product and scrap.

15) A firm of Chartered Accountants carries out internal Audit, which in our opinion is commensurate with the size and the nature of Companys business.

16) As explained to us, necessary cost records have been maintained by Company as prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956. However, no detailed examination of such records have been carried by us.

17) The Company has been generally regular in depositing Provident Fund dues with the appropriate authorities. As explained to us, the provisions of the Employees State Insurance Act are not applicable to the Company at present.

18) As explained to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Custom Duty, Sales Tax and Excise Duty were outstanding as at March 31, 2002, for a period of more than six months from the date they became payable.

19) According to the information and explanations given to us, no personal expenses have been charged to revenue account other than those payable under contractual obligations or in accordance with generally accepted business practices.

20) Subject to our comments in para 4, 5, 6 and 7 of the main report, in our opinion, the Company is not a Sick Industrial Company within the meaning of clause (o) of sub-section (1) of section 3 of the Sick Industrial Companies (Special provisions) Act, 1985.

21) In respect of trading activities of the Company, as explained to us the Company has system for determination of damaged goods. Necessary provision has been made in the accounts for damaged/obsolete goods.

for CHATURVEDI & PARTNERS Chartered Accountants

Place: New Delhi Date: August 23, 2002 R. N. CHATURVEDI