2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit included examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statements 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 Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the order.

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

a. We have obtained only the available information and explanations to the extent furnished and as is made available to us. In view of the closure of the unit since long and non availability of staff; the availability of information and explanation have got effected to a certain extent and subject to these limitations we could elicit the information to the best of our knowledge and Ss&es&which were necessary for the purpose of our audit.

b. In our opinion, proper books of accounts as required by Law "Prima-facie" appear to have been kept; by the company; so far as appears from our examination of those books. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

c. In our opinion proper, books of accounts as required by law have been kept by the company so far as appears from our examination of the books.

d. The Balance Sheet and the Profit & Loss account dealt with by the report are in agreement with the books of account.

e. On the basis of written representation received from the Directors and taken on record by the Board of Directors, we report that none of the Director is disqualified as on March 31st, 2012 from being appointed as a Director under clause (g) of sub-section (1) of section 274 of the companies Act, 1956.

f. The company is not having manufacturing activity since 2001. Hence this ! matter shows the impact / effect on the "Going Concern Concept". I

g. In view of examination of books of accounts the company has not provided the interest on secured loans. And thus not followed the "accrual concepts".

h. The loan outstanding to KSIIDC, Bangalore, NHB, Bangalore are secured against the assets of the company and the same are under the possession of the KSIIDC, Bangalore.

ANNEXURE TO AUDITORS' REPORT

1. According to the information and explanation given to us the assets of the company are under the possession of the KSIIDC, Bangalore. Since the assets are secured against the Loans with KSIIDC.

2. As explained to us, there are no stocks of Goods, stores, spare parts and materials as physically verified and certified by the management.

3. a. The Company has not taken any loans, secured or unsecured, from companies, firms, or other parties listed in the register maintained under Section 301 of the Companies Act, 1956, or from Company under the same management within the meaning of Section 370 (IB) of the Companies Act, 1956, where the rate of interest and other terms and conditions are, in our opinion, prima facie prejudicial to the interests of the Company except that on amount of Rs. 214.83 lacs has been taken as unsecured loans from companies in which Directors are interested and from others.

b. The company has not granted any loans, secured or unsecured, to companies, firms, or other parties listed in the register maintained under section 301 of the Companies Act, 1956, or to company under the same management within the meaning of Section 370 (IB) of the Companies Act, 1956, where the rate of interest and other terms and conditions are, in our opinion, prima facie prejudicial to the interests of the Company.

c. The company has not granted any advances in the nature of loans.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regards to purchases of stores, raw materials including components, plant and machinery, equipment and other assets and with regard to sale of goods.

5. The Company need not to be entered into a register in pursuance of Section 301 of the Act. Since no transaction exceeding the value of Rs. 5, 00,000/- (Rupees five only) as such it is not applicable.

6. According to the information and explanations given to us, the Company has not accepted any deposits as define under Section 58 A of the Companies Act, 1956 and the rules framed there under during the period under review.

7. The company is having a paid-up capital exceeding Rs. 50 lacs as at the commencement of the financial year concerned and has no Internal Audit System commensurate with its size and nature of business.

8. According to the information explanation given to us maintenance of cost records has not been prescribed by the Central Government under section 209 (1) of the Companies Act, 1956, for any of activities of the Company.

9. a. According to the information and explanations given to us Provisions of the Provident Fund Act and Employees State Insurance Act are not applicable to the company.

b. According to the information and explanations given to us, and the records of the company examined by us there are no undisputed amounts payable in respect of Wealth-Tax, sales tax, customs duty and excise duty which have remained outstanding, as at 31st March, 2013, for a period of more than six months from the date they became payable except the amounts of TDS of Rs. 25,100/-.

10. The company has been registered for a period of not less than 5 years and its accumulated losses at the end of the financial year is more than 50% of the net worth.

Thecompany is 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 and the same has not been reported to the BOARD FOR INDUSTRIAL RECONSTRUCTION by the Directors of the Company.

11. The company has defaulted in repayment of dues to a financial institution or bank as such it is not applicable.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the financial year llgnce this point is not applicable.

13. According to the information and explanations given to us, and records of the company examined by us, the company has not given any guarantee for loans taken by others from bank and other financial institutions hence this point is not applicable.

14. According to the information and explanations given to us, and records of the company examined by us the loans were applied for the purpose for which the loans were obtained.

15. According to the information and explanations obtained and records examined by us. The company has not raised any short term fund during the financial year. Accordingly there is no question of long term investments it is not applicable.

16. As per the information and explanations obtained and records examined by us. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act hence this point is not applicable.

17. As per the information and explanations obtained and records examined by us. The company has not issued any debentures during the financial year it is not applicable.

18. As per the information and explanations obtained and records examined by us. Since the company has not offered any public issue. Accordingly the Management has not provided any disclosure on end use of money hence this point is not applicable.

19. As per the information and explanations obtained and records examined by us. No fraud has been committed during the financial year it is not ap&ijsak&te^

                                      By Order of the Board  

                                      For Asian Flora Limited,

Place: Hyderabad                      M.Sambasiva Rao

Date: 25.06.2013                      Director