STI PRODUCTS INDIA LIMITED ANNUAL REPORT 2010-2011 AUDITORS' REPORT TO, THE MEMBERS OF, STI PRODUCTS INDIA LIMITED, BANGALORE We have audited the attached Balance Sheet of STI Products India Limited, Bangalore, as at 31st March 2011, the Profit and Loss Account and the Cash Flow statement for the year ended on that dale, 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. 1. 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 tie 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. 2. 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. 3. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; ii. In our opinion proper books of account as required by law have been kept the Company so far as appears from our examination of those books; iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts; iv. 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 subject to non provision of interest of Rs.30,099,071/- to banks and on unsecured loans. The loss for the year would have been higher at Rs.30,92,275/- (Refer Note No.2 of Schedule 9). v. On the basis or written representations received from the directors, as on 31st March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956. vi. In our opinion and to the best of our information and according to the explanations given to us The said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011. b) In the case of the Profit and Loss Account, of the loss for the year ended on that date; and c) In the case of the Cash How Statement, of the Cash Flows for the year ended on that date. For G R S R A & CO., CHARTERED ACCOUNTANTS Firm Regn. No.012240S S. GOVINDA RAO Place: Bangalore Partner Date : 30.06.2011. Membership No.20546 ANNEXURE TO THE AUDITORS' REPORT (Referred in Paragraph 3 of our report of even date to the members of STI Products India Limited) 1. There are no Fixed Assets in the company as at 31st March, 2011. 2. As there is no inventory no physical verification has been conducted by the management during the year. 3. The company has neither granted nor taken any loans, secured or unsecured during the year to/from companies, firms or other parties in which directors of the company are interested. 4. The Company has not purchased any inventory nor sold any goods during the year. 5. As per the information for and records, there are no transaction that need to he entered in the register in pursuance of section 301 of the Companies Act, 1956. 6. The Company has not accepted any deposit from the public during the year. 7. There is no internal audit system during the year. 8. As informed to us, the Central Government has proscribed the maintenance of case records under section 209(1)(d) of the Companies Act, 1956, in respect of the activities of the company. Their have been no production activities during the year. 9. The company has no employees and as such not deducted Provident fund and Employees State Insurance which are to he deposited. 10. As per records and explanations given to us there are no dues of sales Tax, Income Tax, Customs duty. The which have not been deposited on account of any dispute. 11. According to the records the accumulated losses at the end of the financial year is more than fifty percent of its net-worth. The Company has incurred cash losses in the financial year and also in the immediately preceding financial year. 12. The Company has defaulted on repayment of dues to financial institutions and banks. The amount not repaid is Rs. 5,07,39,927/-. 13. The Company has not granted any loans and advances to any parties on the basis of security by way of pledge of shares, debentures and other securities. 14. 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. 15. The company is not dealing or trading in shares, securities, debentures and other investments. 16. As per the records and explanations given to us, the company has not given any guarantee for loans taken by others from any financial institutions or banks. 17. As per the records and explanations given to us, the company has not taken any term loans during the year. 18. The funds raised on short term basis have not been used for long term investment and vice versa during the year. 19. As per the records the company has not made any preferential allotment of shares during the year. 20. As per the records the company has not issued debentures during the year. 21. The company has not raised any money from public issues during the year. 22. Based upon the audit procedures performed and information and explanations given by the management. We report that no fraud on or by the company has been noticed or reported during the course of our audit. For G R S R A & CO., CHARTERED ACCOUNTANTS Firm Regn. No.012240S S. GOVINDA RAO Place: Bangalore Partner Date : 30.06.2011. Membership No.20546