ANNEXURE TO AUDITORS REPORT Annexure referred in paragraph 3 of the Auditors Report to the members of M/S.

INCOM CABLES PRIVATE LIMITED, NEW DELHI. on the Account for the period ended 31st March 2008. (i) (a) (b) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed Assets. The fixed Assets of the company have been physically verified by the management at reasonable interval. No material discrepancies between books of accounts and physical inventory have been noticed in respect of assets physically verified; Since there is no substantial disposal of fixed assets during the year, the preparation of financial statements on a going concern basis is not affected on this account. The physical verification of inventory of finished goods, stores, spare has been conducted at reasonable intervals by the management. (b) The procedure of physical verification of inventory followed by the management are reasonable and adequate I relation to the size of the company and the nature of its business. On the basis of our examination of the records of the inventory, we are of the opinion that the company is maintaining proper records of inventory and no material discrepancies have been noticed on physical verification of stocks and book records.

(c) (ii) (a)

(iii)

The Company has granted advance against job work charges amounting to Rs.1768645.03 (Pr. Yr. Rs.299939.03) to parties covered in the register maintained under Section 301 of the Companies Act,1956. (b) As regards rate of interest and other terms and conditions of advances, we are informed that there is no stipulation, hence we are unable to comment where same are prima facie prejudicial to the interest of the company or not. (c) As regard repayment of principal and interest, we are informed that there is no stipulation regarding repayment of principal and interest. (d) This clause is not applicable in case of the company. (e) The Company has taken unsecured loans parties covered in the register maintained under Section 301 of the Companies Act,1956 amounting to Rs.1286575.31 (P.Y. Rs. 1842940.00). (f) According to information and explanation provided to us, there is no stipulation in regards to payment of interest and other terms and conditions for unsecured loan, hence we are unable to comment whether the rate of interest and other terms and conditions of loan taken by the company are prima facie prejudicial to the interest of the company or not. (g) According to information and explanation provided to us, there is no stipulation in regards to payment of interest and repayment of principal amount. In our opinion and according to the information and explanations given to us, the internal control procedure are fairly adequate and commensurate with the size of the company and nature of its business regarding purchases of inventory and fixed assets and sale of goods. During the course of our audit no major weakness has been noticed in internal control.

(a)

(iv)

(v)

(a)

According to the information and explanations given to us, there are no contracts or arrangements during the period that need to be entered in the register required to be maintained in pursuance of Section 301 of the Companies Act,1956. Contd2

(b)

In our opinion and according to the information and explanations given to us, there are no transactions exceeding the value of Rs. Five lac each which have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from the public within the provisions of the Sections 58A and 58AA or any other relevant provisions of the Companies Act,1956 and the Companies(Acceptance of Deposits) Rules,1975. The company does not have any internal audit system. The clause is not applicable.

(vi)

(vii)

(viii)
(ix)

a)

b)

According to the information and explanations given to us, the company has been generally regular in depositing undisputed statutory dues including Income Tax, Provident Fund, ESI and other statutory dues with the appropriate authorities during the year. There are no arrear of undisputed statutory dues as on 31-03-2008 outstanding for a period of more than six months on which they became payable. According to the information and explanations given to us and mentioned in Point No. 2(i) of Notes to Accounts in Schedule No. 24, there are amounts of U P Trade Tax ( Central) which have not been deposited on account of dispute as listed below: Nature of Statue Nature of Dues Demand Amount Rs. 11118156/Forum where dispute is pending Allahabad High Court.

UP Trade Tax (Central)

(x) (xi)

This clause is not applicable.

According to information and explanations given to us and as per our verification of records of the company, the Company has not defaulted in repayment of dues to financial institutions or banks during the year. (xii) The Company has not granted loans and advances on the basis of security by way of pledges of shares, debentures and other securities. (xiii)
(xiv)

The Company does not carry business of Chit Funds.

In our opinion and according to information and explanations given to us, proper records have been maintained by the company in respect of transactions and contracts of details of trading in shares, securities, debentures and other investments and timely entries have been made therein. The shares, securities and other investments have been held by the company in its own name except to the extent exemption granted under section 49 of the Companies Act, 1956. . (xv) According to the information and explanation given to us, the company has not given any guarantee for loans taken by others from bank or financial institution.

(xvi) According to the information and explanation given to us, the term loans taken during the period have been applied for the purposes for which they were obtained. Contd. ..3

(xvii) According to the information and explanations given to us and examination of records of the company, we report that no short term loans have been used for long-term investments. (xviii) During the period under Audit, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act,1956..
(xix)

No debentures have been issued during the year. The company has not raised money by Public Issue. given to us, no fraud on or by the

(xx)
(xx)

According to information and explanations company has been noticed or reported during the year.

For S. CHATURVEDI & ASSOCIATES CHARTERED ACCOUNTANTS (PUNEET SACHDEV) PARTNER M.NO. 097897

PLACE : NEW DELHI. DATE :

SCHEDULE 24

INCOM CABLES PRIVATE LIMITED

SIGNIFICANT ACCOUNTING POLICES AND NOTES FORMING PART OF ACCOUNTS 1. SIGNIFICANT ACCOUNTING POLICIES A) Basis of Preparation of Financial Statement a) The Financial statements have been prepared under the historical cost conventions, In accordance with the generally Accepted Accounting policies, principles and the provisions of The Companies Act, 1956 as adopted consistently by the company. b) Accounting Policies not specifically referred to otherwise are consistent in generally Accepted Accounting Principles followed by the company. B) Basis of Accounting All incomes and expenditure are recognised on accrual basis. C) Fixed Assets Fixed Assets are stated at cost of acquisition inclusive of all incidental expenses related thereto. D) Depreciation Depreciation on all the fixed assets of the company has been provided on Straight Line Method at the rates prescribed in schedule XIV of The Companies Act, 1956. E) Inventory Valuation a) Inventories are valued at lower of cost and net realizable value. b) Cost of purchases consists of the purchase price, including applicable duties and taxes, freight in wards and other expenditures attributable to the acquisition, less trade discounts and rebates and include other costs incurred in bringing the inventories to their present location and condition. F) Revenue Recognition Sales revenue is recognized on dispatch of goods, net of trade discount and Sales Tax but includes the Excise Duty. G) Investment All investments are stated at cost. H) Provision for Taxation The provision for taxation is made on the basis of the provisions of the Income Tax Act, 1961. I) Deferred Tax Assets The deferred tax has been provided for all timing differences as required under provisions of Accounting Standard -22 , issued by the Institute of Chartered Accountants of India. J) Insurance Claim Insurance claims are accounted for in the year of lodgement to the extent they are measurable, any shortfall/excess is adjusted on receipt of final claim.

K) Contingent Liabilities Contingent Liabilities are not provided for in the accounts and has been disclosed in Notes to Accounts.

2. i)

NOTES TO ACCOUNTS Contingent Liabilities 1. The Uttar Pradesh Trade Tax Department has raised a demand of Rs. 1,11,18,156/- in the assessment order for assessment year 2005-2006. The company has filed a writ in Allahabad High Court for annulment/ injunction of the said assessment order. However, the management has intimated that this is an arbitrary demand and may not sustain before the Court. 2. Bank Guarantee issued by the Bank 31.03.2008 31.03.2007 in favour of different parties for Rs. Rs. which the Company has stood as a 30,00,000.00 1.40,000.00 Counter Guarantor Previous year figures have been rearranged/regrouped where necessary. In the opinion of the Board of Directors the Current Assets, Loans and Advances are the value as stated if realized in the ordinary course of business. No provision for gratuity and leave encashment have been made, the liability for the same as at the date of Balance Sheet has been worked out at Rs. 10,17,804.81 ( P. Y. Rs. 8,25,838.85) and Rs. 2,59,768.40 ( P.Y. Rs. 1,59,979.69) respectively. Debit/Credit Balances of the Parties are subject to confirmations. Payment to Directors 31.03.2008 Rs. 59,80,000.00 1,08,000.00 60,88,000.00 31.03.2007 Rs. 10,80,000.00 1,08,000.00 11,88,000.00

ii) iii iv) v) vi)

Remuneration Rent for premises

vii)

Professional Charges has been paid to Auditor as follows : 31.03.2008 Rs. a) Audit Fees 33,708.00 b) Tax Audit Fees 11,236.00 b) Income Tax Matters 22,47200 67,416.00

31.03.2007 Rs. 33,708.00 11,236.00 22,472.00 67,416.00

viii) Additional Information under Part II of schedule VI of the Companies Act, 1956. Current Year Previous Year 31.03.2008 31.03.2007 Raw Material Opening Stock NIL NIL Purchases 4448554.89 Kgs 1764023.546 Kgs Consumed 4448554.89 Kgs 1764023.546 Kgs Closing Stock NIL NIL Finished Goods Opening Stock 5038 Mts 59586 Mts

Production Sales Closing Stock

2912975 Mts 2904702 Mts 13311 Mts

1093883 Mts 1148431 Mts 5038 Mts

Scrap Opening Stock Production Sales Closing Stock

14496 Kgs 21420 Kgs NIL 35916 Kgs

6525 Kgs 7971 Kgs NIL 14496 Kgs

W.I.P. ( in lot) Imported Material Raw Material ( inclusive of Excise Duty and Custom Duty)

Rs.5,33,81,097/-

Rs. 3,94,52,052/-

Rs. 4,40,89,666/-

Rs. 3,05,40,090/-

ix) No amortization has been charged to accounts in respect of factory land on lease hold basis. x) The break up of deferred ax liability is given below: Description of timing difference As on 31-03-2007 ( Amount in Rs.) Reversal As on 31-03-2008 During the year 2,11,436/17,47,847/-

Book depreciation and tax depreciation 19,59,283/vii)

Schedule 1 to 24 form an integral part of the Balance Sheet and Profit and loss Accounts. viii) Balance Sheet Absract and Companys General Business Profile as per Part IV of Schedule VI of the Companies Act, 1956 is enclosed as appendix As per our Report of even date annexed. FOR S. CHATURVEDI & ASSOCIATES CHARTERED ACCOUNTANTS (PUNEET SACHDEV) PARTNER M. No. 097897

(DIRECTOR) PLACE : NEW DELHI. DATED :

(DIRECTOR)