AUDIT COMMITTEE

a) Audit Committee

The Audit Committee is constituted in accordance with the provisions of Clause 49 (II) of the Listing Agreement and Section 292A of the Companies Act, 1956. The Audit Committee inter-alia keeps checks on the adequacy of internal control systems, financial disclosures and statutory compliances. It is empowered to investigate any activity within its terms of reference, to seek information from any employee, to obtain outside legal or other professional advice.

Composition: The Audit Committee comprises of three Non-Executive Directors, and two-thirds of them are Independent. The Members of the Committee are financially literate and have accounting and financial management expertise. Mr. Mukul Desai, Chairman of Audit Committee, is in practice as a Chartered Accountant since 1982 and has varied experience in the field of audit and taxation. He has developed expertise in corporate law matters, direct and indirect taxation laws, corporate finance structuring, among others. The Chief Financial Officer (CFO), representatives of the Statutory Auditors and Internal Auditors of the Company remain present at the Meeting.

The Company Secretary acts as Secretary to the Committee Meetings.

The Members of the Audit Committee are as follows:

Objective: The Audit Committee assists the Board in its responsibility for overseeing the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with the legal and regulatory requirements. The Committee’s purpose is to oversee the accounting and financial reporting process of the Company, the audits of the Company’s financial statements, the appointment, independence, performance and remuneration of the Statutory and Internal Auditors.

Meetings: During the financial year 2010-2011, the Audit Committee met four times on May 10, 2010; August 14, 2010; October 29, 2010 and February 14, 2011. The maximum time gap between two meetings did not exceed a period of four months. The quorum of the Audit Committee meeting is two independent Members. Requisite quorum was present at all the Committee meetings held during the year. The attendance of Members at the Audit Committee meetings held during the year is given in the table under Para II (C) above.

Terms of Reference :

The terms of reference of the Audit Committee covers the following:

i. Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

ii. Recommending to the Board, the appointment, re-appointment, and, if required, the replacement or removal of the Statutory Auditors and the fixation of audit fees.

iii. Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors.

iv. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:

• Matters required to be included in the Director's Responsibility Statement forming part of the Board's Report in terms of Clause (2AA) of Section 217 of the Companies Act, 1956;
• Changes, if any, in accounting policies and practices and reasons for the same;
• Major accounting entries involving estimates based on the exercise of judgment by the management;
• Significant adjustments made in the financial statements arising out of audit findings;
• Compliance with listing and other legal requirements relating to financial statements;
• Disclosure of any related party transactions;
• Qualifications in the draft audit report.

v. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.

vi. Reviewing with the management the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.) the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

vii. Reviewing, with the management, performance of Statutory and Internal Auditors, and adequacy of the internal control systems.

viii. Reviewing the adequacy of the internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

ix. Discussion with Internal Auditors, any significant findings and follow up thereon.

x. Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

xi. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

xii. Approval of appointment of CFO after assessing the qualifications, experience and background, etc. of the candidate.

xiii. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

xiv. Discussions with the Statutory Auditors before the audit commences about the nature and scope of audit as well as post audit discussions to ascertain any areas of concern.

xv.To review the functioning of the Whistle Blower Mechanism, in case the same is existing.

The Audit Committee reviews all the matters, prescribed under Clause 49 (II) (E), for mandatory review.