Auditor Report of Crest Animation Studios Ltd.

Mar 31, 2012

1. We have audited the attached Balance Sheet of Crest Animation Studios Limited ('the Company') as at 31 March 2012 and the Statement of profit and loss account and 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 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 Companies (Auditor's Report) Order, 2003 (as amended) 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. As discussed in Note 23 of the accompanying financial statements, at 31 March 2012, the Company has not accrued for interest of Rs 751.78 lacs for the year ended 31 March 2012 on a secured loan as the Company intends to litigate the applicability of interest given the recoverability of the advance referred in paragraph 5 below is uncertain. Had the Company recorded the said interest, the loss for the year ended 31 March 2012 would have been higher by Rs 751.78 lacs and the current liabilities as at 31 March 2012 would have been higher by Rs 751.78 lacs.

5. As indicated in Note 23 of the accompanying financial statements, at 31 March 2012, loans and advances include Rs 3,169.3 lacs (recorded in the Company's books of account pursuant to scheme of arrangement effective from 26 July 2011) due from a company against which the Company intends to initiate legal action to recover the advance. The ultimate outcome of the recoverability of the advance cannot presently be determined and hence, we are unable to comment on its consequential impact, if any, on the Company's loss for the year ended 31 March 2012. The audit report for the year ended 31 March 2011 and was also modified for this matter.

6. As indicated in Note 24 of the accompanying financial statements, the recoverability of the following assets is impacted due to uncertainty relating to the financial condition of the Company, as further investments are required to complete the projects of these investee companies:

a. Investment of Rs 744.6 lacs in an animation production company executing an animation film project, debtor of Rs 723.3 lacs, unbilled revenue of Rs. 1,562.9 lacs due from this company and inventory of Rs 408.3 lacs relating to this film.

b. Investment of Rs 1400.16 lacs in a subsidiary company, carried in the books of the Company based on the carrying value of net assets of this subsidiary as at 31 March 2012. As per the audited financial statements of this subsidiary as at 31 March 2012, the net assets includes receivable of Rs 1,114.22 lacs due from the above mentioned animation production company.

We are unable to comment on the extent of non- recoverability of these balances and their consequential impact, if any, on the Company's loss for the year ended 31 March 2012. The audit report for the year ended 31 March 2011 was also modified for the matter discussed in paragraph 6a above.

7. Without qualifying our opinion we state that, as at 31 March 2012, the Company has long-term investments of Rs 71 lacs in a joint venture company which is having film properties under development for more than 3 years. For the reasons stated in Note 25, pending the final outcome of the decision to be taken by the joint venture partner on the development of the film properties held by the investee, management is of the view there is no diminution in the value of this long term- investment. The ultimate outcome of the above mentioned matter cannot presently be determined, and no provision has been made in the financial statements for diminution in this investment.

8. Without qualifying our opinion, we draw attention to Note 26 in the accompanying financial statements. Without considering the effects / possible effects of the matters stated in paragraph 4, 5, and 6 above, the Company has incurred a net loss of Rs 2055.92 lacs for the year ended 31 March 2012 while the accumulated losses aggregate to Rs 3065.07 lacs. The Company is funding its operations from short term borrowings and has renewed its bank borrowings. These conditions, along with other matters as set forth in Note 26, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern The appropriateness of going concern assumption is dependent on the Company's ability in raising of funds from the liquidation of shares held by the CAS Benefit Trust ("treasury stock"), renewal of its loan obligations on their due date, continuing its business operation and establishing profitable operations,. These mitigating factors have been fully disclosed in the Note 26 of the accompanying financial statements in view of which the accompanying financial statements have been prepared on going concern assumption.

9. 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 purposes of our audit;

ii. 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, except for matter disclosed in paragraph 4 above;

iii. The balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, statement of profit and loss 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, except for matters disclosed in paragraphs 4 to 6 above;

v. On the basis of the written representations received from the directors, as on 31 March 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2012 from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter referred to in paragraph 4, and the possible effects of the matters referred to in paragraph 5 and 6 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;

a) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2012;

b) in the case of the Statement of profit and loss, of the loss for the year ended on that date; and

c) 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 Re : Crest Animation Studio Ltd. ('the Company')

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) The Company's inventory includes work-in-progress related to ongoing animation projects. Considering the Company's nature of business, we are of the opinion that the provisions of clause 4(ii) (b) and (c) of the Companies (Auditor's Report) Order, 2003 (as amended) ('the Order') are not applicable to the Company.

(iii) (a) According to the information and explanations given to us, 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 ('the Act'). Accordingly, the provisions of clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

(b) The Company has taken unsecured loan from two parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding at any time during the year in respect of said loan and the year-end balance is Rs 33,525,000.

(c) In our opinion and according to the information and explanation given to us, terms of interest, where applicable and other terms and conditions are not prejudicial to the interest of the company.

(d) In respect of loan taken by the Company, the payments of interest, where applicable, are payable on demand, the principal amounts are repayable on demand and therefore the question of overdue amount doesn't arise.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. The Company does not purchase any inventory or sell goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) The Company has not accepted any deposits from the public.

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

(viii)To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the products of the Company.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it except for withholding tax which has not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases. The provisions relating to excise duty and sales tax are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, 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 of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

(x) Without considering the consequential effects, if any, of the matters stated in paragraphs 5 and 6 of our auditors' report and after considering the effect of the matter stated in paragraph 4, the Company's accumulated losses at the end of the financial year are less than fifty per cent of its net worth but it has incurred cash losses in the current financial year. The Company did not incur cash loss in the immediately preceding financial year.

(xi) In respect of dues to the two banks the defaults as 31 March 2012 is as follows;

Particulars Amount in Rs. Period of Default as at 31.3.2012

Principal 82,028,693 1 day

Interest 3,906,383 Ranging from 1 day to 60 days

Since then the default in respect of Principal amount of Rs. 80,000,000/- of a term loan from one bank, have been made good as the bank has rescheduled it's repayment schedule and outstanding interest of Rs. 3,906,383/- on said loan have since then been paid.

The Company has not issued any debentures and hence the question of any default for repayment on this account does not arise

(xii) According to the information and explanations given to us and based on the documents and records produced 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 (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) 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) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(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 short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by the public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud by the Company has been noticed or reported during the year.

For S.R. BATLIBOI & ASSOCIATES For CHATURVEDI & SHAH

Firm Registration no. 101049W Firm Registration no. 101720W

Chartered Accountants Chartered Accountants

Sd/- Sd/-

per Govind Ahuja Amit Chaturvedi

Partner Partner

Membership No.: 48966 Membership No.: 103141

Mumbai : 21 August 2012 Mumbai : 21 August 2012

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of Crest Animation Studios Limited ('the Company') as at March 31, 2011 and also the Profit and Loss account and 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 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 Companies (Auditor's Report) Order, 2003 (as amended) 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. As discussed in Note 7 to Schedule R to the accompanying financial statements, at March 31, 2011, investments include Rs. 74,464,890 in a company executing an animation film project, which has been suspended during March 2011 due to financial difficulty. The Company also has a debtor balance of Rs. 49,721,139 outstanding for more than 6 months and unbilled revenue includes Rs. 156,705,289 from this company as at March 31, 2011. The ultimate outcome of the recoverability of the investment and the receivable balances cannot presently be determined and we are unable to comment on the extent of non-recoverability of these balances and their consequent impact, if any, on the Company's loss for the year ended March 31, 2011.

5. As discussed in Note 6 to Schedule R to the accompanying financial statements, at March 31, 2011, loans and advances include Rs 276,437,500 provided to a company against which the Company is in the process of initiating legal action to recover the advances. The ultimate outcome of the recoverability of the advance cannot presently be determined and we are unable to comment on the extent of non-recoverability of this balance and their consequent impact, if any, on the Company's loss for the year ended March 31, 2011.

6. 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 purposes of our audit;

ii. 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;

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

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;

v. On the basis of the 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;

vi. In our opinion and to the best of our information and according to the explanations given to us, subject to the effect of the matters discussed in paragraph 4 and 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;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 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 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 Re : Crest Animation Studios Ltd. ('the Company')

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) The Company's inventory includes work-in-progress related to ongoing animation projects. Considering the Company's nature of business, we are of the opinion that the provisions of clause 4(ii) (b) and (c) of the Companies (Auditor's Report) Order, 2003 (as amended) ('the Order') are not applicable to the Company.

(iii) (a) According to the information and explanations given to us, 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 ('the Act'). Accordingly, the provisions of clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

(b) The Company has taken unsecured loan from one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding at any time during the year in respect of this party is Rs. 15,000,000 and the year-end balance of loans taken from such party was Rs. NIL.

(c) In our opinion and according to the information and explanation given to us, the said loan is interest free and other conditions are not prejudicial to the interest of the company.

(d) In respect of loan taken by the Company, the principal amounts are repayable on demand and therefore the question of overdue amount doesn't arise.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. The Company does not purchase any inventory or sell goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

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

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the products of the Company.

(ix) (a) The Company is 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, service tax, customs duty, cess and other material statutory dues applicable to it. The provisions relating to excise duty are not applicable to the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Act, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales- tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, 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 of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

(x) The Company's accumulated losses at the end of the financial year are less than fifty per cent of its net worth and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced 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 Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order 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) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(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 short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by the public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that except for one instance of a default by a co-financier for a film project explained in Note 6 to Schedule R to the financial statements, no fraud on or by the Company has been noticed or reported during the year. The Company is in the process of initiating legal action against the co-financier for the recovery of Rs. 276,437,500 referred to in paragraph 5 of the audit report.

For S.R. BATLIBOI & ASSOCIATES For CHATURVEDI & SHAH

Firm Registration no. 101049W Firm Registration no. 101720W

Chartered Accountants Chartered Accountants

Sd/- Sd/- per Govind Ahuja Amit Chaturvedi

Partner Partner

Membership No.: 48966 Membership No.: 103141

Mumbai Mumbai

August 29, 2011 August 29, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Crest Animation Studios Limited (‘the Company) as at March 31, 2010 and also the Profit and Loss account and 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 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 Companies (Auditors Report) Order, 2003 (as amended) 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. Without qualifying our opinion we state that, as at March 31, 2010, the Company has receivables of Rs. 81.54 million, long-term investments of Rs 558.22 million in and advances aggregating Rs 127.65 million due from subsidiary companies. The combined loss and accumulated losses of these subsidiaries and the step- down subsidiaries and their joint ventures, attributable to the Company, as per their audited financial statements for the year ended March 31, 2010, is Rs 36.90 million (Previous Year Rs 71.97 million) and Rs 471.26 million (Previous Year Rs 387.04 million) respectively. For the reasons stated in Note 5 to Schedule Q, management is of the view there is no diminution, other than temporary, in the value of these long term-investments and the advances, receivables and inventories are fully recoverable therefore no provision is considered necessary. The ultimate outcome of the above mentioned matter cannot presently be determined, and no provision has been made in the financial statements for diminution in the investments or recoverability of advances, receivables and inventory.

5. 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 purposes of our audit.

ii. 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.

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account.

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.

v. On the basis of the 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.

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 March 31, 2010;

b) in the case of the profit and loss account, of the profit for the year ended on that date; and

c) 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 Re: Crest Animation Studios Ltd (‘the Company)

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) The Companys inventory includes work-in-progress related to ongoing animation projects. Considering the Companys nature of business, we are of the opinion that the provisions of clause 4(ii) (a), (b) and (c) of the Companies (Auditors Report) Order, 2003 (as amended) (‘CARO) are not applicable to the Company.

(iii) (a) As informed, 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 (‘the Act). Accordingly, the provisions of clause 4(iii) (b), (c) and (d) of CARO are not applicable to the Company.

(b) As informed, 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 Act. Accordingly, the provisions of clause 4(iii) (f) and (g) of CARO are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. The Company does not purchase any inventory or sell goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that there are no particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 of the Act.

(b) In view of the observation above, the provisions of clause 4(v) (b) of CARO are not applicable to the Company.

(vi) The Company has not accepted any deposits from the public.

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

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the products of the Company.

(ix) (a) The Company is 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, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

Further, since the Central Governent has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of Nature Amount Period to Forum where

the Statute of dues (in Rs. which the the dispute is million.) amount pending

relates

Income Tax Income tax 6.83 Assessment Commissioner Act, 1961 and related year 2007-08 of Income

interest Tax (Appeals)

Income Tax Penalty 3.91 Assessment Commissioner Act, 1961 year 2003-04 of Income

Tax (Appeals)

(x) The Companys accumulated losses at the end of the financial year are less than fifty per cent of its net worth and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of

the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced 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 CARO are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of CARO 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) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(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 short- term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by the public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the 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 S.R. BATLIBOI & ASSOCIATES For CHATURVEDI & SHAH Firm Registration no. 101049W Firm Registration no. 101720W Chartered Accountants Chartered Accountants

Sd/- Sd/- per Govind Ahuja Amit Chaturvedi

Partner Partner Membership No.: 48966 Membership No.: 103141 Mumbai, August 09, 2010

Mumbai, August 09, 2010