Auditor Report of Deccan Chronicle Holdings Ltd.

Sep 30, 2012

1. We have audited the attached Balance Sheet of DECCAN CHRONICLE HOLDINGS LIMITED ("the Company") as at 30th September, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the period 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 in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) 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;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this report subject to para no 4(f) below are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors as on 30lh September 2012 and taken on record by the Board of Directors, (except for the directors resigned from the Board after 30th September, 2012), we report that none of the directors is disqualified as on 30th September 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) We invite the attention of the members to the following material matters:

(Note Nos. referred hereunder are with reference to respective Notes forming part of the financial statements)

i) With regard to the preparation of financial statements on going concern:

In view of the dispute on cancellation of franchise by the Board of Control for Cricket in India (BCCI)for the Indian Premier League as stated in Note No. 27.12, Scaling down of operation of Odyssey outlets as stated in Note.27.13 some of the lenders and creditors filing a petition for Winding Up of the Company as stated in Note No.27.14, pending adjustment of Intangible Asset under Development-Brand and Capital Work in Progress -Advance for purchase of property as stated in Note No. 27.15 and 27.16 and other related factors indicate the existence of uncertainty that may cast doubt about the Company''s ability to continue as a Going Concern.

ii) With regard to the Note No.27.11 relating to the restructuring and regrouping of the financial statements iv high resulted in recognition of liability of Rs. 3,075.48 Crores on the credit side and equivalent Intangible Asset under Development- Brand and Capital Work in Progress -Advance for purchase of property on the asset side and writing off of financial charges to the extent of Rs . 638.22 Crores for the current period. In the absence of sufficient information we are unable to express any opinion on these amounts whether any provision is to be made for the short fall in carrying the said amounts and any consequential impact on the reported loss is not quantified.

iii) With retard to Note No.27.10 relating to pending confirmation of balances:. In the absence of confirmation of balances from lenders, trade payables, trade receivables, other loans and advances as at 30"'' September, 2012, any provision to be made for adverse variation in the carrying amounts of these balances is are not quantified.

In the absence of information, Profit/loss) on sale of assets, if any, on adjustment of loan liability with assets swapped is not quantified.

iv) With regard to Note No.27.17 relating to pending accounting of interest on borrowings: As stated in the notes, pending quantification of the interest payable, damages, costs, other financial charges, the ultimate liability for financial charges and related impact on the reported loss is not quantified for the period.

v) With regard to the Note No.27.18 and Note No. 27.20 relating to the non disclosure of details as required by Schedule VI of the Companies Act. 1956: Details of principal overdue, period of due, penal interest, redemption or extension of redemption etc. for the loan borrowers, debenture borrowers etc. and details regarding lease disclosures are not furnished by the management as required by Schedule VI of the Companies Act, 1956.

5. Subject to the matters referred to in paragraph 4(f) above, in our opinion and to the best of our information and according to the explanations given to us, they said accounts read with the accounting policies and notes thereon, 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.

i) in the case of the Balance Sheet, of the state of affairs of the Company as at SO''" September 2012;

ii) in the case of Statement of Profit & Loss, of the Loss of the Company for the period ended 30th September 2012 and

iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that date

Annexure to the Auditors'' Report of

M/s. DECCAN CHRONICLE HOLDINGS LIMITED

(Referred to in paragraph 3 of our report of even date)

(Note Nos. referred hereunder are with reference to respective Notes forming part of the financial statements)

i. In respect of its Fixed Assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets which needs to be updated.

b. All fixed assets have been physically verified during the period by the management and according to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. In our opinion and according to the information and explanations given to us, substantial part of fixed assets has not been disposed off by the Company during the period.

ii. In respect of its inventories:

a. The inventories have been physically verified during the period by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. The Company has maintained proper records of inventories. As explained to us, the material discrepancies noticed on physical verification of inventories as compared to the book records has been properly dealt with- in. In respect of the Loans secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained u/s301 of the Companies Act, 1956:

The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

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 inventories and fixed assets except for purchase of certain items of inventories, certain consumer lifestyle products for retail stores and with regard to the sale of advertisement space except as stated in Note No.27.11 regarding restructuring of operations and consequential reinstatement of financials, we have not observed any continuing failure to correct major weaknesses in such internal control system during the course of our audit.

v. In respect of the Contracts or arrangements referred to in sec 301 of the Companies Act, 1956;

a. As explained to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in the register maintained under section 301 of the companies Act, 1956 have been so entered.

b. As explained to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the companies Act, 1956 and exceeding the value of Rs. 5 lakhs in respect of each party during the period have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

vi. The Company has not accepted any deposits from the public within the meaning of sections 58A, 58AA or any other relevant provisions of the Act and the rules framed there under. Hence, the provisions of clause (vi) of paragraph 4 of the Order are not applicable to the Company.

vii. In our opinion, the Company has an internal audit system, which needs to be strengthened to commensurate with the size of the Company and the nature of its business.

viii. According to the information and explanations given to us, the Company is in the process of updating cost records in respect of its products and processes for which the maintenance of cost records has been prescribed under sec. 209(1 )(d) of the Act pursuant to the Companies (Cost Accounting Records) Rules, 2011 notified by the Central Government of India vide notification dated June 3,2011.

ix. In respect of Statutory dues:

a. According to the information and explanations given to us and on the basis of our examination of records of the Company, the Company has been generally regular in depositing amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employee''s State Insurance, Income Tax, Sales tax, Wealth Tax, Customs Duty, Cess and other applicable statutory dues with the appropriate authorities.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employee''s State Insurance, Income Tax, Sales tax, Wealth Tax, Customs Duty, Cess and other applicable statutory dues were in arrears as at 30,h September 2012fora period of more than six months from the date they became payable.

a. There are no dues of Sales Tax, Service Tax and Cess that have been deposited on account of any dispute. Dues relating to Income Tax which have not been deposited on account of disputes are as under:

Name of the Statute Financial Amount Year (Rs.in crorees) forum where the dispute is pending

Income Tax 2007-08 0.53 Appeal pending with ITAT, Hyderabad

Income Tax 2008-09 1-70 Appeal pending with Commissioner of Income Tax (Appeals)-V, Hyderabad

Income Tax 2008-09 0.60 (netoffRefund) Appeal pending with Commissioner of Income Tax - (Appeals)-V, Hyderabad

x. In our opinion and according to the information and explanations given to us, the accumulated loss of the Company as at the end of financial year is more than 50% of its net worth. The Company has incurred cash losses during financial period but not in the immediately preceding financial year, subject to the effects as stated in para 4(f) of our Audit Report of even date.

xi. According to the information and explanations given to us, the management has reinstated the borrowings from banks and others as stated in Note 27.11 of the notes to accounts. In the absence of sufficient information we are unable to comment on the default on repayment to the banks, financial institutions and debenture holders.

xii. The Company has not granted any 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 clause 4 (xiii) of paragraph 4 of the Order is not applicable to the Company.

xiv. As the Company is not dealing or trading in shares, securities, debentures and other investments, the clause (xiv) of paragraph 4 of the Order is not applicable to the Company.

xv. According to information and explanations given to us, the Company has not given guarantees for loans taken by others from Banks or Financial Institutions except as stated in Note No. 27.21.

xvi. According to the information and explanations given to us, in the absence of adequate information we are unable to comment whether the term loans availed by the Company were, prima facie, 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 are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment subject to the matters detailed in Note No. 27.11, Note No.27.15 and Note No. 27.16. xviii. According to the information and explanation given to us, during this period 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. In our opinion and according to the information and explanations given to us, during the period under audit, the Company has not issued any secured debentures requiring creation of charge to the debenture holders.

xx. The Company has not raised any money by way of public issue during the period and hence clause (xx) of paragraph 4 of the Order is not applicable.

xii. In our opinion and according to the information and explanations given to us and, on our examination of books and records, no fraud on or by the Company has been noticed or reported during the period except some of the lenders/creditors have filed winding up petition before the court and the management represented us that these will not have any impact on the financials for the period.

For C.B.MOULI & ASSOCIATES

Chartered Accountants

Firm Registration No: 002140S



MANIOOMMEN

Partner

Membership No: 24046

Place: Secunderabad

Date: 21st January 2013

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Mar 31, 2011

1 We have audited the attached balance sheet of Deccan Chronicle Holdings Limited ("the Company") as at 31st March 2011, 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 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 ("the Act"), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4 Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) 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;

(b) 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;

(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(d) 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 Act, to the extent applicable;

(e) on the basis of 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 are disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act;

(f) 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:

(ii) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2011;

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

(iii) in the case of cash flow statement, of the cash flows of the Company for the year ended on that date.

Annexure to the Auditors' Report

Annexure referred to in paragraph 3 of our report of even date to the members of Deccan Chronicle Holdings Limited. We report that:

1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

2. The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified in a phased manner. Accordingly, certain assets were verified by Management during the year. No material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

3. Fixed assets disposed of during the year were not substantial, and therefore, do not affect the going concern assumption.

4. Inventory, have been physically verified by the management at regular intervals. In our opinion, the frequency of verification is reasonable.

5. The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

6. The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

7. The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

8. In our opinion and according to the information and explanations given to us and having regard to the explanation that purchase of certain items of inventories and fixed assets are for the Company's specialized requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of advertisement space. The activities of the Company do not involve the sale of services. We have not observed any major weakness in the internal control system during the course of our audit.

9. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

10. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

11. The Company has not accepted any deposits from the public.

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

13. The Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for any of the products manufactured/services rendered by the Company.

14. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has been generally regular in depositing with the appropriate authorities amounts deducted / accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth tax, Customs duty, Cess and other material statutory dues. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, excise duty and service tax.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Customs duty, Cess and other material statutory dues were in arrears as at 31 March 2011 for a period of more than six months from the date they became payable. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, excise duty and service tax.

15. According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Wealth tax, Customs duty and Cess which have not been deposited with the appropriate authorities on account of any dispute. As explained to us, the Company did not have any dues on account of excise duty and service tax.

16. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

17. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers or to any financial institutions or to debenture holders.

18. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

19. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

20. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

21. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

22. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

23. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

24. The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956.

25. According to the information and explanations given to us, the Company has created security or charge in respect of debentures issued during the year.

26. As informed to us, the Company has not raised any money during the year by public issues.

27. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For C B Mouli & Associates

Chartered Accountants

(Firm's Registration No. 2140S)

Mani Oommen

Partner M.No.24046

Secunderabad, August 13, 2011

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Mar 31, 2010

1 We have audited the attached balance sheet of Deccan Chronicle Holdings Limited ("the Company") as at 31 March 2010, 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 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 ("the Act"), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4 Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) 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;

(b) 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;

(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(d) 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 Act, to the extent applicable;

(e) on the basis of written representations received from the directors, as on 31 March 2010, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31 March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act;

(f) 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:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2010;

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

(iii) in the case of cash flow statement, of the cash flows of the Company for the year ended on that date.

Annexure to the Auditors Report Annexure referred to in paragraph 3 of our report of even date to the members of Deccan Chronicle Holdings Limited. We report that:

1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

2. The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified in a phased manner. Accordingly, certain assets were verified by Management during the year. No material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

3. Fixed assets disposed of during the year were not substantial, and therefore, do not affect the going concern assumption.

4. Inventory, have been physically verified by the management as at the balance sheet date. In our opinion, the frequency of verification is reasonable.

5. The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

6. The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

7. The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

8. In our opinion and according to the information and explanations given to us and having regard to the explanation that purchase of certain items of inventories and fixed assets are for the Companys specialized requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of advertisement space. The activities of the Company do not involve the sale of services. We have not observed any major weakness in the internal control system during the course of our audit.

9. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

10. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

11. The Company has not accepted any deposits from the public.

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

13. The Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for any of the products manufactured/services rendered by the Company.

14. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has been generally regular in depositing with the appropriate authorities amounts deducted / accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth tax, Customs duty, Cess and other material statutory dues. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, excise duty and service tax.

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

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Customs duty, Cess and other material statutory dues were in arrears as at 31 March 2010 for a period of more than six months from the date they became payable. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, excise duty and service tax.

15. According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Wealth tax, Customs duty and Cess which have not been deposited with the appropriate authorities on account of any dispute. As explained to us, the Company did not have any dues on account of excise duty and service tax.

16. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

17. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers or to any financial institutions or to debenture holders.

18. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

19. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

20. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

21. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

22. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

23. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

24. The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956.

25. According to the information and explanations given to us, the Company has created security or charge in respect of debentures issued during the year.

26. As informed to us, the Company has not raised any money during the year by public issues.

27. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For C B Mouli & Associates

Chartered Accountants (Firms Registration No. 2140S)

Mani Oommen

Partner M.No.24046

Secunderabad, August 13, 2010