Auditor Report of Sterling Holiday Resorts (I) Ltd.

Mar 31, 2014

REPORT ON FINANCIAL STATEMENTS

We have audited the accompanying fnancial statements of STERLING HOLIDAY RESORTS (INDIA) LIMITED which comprise of the Balance Sheet as at March 31, 2014, Statement of Proft & Loss and Cash Flow Statement for the year then ended and a summary of signifcant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). The responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR''S RESPONSIBILITY

Our responsibility is to express an opinion on these fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the fnancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fnancial statements.

We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the fnancial statements give the information required by the Act 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, 2014;

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

c) in the case of Cash Flow Statement, of the cash fows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the annexure a statement on the matters specifed in the paragraphs 4 and 5 of the said Order.

2. As required by Section 227(3) of the Act, 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 purpose 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, Statement of Proft and loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Statement of Proft and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(e) On the basis of written representations received from the directors as on March 31, 2014 and taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) Fixed Assets are physically verifed by the management at reasonable intervals. In our opinion, the frequency of verifcation is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies as compared to book records were noticed on such verifcation.

(c) Since the disposal of fxed assets during the year is not substantial, the preparation of fnancial statements on a going concern basis is not affected on this account.

2. (a) The inventories have been physically verifed by the management during the year. In our opinion, the frequency of verifcation was reasonable.

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

(c) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account.

3. (a) The Company has not granted any loans secured or unsecured to companies, frms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has taken unsecured loan of INR 2 crores from one company listed in the register maintained under Section 301 of the Companies Act 1956.

(c) The terms and conditions of such loan are not prima facie prejudicial to the interest of the company. The payment of interest has been regular.

(d) The maximum amount outstanding at any time during the year was INR 2 crores. The loan taken has been fully repaid during the year.

4. In our opinion and according to the information and explanations given to us, the internal control system are commensurate with the size of the Company and the nature of its business for purchase of inventory, fxed assets, sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. (a) Based on the audit procedures applied by us, to the best of our knowledge 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 maintained under that section.

(b) 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 INR 5 lakhs, during the year, have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company law Board or National Company law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us and as clarifed under General Circular No. 67/2011 dated 30th Nov. 2011, the Companies (Cost Accounting Records) Rules, 2011 are not applicable to the Company since the company is in hospitality sector. Hence reporting under this para does not arise.

9. a. According to the information and explanations given to us, the Company is generally regular in depositing the undisputed statutory dues in respect of Income Tax, luxury Tax, Wealth Tax, Service Tax, VAT, Provident Fund, Employees State Insurance and Customs Duty. There is no liability to remit Excise duty and Investor Education and Protection Fund. According to the information and explanations given to us, except for the undisputed statutory dues representing Fringe Beneft Tax of INR 73.12 lakhs, no other Statutory Dues were outstanding at the year end for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and on the basis of examination of records of the Company the dues of luxury Tax / Service Tax as at March 31, 2014 which have not been deposited on account of any dispute are as follows:

10. The accumulated loss at the end of the fnancial year does not exceed 50% of net worth inclusive of "Deferred income" (other than "Entitlement Fee" which is refundable in nature). The company has incurred cash loss during the Current fnancial year and in the preceding fnancial year.

11. On the basis of verifcation of records and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to Financial Institutions / Banks.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of Shares, Debentures and other securities.

13. The Company is not a chit fund or a nidhi or mutual fund society. Therefore, the provisions of sub-para (xiii) of para 4 of the order are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments other than investing in mutual fund units. Proper records have been maintained in respect of these mutual fund investments and timely entries have been made therein. The investments have been held by the Company in its own name except to the extent of exemption granted under Section 49 of the Act.

15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any Bank or Financial Institution.

16. In our opinion, the term loans availed has been utilised for the purpose for which they were raised.

17. According to the information and explanations given to us, based on an overall examination of the balance sheet of the Company and related information made available, we report that funds raised on short-term basis have not been used for long-term investments.

18. According to the information and explanations given to us, the preferential allotment of shares made during the year are not made to parties covered under Register maintained under Section 301 of the Act.

19. During the year, the Company has not issued any secured debentures and accordingly no securities were required to be created.

20. During the year, the company has not raised any money by public issue. Therefore, the requirement of disclosure by the Management on the end use of money raised by public issue and verifcation of the same is not applicable.

21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fnancial statements and as per the information and explanations given to us by the Management, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For V.Sankar Aiyar & Co For R.Subramanian & Co.

Chartered Accountants Chartered Accountants

ICAI regd. No. 109208W ICAI regd. No. 004137S

S. Venkataraman A. S. Ramanathan

Partner Partner

Membership No.: 023116 Membership No.: 011072

Place: Chennai

Date: April 26, 2014

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Mar 31, 2013

Report on Financial Statements

We have audited the accompanying financiai statements of Sterling Holiday Resorts (India) Limited which comprise of the Baiance Sheet as at March 31'' 2013'' Statement of Profit & Loss and Cash Fiow Statement for the year then ended and a summary of significant accounting policies and other expianatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financiai statements that give a true and fair view of the financiai position'' financiai performance and cash fiows of the Company in accordance with the Accounting Standards referred to in sub-Section (3C) of Section 211 of the Companies Act'' 1956 ("the Act"). The responsibility inciudes the design'' impiementation and maintenance of internaicontroireievanttothe preparation and presentation of the financiai statements that give a true and fair view and are free from materiai misstatement'' whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financiai statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we compiy with ethicai requirements and pian and perform the audit to obtain reasonabie assurance about whether the financiai statements are free of materiai misstatement.

An audit invoives performing procedures to obtain audit evidence about the amounts and disclosures in the financiai statements. The procedures selected depend on the auditor''sjudgment'' including the assessment of the risks of materiai misstatement of the financiai statements'' whether due to fraud or error. In making those risk assessments'' the auditor considers internal controi reievant to the Company''s preparation and fair presentation of the financiai statements in order to design audit procedures that are appropriate in the circumstances. An audit aiso inciudes evaluating the appropriateness of accounting policies used and the reasonabieness of the accounting estimates made by Management'' as weii as evaiuating the overaii presentation of the financiai statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us'' the financiai statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generaiiy accepted in India:

a) in the case of the Baiance Sheet'' of the State of Affairs of the Company as at March 31'' 2013

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 Cash Fiow Statement'' of the cash fiows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order'' 2003 ("the Order") issued by the Centrai Government of India in terms of sub-Section (4A) of Section 227 of the Act'' we give in the annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2. As required by Section 227(3) of the Act'' we report that:

(a) we have obtained aii the information and explanations'' which to the best of our knowiedge and belief were necessary for the purpose of our audit;

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

(c) the Baiance Sheet'' Statement of Profit and Loss and Cash Fiow Statement deait with by this report are in agreement with the books of account;

(d) in our opinion'' the Baiance Sheet'' Statement of Profit and Loss and Cash Fiow Statement compiy with the Accounting Standards referred to in sub-Section (3C) of Section 211 of the Companies Act'' 1956.

(e) On the basis of written representations received from the directors as on March 31'' 2013 and taken on record by the Board of Directors'' none of the directors is disqualified as on March 31'' 2013 from being appointed as a director in terms of Ciause (g) of sub-Section (1) of Section 274 of the Companies Act'' 1956.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE.

1. (a) The Company has updated and reconstructed

its Fixed Assets Register with fuii particulars including quantitative details and situation of Fixed Assets. Consequent to such reconciliation'' certain categories of Fixed Assets have been re-grouped.

(b) We are informed that during the year the Fixed Assets located at resorts and Head Office have been physically verified by the Management and reconciled with financial records and no material discrepancies were noticed on such verification.

(c) As per information and explanations given to us'' the disposal of Fixed Assets during the year were not substantial and hence it does not affect the going concern assumption.

2. (a) The inventories have been physically verified at the end of the year by the Management. In our opinion'' the frequency of verification was reasonable.

(b) In our opinion'' the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of the records examined by us and relying on the information provided to us'' in our opinion'' the Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification as compared to the record of inventories.

3. (a) The Company has not granted any loans secured or unsecured to companies'' firms or other parties listed in the Register maintained under Section 301 of the Companies Act'' 1956.

(b) The Company has not taken any loan secured or unsecured from companies'' firms or other parties listed in the Register maintained under Section 301 of the Companies Act 1956.

4. In our opinion and according to the information and explanations given to us'' the internal control system are commensurate with the size of the Company and the nature of its business for purchase of inventory'' Fixed Assets'' sale of goods and services. During the course of audit'' we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. (a) Based on the audit procedures applied by us'' to the best of our knowledge 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 maintained under that Section.

(b) Other than our observation stated in para 18 given below'' there are no transactions exceeding INR 5 lakhs in respect of any parties referred to in the Register maintained under Section 301 of the Companies Act'' 1956 in the financial year.

6. In our opinion and according to the information and explanations given to us'' the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act'' 1956.

7. The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us and as clarified under General Circular No. 67/2011 dated November 30'' 2011 the Companies (Cost Accounting Records) Rules'' 2011 are not applicable to the Company since the Company is in hospitality sector. Hence reporting under this para does not arise.

9. (a) According to the information and explanations given to us'' the Company is generally regular in depositing the undisputed statutory dues in respect of Income Tax'' Luxury Tax'' Employees State Insurance and Customs Duty. However'' there have been instances of delay in deposit of the undisputed statutory dues of Provident Fund'' Sales Tax (VAT) and Service Tax with appropriate authorities'' during the year. There is no liability to remit Excise duty and Investor Education and Protection Fund.

(b) According to the information and explanations given to us'' except for the undisputed Fringe Benefit Tax of INR 101.34 lakhs'' no other 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 and on the basis of examination of records of the Company the dues of Income Tax/Service Tax as at March 31'' 2013 which have not been deposited on account of any dispute are as follows:

Forum where dispute Is pending INR In lakhs Name of Statute/ Nature of Dues Period High Court Grand Total

Service Tax Rules (Service Tax including 16.06.05 to 30.09.06 527.03 527.03

penalty & interest wherever applicable)

Luxury Tax (Kerala) 2006-07 & 2007-08 12.69 12.69

Appellate Authority Includes Commissioner Appeals'' Assistant Commissioner Appeals'' Deputy Commissioner Appeals'' and Joint Commissioner Appeals

10. The accumulated loss atthe end ofthefinancialyear exceeds 50% of net worth inclusive of "Deferred income"(other than "Entitlement Fee" which is refundable in nature). The Company has incurred cash loss during the current financial year and in the preceding financial year.

11. In our opinion and according to the information and explanations given to us'' there is no default in the repayment of dues to the Financial Institutions/ Banks.

12. According to the information and explanations given to us'' the Company has not granted any loans and advances on the basis of security by way of pledge of Shares'' debentures and other securities.

13. The provisions of Clause 4(xiii) of the Order relating to Chit Funds are not applicable to the Company.

14. In our opinion'' the Company is not dealing or trading in Shares'' securities'' debentures and other investments other than investing in mutual fund units. Proper records of the transactions and contracts have been maintained and timely entries have been made. The said investments have been held by the Company in its own name.

15. According to the information and explanations given to us'' the Company has not given any guarantee for any loan taken by others from any Bank or Financial Institution.

16. According to the information and explanations given to us and based on the examination of records'' the term loan availed during the year has been used for the purpose for which such loan has been availed.

17. According to the information and explanations given to us'' based on an overall examination of the Balance Sheet of the Company'' information made available to us and as represented to us by the Management'' funds raised on short-term basis have not been applied for long-term investment during the year.

18. According to the information and explanations given to us'' during the year the Company has not made any preferential allotment of Shares to parties and companies covered in the Register maintained under Section 301 of the Act'' other than Shares allotted on conversion of Warrants issued on preferential basis in earlier years to parties covered in Register maintained under Section 301 of the Companies Act'' 1956. The issue price of Shares so allotted has been determined in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations'' 2009. Hence'' it is not prejudicial to the interest of the Company.

19. The Company has not issued debentures during the year and therefore the question of creating security or charge in respect thereof does not arise.

20. The Company has not made public issue of securities during the year and therefore the question of disclosing the end-use of money raised by way of public issue does not arise.

21. During the course of our examination of the books and records of the Company'' carried out in accordance with the generally accepted auditing practices in India'' and according to the information and explanations given to us'' we have not come across any instance of material fraud on or by the Company'' noticed or reported during the year.

For V. Sankar Alyar & Co. For R. Subramanlan and Company

Chartered Accountants Chartered Accountants

ICAI Regn. No. 109208W ICAI Regn. No. 004137S

S. Venkataraman A. S. Ramanathan

Partner Partner

Membership No.: 023116 Membership No.: 011072

Place: Chennal Date : April 29'' 2013

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Mar 31, 2012

1. We have audited the attached Balance Sheet of Sterling Holiday Resorts (India) Limited as at March 31, 2012 and the Statement of Profit and Loss for the year ended on that date 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 the financial statements based on our audit.

2. We conducted our audit in accordance with the 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 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. 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 it appears from our examination of those books;

iii. The Company's 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 and 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 to the extent applicable;

v. On the basis of written representations received from the Directors and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on March 31, 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, the said accounts and read with the significant accounting policies and other 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:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st 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.

1. (a) The Company has maintained records showing full particulars including quantitative details and situation of Fixed Assets except in respect of plant and machinery, office equipments and furniture and fixtures. The management informs that the updation of fixed assets register for the said assets is in progress.

(b) We are informed that during the year the Fixed Assets comprising of Plant and Machinery, office equipments and furniture and fixtures located at resorts and at head office have been physically verified by the Management and being compared with records to ascertain discrepancies if any and its adjustment will be done when completed. In our view the periodicity of verification is reasonable.

(c) As per information and explanations given to us, the disposals of fixed assets during the year were not substantial and hence it does not affect the going concern assumption.

2. (a) The inventories have been physically verified at the end of the year by the management. In our opinion, the frequency of verification was reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of the records examined by us and relying on the information provided to us, in our opinion, the Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification as compared to the record of inventories.

3. (a) The Company has not granted any loans secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956

(b) The Company has not taken any loan secured or unsecured from companies firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, the internal control system are commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets, sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. (a) Based on the audit procedures applied by us, to the best of our knowledge 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

(b) Other than our observation stated in para 18 given below, there are no transactions exceeding Rs 5 lakh in respect of any parties referred to in the register maintained under Section 301 of the Companies Act, 1956 in the financial year.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us and as clarified under General Circular No. 67/2011 dated November 30, 2011, the Companies (Cost Accounting Records) Rules, 2011 are not applicable to the Company since the Company is in hospitality sector. Hence reporting under this para does not arise.

9. (a) According to the information and explanations given to us, there have been instances of delay in deposit of the undisputed statutory dues including Provident Fund, Sales Tax (VAT), Service Tax, Employees State Insurance, Luxury Tax, Professional Tax, Income Tax (TDS) with appropriate authorities. There is no liability to remit Wealth tax, Customs duty, Excise duty and Investor Education and Protection Fund

(b) According to the information and explanations given to us, undisputed statutory dues representing Fringe Benefit Tax of Rs 101.34 lakh and Sales tax (VAT) of Rs 0.96 lakh 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 and on the basis of examination of records of the Company, the dues of income tax/service tax as at March 31, 2012 which have not been deposited on account of any dispute are as follows:

Name of Statute / nature of dues Period High Court

Income Tax Act, 1961 (Income Tax 2006-07 - including penalty & interest wherever applicable)

Service Tax Rules (Service Tax 16.06.05 to 557.03** including penalty & interest wherever 30.09.06 applicable)

Name of statue / nature of dues Forum where dispute is pending Appellate Appellate Grand Total Tribunal $ Authority @

Income Tax Act,1961 (Income Tax including penalty & interest wherever applicable) 38.34 65.40 103.74

Service Tax Rules (Service Tax including penalty & interest wherever applicable - - 557.03

** Excludes pre deposit of Rs 30 lakh

$ Appellate Tribunal includes STAT, ITAT

@ Appellate Authority includes Commissioner Appeals, Assistant Commissioner Appeals,

Deputy Commissioner Appeals, and Joint Commissioner Appeals

10. The accumulated loss at the end of the financial year exceeds 50% of net worth after including "Deferred Income" (other than "Entitlement Fee" which is refundable in nature) as part of net worth. The Company has incurred cash loss during the current financial year and in the preceding financial year.

11. During the year, the Company has made one time settlement of its dues to a Financial Institution. In our opinion and according to the information and explanations given to us, there is no default in the repayment of dues to the Financial Institutions/Banks.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Provisions of Clause 4(xiii) of the Order relating to Chit Funds are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments other than investing in mutual fund units. Proper records of the transactions and contracts have been maintained and timely entries have been made. The said investments have been held by the Company in its own name.

15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any Bank or Financial Institution.

16. According to the information and explanations given to us and the basis of examination of records, the Company has availed hire purchase loans from banks during the year and has been used for the purpose for which such loans have been obtained.

17. According to the information and explanations given to us, based on an overall examination of the balance sheet of the Company, related information made available to us and as represented to us by the Management, funds have not been raised on short term basis during the year.

18. According to the information and explanations given to us, the Company has during the year made allotment of shares to Warrant holders on conversion of such warrants issued on preferential basis to parties covered in register maintained under Section 301 of the Companies Act, 1956. The issue price of shares so allotted has been determined in accordance to SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Hence, it is not prejudicial to the interest of the Company.

19. The Company has not issued debentures during the year and therefore the question of creating security or charge in respect thereof does not arise.

20. The Company has not made public issue of securities during the year and therefore the question of disclosing the end-use of money raised by way of public issue does not arise.

21. Based on the audit procedures performed and on the basis of representation obtained from the management, we report that no instance of fraud on or by the Company, have been noted or reported by the management, during the year.

For V. SANKAR AIYAR & CO For R.SUBRAMANIAN AND COMPANY

Chartered Accountants, Chartered Accountants,

ICAI Regd.No 109208W ICAI Regd.No 004137S

S.VENKATARAMAN A.S.RAMANATHAN

Partner Partner

M.No: 023116 M.No: 011072

Place: Chennai

Date: May 29, 2012

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Mar 31, 2011

1. We have audited the attached Balance Sheet of Sterling Holiday Resorts (India) Limited as at 31st March, 2011 and the Profit and Loss Account for the year ended on that date and the cash flow statement of the Company thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audit.

2. We conducted our audit in accordance with the 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 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 Annexurea statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. 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 it appears from our examination of those books;

iii. The Company's 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 and 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 to the extent applicable;

v. On the basis of written representations received from the Directors 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 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 and read with the significant accounting policies and other 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 :

(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 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.

1. (a) The Company has maintained records showing full particulars including quantitative details and situation of Fixed Assets except in respect of plant and machinery, office equipments and furniture and fixtures. The management informs that the updation of fixed assets register for the said assets is in progress.

(b) We are informed that during the year the Fixed Assets (other than plant and machinery, office equipments and furniture and fixtures) located at Resorts and at Head Office have been physically verified by the Management and no material discrepancies were noticed on such verification. In our view the periodicity of verification is reasonable. The Management has represented to us that the physical verification of plant and machinery, office equipments and furniture and fixtures will be carried out in the subsequent year.

(c) As per information and explanations given to us, the disposals of fixed assets during the year were not substantial and hence it does not affect the going concern.

2. (a) The inventory has been physically verified at the end of the year by the Management. In our opinion, the frequency of verification was reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of the records examined by us and relying on the information provided to us, in our opinion, the Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification as compared to the record of inventories.

3. (a) The Company has not granted any loans secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(b) The company has not taken any loan secured or unsecured from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, the internal control systems, are commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets, sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. (a) Based on the audit procedures applied by us, to the best of our knowledge 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.

(b) Sub Clause 5 (b) of Para 4 of the Order is not applicable as there are no transactions exceeding the value of Rs.5,00,000/- in respect of any party in the financial year.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us, the Central Govt, has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for the services rendered by the Company.

9. (a) According to the information and explanations given to us, the Company has been regular in depositing, undisputed statutory dues representing, Provident Fund, Sales Tax (VAT) and other statutory dues with appropriate authorities. There has been delay in remittance of Income Tax, Service Tax, Employees State Insurance and Cess and Luxury Tax. There is no liability to remit Wealth Tax, customs Duty and Excise Duty, Investor Education and Protection Fund.

(b) According to the information and explanations given to us, undisputed statutory dues representing Fringe Benefit Tax of Rs. 101.34 lacs, service tax of Rs.0.85 lacs and ESI of Rs.0.49 lacs and professional tax of Rs.4.27 lacs and consent fees to Tamil Nadu Pollution Control Board of Rs.1.36 lacs were outstanding at the year end for a period of more than 6 months from the date they become payable.

Further, since the Central Government has till date not prescribed the amount of Cess payable under section 441A 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.

(c) According to the information and explanations given to us and the basis of examination of records of the Company the dues of Income Tax/Wealth Tax/Service Tax/Cess as at 31st March 2011 which have not been deposited on account of any dispute are as follows:

(Rs. In Lacs)

Name of Statute / nature of dues Period Forum where dispute is pending

High Appellate Appellate Grand Total

Court Tribunal $ Authority @

Income Tax Act, 1961 (Income 2006-07 - 38.34 38.34 Tax Including penalty & interest wherever applicable)

Service Tax Rules (Service Tax 16.06.05 to 557.03 - - 557.03 including penalty & interest 30.09.06 wherever applicable)

$ Appellate Tribunal includes STAT, ITAT

@ Appellate Authority includes Commissioner Appeals, Assistant Commissioner Appeals, Deputy Commissioner Appeals, and Joint Commissioner Appeals

10. The accumulated loss at the end of the Financial Year exceeds 50% of its net worth inclusive of Advance Subscription towards Customer Facilities (ASCF). The company has incurred cash loss during the Current Financial year and In the preceding Financial Year.

11. In our opinion and according to the information and explanations given to us, the company has defaulted in the repayment of dues to a Financial Institution from Jan 2001 as stated in note no. B.6 of schedule 14.

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

13. The provisions of clause 4 (xiii) of the Order relating to Chit Funds are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments other than investing in mutual fund units. Proper records of the transactions and contracts have been maintained and timely entries have been made. The said investments have been held by the company In its own name.

15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any bank or financial institution.

16. The company has availed term loan from a non banking finance company. According to the information and explanations given to us and related information made available to us, the Company has applied the term loan for the purpose for which the same was availed.

17. According to the information and explanations given to us, based on an overall examination of the balance sheet of the Company, related information made available to us and as represented to us by the Management, funds raised on short term basis, prima facie, have not been used during the year for long term investment.

18. According to the information and explanations given to us, the Company has during the year made allotment of shares to warrant holders on conversion of such warrants issued on preferential basis to parties covered in register maintained under section 301 of the Companies Act, 1956. The issue price of shares so allotted has been determined in accordance SEBI (Disclosure and Investor Protection) Guidelines 2000. Hence, it is not prejudicial to the interest of the Company.

19. The Company has not issued any debentures during the year and therefore the question of creating security or charge in respect thereof does not arise.

20. The Company has not made public issue of securities during the year and therefore the question of disclosing the end-use of money raised by way of public issue does not arise.

21. Based on the audit procedures performed and on the basis of representation obtained from the management, we report that no instance of fraud on or by the Company, have been noted or reported by the Management, during the year.

For V.SANKAR AIYAR & CO For R.SUBRAMANIAN AND COMPANY

Chartered Accountants, Chartered Accountants

ICAI regd. No. 109208W ICAI regd. No. 004137S

S.VENKATARAMAN A.S.RAMANATHAN

Partner Partner

M.NO : 023116 M.No : 011072

Place: Chennai

Date : 28th July 2011.

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Sterling Holiday Resorts (India) Limited as at 31st March, 2010 and the Profit and Loss Account for the year ended on that date and the cash flow statement of the Company thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the financial statements based on ouraudit.

2. We conducted our audit in accordance with the 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 ouraudit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors 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.

4. 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 it appears from our examination of those books;

iii. The Companys 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 and 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 to the extent applicable;

v. On the basis of written representations received from the Directors and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March 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, read with the significant accounting policies and other 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:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010,

(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 of the Company for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE.

1 .(a) The Company has maintained records showing full particulars including quantitative details and situation of Fixed Assets except in respect of plant and machinery office equipments and furniture and fixtures.

(b) We are informed that during the year, Fixed Assets located at Resorts and at Head office have been physically verified by Management. According to the information and explanations given to us, no material discrepancies were noticed on such verification. In our opinion, frequency of verification is reasonable.

(c) As per information and explanations given to us, the disposals of fixed assets during the year were not substantial and hence it does not affect the going concern assumptions.

2.(a) Inventories have been physically verified at the end of the year by the management. In our opinion, the frequency of verification was reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of the records examined by us and relying on the information provided to us, in our opinion, the Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification as compared to the record of inventories.

3.(a) The Company has not granted any loans secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(b) A director of the Company has settled a loan of Rs. 128.77 lacs, taken by the Company and requested for reimbursement. The loan is unsecured, interest free and is repayable on demand. The terms and conditions of the loan are not prima facie prejudicial to the interest of the Company.

4. In our opinion and according to the information and explanations given to us, the internal control procedures are commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets, sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. Based on the audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us, the company has not entered into contracts or arrangements referred to in Section 301 of the Companies Act, 1956 and consequently reporting under clause 4 (v) (a), (b) does not arise.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us, the Central Govt, has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for the services rendered by the Company.

9.(a) According to the information and explanations given to us, the Company has been regular in depositing, undisputed statutory dues representing, Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax (VAT), Service tax,, cess and other statutory dues with appropriate authorities. We are informed that there is no liability to remit Wealth tax, customs duty and Excise duty.

(b) According to the information and explanations given to us, undisputed statutory dues representing Fringe Benefit Tax of Rs. 101.34 lacs was outstanding at the year end for a period of more than 6 months from the date they become payable. To the best of our knowledge and belief and based on information given to us, no other undisputed statutory dues namely Provident Fund, Employees State Insurance, Income Tax, Sales Tax (VAT), Service tax, Cess are outstanding for more than six months.

(c) According to the information and explanations given to us on the basis of examination of records of the Company the dues of income tax/wealth tax/service tax/cess as at 31st March 2010 which have not been deposited on account of any dispute are as follows:

Forum where dispute is pending

Name of Statute/

nature of dues Period High Appellate Appe llate Asse ssing Grand

Court Tribunal $ Autho rity @ Offi cer total

Income Tax Act, 1961

(Income tax includinq

penalty & interest 2006-07 - - 38.34 - 38.34

wherever applicable)

Central Excise Act,

1944 ( Service tax 16.06.05

including penalty & to 227.03 - - - 227.03

interest wherever 30.09.06

applicable)

2003-04 Sales Tax to - - - 53.46 53.46

2005-06

$ Appellate Tribunal includes STAT, ITAT

@ Appellate Authority includes Commissioner Appeals, Assistant Commissioner Appeals, Deputy

Commissioner Appeals, and Joint Commissioner Appeals

10. Taking the view that Advance Subscription towards Customer Facilities forms part of "net worth", in our opinion, the accumulated losses of the Company have not exceeded fifty percent of its net worth as at the end of the financial year. The Company has incurred cash losses during the current financial year and not in the immediate preceding financial year (by considering the Provision for Doubtful Advances and Debts created as non cash nature during the pervious year).

11. In our opinion and according to the information and explanations given to us, the company has defaulted in the repayment of dues to a Financial Institution of Rs.162 lacs which is outstanding since January 2001.

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

13. The provisions of clause 4 (xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debtors and other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any bank or financial institution.

16. According to the information and explanations given to us, the Company has not availed any term loan during the year.

17. According to the information and explanations given to us, based on an overall examination of the balance sheet of the Company, related information made available to us and as represented to us by the Management, funds raised on short term basis, prima facie, have not been used during the year for long term investment.

18. According to the information and explanations given to us ,the Company has during the year made preferential allotment of shares warrants to parties covered in register maintained under section 301 of the Companies Act, 1956. The price of share warrants has been

determined in accordance SEBl (Disclosure and Investor Protection) Guidelines 2000. In out opinion, the terms of such preferential allotment of share warrants are not prima facie prejudicial to the interest of the Company.

19. The Company has not issued any debentures during the year and therefore the question of creating security or charge in respect thereof does notarise.

20. The Company has not made any public issue of any securities during the year and therefore the question of disclosing the end-use of money raised by any public issue does not arise.

21. Based on the audit procedures performed and on the basis of representation obtained from the management, we report that no instance of fraud on or by the Company, have been noticed or reported by the management, during the year.

for R.SUBRAMANIAN AND COMPANY

Chartered Accountants,

ICAIregd.No.004137S

A.S.Ramanathan

Partner

M.No:011072

for V. SANKAR AIYAR & Co

Chartered Accountants

ICAI regd.No.109208W

S.VENKATARAMAN

Partner

M.NO:23116

Place :Chennai

Date :28th August 2010

---

Mar 31, 2009

1. We have audited the atached Balance Sheet of Sterling Holiday Resorts (India) Limited as at 31st March, 2009 and the Profit and Loss Account for the year ended on that date and the cash flow statement of the Company thereto. These financial statements are the responsi- bility of the Companys management. Our responsibility is to express an opinion on the financial statements based on our audit.

2. We conducted our audit in accordance with the auditng 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 supportng the amounts and disclosures in the financial statements. An audit also includes assessing the accountng principles used and significant estmates made by management, as well as evaluatng the overall financial statement presentaton. We believe that our audit provides a reason- able basis for our opinion.

3. As required by the Companies (Auditors 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 maters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the annexure referred to above, we report that:

i. We have obtained all the informaton and explanatons, 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 it appears from our examina- ton of those books;

iii. The Companys 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 and Profit and Loss Account and cash flow statement dealt with by this report comply with the Accountng Standards referred to in sub-Section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable;

v. On the basis of writen representatons received from the Directors and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March 2009 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 informaton and according to the explanatons given to us, the said accounts and read with the significant accountng policies and other notes thereon, give the informaton required by The Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accountng 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 2009,

(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.

1. (a) The Company has maintained records showing full partculars including quanttatve details and situaton of Fixed Assets except in respect of plant and machinery office equipments and furniture and fixtures

(b) We are informed that during the year, that the Fixed Assets located at Resorts and at Head office have been physically verified by Management According to the informaton and explanatons given to us, no material discrepancies were notced on such verificaton. In our opinion, frequency of verificaton is reasonable.

(c) As per informaton and explanatons given to us, the disposals of fixed assets during the year were not substantal and hence it does not affect the going concern.

2. (a) The inventory has been physically verified at the end of the year by the management. In our opinion, the frequency of verificaton was reasonable.

(b) In our opinion, the procedures of physical verificaton of inventories followed by the management are reasonable and adequate in relaton to the size of the Company and nature of its business.

(c ) On the basis of the records examined by us and relying on the informaton provided to us, in our opinion, the Company is maintaining proper records of inventories and no material discrepancies were notced on physical verificaton as compared to the record of inventories.

3. (a) The Company has not granted any loans secured or unsecured to companies, firms or other partes listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans secured or unsecured from companies, firms or other partes listed in the register maintained under Section 301 of the Companies Act, 1956. Therefore, reportng under sub clauses (e) to (g) of clause 4 (iii) does not arise.

4. In our opinion and according to the informaton and explana- tons given to us, the internal control procedures are commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets, sale of goods and services. During the course of audit, we have not observed any contnuing failure to correct major weaknesses in the internal control system.

5. Based on the audit procedures applied by us, to the best of our knowledge and belief and according to the informaton and explana- tons given to us, the company has not entered into contracts or arrangements referred to in Section 301 of the Companies Act, 1956 and consequently reportng under clause 4 (v) (a), (b) does not arise.

6. In our opinion and according to the informaton and explanatons given to us, the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company Law Board or Natonal Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system which needs to be strengthened to make it commensurate with the size of the Company and the nature of its business.

8. According to the informaton and explanatons given to us, the Central Govt. has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for the services rendered by the Company.

9. (a) According to the informaton and explanatons given to us, the Company has not been generally regular in depositng, undisputed statutory dues representng, Provident Fund, Employees State Insurance, Income Tax, Fringe Benefit, , Service tax, cess. The Company has generally been regular in depositng Sales Tax (VAT) Investor Education and Protecton Fund other statutory dues, with appropriate authorites. We are informed that there is no liability to remit Wealth tax, customs duty and Excise duty.

(b) According to the informaton and explanatons given to us, undisputed statutory dues were outstanding at the year end for a period of more than 6 months from the date they become payable were as follows: (c) According to the informaton and explanatons given to us and the basis of examinaton of records of the Company the dues of income tax/wealth tax/service tax/cess as at 31st March 2009 which have not been deposited on account of any dispute are as follows:

Forum where dispute is pending Name of Statute / nature of dues Period Appellate Appellate Grand total Tribunal $ Authority @

Income Tax Act, 1961 ( Income tax 2006-07 - 38.34 38.34 including penalty & interest wherever applicable)

Central Excise Act, 1944(Service 16.06.05 257.03 257.03 tax including penalty & interest to wherever applicable) 30.09.06

$ Appellate Tribunal includes STAT, ITAT

@ Appellate Authority includes Commissioner Appeals, Assistant Commis- sioner Appeals, Deputy Commissioner Appeals, and Joint Commissioner Appeals

10. In our opinion, the accumulated losses of the Company have not exceeded fify percent of its net worth as at the end of the financial year. The Company has not incurred cash losses during the current financial year (by considering the ‘Provision for Doubtul Advances and Debtscreated, as non cash nature)as well as in the immediate preceding financial year.

11. In our opinion and according to the informaton and explanatons given to us, the company has defaulted in the repayment of dues to Financial Institutions and Banks as per details given below:

S.No Nature of loan Amount - Rs. In lacs Period of default

01. Term Loan from Banks 720.00 Since January 1998

02. Term Loan from Financial 1323.84 Since January 2001 Institutions

03. Short Term Loan From 674.35 Since June 1997 Financial Institution

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

13. The provisions of clause 4 (xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securites, debtors and other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. According to the informaton and explanatons given to us, the Company has not given any guarantee for any loan taken by others from any bank or financial insttuton.

16. According to the informaton and explanatons given to us, the Company has not availed any term loan during the year.

17. According to the informaton and explanatons given to us, based on an overall examinaton of the balance sheet of the Company, related informaton made available to us and as represented to us by the Management, funds raised on short term basis, prima facie, have not been used during the year for long term investment.

18. According to the informaton and explanatons given to us ,the Company has during the year made preferental allotment of shares warrants to partes covered in register maintained under Section 301 of the Compa- nies Act, 1956. The price of share warrants has been determined in accordance SEBI (Disclosure and Investor Protecton) Guidelines 2000. Hence, it is not prejudicial to the interest of the Company.

19. The Company has not issued any debentures during the year and therefore the queston of creatng security or charge in respect thereof does not arise.

20. The Company has not made any public issue of any securites during the year and therefore the queston of disclosing the end-use of money raised by any public issue does not arise.

21. Based on the audit procedures performed and on the basis of representa- ton obtained from the management, we report that no instance of fraud on or by the Company, have been noted or reported by the management, during the year.

For V. Sankar Aiyar & Co For R.Subramanian and Company

Chartered Accountants Chartered Accountants

S Venkataraman A.S. Ramanathan

Place: Chennai Partner Partner

Date: 01.09.2009 Membership No: 23116 Membership No: 011072