B) Attention is invited to Point No:14 of Note 15 expressing that the balances under sundry debtors, sundry creditors and loans and advances remain to be confirmed and in absence of evidence to the contrary, book balances have been taken as correct subject to the other notes as per of Note 15. Attention is also invited to Point No:l to Point No. 7 and Point No:10 to Point No. 12 of Note 15 giving the status of contingent liabilities, old accounts, pending cases and claims from various parties including Banks and Statutory Authorities (towards Gratuity, PF, Income tax and others) and non provision of interest as the case may be. Accuracy of the balances stated in the financial statements depends on the outcome of the court cases/settlements/negotiations in various stages and the accounts may undergo changes as and when the liabilities crystallize/further information is made available, extent of such changes not ascertainable.

Subject to the observations as above, we report as below:

1. We have audited the attached Balance Sheet of Alacrity Housing Limited as at 31st March 2014 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have 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 the 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 and amendments thereto issued by the Central Government of India in terms of Sec 227(4A) of the Companies Act 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said order, to the extent applicable to the Company.

4. Subject to our observations as mentioned in A and B and lto3 above, we further report that:

i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

iii. /fhe company's balance sheet and profit and loss account dealt with by this report are in agreement with the books of account produced before us.

iv. In our opinion, the profit and loss account and balance sheet dealt with by this report comply with the applicable accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. The Company has filed Annual Accounts and Annual Returns for all financial years up to 31.03.2013. However, two other Companies in which Mr. Dilip Dharmasthal (DIN 0.1737794) is a Director have not filed their Annual Accounts and Annual Returns for more than three continuous financial years as on 31.03.2014. Consequently, Mr. Dilip Dharmasthal is disqualified as on 31.03.2013 from being appointed as Director under Clause (g) of sub-section (1) of 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 together with and subject to notes thereon and subject to our observations as mentioned in the above paragraphs and the annexure attached as mentioned in Para 3 above, 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 31st March 2014; and

ii. in the case of Profit and Loss Account, of the Loss for the year ended on that date.

iii. 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 the auditor's report to the members of Alacrity Housing Ltd for the year ended 31st March, 2014.

As required by the companies (Auditor Report) Order, 2003 (as amended) and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

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

b) All the assets have been physically verified by the management in accordance with a phased programme of verification, which in our opinion is reasonable, considering the size and the nature of business. The frequency of verification is reasonable and no material discrepancies have been noticed on such physical verification.

(ii) The company doesn't have any inventory.

(iii) a) to g) The Company has not granted any loan secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly clauses 4 (iii) (b) to (d) of the Order are not applicable to the company. The company has taken unsecured loans from one party to the extent of Rs. 0.63 lacs during the year. The balance outstanding on 31-3-2014 is Rs. 56.63 lacs to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. In our opinion and according to the information and explanations given to us, the rate of interest and the other terms and conditions of loans taken by the company, secured or unsecured, are prima-facie not pre-judicial to the interest of the company. The company is not regular in repayment of principal and interest.

(iv) From the information and explanations made available at the time of Audit, we are unable to express an opinion as to adequacy of internal control systems commensurate with the size of the company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods and services and whether there is a continuing failure to correct major weaknesses in internal control.

(v) a) The transactions made in pursuance of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 has been recorded in the register.

b) The transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public within the meaning of the sections 58A, 58AA or any other relevant provision of the Act and the rules framed there under. As per the information and explanations given, no order from the Company Law Board has been passed.

(vii) The Company has no formal internal audit system commensurate with its size and nature of its business.

(viii) The Central Government has not prescribed for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for the company.

(ix) a) According to the records of the company, there are undisputed statutory dues including Pension, investor Education and Protection Fund, Employees State Insurance, Income Tax (including TDS), Sales Tax, Service Tax, and Cess which have not been regularly deposited with the appropriate authorities. The extent of arrears of statutory dues outstanding for more than 6 months as at 31-3-2014 amounted to Rs. 62.91 lacs. Reference is drawn to Point No:12 of Note 15 (Notes to the Accounts) for details.

b) There are also disputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax (including TDS), Sales Tax, Service Tax, and Cess which have remained unpaid as at 31st March, 2014 to the extent of Rs. 8.86 lacs. Reference is drawn to Point No: 11 of Note 15 (Notes to the Accounts) for details.

(x) The company has accumulated losses at the end of the financial year 2013-2014 which has far exceeded its net worth and it has incurred cash losses in this financial year as well as in the immediately preceding financial year.

(xi) The Company has defaulted in repayment of dues to the Banks. For the amount and the period of default, refer Point Nos. 6 and 7 of Note 15 (Notes to the Accounts).

(xii) The company has not granted any loans or advances on the basis of security by way of pledge of. shares, debentures or other securities.

(xiii) The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the company.

(xiv) In our opinion and according to the information and explanations given to us, the company is not a dealer or trader in shares, securities, debentures and other investments.

(xvi) No term loans have been received during the year by the Company.

(xvii) On an overall examination of the financials of the company, we are unable to report that funds raised on short term basis have been used for long term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act. :

(xix) The company has not issued any debentures during the year.

(xx) The company has not raised any money by way of public issue during the year. '

(xxi) 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, we have not come across any instance of fraud on or by the Company noticed or reported during the year.

                                                       R.VATHSANGAM
Place: Chennai                                 Chartered Accountant
Dated: 1st September 2014                    (Membership No.018978)