Management's Responsibility for the Financial Statements :

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows 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") (which continues to be applicable in respect of section 133 of the Companies Act, 2013 in terms of General Circular No. 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial 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 financial 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial 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 financial 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 company'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 financial 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 financial 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:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

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

iii. In the case of the Cash Flow Statement, of the cash flows 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 specified in paragraphs 4 and 5 of the 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 Profit 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 Profit 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 (which continues to be applicable in respect of section 133 of the Companies Act, 2013 in terms of General Circular No. 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs);

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 disqualified 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.

The Annexure referred to in paragraph 1 of Our Report of even date to the members of PARAGON FINANCE LIMITED on the accounts of the company for the year ended 31st March, 2014.

1. 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 during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of company and the nature of its assets. No materials discrepancies were noticed on such verification.

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

2. a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. The Company has received confirmation of Shares lying with depository participants at regular intervals.

b) The procedures of physical verification of inventories followed by management are reasonable and adequate in relation to the size of the company and nature of its business.

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

3. a) The Company has not given any loans, secured or unsecured to Companies, Firms or other parties listed in the register maintained pursuant to provision of section 301 of the Companies Act, 1956.

b) The Company had taken loan from 15 (Fifteen) companies/parties listed in the register maintained pursuant to provision of sections 301 of the Companies Act, 1956. The maximum amount involved during the year was n 3206.71 lakhs and the year-end balance of loans taken from such parties was n 1669.57 lakhs.

c) In our opinion and according to the information and explanations given to us, the rate of interest,

wherever applicable and other terms and conditions are not prima facie prejudicial to the interest of the company.

d) In respect of loans taken by the company, the interest payments are regular and the principal amount

is repayable on demand. There is no overdue amount in respect of such loans taken by the Company.

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

5. a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) No transaction of any amount of purchase of goods and materials and sale of goods, materials and services as aggregating to n 5,00,000/- during the year has been made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956.

6. In our opinion and according to the information and explanations given to us, the company has not taken any loan (Secured or Unsecured) nor has it accepted any deposit from the public within the meaning of Section 58A and Section 58AA or any other relevant provisions of the Companies Act, 1956.

7. In our opinion, the internal audit system of the company is commensurate with its size and nature of its business.

8. The Central Government of India has not prescribed the maintenance of cost records under section 209 (I) (d) of the Companies Act, 1956 for any of the products of the company.

9. a) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respects of Income -Tax, Wealth-Tax, Service Tax, Sales Tax, Custom Duty, Excise Duty and cess were in arrears, as at 31st March, 2014 for a period of more than six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess, which have not been deposited on account of any dispute.

10. The company has no accumulated losses as at 31st March, 2014 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to any bank as at the balance sheet date.

12. In our opinion, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

13. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

14. The company has maintained proper records of transactions and contracts in respect of trading in shares, securities, debentures and other investment and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the company in its own name except as permissible under section 49 of the Companies Act, 1956.

15. In our opinion, the company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4 (xv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

16. The company has not obtained any term loans.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the no funds raised on short-term basis have been used for long-term investment.

18. In our opinion and according to the information and explanations given to us, the company has not allotted preferential shares during the year to any parties covered U/S 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (xviii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

19. The company has not issued any debentures during the year.

20. The company has not raised any money by way of public issue during the year.

21. 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, MANDAWEWALA & CO.
                                                         FRN : 322130E 
                                                 Chartered Accountants

1, British Indian Street,
1st Floor, Suite No. 110D,
Kolkata -700 069.
                                            [CA. ANIL KR. MANDAWEWALA]
                                                               Partner
Dated: The 17th day of May, 2014                         M. No. 055939