2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 statements pres- entation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2005 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:

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

b) In our opinion, proper books of account as required by law have been kept by the Com- pany, so far as appears from our examination of those books;

c) The Balance Sheet and Profit and Loss account dealt with by this report are in agreement with the books of account;

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

e) On the basis of written representations received from the directors, as on March 31, 2007, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2007 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with notes thereon give the information required by the

Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

i) In the case of the balance sheet, of the state of affairs of the Company as at March 31,2007;

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

iii) In case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Annexure referred to in paragraph 3 of the Auditors Report to the Members of Esskay Telecom Ltd. on the accounts for the year ended March 31, 2007.

(i) . (a) The company has maintained proper records to show full particulars, including quantitative details and situation of its fixed assets;

(b) We have been informed that the fixed assets of the company are physically verified by the management at reasonable intervals and the procedure of such verification, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Discrepancies noticed on such verification, which were not material, have been properly dealt with in the books of account;

(c) No Substantial part of Fixed Assets has been disposed off by the company during the year under review.

(ii) (a) Physical verification of inventory (Shares & Securities) has been conducted at reasonable intervals by the management during the year;

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

(c) The company has maintained proper records of inventory and discrepancies noticed on physical verification, which were not material, have been properly dealt with in the books of account;

(iii) (a) The company has not granted unsecured/secured loans to companies, firms or other parties covered in the register maintained under section 301 of the Act and accordingly paragraphs iii (b), (c) and (d) are not applicable

(b) The company has not taken any secured/unsecured loan from companies, firms or other parties covered in the register maintained under section 301 of the Act and accordingly paragraphs iii (f) and (g) of the Order are not applicable.

(iv) According to the information and explanations given to us, there are adequate internal control procedures commensurate with,the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the underlying internal controls.

(v) (a) According to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into a register in pursuance of section 301 of the Act have been duly entered;

(b) Aforesaid 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 under the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under.

(vii) The company has an internal audit system commensurate with its size and nature of its business;

(viii) Maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

(ix) (a) According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also based on Management representations, undisputed statutory dues in respect of Provident Fund, Employees State Insurance dues, Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Sales Tax, Custom Duty, Excise duty, Cess and other material statutory dues have generally been regularly deposited by the company during the year with appropriate authorities. There are no undisputed statutory dues as referred to above as at 31 st March, 2007 outstanding for a period of more than six months from the date they became payable.

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

(x) The company has no accumulated losses as at 31 st March, 2007, and it has not incurred any cash loss during the financial year ended on that date or in the immediately preceding financial year.

(xi) According to the records of the company, it has not defaulted in repayment of its dues to any financial institution or bank or to debenture holders as at the balance sheet date.

(xii) According to the information and explanations given to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other investments.

(xiii) In our opinion, considering the nature of activities carried on by the company during the year, the provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to it.

(xiv) The Company is maintaining proper records for purchases of shares, securities, debentures and other investments and timely entries have been made therein. The Shares, securities, debentures and other investments have been held by the company in its own name except to the extent, exemption has been granted under section 49 of the Companies Act, 1956.

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

(xvi) We have been informed by the management that no term loans have been raised during the year.

(xvii) According to information and explanations given to us by the management the funds raised on short-term basis have not been used for long-term investment.

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

(xix) The company has not issued any debentures.

(xx) The company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedure performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit for the year ended 31 st March, 2007.

                                                    For A. K. BASU&CO.
                                                Chartered Accountants

                                                         (A. K. BASU)
Place : Kolkata                                           Proprietor
Dated : 30th June, 2007                          Membership No. 5887