We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003 and as amended by the companies (Auditor's Report) (Amendment) Order, 2004 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 on the matters specified in paragraphs 4 and 5 of the said order.

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 appears from our examination or those books.

iii) The Balance Sheet and Profit and Loss Account 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 dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v) On the basis of written representations received from the directors, as on 31st March, 2010and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 on the Companies Act, 1956;

vi) In Our opinion and to the best of our information and according to the explanations given to us, subject to notes on accounts, the said accounts give this 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 Balance Sheet, of the state of affairs of the company as at 31st March, 2011; and

b) in the case of the Profit and Loss Account, of the profit/loss for the year ended on that date. ANNEXURE

The Auditor's Report on the account of a company to which this Order applied shall include a statement in the following matters, namely:

i) a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) In our opinion the fixed assets have been physically verified by the management at reasonable intervals; having regards to the size of the company and the nature of its assets. No material discrepancies between the books records and the physical inventory were noticed.

c) During the year, in our opinion a substantial part of fixed assets has not been disposed of by the company.

ii) a) The physical verification of inventory has been conducted at reasonable intervals by the management.

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

c) The company maintaining the proper record of inventory and no material discrepancies were noticed on physical verification.

iii) a) The company has neither granted nor taken any loans, secured or unsecured, from companies, firm or other parties listed in the register maintained u/s 301 of the Companies Act, 1956.except from Kamlesh Gupta and amount outstanding to her account is Rs.8,98,826 as on 31/03/2011.

b) The rate of interest and other terms and condition of the loans taken by company are prima facie prejudicial to the interest of the company.

c) Yes principal amount and interest on loan taken by the company from Kamlesh Gupta is regular.

d) There is no overdue amount.

iv) In our opinion and according to the information and explanation given to us there is adequate internal control procedure commensurate with the size of the company and the nature of its business for the purpose of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination, and according to the information and explanation given to us, we have neither come across nor have we been informed of any instance of major weaknesses in the aforesaid internal control procedure.

v) a) According to the information and explanation given to us, we are of the opinion that the transactions that need to be entered into the register maintain under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5.00 Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanation given to us, the company has complied to the provisions of section 58A and 58AA of the Companies Act, 1956, and the companies (acceptance of deposit) rules, 1975 as applicable except unsecured loan of Rs.8,98,826/- from Mrs. Kamlesh Gupta with regards to the deposits accepted from the public. As per information and explanation given to us no order under the aforesaid section has been passed by the company law board on the company.

vii) In our opinion, the company has an internal audit system commensurate with its size and nature of its business.

viii) To the best of our knowledge, the Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956, for any of the products of the company accepting paper for which in our opinion, prima facie, the prescribed accounts and records have been maintained and are being made up. We are not required to and, accordingly, have not made a detailed examination of the records.

ix) a) According to the information and explanation given to us and according to the books and records as produced and examined by us, in our opinion, the company is regular in depositing undisputed statutory dues including, investor education and protection fund employees' state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues as application with the appropriate authorities Except ESI of Rs.2090/- and ESI interest of Rs. 65,687/- has not been paid till date.

b) As at 31st March, 2011 according to the records of the company and the information and explanation given to us the following are the particular of dues on account sales tax, income tax, custom duty, wealth tax, excise duty and cess matters that have not been deposited:

Name of the      Name of      Amounts   Forum where pending
Statute          the Dues    (in Lakhs)            

ESI              ESI            0.02       Employee's state insurance

Interest         ESI            0.66       ESI

xi) According to the information and explanation given to us, the company has defaulted in payment of dues of IDBI & Punjab & Sind Bank. Total outstanding amount of IDBI is Rs.48.13 Crore including interest since September- 1999 and Punjab & Sind Bank is Rs. 10.30 Crore including interest since march-2001.

xii) According to the information and explanation given to us, the company has not granted any loans and advance on the basis of security by way of pledge of shares, debentures and other securities.

xiii) The provisions of any special statute as specified under paragraph, of the order are not applicable to company.

xiv) The company is not dealing or trading in Shares, Securities, Debentures and other investments.

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

xvi) The company has not taken any terms loan during the year.

xvii) Based on the information and explanation given to us, and on an overall examination of the Balance Sheet of the company, in our opinion, there are no funds raised on a short term basis which have been used for long term investment and vice versa

xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the Register maintained Under Section 301 of the Companies Act, 1956, during the year. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

xix) No securities have been created in respect of debentures, since no debentures have been issued.

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

xxi) According to the information and explanation given to us, during the year, there was no fraud on the company or by the company.

                                              for K J M A & ASSOCIATES
                                              CHARTERED ACCOUNTANTS
  
DATED : 07/09/2011                           (KRISHAN JUNEJA-FCA)

PLACE : CHANDIGARH                                PARTNER

                                                M. No. 089484