Aegis Logistics Ltd

TO THE MEMBERS OF AEGIS LOGISTICS LIMITED

1. We have audited the attached Balance Sheet of Aegis Logistics Limited(“the Company”) as at 31st March, 2011, the Profit and Loss account and the CashFlow statement of the Company for the year ended on that date, both annexed thereto. Thesefinancial statements are the responsibility of the Company's Management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the Management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by theCentral Government in terms of Section 227 (4A) of the Companies Act, 1956 we enclose inthe Annexure, a Statement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportas follows:-

a) We have obtained all the information and explanations which to the best of ourknowledge 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 theCompany so far as appears from our examination of those books;

c) The Balance Sheet, the Profit and Loss account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, the Profit and Loss account and the Cash FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 211(3C) of the Companies Act, 1956;

e) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts 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 accountingprinciples generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2011;

ii) in the case of the Profit and Loss account, of the profit of the Company for theyear ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows of the Company for theyear ended on that date.

5. On the basis of the written representations received from the Directors as on 31stMarch, 2011 taken on record by the Board of Directors, we report that none of theDirectors is disqualified as on 31st March, 2011 from being appointed as a Director interms of Section 274(1)(g) of the Companies Act, 1956.

(Referred to in paragraph 3 of our report of even date on the accounts for the yearended 31st March, 2011 of Aegis Logistics Limited ("the Company")

(i) Having regard to the nature of the Company's activities, clauses (xiii) and (xiv)of CARO are not applicable.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of the fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which, in our opinion, provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us, no material discrepancies were noticed on suchverification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company and such disposal has, in our opinion,not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by theManagement at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

(iv) According to the information and explanations given to us the Company has neithergranted nor taken any loans, secured or unsecured, to or from companies, firms or otherparties covered in the Register maintained under Section 301 of the Companies Act 1956.

In view of what has been stated above, sub-clauses (b), (c), (d), (f) and (g) of clause(iii) of CARO are not applicable to the Company for the year.

(v) In our opinion and according to the information and explanations given to us, thereare adequate internal control systems commensurate with the size of the Company and thenature of its business for the purchase of inventory and fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records ofthe Company, we have neither come across nor have been informed of any continuing failureto correct major weaknesses in the aforesaid internal control systems.

(vi) According to the information and explanations given to us, there are no contractsor arrangements that need to be entered into a Register in pursuance of Section 301 of theCompanies Act, 1956. Hence, we have no comments to offer in respect of clause v (b) ofCARO.

(vii) In our opinion and according to the information and explanations given to us, theCompany has complied with the provisions of Sections 58A and 58AA or any other relevantprovisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 with regard to the deposits accepted from the public. According to the informationand explanations given to us, no order has been passed by the Company Law Board or theNational Company Law Tribunal or the Reserve Bank of India or any Court or any otherTribunal.

(viii) In our opinion, the internal audit functions carried out during the year by afirm of Chartered Accountants appointed by the Management have been commensurate with thesize of the Company and the nature of its business.

(ix) We are informed that maintenance of Cost Records has not been prescribed by theCentral Government under Section 209(1) (d) of the Companies Act, 1956 for any of theproducts of the Company.

(x) According to the information and explanations given to us in respect of statutorydues:

(a) The Company has been generally regular in depositing undisputed dues, includingProvident Fund, Investor Education and Protection Fund, Employees' State Insurance, Incometax, Sales tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other materialstatutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, InvestorEducation and Protection Fund, Employees' State Insurance, Income tax, Sales tax, WealthTax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues inarrears as at 31st March, 2011 for a period of more than six months from the date theybecame payable.

(c) According to the records of the Company, there are no dues of Sales tax, Incometax, Custom duty, Wealth tax, Service Tax, Excise duty and Cess, which have not beendeposited on account of any dispute.

(xi) The Company has no accumulated losses as at 31st March, 2011 and has not incurredany cash losses during the financial year covered by our audit and the immediatelypreceding financial year.

(xii) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in the repayment of dues to banks, financial institutions anddebenture holders.

(xiii) According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

(xiv) The Company has given guarantees amounting to Rs. 18,900 lacs for loans taken byits subsidiaries from banks and against the credits availed by the subsidiaries from thesuppliers. In our opinion and according to the information and explanations given to us,the terms and conditions, of such guarantees, are not prima facie prejudicial to theinterest of the Company.

(xv) In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purposes for which they were obtained, other thantemporary deployment pending application.

(xvi) In our opinion and according to the information and explanations given to us andon an overall examination of the Balance Sheet, we report that funds raised on short-termbasis have not been used during the year for long- term investment.

(xvii) The Company has not made any preferential allotment of shares to parties andcompanies covered in the Register maintained under Section 301 of the Companies Act, 1956during the year.

(xviii) According to the information and explanations given to us, the Company hascreated securities / charges in respect of debentures issued and outstanding at the yearend.

(xix) The Company has not raised any money by public issue during the year.

(xx) To the best of our knowledge and according to the information and explanationsgiven to us, no fraud by the Company and no fraud on the Company has been noticed orreported during the year.