Arman Financial Services Ltd

To,

The Members of

ARMAN FINANCIAL SERVICES LIMITED

Ahmedabad.

We have audited the attached Balance Sheet of Arman Financial Services Ltd. asat 31st March, 2011, the Profit & Loss Account and also Cash Flow Statement for theyear ended on that date annexed thereto (herein after referred to as financialstatements). These financial statements are the responsibility of the Company sManagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. 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 management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

2. As required by the Companies (Auditors' Report) Order, 2003 issued by the CentralGovernment 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& 5 of the said Order.

3. Further to our comments in the Annexure referred in para 3 above, we report that:

(i) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of our audit;

(ii) 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;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt 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 and taken onrecord by the Board of Directors, we report that none of the directors is disqualified ason 31st March 2011 from being appointed as directors in terms of clause (g) of sub-section(1) of section 274 of the Companies Act 1956;

(vi) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts, read together with the notes thereon, givethe information required by the Companies Act, 1956, in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:

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

(b) in the case of the Profit and Loss Account, of the Profit of the Company for theyear ended on that date; and

(c) in the case of the Cash flow Statement, of the Cash Flow for the year ended on thatdate.

ANNEXURE

Referred to in paragraph 3 of our report of even date for the year ended 31st March2011.

1) In respect of Fixed Assets:

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

b. As per the information and explanations given to us, all the fixed assets have beenphysically verified by the management during the year. We are informed that no materialdiscrepancies were noticed on such verification.

c. During the year, the Company has not disposed off any major/substantial part of thefixed assets.

2) In respect of its Inventories:

a. The inventory has been physically verified during the year by the management. In ouropinion, the frequency of verification is reasonable.

b. The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

c. On the basis of our examination of the records of inventory, we are of opinion thatthe Company is maintaining proper records of inventory. No discrepancies were noticed onverification between the physical stocks and books records.

3) In respect of loans, secured or unsecured, granted or taken by the company to/fromcompanies, firms or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956 :

a. During the year under audit, there are ten parties covered in the registermaintained under section 301 of the Companies Act, 1956 from whom the company has takenloans. The year end balance is amounting to Rs. 1.81 Lacs and the maximum amount involvedduring the year was Rs. 179.88 Lacs.

b. In our opinion and according to the information and explanations given to us, incase of loans taken during the period, the rates of interest, wherever applicable andother terms and conditions are not prima facie prejudicial to the interest of the company.

c. There are no stipulated terms for repayment of loans taken by the company from thecompanies/ firms / parties listed in the register maintained under section 301 of theCompanies Act, 1956. Hence we are not able to give comment on para (iii) (c) & (d) ofthe Companies (Auditor s Report) Order, 2003.

d. As per the information and explanation given to us, the Company has not granted anyloan to any of the companies, firms and other parties covered under section 301 of theCompanies Act, 1956 hence clause no (iii)(e) to (iii)(g) of para 4 are not applicable.

4) In our opinion and according to the information and explanations given to us, theinternal control system for purchase of fixed assets and for sanction, disbursements andrecovery of loans given by the Company are adequate and commensurate with the size of theCompany and present nature of its business. During the course of audit we have notobserved any continuing failure to correct major weakness in internal controls.

5) In respect of contract or arrangements covered under Section 301 of the CompaniesAct, 1956:

a. Based on the audit procedures applied by us and according to the information andexplanations provided by management, we are of the opinion that the contract orarrangements that need to be entered into the register maintained under section 301 havebeen so entered.

b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registersmaintained under section 301 of the Act, in respect of any party during the year have beenmade at prices which are reasonable having regard to prevailing market prices at therelevant time.

6) During the year, the Company has not accepted any deposits from the public withinthe meaning of provisions of Sections 58A and 58AA and relevant other provisions of theCompanies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

7) In our opinion, the Company has an internal audit system commensurate with the sizeand nature of its business.

8) As informed to us, the maintenance of cost records have not been prescribed by theCentral Government under section 209(1) (d) of the Companies Act, 1956, for the year underreview.

9) In respect of Statutory Dues:

a. According to the records of the Company, the Company is by and large regular indepositing with appropriate authorities undisputed statutory dues including providentfund, employee s state insurance, income-tax, sales-tax, wealth-tax, Service Tax, CustomDuty, Excise Duty, Cess and other statutory dues applicable to it except short fall inpayment of Advance Tax of Rs. 38.80 lacs.

b. According to the information and explanations given to us, no undisputed amountspayable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty andExcise Duty were outstanding, as at 31st March, 2011 for a period of more than six monthsfrom the date they became payable.

c. According to the records of the Company, the dues of sales tax, income tax, customs,wealth-tax, excise duty, cess which have not been deposited on account of disputes and theforum where the dispute is pending are as under:

10) The company has no accumulated losses and has not incurred any cash losses duringthe financial period under review or in the immediately preceding financial year.

11) In our opinion and according to the information and explanations given to us, thecompany has not defaulted in repayment of dues to a financial institution, bank ordebenture holders.

12) The Company has not granted any loans and advances by way of pledge of Shares,Debentures and other securities.

13) The provisions of any special statute applicable to Chit Fund, Nidhi or Mutualbenefit Fund / Societies are not applicable to the Company.

14) In respects of shares, securities, debentures and other investments dealt or tradedby the company, proper records are maintained in respect of transactions and contracts andtimely entries have been made therein. All the investments are held by the Company in itsown name.

15) As per the information provided to us, The Company has not given any guarantee forloans taken by others from bank or financial institutions.

16) In our opinion, and according to the information and explanations given to us, onoverall basis, the term loans have been applied for the purpose for which they wereobtained.

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

18) During the year, the Company has not made any preferential allotment of shares toparties and companies covered in the register maintained under section 301 of theCompanies Act, 1956.

19) The Company has not issued any Debentures and therefore the question of creatingthe securities in respect thereof does not arise.

20) During the year, the Company has not raised any money by way of Public issues.

21) Based upon the audit procedures performed and information and explanations given bythe management, we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit.