J J Finance Corporation Ltd

To

The Members

J J Finance Corporation Limited

We have audited the attached Balance Sheet of J J Finance Corporation Limitedas at 31st March 2010 and the Profit & Loss Account for the year ended on that dateannexed thereto and Cash Flow Statement for the year ended on that date. These financialstatements are the responsibility of the Company's Management. Our responsibility is toexpress an opinion on these financial statements based 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 mis-statement. Anaudit includes examining, on 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.

2. As required by the Companies (Auditors' Report) Order, 2003 (as amended) issued bythe Central Government of India in terms of sub-section (4A) of section 227 of 'TheCompanies Act, 1956' (the Act), we enclose in the annexure a statement on the matterspecified in paragraphs 4 and 5 of the said Order.

3. Further to our comment in annexure referred to in paragraph 2 above, we report that:

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, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the Books of Account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the mandatory Accounting Standards referred insub-section (3C) of Section 211 of the" Companies Act, 1956.

e) In our opinion and based on information and explanations given to us, none of thedirectors are disqualified as on March 31, 2010 from being appointed as a director interms 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 explanationsgiven to us, the said accounts, subject to note 6 of schedule 'N' regarding pendingconfirmation & reconciliation, read together with the Significant Accounting Policiesand Other Notes on Accounts in Schedule 'N', give the information required by theCompanies Act, 1956, in the manner so required, and present a true and fair view inconformity with the accounting principles generally accepted in India

(i) In so far as it relates to Balance Sheet, of the state of affairs of the Company asat 31st March 2010,

(ii) In so far as it relates to the Profit & Loss Account, of the Profit of theCompany for the year ended on that date; and

(iii) In so far as it relates to the Cash Flow Statement, of the Cash Flow of theCompany for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

(REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE)

1. In respect of its fixed assets :

a) The Company has maintained proper records showings full particulars includingquantitative details and situation of fixed assets on the basis of available information

b) As explained to us, the fixed assets have been verified by the management during theyear in a phased periodical manner, which in our opinion is reasonable, having regard tothe size of the Company and nature of its assets. No material discrepancies were noticedon such physical verification.

c) In our opinion, the Companies has not disposed of substantial part of fixed assetsduring the period and the going concern status of the Company is not affected.

2. a) The inventories have been physically verified during the year by the managementat resonable intervals.

b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of stocks followed by the management are resonable andadequeate in relation to the size of the company and nature of its business.

c) On the basis of our examination, we are of the opinion that the Company ismaintaining proper records of inventory. No material discrepancies were noticed onverification between the physical stocks and the book records.

3.1. The Company has given loan to two companies covered in the Register maintainedunder section 301 of the Companies Act, 1956. The maximum amount involved during the yearwas Rs 285.50 lacs and the year end aggregate balance was Rs 47.84 lacs

In our opinion, the rate of interest and other terms and conditions on which loans havebeen granted and listed in the Register maintained under Section 301 of the Companies Act,1956 are not prima facie prejudicial to the interest of the company.

As informed, the fresh loans granted by the company are repayable on demand; hence thequestion of repayment of principal amount does not arise. However, the party has beenregular in payment of interest.

There are no overdue loans granted to company listed in the register maintained undersection 301 of the Companies Act, 1956.

3. 2. The Company has not taken any loan from any Company listed in the registermaintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the company and thenature of its business for the purchase of fixed assets and investments and also for thesale of fixed assets and investments. During the course of audit, we have not observed anymajor weaknesses in internal control system.

5. a) The particulars of contracts or arrangement referred to in section 301 of theCompanies Act, 1956 have been entered in the register required to be maintained under thatsection.

b) The Company has not entered into transactions in pursuance of contracts /arrangements entered in the register maintained under section 301 of the Companies Act.1956 and exceeding the value of rupees five lacs in respect of any party during the year.

6. The Company has not accepted any deposits from public.

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

8. We have been informed that the Central Government has not prescribed the maintenanceof Cost Records under Section 209 (1) (d) of the Companies Act, 1956 for any of theproduct of the Company.

9. In respect of statutory dues:

a. The undisputed statutory dues including Provident Fund, Investor Education andProtection Fund, Employees State Insurance, lncome Tax, Sales Tax Wealth Tax, Service Tax,Customs Duty, Excise Duty, Cess and other statutory dues have been regularly depositedwith the appropriate authorities. No undisputed amounts payable in respect of theaforesaid dues were outstanding as on 31st March, 2010 for a period of more than sixmonths from the date of becoming payable.

b There are no dues outstanding of income tax, sales tax, wealth tax, custom duty,service tax, excise duty, and cess on account of any dispute.

10. The Company has no accumulated losses as at 31st March, 2010. The Company has notincurred any cash loss during the year under audit and in the immediate preceedingfinancial year.

11. Based on our audit procedures and according to the information and explanationsgiven to us, we are of the opinion that the Company has not defaulted in repayment of duesto financial institutions, banks or debenture holders

12. In our opinion and according to the information and explanations given to us, noloans and advances have been granted by the Company on the basis of security by way ofpledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fundsociety therefore, clause 4(xiii) of Companies (Auditor's Report) Order, 2003 (as amended)is not applicable to the company.

14. The Company has maintained proper records of transactions and contracts in respectof trading in securities, debentures and other investments and timely entries have beenmade therein. All shares, debentures and other investments have been held by the Companyin its own name.

15. The Company has not given any guarantee for loans taken by others from bank orfinancial institutions.

16. The Company has not raised any new term loans during the year; and hence thequestion of their application for intended purpose, does not arise.

17. According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that no funds raised onshort-term basis which have been 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. According to the information and explanations given to us, during the periodcovered by our audit Report, the company has not issued debentures.

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

21. In our opinion and according to the information and explanations given to us, nofraud on or by the company has been noticed or reported during the year under audit thatcauses the financial statement to be materially misstated.