Jai Corp Ltd

To the Members of JAI CORP LIMITED

We have audited the attached Balance Sheet of 'JAI CORP LIMITED' ('the Company')as at 31^st March, 2010, the Profit and Loss Account and also the Cash FlowStatement for the year ended on that date, annexed thereto. These financial statements arethe responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audit.

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.

1. As required by the Companies (Auditor's Report) Order, 2003 (as amended)issued byCentral Government of India in terms of sub-section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure hereto, a Statement on the matters specified in theparagraphs 4 and 5 of the said Order.

2. 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 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 referred to inthis report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementreferred to in 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 the written representations received from the Directors, as on 31^stMarch 2010, and taken on record by the Board of Directors, we report that none ofthe directors is disqualified as on 31^st March, 2010 from being appointed as adirector 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 explanationsgiven to us, the said accounts read together with the Significant Accounting Policies andother notes thereon, give the information required by the Companies Act, 1956 in themanner 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 31^stMarch, 2010;

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.

ANNEXURE TO AUDITORS' REPORT

(Referred to in paragraph 1 of our report of even date to the members of Jai CorpLimited on the accounts for the year ended 31^st March, 2010)

(i) In respect of its fixed assets:

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

(b) As explained to us, all the fixed assets have been physically verified by themanagement in accordance with the programme of verification, which in our opinion isreasonable, having regard to the size of the Company and nature of its assets. No materialdiscrepancies were noticed on such physical verification as compared to the book records.

(c) In our opinion and according to the information and explanations given to us, theCompany has not disposed off substantial part of fixed assets during the year and thegoing concern status of the Company is not affected.

(ii) In respect of its inventories:

(a) Inventories have been physically verified during the year by the management. In ouropinion the programme of verification is reasonable.

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

(c) On the basis of our examination of inventory records, we are of the opinion thatthe Company is maintaining proper records of inventory. As explained to us, no materialdiscrepancies were noticed on physical verification of the inventories, as compared tobook records maintained.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to /from companies, firms or other parties covered in the register maintained under section301 of the Companies Act, 1956: -

(a) The Company has granted unsecured loans to two wholly-owned subsidiary companies ofit. The maximum amount outstanding at any time during the year was Rs. 405,10.44 lacs andthe year-end balance was Rs. 359,89.45 lacs.

(b) In our opinion and according to the information and explanations given to us, theaforesaid loan is interest free and others terms and conditions of such loans are, primafacie not prejudicial to the interest of the Company.

(c) The loans given were not due for repayment at year end.

(d) The loans given were not due for repayment, therefore the question of overdueamounts does not arise.

(e) The Company has not taken any loans during the year from companies, firms or otherparties covered in the Register maintained under section 301 of the Companies Act, 1956.Consequently, the provisions of sub clauses (e), (f) and (g) of paragraph 4 of the saidOrder are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us,there is an adequate internal control system commensurate with the size of the Company andthe nature of its business for the purchase of inventories and fixed assets and also forsale of goods and services. During the course of our audit, we have not observed anycontinuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) According to the information and explanations given to us, we are of theopinion that transactions that need to be entered into the register maintained undersection 301 of the Companies Act, 1956, have been so entered.

(b) I n our opinion and according to the information and explanations given to us, thetransactions made during the year in pursuance of such contracts or arrangements exceedingvalue of Rupees five lakhs for each party, have been made at prices which are prima faciereasonable having regard to the prevailing market price at the relevant time, except forcertain transactions for purchase and sale of goods and materials of specific nature forwhich alternative quotations are not available and hence upon which, we are unable tocomment.

(vi) The Company has not accepted any deposits from the public and accordingly, theprovisions of clause (vi) of paragraph 4 of the said Order are not applicable to theCompany.

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

(viii) We are informed by the management that the Central Government has prescribed themaintenance of Cost Records pursuant to clause (d) of sub-section (1) of Section 209 ofthe Companies Act, 1956, in respect of one of the products of the Company. We have broadlyreviewed the accounts and records of the Company in this connection and are of the opinionthat prima facie, the prescribed accounts and records have been made and maintained. Wehave not, however, made a detailed examination of the records with a view to determinewhether they are accurate and complete.

(ix) (a) According to records of the Company examined by us, the Company has generallybeen regular during the year in depositing undisputed statutory dues including ProvidentFund, Employees State Insurance, Investor Education and Protection Fund, Income-tax,Sales-tax, Wealth tax, Service tax, Custom Duty, Excise Duty, Cess and other materialstatutory dues as applicable with the appropriate authorities . Further, since the CentralGovernment has till date not prescribed the amount of cess payable under section 441A ofthe Companies Act, 1956, we are not in a and explanations given to us, the Company hasmaintained proper records of transactions and contracts in respect of dealing in sharesand other investments and timely entries have been made therein. The investments are heldby the Company in its own name.

(xv) According to the information and explanations given to us, the Company has notgiven any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations

(*) Net of amount Rs. 5.50 Lacs deposited under protest. position to comment upon theregularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amountspayable in respect of the aforesaid dues were outstanding as at March 31,2010 for a periodof more than six months from the date they became payable;

(c) The disputed statutory dues aggregating Rs. 114.24 lacs as at 31.03.10, that havenot been deposited on account of matters pending before appropriate authorities, are asunder:

(x) The Company does not have accumulated losses at the end of the financial year. Ithas not incurred any cash losses in the current financial year and in the immediatelypreceding financial year.

(xi) 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 banks. During the year, the Company did not have any loans from financial institutionsor by way of debentures.

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

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/society, and hence the provisions of clause (xiii) of paragraph 4 of the said Order arenot applicable to the Company.

(xiv) In our opinion and according to the information given to us, term loans wereprima facie applied for the purposes for which the loans were obtained.

(xvii) On a review of utilization of funds based on an overall examination of theBalance Sheet of the Company as at 31st March, 2010, we report that prima facie, fundsraised on short-term basis have not been utilized for long-term investment.

(xviii) During the year, the Company has not made any preferential allotment of sharesto parties and companies covered in the register maintained under section 301 of theCompanies Act, 1956.

(xix) The Company has not issued any debentures and hence provisions of clause (xix) ofparagraph 4 of the said Order are not applicable to the Company.

(xx) During the year the Company has not raised any monies by way of public issue.

(xxi) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and as per the information and explanationsgiven by the management, we report that no fraud on or by the Company has been noticed orreported during the course of our audit.