Joy Reality Ltd

TO,

THE MEMBERS OF

JOY REALITY LIMITED

(formerly Madhusudan Leasing and Finance Limited)

1. We have audited the attached Balance Sheet of JOY REALITY LIMITED (FormerlyMadhusudan Leasing and Finance Limited) as at 31 st March 2010, the Profit and LossAccount and the Cash flow statement of the Company for the year ended on that date asannexed thereto. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. We conducted our audit in accordance with standards of auditing 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 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 the Management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides reasonable basis forour opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 as amended by theCompanies (Auditor's Report) (Amendment) Order, 2004 ("the order") issued by theCentral Government of India in terms of sub section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4and 5 of the said order.

4. Further to our comments in the Annexure referred to in Paragraph (3) above; wereport 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 accounts as required by law have been kept by theCompany so far as appears from our examination of those books;

(iii) the Balance Sheet, the Profit & Loss Account and the Cash Flow Statementdealt with by this report are in agreement with the books of accounts;

(iv) in our opinion, the Balance Sheet, the Profit & Loss Account and the Cash FlowStatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956;

(v) based on the representations made by the Directors and taken on record by the Boardof Directors of the Company and the information and explanations given to us, none of theDirectors is, as at March 31, 2010, prima-facie disqualified from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956 and

(vi) in our opinion and to the best of our information and according to theexplanations given to us, the said accounts, subject to :

Note V(i) - regarding non-provision of doubtful debts of Rs.83,80,299/-

Note V(ii) - regarding diminution in the value of investments

read together with other notes in Schedule 'M', give the information required by theCompanies Act, 1956, in the manner so required and give a true and fair view m conformitywith the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the State of affairs of the company as atMarch 31, 2010.

(b) in the case of Profit & Loss Account of the PROFIT of the Company for the yearended on that date and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

ANNEXURE TO THE AUDITORS'REPORT

(Referred to in Paragraph 3 of our Report of even date for the year 31 st March 2010)

(I) In respect of its Fixed Assets

(a) The records showing full particulars including quantitative details and situationof fixed assets needs to be updated.

(b) As explained to us according to the practice generally followed, the fixed assetsof the Company are physically verified by the management at reasonable intervals, in aproper manner, which in our opinion is reasonable and no discrepancies were noticed onphysical verification;

(c) The Lease Assets has been dispensed during the year amounting to Rs.1,46,06,426/-(WDV 69,02,339/-) in view of the closure of Lease Business, and this does not affect thegoing concern status of the Company;

(II) In respect of inventories

(a) We are informed that inventories in the nature of work in progress undertaken havebeen physically verified by the management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, theprocedure of stock-in-trade followed by the management is reasonable and adequate inrelation to the size of the company and the nature of its business.

(c) In our opinion, the company is generally maintaining proper records of inventory.No material discrepancies have been notified between the physical stock and book records.

(III) In respect of the loans, secured or unsecured, granted or taken by thecompany to/from companies, firms or other parties covered under register maintained u/s301 of The Companies Act, 1956:

(a) The Company has not granted any secured or unsecured loans to companies, firms andother parties as covered in the register maintained u/s 301 of The Companies Act, 1956.Accordingly, paragraphs 4(iii) (b) (c) and (d) of "the Order" are notapplicable.

(b) The Company has taken unsecured loan from two parties covered in the registermaintained under section 301 of the Companies Act, 1956. The maximum amount involvedduring the year is 35,00,000/- and the year-end Balance of loans taken from such partieswas NIL.

(c) The rate of interest and other terms and conditions of loans taken by the companyare not prima facie prejudicial to the interest of the company. (d) There is fullrepayment of principal amount.

IV. I n our opinion and according to the information and explanations given to us,there is adequate internal control procedure commensurate With the size of the company andnature of its business for purchase of fixed assets, inventories and for sale of goods, ifany. During the course of our audit no major weakness has been observed in the internalcontrol procedures.

V. According to the information and explanations given to us, there are notransactions in pursuance of contracts and arrangements entered in the register maintainedunder section 301 of the Companies Act, 1956 aggregating during the year to f 500,OOO/- ormore in respect of any party in the year under report.

VI. The Company has not accepted any deposits from the public within the meaning ofSection 58A and Section 58AA of the Companies Act 1956 and the rules framed there under.

VII. As informed to us, the Company has no formal internal audit system as such butits internal control procedures ensure reasonable internal check of its financial andother records.

VIII. As informed to us, the maintenance of cost records has not been prescribed bythe Central Government under Section 209 (1) (d) of the Companies Act, 1956, in respect ofactivities carried on by the Company.

IX. According to information and explanation given to us, in respect to statutorydues

(a) The company is generally regular in depositing with the appropriate authorities inIndia the undisputed statutory dues under Income tax Act and other material statutory duesas applicable to it.

(b) At the end of the financial year there were no undisputed amounts payable n respectof income tax and other material statutory dues as applicable, i for a period of more thensix months from the date they become payable.

X. The accumulated losses of the Company are more than 50% of its net worth. TheCompany has not incurred cash losses during the financial year covered by our audit and inthe immediately preceeding financial year.

XI. In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to any bank or financial institution.

XII. In our opinion and according to the information and explanations given to usthe company has not granted any loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

XIII. In our opinion and according to the information and explanation given to usthe Company is not a chit fund or a nidhi/mutual benefit fund / society. Therefore, theprovisions of clause 4 (xiii) of "the Order" are not applicable to the Company.

XIV. In our opinion and according to the information and explanations given to us,the Company is not a dealer in or trader in shares, securities, debentures and otherinvestments. Accordingly, the provisions of clause 4(xiv) of "the Order" are notapplicable to the Company.

XV. In our opinion and according to the information and explanations given to usthe company has not given any guarantee for loans taken by others from bank and financialinstitutions.

XVI. In our opinion and according to the information and explanations given to usthe Company has not obtained term loans during the year.

XVII. 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 have been used for long-term investment.

XVIII. 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 1956,during the year.

XIX. The Company has not raised any funds by the way of debenture issue during theyear. Accordingly, the provision of clause 4 (xix) of "the Order" is notapplicable to the Company.

XX. The Company has not raised any money by way of public issue during the yearunder review.

XXI. According to the information and explanations given to us no fraud on or bythe Company was noticed or reported during the year.