Max India Ltd

TO THE MEMBERS OF MAX INDIA LIMITED

1. We have audited the attached Balance Sheet of Max India Limited (the"Company") as at March 31, 2010, and the related Profit and Loss Account andCash Flow Statement for the year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are the responsibility of theCompany’s Management. Our responsibility is to express an opinion on these financialstatements 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 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.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by theCompanies (Auditor’s Report) (Amendment) Order, 2004 (together the "Order")issued by the Central Government of India in terms of sub-section (4A) of Section 227 of‘The Companies Act, 1956’ of India (the ‘Act’) and on the basis ofsuch checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we further report that:

(i) (a) The Company is maintaining proper records showing full particulars, includingquantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which, in ouropinion, is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme, a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies between the bookrecords and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed of by the Company during the year.

(ii) (a) The inventory (excluding stocks with third parties) has been physicallyverified by the Management during the year. In respect of inventory lying with thirdparties, these have substantially been confirmed by them. In our opinion, the frequency ofverification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe Management are reasonable and adequate in relation to the size of the Company and thenature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, theCompany is maintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to book records were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies,firms or other parties covered in the register maintained under Section 301 of the Act.

(b) The Company has not taken any loans, secured or unsecured, from companies, firms orother parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us,having regard to the explanation that certain items purchased are of special nature forwhich suitable alternative sources do not exist for obtaining comparative quotations,there is an adequate internal control system commensurate with the size of the Company andthe nature of its business for the purchase of fixed assets and for the sale of goods andservices. Further, on the basis of our examination of the books and records of theCompany, and according to the information and explanations given to us, we have neithercome across nor have been informed of any continuing failure to correct major weaknessesin the aforesaid internal control system.

(v) (a) In our opinion and according to the information and explanations given to us,the particulars of contracts or arrangements referred to in Section 301 of the Act havebeen entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements and exceeding the valueof Rupees Five Lakhs in respect of any party during the year have been made at priceswhich are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the rules framed there under.

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

(viii) The Central Government of India has not prescribed the maintenance of costrecords under clause (d) of subsection (1) of Section 209 of the Act for any of theproducts of the Company.

(ix) (a) According to the information and explanations given to us and the records ofthe Company examined by us, in our opinion, the Company is regular in depositing theundisputed statutory dues including provident fund, investor education and protectionfund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax,customs duty, excise duty, cess and other material statutory dues as applicable with theappropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us, the particulars of dues of income-tax, sales-tax, wealth-tax,service-tax, customs duty, excise duty and cess as at March 31, 2010 which have not beendeposited on account of a dispute, are disclosed in Notes 1(d) and 4 on Schedule 23B.

(x) The Company has no accumulated losses as at March 31, 2010 and it has not incurredany cash losses in the financial year ended on that date or in the immediately precedingfinancial year.

(xi) According to the records of the Company examined by us and the information andexplanation given to us, the Company has not defaulted in repayment of dues to anyfinancial institution or bank or debenture holders as at the balance sheet date.

(xii) The Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

(xiii) The provisions of any special statute applicable to chit fund / nidhi / mutualbenefit fund/ societies are not applicable to the Company.

(xiv) In our opinion, the Company has maintained proper records of transactions andcontracts relating to dealing or trading in shares, securities, debentures and otherinvestments during the year and timely entries have been made therein. Further, suchsecurities have been held by the Company in its own name.

(xv) In our opinion and according to the information and explanations given to us, theterms and conditions of the guarantees given by the Company, for loans taken by othersfrom banks or financial institutions during the year, are not prejudicial to the interestof the Company.

(xvi) In our opinion, and according to the information and explanations given to us, onan overall basis, the term loans have been applied for the purposes for which they wereobtained.

(xvii) On the basis of an overall examination of the balance sheet of the Company, inour opinion and according to the information and explanations given to us, there are nofunds raised on a short-term basis which 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 Act during the year.

(xix) The Company has not created security or charge in respect of debenturesaggregating Rs. 52192.75 Lacs issued and outstanding at the year-end.

(xx) The Company has not raised any money by public issues during the year.

(xxi) During the course of our examination of the books and records of the Company,carried out in accordance with the generally accepted auditing practices in India, andaccording to the information and explanations given to us, we have neither come across anyinstance of fraud on or by the Company, noticed or reported during the year, nor have webeen informed of such case by the management.

4. Further to our comments in paragraph 3 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 accounting standards referred to in subsection(3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March31, 2010 and taken on record by the Board of Directors, none of the directors isdisqualified as on March 31, 2010 from being appointed as a director in terms of clause(g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto give, in the prescribed manner, the information required by the Act, and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:

(i) in the case of the Balance Sheet, of the state of affairs of the company as atMarch 31, 2010;

(ii) in the case of the Profit and Loss Account, of the loss for the year ended on thatdate; and

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