Nahar Capital & Financial Services Ltd

The Members of

M/S NAHAR CAPITAL & FINANCIAL SERVICES LIMITED,

LUDHIANA.

We have audited the attached Balance Sheet of M/s Nahar Capital & FinancialServices Limited, Ludhiana (the Company) as at 31st March, 2010 and also Profit &Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto.These financial statements are the responsibility of the Company's Management. Ourresponsibility is to express an opinion 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.

As required by the Companies (Auditors' Report) Order, 2003 {as amended by theCompanies (Auditor's Report) (Amendment) Order, 2004} issued by the Central Government ofIndia in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclosein the an-nexure a Statement on the matters specified in Paragraph 4 of the said Order.

Further to our comments in the Annexure referred to in Paragraph above, we reportthat:-

a) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose 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 & 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 & 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;

e) On the basis of written representations received from the Directors as on 31stMarch, 2010 and taken on record by the Board of Directors, we report that none of theDirectors is disqualified as on 31st March, 2010 from being appointed as a Director interms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with the Schedule-16 of Notes on Accountsthereon, give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair in conformity with the accounting principles generallyaccepted in India:-

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2010;

(ii) in the case of the Profit & Loss Account, of the profit for the year ended onthat date; and

(iii) in the case of Cash Flow Statement, the Cash Flows of the Company for the yearended on that date.

(Referred to in paragraph (3) thereof)

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

(b) All the fixed assets have been physically verified by the management during theyear.

In our opinion, the frequency of physical verification is reasonable and no materialdiscrepancies were noticed on such verification.

(c) During the year, the Company has not sold any fixed assets.

(ii) (a) As explained to us, Inventories (Investments held for sale) have beenphysically verified by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, theprocedure of physical verification of inventories followed by the management is reasonableand adequate in relation to the size of the Company and nature of its business.

(c) On the basis of our examination of inventory records, we are of the opinion thatthe Company is maintaining proper records of the inventory. As explained to us, nomaterial discrepancies were noticed on physical verification of inventories as compared tobook records.

(iii) According to the explanations and information given to us, the Company hasneither granted nor taken any loans from the parties covered in the Register maintainedunder section 301 of the Companies Act, 1956. Hence, the clause 4(iii)(a) to (g) of theCompanies (Audit Report) Order, 2003 are not applicable in the case of the company.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control system commensurate with the size of the Company andnature of its business with regards to purchase of inventory, fixed assets and with regardto the sale of goods and services.

During the course of our audit, we have not observed any major weakness in internalcontrol.

(v) (a) In our opinion and according to the information and explanations given to us,we are of the opinion that the transaction made in pursuance of contracts or arrangementsthat need to be entered in the register maintained under Section 301 of the Companies Act,1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, thereare no transactions made in pursuance of contracts or arrangements required to be enteredin the register maintained under Section 301 of the Companies Act, 1956 aggregating duringthe year to Rs.5.00 lacs or more in respect of each party.

(vi) According to the information and explanations given to us, the Company has notaccepted any public deposits during the year and therefore, the provisions of Clause 4(vi)of the Order are not applicable to the Company.

(vii) In our opinion the company has an internal Audit System commensurate with thesize and nature of its business.

(viii) The provisions of Clause 4(viii) of the Order are not applicable to the Company.

(ix) (a) According to the records of the Company, undisputed statutory dues includingprovident fund, investor education and protection fund, income tax, wealth tax, servicetax and other material statutory dues applicable to the Company, if any, have beenregularly deposited with appropriate authorities. According to the information andexplanations given to us, no undisputed amounts payable in respect of the aforesaid dueswere outstanding as at 31st March, 2010, for a period of more than six months from thedate they became payable.

(b) According to the information and explanations given to us, there are no disputeddues in respect of income tax, wealth tax, and cess that have not been deposited onaccount of matters pending before the appellate authorities.

(x) The Company has no accumulated losses as at 31st March, 2010 and has not incurredany cash losses in the financial year covered under audit.

(xi) In our opinion and according to the information and explanations given to us, theCompany has neither taken any loans from the banks nor any debentures. Accordingly, theprovisions of Clause 4(xi) of the Order are not applicable to the Company.

(xii) According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities. Therefore, the provisions of Clause 4(xii) of the Orderare not applicable to the Company.

(xiii) The Company is not a chit fund or a nidhi mutual benefit fund/society.Accordingly, the provisions of Clause 4(xiii) of the Order are not applicable to theCompany.

(xiv) In respect of dealing or trading in shares, securities, debentures and otherinvestments, the Company is maintaining proper records and timely entries have been madetherein. All the Investments have been held by the Company in its name.

(xv) The Company has not given any guarantee for loans taken by others from banks orfinancial institutions. Accordingly, the provisions of Clause 4(xv) of the Order are notapplicable to the Company.

(xvi) The Company has not raised any term loan during the year. Accordingly, theprovisions of Clause 4(xvi) of the Order are not applicable to the Company.

(xvii) The Company has not raised any loans on short-term basis during the year.Accordingly, the provisions of Clause 4(xvii) of the Order are not applicable to theCompany.

(xviii) According to the information and explanations given to us, the Company has notmade any preferential allotment of shares during the year.

Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable to theCompany.

(xix) According to the information and explanations given to us, the Company has notissued debentures during the year. Accordingly, the provisions of Clause 4(xix) of theOrder are not applicable to the Company.

(xx) According to the information and explanations given to us, the Company has notraised any money by way of public issue during the year.

Accordingly, the provisions of Clause 4(xx) of the Order are not applicable to theCompany.

(xxi) According to the information and explanations given to us, no fraud on or by theCompany has been noticed or reported during the year.