Renaissance Jewellery Ltd

TO,

THE MEMBERS OF

RENAISSANCE JEWELLERY LIMITED

1. We have audited the attached Balance Sheet of Renaissance Jewellery Limited as atMarch 31, 2011, the Profit and Loss account and also cash flow statement for the yearended on that date annexed thereto. These financial statements are the responsibility ofthe company'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 accounting standards generallyaccepted in India. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by the management, as well asevaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for 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 bythe Central Government of India in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, and on the basis of the information and explanation given to us andthe books and records examined by us in the normal course of audit and to the best of ourknowledge and belief, we give in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

4. Further to our comment in the Annexure referred to above, we report that:

(a) We have obtained all the information and explanation, 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 and proper returns adequatefor the purpose of our audit have been received from the branch not visited by us. TheBranch Auditor's report have been forwarded to us and have been appropriately dealt with;

(c) The balance sheet, profit and loss account and cash flow statement dealt with bythis report are in agreement with the books of account and with the audited returns fromthe branches;

(d) In our opinion, the balance sheet and profit and loss account dealt with by thisreport comply with the Accounting Standards referred to in sub-section (3C) of Section 211of the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representation received from the directors, as on March 31,2011 and taken on record by the Board of Directors, we report that none of the directorsis disqualified as on March 31, 2011 from being appointed as a director 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 the explanationgiven to us, the said accounts, read together with the Significant Accounting Policies andNotes thereon, give the information required by the Companies Act, 1956 in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

(i) In the case of the balance sheet, of the state of affairs of the Company as atMarch 31, 2011;

(ii) in the case of the profit and loss account, of the profit for the year ended onthat date; and

(iii) in the case of cash flow statement, of the cash flow for the year ended on thatdate.

ANNEXURE TO THE AUDITOR'S REPORT (as referred to in paragraph 3 of our report of evendate)

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

(b) These fixed assets have been physically verified by the management at regularinterval considering the size of the Company and nature of assets. No materialdiscrepancies have been noticed on such verification.

(c) No disposal of a substantial part of fixed assets of the Company has taken placeduring the year.

2. (a) As explained to us, the inventories were physically verified by the managementat reasonable intervals during the year.

(b) In our opinion and according to the information and explanation 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) In our opinion and according to the information and explanation given to us, theCompany has maintained proper records of its inventories and the discrepancies noticed onsuch physical verification between physical stock and the book records were not materialand have been adequately dealt with in the books of account.

3. (a) As per the records of the Company, it has given interest free unsecured loans,repayable on demand to its one wholly owned subsidiary covered in the register maintainedu/s 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.13.07 crores and year-end balance was Rs. Nil.

(b) The other terms and conditions are not prima-facie prejudicial to the interest ofthe Company.

(c) The Company has taken interest free unsecured loan from three parties being itsdirectors. The maximum amount involved during the year was Rs. 22.09 crores and year-endbalance was Rs. 16.09 crores

(d) The other terms and conditions of the said loans were not prima-facie prejudicialto the interest of the Company.

(e) The principal amounts were repayable on demand.

4. The Company has adequate internal control procedure commensurate with the size ofthe Company and nature of its business with regard to purchase of inventories and fixedassets and also for sale of goods. We have not come across any major weakness in internalcontrol.

5. (a) Based on the audit procedure applied by us and on the basis of information andexplanations provided by the management, we are of the opinion that the transactions thatneeded to be entered in to a register in pursuance of Section 301 of the Companies Act,1956 have been so entered.

(b) The Company is dealing in the items which requires technical appraisal andexpertise in determining the prevailing market prices as on the date of the transactionand in the absence of required information and records, we are unable to express ouropinion in respect of transaction made in pursuance of contracts or arrangements enteredin the register maintained u/s 301 and exceeding the value of Rs. 5,00,000/- during theyear have been made at prices which are reasonable having regard to prevailing marketprices at the relevant time.

6. During the year, the Company has not accepted any deposits to which provisions ofSections 58A and 58AA of the Companies Act, 1956 or any other provisions of the Act willapply.

7. The Company has internal audit function performed by a firm of CharteredAccountants. In our opinion, the internal audit system is commensurate with the size ofthe Company and nature of its business.

8. The Central Government has not prescribed maintenance of cost records under clause(d) of sub-section (1) of Section 209 of the Companies Act, 1956.

9. (a) According to the records of the Company, the

Company is regular in depositing undisputed statutory dues including Provident Fund,Investor Education and Protection Fund, Employees' State Insurance, Income Tax, ValueAdded Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other statutory dues with theappropriate authorities. According to the information and explanation given to us, thereare no undisputed amounts payable in respect of such statutory dues which have remainedoutstanding as at March 31, 2011 for a period of more than six months from the day theybecome payable.

(b) According to information and explanation given to us and as per the records of theCompany, the following statutory dues have not been deposited on account of disputes:

10. The Company does not have accumulated losses at the end of the financial year. TheCompany has not incurred cash losses during the financial year covered by the audit and inthe immediately preceding financial year.

11. Based on our audit procedure and on the basis of information and explanations givenby the management, we are of the opinion that the Company has not defaulted in repaymentof dues to any bank. The Company has neither taken any loans from financial institutionsnor has issued debentures.

12. The Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures or other securities.

13. The provisions of any Special Statue applicable to Chit Funds, Nidhis or MutualBenefit Funds/Societies are not applicable to the Company.

14. The Company is not dealing in or trading in shares, securities, debentures, orother investments and hence, requirement of clause (xiv) of the Order is not applicable tothe Company.

15. According to the information and explanation given to us, the Company has givenguarantee for loan taken by its indirect subsidiary from a bank, the terms and conditionswhereof in our opinion are not prima-facie prejudicial to the interest of the Company,

16. The Company has not taken any Term Loans during the year.

17. According to Cash flow statements and other records examined by us and on the basisof the information and explanations received, the Company has not applied short termborrowings for long terms use.

18. The Company has not made any preferential allotment of shares during the year toparties or companies covered in the register maintained u/s 301 of the Companies Act,1956.

19. Since the Company does not have any debentures, the question of creation ofsecurities for debentures does not arise.

20. Since the Company has not raised money by public issue, clause (xx) of the Order isnot applicable.

21. In our opinion and according to the information and explanations given to us, nomaterial fraud on or by the Company has been noticed or reported during the year.