Sayaji Hotels Ltd

THE MEMBERS OF

SAYAJI HOTELS LIMITED

VADODARA

We have audited the attached Balance Sheet of SAYAJI HOTELS LIMITED as at 31st March, 2009 and also the Profit & Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (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, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary forthe purposes ofouraudit;

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

(iii) The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31 st March, 2009, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2009 from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies as per Schedule 16 and other notes thereon appearing in Schedule 16, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2009;

b. in the case of the Profit & Loss Account, of the profit of the Company for the year ended on that date; and

c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

(Referred to in paragraph 3 of our report of even date on the accounts for the year ended on 31st March, 2009 of Sayaji Hotels Limited)

As required by the Companies' (Auditors' Report) Order, 2003, issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of books and records of the Company as we considered appropriate and the information and explanations given to us during the course of the audit, we report as under:

1. (a) The records of the Company in respect of fixed assets needs to be updated in respect of additions, quantitative details, identification numbers, valuation, etc.

(b) We are informed that the Fixed Assets of the Company have been physically verified by the Management during the year at reasonable intervals and no material discrepancy has been noticed on such verification

(c) The assets disposed off during the year are not significant and therefore do not affect the going concern assumption.

2. (a) Stocks of Food & Beverages, Stores, and Operating Supplies etc. have been physically verified by the management during the year. In our opinion, frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion the Company has maintained proper records of inventory. The discrepancies noticed on such physical verification of stocks as compared to book records were not significant and the same has been properly dealt with in the books of accounts.

3. (a) Company has granted loans to 5 companies, firms or other parties covered in the register maintained under section 301 of the Act., where in the balance payable as at the year end is Rs. 341.06 lacs. The maximum amounts involved in the transactions during the year are Rs. 125.06 lacs.

(b) The loans granted are interest free and are repayable on demand.

(c) There is no overdue amount of loans granted to companies, firms or other parties since they have not been called up for repayment.

(d) The Company has taken loans from 1 firm covered in the register maintained under section 301 of the Act, where in the balance payable as at the year end is Rs. 2 lacs. The maximum amount involved in the transactions during the year is Rs. 2 lacs.

(e) The loans taken are interest free and other terms and conditions of loans taken by the company are not prima facie prejudicial to the interest of the Company.

(f) The loans taken by the company are repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to the purchase of stores, operating supplies, components, plant and machinery, equipments and other assets and for the sale of goods and services.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of the contracts or arrangements refereed to in section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company, with regards to the deposits accepted from the public, has complied the provisions of the section 58A, 58AA or any other relevant provision of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

7. The Company has system of internal audit which, in our opinion, is commensurate with the size of the business.

8. Central Government has not prescribed maintenance of the cost records under section 209(1 )(d) of the companies Act 1956 for the Company.

9. (a) According to the records, information and explanations provided to us of the company is generally regular in depositing, with appropriate authorities undisputed amount of Provident Fund, investor education fund, Employees' State Insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues applicable to it and no undisputed amounts payable were outstanding as at 31st March, 2009 for the period of more than six months from the date they became payable,

(b) The following are the details of disputed Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess that have not been paid to the concerned authorities.

10. Based on our audit procedures and on the information and explanation given by management, the company has not defaulted in repayment of dues to the financial institution, bank or debenture holders as at the balance sheet date:

11. Based on our audit procedures and the information and explanation given to us, the company has not granted loans and advances on the basis of securities by way of pledge of shares, debentures and other securities.

12. The Company is not a chit/ nidhi /mutual benefit fund/ society and clause XIII of the order is not applicable.

13. The Company is not dealing or trading in shares, securities, debentures and other investments.

14. On the basis of the information and explanation given to us the company has given guarantees for the loans taken by other company from bank or financial institution and are not prejudicial to the interest of the Company.

15. Based on our audit procedures and explanation given to us the term loans have been applied for the purpose for which they were raised.

16. On the basis of our examination of the Balance Sheet of the Company and the information and explanation given to us, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

17. During the year, The company has not made any preferential allotment of share to parties and companies covered in the Register maintained under section 301 of the Act.

18. The Company has not issued any debentures during the year.

19. The Company has not raised any money by public issues during the year.

20. Based on the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.