Walchand Peoplefirst Ltd

TO THE MEMBERS OF

WALCHAND PEOPLEFIRST LIMITED

1. We have audited the attached Balance Sheet of WALCHAND PEOPLEFIRST LIMITED asat 31st March 2011 and also the Profit and Loss Account and Cash Flow Statement of theCompany for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements 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, issued by the Central Government ofIndia in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclosein the Annexure a statement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportthat:

(i) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our audit;

(ii) 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.

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

(iv) 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 sub-section(3C) of section 211 of the Companies Act, 1956.

(v) On the basis of written representations received from the directors, as on 31stMarch 2011 and taken on record by the Board of Directors, we report that none of thedirectors of the Company is disqualified as on 31st March, 2011 from being appointed as adirector, in terms of clause (g) of sub-section (1) of section 274 of the Companies Act,1956;

(vi) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2011;

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

(c) in the case of Cash Flow Statement of the cash flows for the year ended on thatdate.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 3 of our report of even date,

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

(b) A substantial portion of the fixed assets have been physically verified by themanagement during the year. In our opinion the frequency of verification is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) As per the information and explanation given to us on our enquiries the disposalsof assets during the year were not substantial so as to have an impact on the operationsof the company, or affect its going concern.

(ii) The Company does not have any inventory. Accordingly, clause 4 (ii)(a), (b) &(c) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable.

(iii) (a) The Company has not granted any loan secured or unsecured from partiescovered in the Register maintained under Section 301 of the Companies Act, 1956.Accordingly, sub clauses (a),(b),(c) and (d) of clause 4(iii) of the Companies (Auditor'sReport) (Amendment) Order, 2004 are not applicable.

(b) The Company has taken unsecured loans amounting to Rs. 71,63,238/- and repaid Rs.1,26,01,935/- from a party covered in the register maintained under Section 301 of theCompanies Act, 1956. Maximum amount outstanding during the year was Rs. 1,99,83,000/- andyear end outstanding balance is Rs. 1,20,11,303/-.

(c) The rate of interest and other terms and conditions of loan taken by the Companyare not prima facie prejudicial to the interest of the Company.

(d) According to the information and explanations given to us, there is no stipulationwith regard for the repayment of loans.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control procedures commensurate with the size of the Companyand the nature of its business with regard to purchase of fixed assets. During the courseof our audit, no major weakness has been noticed in the internal controls.

(v) (a) In our opinion and according to the information and explanations given to us,the particulars of contracts or arrangements that need to be entered into the registermaintained in pursuance of section 301 of the Companies Act, 1956 have been so entered.

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

(vi) In our opinion and according to the information and explanations given to us, theCompany has not accepted any deposits from the public to which the provisions of section58A and 58AA of the Companies Act, 1956 and the rules made thereunder is applicable. Noorder has been passed by the Company Law Board, National Law Tribunal or Reserve Bank ofIndia or any other court or any other tribunal.

(vii) The Company has an internal audit system commensurate with the nature and size ofthe business.

(viii) The Central Government has not prescribed the maintenance of cost records underSection 209(l)(d) of the Companies Act, 1956.

(ix) (a) According to the records of the Company, the Company is regular in depositingwith appropriate authorities undisputed statutory dues including provident fund, salestax, wealth tax and other statutory dues. According to the records of the Company, theCompany is generally regular in depositing with appropriate authorities undisputedstatutory dues relating to income-tax and service tax except in certain cases where delayswere noticed. Based on our audit procedures and according to the information andexplanations given to us, there are no arrears of undisputed statutory dues which remainedoutstanding as at 31st March 2011, for a period of more than six months from the date theybecame payable.

(b) According to the information and explanations given to us and records of theCompany, the dues outstanding of income-tax, customs duty, wealth-tax, service Tax, andcess which have not been deposited on account of any dispute, are as follows:

(x) The Company does not have any accumulated losses at the end of the financial yearand has not incurred any cash losses during the financial year covered by our audit andbut had incurred cash losses in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, weare of the opinion that the Company has not defaulted in repayment of dues to anyfinancial institution, banks. The Company does not have any outstanding debentures.

(xii) Based on our examination of documents and records and according to theinformation and explanations given to us, the Company has not granted any loans andadvances on the basis of the security by way of pledge of shares, debentures and othersecurities..

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefitfund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor'sReport) (Amendment) Order, 2004 are not applicable to the Company.

(xiv) In our opinion and according to the information and explanations given to us, theCompany is not dealing in or trading in shares, securities, debentures and otherinvestments. Accordingly the provisions of clause 4(xiv) of the Companies (Auditor'sReport) (Amendment) Order, 2004 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has givenguarantee for loans taken by its holding company from a bank, the terms and conditionswhereof in our opinion are not prima facie prejudicial to the interest of the Company.

(xvi) The term loan raised has been applied for the purpose for which they were raised.

(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) Company has not made any allotment during the year. Hence, clause (xviii) ofthe Companies (Auditor's Report) (Amendment) Order, 2004 relating to preferentialallotment of shares to parties under section 301 is not applicable.

(xix) The Company has not issued any debentures during the financial year and thereforethe question of creating security in respect thereof does not arise.

(xx) The Company has not raised money by public issues during the year. Therefore theprovisions of clause 4(xx) of the Companies (Auditor's Report) (Amendment) Order, 2004 arenot applicable.

(xxi) Based upon the audit procedures performed and according to the information andexplanations given to us, we report that no fraud on or by the Company has been noticed orreported during the course of our audit.