Nakshatra Infrastructure Ltd Auditor Reports

To the Members of

Nakshatra Infrastructure Limited,

HYDERABAD.

1. We have audited the attached Balance Sheet of NAKSHATRA INFRASTRUCTURE LIMITED, as at 31st March 2012, Profit and Loss 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan 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.

3. As required by the Companies (Auditors Report) Order, 2003, and amendment thereto by the Companies (Auditors Report) (Amendment) order, 2004 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.

4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that;

I. We have obtained all the information and explanations, which to the best of our knowledge 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 the company so far as appears from our examination of those books;

III. The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

IV. In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt 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 March 31, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and

VI. In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon 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 31st March 2012

b) In the case of the Profit and loss Account, of the loss 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.

Annexure to the Auditors report referred to in Paragraph 3 of our Report of even date on the accounts of NAKSHATRA INFRASTRUCTURE LIMITED for the year ended 31 March, 2012.

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

(b) Fixed Assets have been physically verified by the management during the period and, in our opinion, the verification is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) No part of fixed assets has been disposed off during the year.

2) (a) As explained to us, inventories have been physically verified by the management at regular intervals during the year.

(b) In our opinion and according to the information and explanations given to us, the procedure for physical verification of inventory fallowed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company has maintained proper records of inventories. As explained to us there were no material discrepancies noticed on physical verification of inventories as compared to book records.

3) (a) According to the information and explanations given to us, 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 Companies Act, 1956. Accordingly, paragraphs3) (b), (c) and (d) of the Order, are not applicable.

(b) According to the information and explanations given to us, the Company .has taken secured or unsecured loans Rs. 12000000 /- from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 accordingly, paragraphs 3) (f) and (g) of the Order. The outstanding balance amounts to Rs. 18469885 /-

4) On the basis of checks carried out during the course of audit and as per explanations given to us, we are of the opinion that there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchases of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

5) (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 Companies Act, 1956 have been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred in Section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits with in the meaning of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits Rules, 1975 with regard to the deposits accepted from the public.

7) In our opinion and according to the information and explanations given to us, the company has an internal audit system commensurate with the size and nature of its business.

8) The Central Government has not prescribed maintenance of cost records under Section 209 (i) (d) of the Companies Act, 1956 in respect of the Companys nature of business.

(9) (a) According to the records of the company, the company is NOT regular in depositing undisputed statutory dues including Income tax - Rs. 493230 / - Sales tax Rs. 191615 /- custom duty, excise-duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us, there are no income tax, wealth tax, sales tax, service tax, customs duty and excise duty, which have not been deposited on account of any dispute.

10) The company does not have any accumulated losses at the end of the year. The company has not incurred any cash losses during the financial year covered by our audit but has incurred cash loss in the immediately preceding financial year.

11) According to the information and explanations given to us, the company has not defaulted in repayment of dues to any financial institutions, bank or to debenture holders during the year.

12) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) The company is not a chit fund or nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of the said Order are not applicable to the company.

14) According to the information given to us, the company is not a dealer or trader in securities, accordingly the provisions of clause 4 (xiv) of the order is not applicable.

15) According to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions.

16) According to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

17) According to the information and explanation given to us, and on an overall examination of the Balance Sheet, the company has not raised any short-term funds. Hence the question of reporting on its application does not arise.

18) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19) The Company has not issued any debentures. Accordingly, the question of creating security or charge for such debentures does not arise.

20) According to the information and explanations given to us, the company has not raised any money through the public issue during the year.

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