We have audited the attached Balance Sheet of Action Construction
 Equipment Limited as at 31st March, 2011, the Profit and Loss Account
 and Cash Flow Statement of the Company for the year ended on that date
 annexed thereto.  These financial statements are the responsibility of
 the Company management. Our responsibility is to express an opinion on
 these Financial Statements based on our audit.
 
 We have conducted our audit in accordance with Auditing Standards
 generally accepted in India. These 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 statement on the Companies (Auditors Report) order,
 2003 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 above, we report
 that:
 
 a.  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;
 
 b.  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;
 
 c.  The Balance Sheet and Profit & Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  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;
 
 e.  On the basis of written declaration received from the Directors, as
 on 31st March, 2011, and taken on record by the Board of Directors we
 report that none of the Directors is disqualified as on 31st March,
 2011, from being appointed as a director in terms of clause (g) of
 sub-section(l) of section 274 of the Companies Act, 1956;
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements read
 together with the significant accounting policies and 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;
 
 i.  In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011,
 
 ii.  In the case of the Profit & Loss Account, of the profit for the
 year ended on that date and,
 
 iii.  In the case of the Cash Flow Statement, of the cash flow of the
 company for the year ended on that date.
 
 Annexure to the  Auditors'' Report
 
 As required by the Companies (Auditor''s report) Order, 2004 issued by
 the central Government of India in terms of section 227(4-A) of the
 Companies Act, 1956, we report that:
 
 (I) In respect of fixed assets:
 
 (A) The company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets on the
 basis of available information.
 
 (B) As explained to us, all the fixed assets have been physically
 verified by the management during the year at reasonable intervals,
 which in our opinion, is reasonable having regard to the size of the
 company and the nature of assets. No material discrepancies were
 noticed on such physical verification.
 
 (C) There was sale of Plant & Machineries worth Rs.46.13 lac, Building
 worth Rs.111.48 lac & Vehicles Worth Rs.59.61 lac during the year.
 Though, it is not substantial compare with total value of the fixed
 assets
 
 (II) In respect of its inventories:
 
 (A) As explained to us, the inventory has 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 procedures followed by the management for physical
 verification of inventory are reasonable and adequate in relation to
 size of the company and nature of its business,
 
 (C) In our opinion and according to the information and explanations
 given to us and on the basis of our examination of the records of
 inventory, the Company has maintained proper records of inventory. And
 there were no material discrepancies noticed on physical verification
 of inventory as compared to the book records.
 
 (III) The Company has neither granted nor taken any loans secured or
 unsecured , to or from companies, firms or other parties covered in the
 register maintained under section 301 of the companies act,1956
 
 (IV) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedure commensurate
 with the size of the company and nature of its business with regard to
 purchase of inventory and fixed assets and with regard for the sale of
 goods and services. During the course of audit, no major weakness has
 been noticed in the internal control.
 
 (V) On the basis of our examination of the books of accounts, the
 transaction in respect of any party during the financial year that
 needs to be entered in the register pursuant to the section 301 of the
 companies act, 1956 have so been entered.
 
 In Our opinion and according to the information and explanations given
 to us, the transaction made in pursuance of contracts or arrangements
 entered in the register maintained under section 301, in respect of any
 party ,during the year have been made at the prices which are
 reasonable having regard to prevailing market price at the relevant
 time
 
 (VI) In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits from the public and
 therefore, the provisions of Section 58A and 58AA of the Companies Act,
 1956 and Rules made there under are not applicable to the Company.
 
 (VII) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 (VIII) In respect of statutory dues:
 
 (A) According to the information and explanations
 
 given to us, the company was generally regular in depositing dues in
 respect of Employees Provident Fund, Employees State Insurance
 
 Annexure to the Auditors'' Report (Contd.)
 
 Fund, Income Tax, and other statutory dues with the appropriate
 authority during the year.
 
 (B) According to the records examined by us and the information and
 explanations given to us, there are no disputed amounts due in respect
 of income tax, wealth tax, sales tax, excise duty, Employees provident
 fund, Employee state insurance fund and other statutory dues at the end
 of the year.
 
 (IX) The Company does not have accumulated losses as at the end of the
 year and the Company has not incurred cash losses during current and
 the immediately preceding financial year.
 
 (X) Based on our audit procedures and on the basis of information and
 explanations given by the management, Company has not defaulted in the
 repayment of dues to banks, financial institutions and Debentures
 holders during the year.
 
 (XI) In our opinion and according to information and explanation given
 to us, no loans and advances have been granted by the company on the
 basis of security by way of pledge of shares, debentures and other
 security.
 
 (XII) In our opinion the company is not a Chit Fund, Nidhi or Mutual
 Benefit Fund/Society. Therefore, the provisions of clause 4(XIII) of
 the CARO,2004 are not applicable to the company.
 
 (XIII) The company is not dealing in or trading in shares, securities,
 debentures and other investments.  Accordingly, the provisions of
 clause 4(xiv) of the order are not applicable.
 
 (XIV) The company has not given guarantees for loans taken by other
 from banks and financial institutions which are prima facie prejudicial
 to the interest of the company.
 
 (XV) According to the information & explanation given to us the Term
 loan have been applied for the purpose for which obtained.
 
 (XVI) The company has issued fifty lacs share warrants to Mrs. Mona
 Agarwal (Promoter Director) against which amount to the extent of
 Rupees Five crores eighteen lacs twelve thousand and five hundred only
 has been received as share application money.
 
 (XVII) The Clause 13 of the order is not applicable, as the company has
 not issued any debentures during the year.
 
 (XVIII) The Cost Records, as applicable , are being maintained by the
 company.
 
 (XIX) According to the information and explanations given to us , no
 fraud on or by the company has been noticed or reported during the
 year.
 
                                                For Rajan Chhabra & Co.
 
                                          Firm Registration No. 009520N
 
                                                  Chartered Accountants
 
 
                                                        (Rajan Chhabra)
                                                               Partner
                                                   Membership No.088276
 
 Place: Faridabad 
 
 Dated: 30th May, 2011