1.  We have audited the attached Balance Sheet of Shreno Limited as at
 31 st March 2011, the Profit and Loss Account and the Cash Flow
 Statement of the Company 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.
 
 2.  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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003, issued
 by the Central Government of India in terms of section 227(4A) of the
 Companies Act, 1956 and oh the basis of such checks as we considered
 appropriate and according to the information and explanations given to
 us, we enclose in the Annexure a statement on the matters specified in
 paragraph 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 purpose of our
 audit;
 
 b.  in our opinion, proper books of accounts as required by the law
 have been kept by the Company so far as appears from our examination of
 the books;
 
 c.  the Balance Sheet, Profit and Loss account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d.  in our opinion, the Balance Sheet, Profit & Loss account and Cash
 Flow Statement dealt with by this report are in compliance with
 Accounting Standard referred to in Section 211 (3C) of the Companies
 Act, 1956, to the extent applicable;
 
 e.  on the basis of the written representations received from the
 directors of the Company, 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 (1) 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 accounts read 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 accounting principles generally accepted in India:
 
 i.  in the case of Balance Sheet, the state of affairs of the Company
     as at 31st March, 2011; 
 
 ii.  in the case of Profit and Loss account, of the Loss for the year
      ended on that date and;.
 
 iii.  in the case of Cash Flow Statement, of the cash flows for the
       year ended on the date.
 
 (ANNEXURE TO THE AUDITORS'' REPORT) (referred to in paragraph (3)
 thereof)
 
 i. (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets. However item wise value in respect of assets other than land,
 buildings and vehicles acquired prior to 1968 are not available.
 
 (b) The Company has a regular program of physical verification of fixed
 assets which, in our opinion is reasonable.  The assets which were to
 be covered as per the said program have been physically verified by the
 management during the year. According to the information and
 explanations give to us, no material discrepancies were noticed on such
 verification.
 
 (c) The Company has not disposed off substantial part of its fixed
 assets during the year and therefore, do not affect the going concern
 assumption.
 
 ii.  (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) On the basis of our examination of the records of inventory and
 according to the information and explanations given to us, we are of
 the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stock and the book records were not material.
 
 iii. (a) According to the information and explanations given to us, the
 Company has granted unsecured loan to a company covered in the register
 maintained under section 301 of the Companies Act, 1956. The maximum
 amount outstanding during the year was Rs. 3644 lacs and the year end
 balance was Rs. 1975 lacs.
 
 (b) In our opinion and according to the information and explanation
 given to us, the rate of interest and other terms and conditions are
 not prima facie prejudicial to the interest of the Company.
 
 (c) The terms and conditions of the loan granted do not involve
 repayment of principal and interest and hence provisions of clause
 (iii), (b), (c) and (d) of the Order are not applicable to the Company.
 
 (d) In our opinion and according to the information and explanation
 given to us, the loans granted by the Company are repayable on demand
 and therefore the question of overdue amount does not arise.
 
 (e) The Company has taken unsecured loans from a company covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount outstanding during the year was Rs. 2856 lacs and the
 year end balance of loans taken was Rs. 320 lacs.
 
 (f) In our opinion and according to the information and explanation
 given to us, the rate of interest and other terms and conditions are
 not prima facie prejudicial to the interest of the Company.
 
 (g) The terms and conditions of the loan taken do not involve repayment
 schedule of principal. The payment of interest is regular.
 
 iv.  In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and nature of its business with regard to
 purchase of inventories and fixed assets and sale of goods and
 services. Further on the basis of our examination and according to the
 information and explanations given to us, we have neither come across
 nor have been informed of any instance of major weaknesses in the
 aforesaid internal control system.  
 
 v.  (a) To the best of.our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts or arrangements referred to in section 301
 of the Companies Act, 1956 have been entered in the register required
 to be maintained under that section.  
 
 (b) In our opinion and according to the information and
 explanation given to us, the transactions made in pursuance of
 contracts or arrangements entered in the registers maintained under
 section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5
 lac in respect of any party during the year have been made at prices
 which are reasonable having regard to prevailing market prices at the
 relevant time.  
 
 vi.  The Company has not accepted any deposits during the year from the
 public within the meaning of provisions of section 58A and 58AA of the
 Companies Act, 1956 and the rules framed there under and therefore, the
 provisions of clause (vi) of the Order are not applicable to the
 Company.
 
 vii.  In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.  
 
 viii.  According to the information and explanations given to us, 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
 for any of the products of the Company and therefore, the provisions of
 clause (viii) of the Order are not applicable to the Company.  
 
 ix.  (a) The Company has been regular in depositing with appropriate
 authorities undisputed statutory dues, including provident fund,
 investor education protection fund, employee''s state insurance,
 income-tax, sales-tax, wealth tax, service tax, custom duty and other
 material statutory dues applicable to it.  According to the information
 and explanations given to us, no undisputed amounts payable in respect
 of income tax, sales tax, wealth tax, service tax, custom duty and
 excise duty were in arrears, as at 31st March 2011 for a period of more
 than six months from the date they become payable.  
 
 (b) According to the information and explanations
 given to us, and the records of the Company examined by us, the
 particulars of sales tax and central excise as at 31st March 2011 which
 have not been deposited on account of dispute pending are as under:
 
 Nature of the   Amount      Period to which the  Forum where diputes      
 disputed dues  (Rs. in Lakh)     amount relates  are pending
 
 Sales Tax             24.21           2004-2005  Deputy Commissioner 
                       51.51           2004-2005  (Appeal)
 
 Custom                 0.10           2009-2010  Deputy Commissioner
                                                  (Custom)
 
 Custom                 0.64           2010-2011  Deputy Commissioner
                                                  (Custom)
 
 Central Excise         3.30           2008-2009  Deputy Commissioner 
                                                  (Central Excise)
 
 Central Excise         1.04        1981 to 1985  Deputy Commissioner 
                                                  (Central Excise)
 
 Central Excise         0.20           1999-2000  Deputy Commissioner 
                                                  (Central Excise)
 
 Service Tax            0.28           2008-2009  Commissioner 
                                                  (Appeal)
 
 Service Tax            0.06           2009-2010  Deputy Commissioner
                                                  (Central Excise)
 
 Service Tax            0.02           2010-2011  Deputy Commissioner 
                                                  (Central Excise)
 
 x.  In our opinion and according to the information and explanations
 given to us, theCompany''s accumulated losses are less than fifty
 percent of its net worth. The Company has not incurred cash losses
 during the financial year covered by our audit and the immediately
 preceding financial year.
 
 xi.  In our opinion and according to the information and explanations
 given to us by the management, the Company has not defaulted in
 repayment of dues to any financial institution or bank. The Company has
 not obtained any borrowings by way of debentures.  
 
 xii.  According to the information and explanation given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities and therefore,
 the provisions of clause (xii) of the Order are not applicable to the
 Company.
 
 xiii.  In our opinion and according to information and explanations
 given to us, the Company is not a chit fund or a nidhi / mutual benefit
 fund society and therefore, the provisions of clause (xiii) of the
 Order are not applicable to the Company.
 
 xiv.  In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities. The
 Company has invested surplus funds in securities.  According to the
 information and explanations given to us, proper records have been
 maintained of the transactions and contracts and timely entries have
 made therein. The investments in securities have been held by the
 Company in its own name.  
 
 xv.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks and financial institutions and therefore, the provisions of
 clause (xv) of the Order are not applicable to the Company.  
 
 xvi.  In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purpose for which
 they were raised.
 
 xvii. According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that the funds raised on short term basis have not been used for long
 term investment.
 
 xviii. According to the information and explanations given to us during
 the period covered by our audit report, the Company has not made
 preferential allotment of shares to parties and companies covered in
 the register maintained under Section 301 of the Companies Act, 1956.  
 
 xix.  According to the information and explanations given to us, during
 the period of audit the Company has not issued any secured debentures
 and therefore, the provisions of clause (xix) of the Order are not
 applicable to the Company.
 
 xx.  The Company has not raised any money by public issues during the
 period and therefore, the provisions of clause (xx) of the Order are
 not applicable to the Company.
 
 xxi.  According to information and explanations given to us, no fraud
 on or by the Company has been noticed or reported during the course of
 our audit.
 
 For K. C. Mehta & Co.
 
 Chartered Accountants
 Firm''s Registration No. 106237W
 
 Vishal P. Doshi
 
 Partner
 Membership No. 101533
 Vadodara, 27th July, 2011