We have audited the attached Balance Sheet of ARCHIES LIMITED as at 31
 March, 2011 and also the Profit and Loss Account for the year ended on
 that date annexed thereto, Incorporating the Branch Auditors'' Report of
 Mumbai, Pune, Indore, Ahmedabad, Chennai, Chandigarh, Hyderabad,
 Ludhiana, Kolkata, Bhubaneshwar, Ernakulam and Bangalore branches and
 the Cash Flow Statement for the year ended on that date. 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.
 
 1.  As required by the Companies (Auditor''s 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.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 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 such
 books and proper returns adequate for the purposes of our audit have
 been received from the branches. The Branch Auditor''s Reports have been
 appropriately dealt with in the accounts;
 
 (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 and Loss Account and 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 representations received from the
 Directors, as on 31 March 2011 and taken on record by the Board of
 Directors, we hereby certify that none of the directors of the company
 as on 31 March, 2011 is disqualified for appointment as a director in
 terms of clause (g) of sub-section (1) of section 274 of the Companies
 Act, 1956 on the said date;
 
 (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
 Accounting Policies and Notes to Accounts, 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 31 March, 2011;
 
 (b) In the case of the Profit and Loss Account, of the profit 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
 
 Annexure referred to in paragraph of the Auditors'' Report to the
 Members of Archies Limited on the accounts for the year ended 31 March,
 2011.
 
 1.  (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) According to the information and explanations given to us, the
 management has physically verified the fixed assets at reasonable
 intervals. No material discrepancies were noticed on such verification
 as compared to the available records.
 
 (c) The company has not disposed off any substantial part of fixed
 assets during the year.
 
 2.  (a) As explained to us, the inventory has been physically verified by
 the management at reasonable intervals.
 
 (b) The procedures of physical verification of inventories 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, we are
 of the opinion that the company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.
 
 3.  (a) 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, sub-
 clauses (iii)(b) to sub-clauses (iii)(d) of paragraph 4 of the order
 are not applicable to the company.
 
 (b) The company has taken interest free unsecured loans from two
 parties covered in the register maintained under Section 301 of the
 Companies Act, 1956. The balance outstanding from them as at 31.03.2011
 is Rs. Nil (Maximum amount outstanding during the year is Rs. 80.00
 Lacs)
 
 (c) The terms and conditions on which loans have been taken as per (b)
 above are not, prima facie, prejudicial to the interest of the company.
 
 (d) The company has repaid the principal amount as stipulated, during
 the year of the loans as per (b) above.
 
 4.  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 company and the nature of its
 business with regard to purchase of inventory and fixed assets and with
 regard to the sale of goods and services.
 
 5.  (a) The particulars of contracts or arrangements referred to in
 Section 301 of the Act have been entered in the register required to be
 maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements entered in the register maintained under Section 301 have
 been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time.
 
 6.  The company has not accepted any deposits from the public under the
 provisions of Sections 58A, 58AA or any other relevant provisions of
 the Act and the rules framed there under.
 
 7.  In our opinion, the company has an internal audit system commensurate
 with its size and nature of its business.
 
 8.  The Central Government has not prescribed maintenance of cost
 records under Section 209 (1) (d) of the Companies Act, 1956 in respect
 of the products of the company.
 
 9.  (a) According to the records of the company, the company is regular
 in depositing with appropriate authorities undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable
 to it. According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees'' State Insurance, Income Tax,
 Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and
 other statutory dues applicable to it, were outstanding, as at 31
 March, 2011 for a period of more than six months from the date they
 became payable.
 
 (b) According to the records of the company, there are no dues on
 account of any dispute of Income Tax, Wealth Tax, Service Tax, Custom
 Duty, Excise Duty and Cess except the following:-
 
 Nature of the          Amount (Rs.)      Period to          Forum where
 
 Statutory Dues                           which the          the dispute
 
                                          amount relates     is pending
 
 Entry Tax              1.89 Lacs       01.04.2005 to        Joint 
                                                             Commissioner
 VATandCST                              31.08.2008 of        Sales Tax