1.  We have audited the attached Balance Sheet of Arshiya International
 Limited as at 31st March 2011, the Profit and Loss Account and the Cash
 Flow Statement 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 the 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 (Auditors'' Report) Order, 2003 issued
 by the Central Government of India in terms of Section 227(4A) of the
 Companies Act, 1956 (the Act), and on the basis of such checks as we
 considered appropriate and according to the information and
 explanations given to us during the course of audit, we enclose in the
 annexure a statement on the matters specified in paragraph 4 and 5 of
 the said order.
 
 4.  Without qualifying our report, we draw attention to,
 
 i) Note 10(a) regarding change in policy of charging for depreciation
 from written down value method to straight-line method with
 retrospective effect and the said change has resulted a surplus of Rs.
 16,111,279. Consequently, net profit for the year is higher by Rs.
 10,883,975. Had the Company continued with the written down value
 method, the charge of depreciation would have been higher by Rs
 48,767,509 and the deferred tax charge lower by Rs 15,822,618 and,
 
 ii) Note 10(b) regarding change in accounting policy for ancillary cost
 incurred during the year to amortise over the tenure of borrowings, in
 conformity with Accounting Standards, resulted in profit before tax is
 higher by Rs. 70,881,932.
 
 5.  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 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, 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 Act;
 
 (e) On the basis of written representations received from the directors
 as at 31st March 2011 and taken on record by the Board of Directors, we
 report that none of the directors are disqualified as at 31st March
 2011 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act;
 
 (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
 significant accounting policies and notes to accounts as per Schedule
 18, give the information required by the Act 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 and Loss Account, of the Profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 Annexure referred to in paragraph 3 of Auditors'' Report to the Members
 of Arshiya International Limited on the accounts for the year ended
 31st March 2011.
 
 1.  (a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) According to the information and explanations given to us, the
 fixed assets physically verified by the management, which in our
 opinion is reasonable having regard to the size of the Company and the
 nature of its assets. As informed, no material discrepancies were
 noticed on such verification.
 
 (c) The Company has not disposed off substantial part of fixed assets
 during the year.
 
 2.  Considering the nature of business activity carried out by the
 Company, requirements of clause (ii) of paragraph 4 of the order
 regarding inventory are not applicable to the company.
 
 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 Act.
 
 (b) According to information and explanations given to us, the Company
 has not taken any loans, secured or unsecured from companies, firms or
 other parties covered in the register maintained under section 301 of
 the Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanations that certain capital
 items purchased are of special nature for which suitable alternative
 sources do not exist for obtaining comparative quotations, there is an
 adequate internal control system commensurate with the size of the
 Company and the nature of its business, for the purchase of fixed
 assets and for sale of services. The Company''s operation does not
 involve purchase of inventories and sale of goods. Further, on the
 basis of our examination of the books and records of the Company and
 according to the information and explanations given to us, we have
 neither come across nor have been informed of any continuing failure to
 correct major weaknesses in the aforesaid internal control system
 except for capital items as stated above.
 
 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 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 contracts or
 arrangements, entered in the register maintained under Section 301 of
 the Act, and exceeding the value of rupees five lacs, are of a special
 nature, for which comparative prices are not available. Hence, we are
 unable to comment on the reasonableness of the price or otherwise of
 such transactions.
 
 6.  The Company has not accepted any deposits from the public during
 the year.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 8.  According to the information and explanations given to us, the
 Central Government has not prescribed the maintenance of cost records
 under Section 209(1) (d) of the Act in respect of the Company''s
 activities.
 
 9.  According to the information and explanations given to us and
 records of the Company examined by us;
 
 (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, income tax, sales tax, wealth tax,
 customs duty, excise duty, cess and other material statutory dues as
 applicable have generally been regularly deposited with the appropriate
 authorities except delay deposit of employee state insurance due to
 pending registration with the requisite authorities. There are no
 undisputed amounts payable in respect of aforesaid dues outstanding as
 at 31st March 2011 for a period of more than six months from the date
 they became payable.
 
 (b) There are no disputed amounts on account of sales tax, wealth tax,
 services tax, custom duty, excise duty and cess which have not been
 deposited except on account of income tax, details as under -
 
 Name of the 
 statute            Nature of dues    Amount (Rs.)  Period to 
                                                  which the   Forum 
                                                              where the
                                                  amount 
                                                  relates     dispute is
                                                              pending
 
 Income tax 
 Act, 1961          Income tax        4,350,076   Assessment  Commissi
                                                             -oner of
                                                  Year 2006
                                                  -2007       Income-
                                                              tax-
                                                              Appeals
 
 10.  The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses during the financial
 year ended on that date and in the immediately preceding financial
 year.
 
 11.  According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any banks during the year. The Company has not
 obtained any borrowings from financial institution or by way of
 debenture.
 
 12.  The Company has not granted any loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/societies are not applicable to the
 Company.
 
 14.  The Company is not dealing or trading in shares, securities,
 debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the company has given
 guarantee for loan taken by subsidiaries from banks and financial
 institutions are prima facie not prejudicial to the interests of the
 Company.
 
 16.  In our opinion and according to the information and explanations
 given to us, the term loans raised during the year has been applied for
 the purpose for which they were raised.
 
 17.  According to the information and explanations given to us, and the
 examination of the balance sheet of the Company and other records, on
 overall basis, we report that short-term funds have not been used for
 long-term investments.
 
 18.  During the year, the Company has made preferential allotment of
 shares under the ESOP scheme to the parties covered in the register
 maintained under section 301 of the Act. The price at which these
 shares were issued is prima facie not prejudicial to the interests of
 the Company.
 
 19.  The Company has not issued any secured debentures during the year.
 
 20.  The Company has not raised any money by way of public issues
 during the year.
 
 21.  Based on the audit procedures performed and according to the
 information and explanations given to us, we report that no fraud on or
 by the Company has been noticed or reported during the year.
 
 For MGB & Co
 
 Chartered Accountants
 
 Firm Registration No. 101169W
 
 Sanjay Kothari
 
 Partner
 
 Membership No 48215
 
 Mumbai, 10th August 2011