1.  We have audited the attached Balance Sheet of BABA ARTS LIMITED as
 at 31st March, 2012 and 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 have 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 the 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 (the
 Order) 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 and the Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv) In our opinion, the Balance Sheet and the Profit and Loss Account
 and Cash Flow statement dealt with by this report comply with the
 applicable 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 31st March, 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;
 
 vi) 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 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 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 AUDITOR''S REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  In respect of its Fixed Assets:
 
 (a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of its fixed assets. With
 consideration to significant additions from time to time such records
 are being updated periodically.
 
 (b) All the assets have not been physically verified by the management
 during the year but there is regular program of reconciliation which in
 our opinion is reasonable having regard to the size of the company and
 nature of its assets.  According to the information and explanation
 given to us no material discrepancy were noticed on such verification.
 
 (c) During the year the Company has not disposed of any part of the
 plant and machinery, disposal of fixed assets does not constitute a
 substantial part of the company''s fixed assets.
 
 2.  Since, the company is having only Intellectual property rights as
 its inventory therefore the Para 2 of the order relating to physical
 verification of inventories is not applicable.
 
 3.  According to information and explanations given to us, In respect
 of the loans, secured or unsecured, granted or taken by the Company
 to/from companies, firms or other parties covered in the Register
 maintained under Section 301 of the Companies Act, 1956:
 
 (a) The Company has not granted any loans, secured or unsecured to
 parties covered under Section 301 of the Companies Act, 1956.
 Accordingly, the provisions of clause 4(3) (a) to (d) are not
 applicable to the company and hence not commented upon.
 
 (b) The Company has not taken any loans, secured or unsecured, from
 companies, firms or other parties during the year covered in the
 Register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, the provisions of clause 4(3) (e) to (g) are not
 applicable to the company and hence not commented upon.
 
 4.  In our opinion and according to the information and explanations
 given to us, Company''s internal control systems are commensurate with
 the size of the Company and the nature of its business with regard to
 purchases of inventories and fixed assets and with regard to the sale
 of goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weakness in internal
 control system.
 
 5.  In respect of the contracts or arrangements referred to in Section
 301 of the Companies Act, 1956:
 
 (a) According to the information and explanations provided by the
 management to us, there were no contracts or arrangements referred to
 in section 301 of the Act during the year. Accordingly sub clause (b)
 is not applicable
 
 6.  The Company has not accepted any deposits from the public to which
 the provisions 58A, 58AAor any other relevant provision of The
 Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules,
 1975 apply. Therefore, the provisions of clause (vi) of the paragraph 4
 of the order are not applicable to the Company.
 
 7.  In our opinion and according to information and explanation given
 to us, the Company has an internal audit system commensurate with the
 size and nature of its business.
 
 8.  To the best of our knowledge and 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 Companies
 Act, 1956, for any of the products of the Company.
 
 9.  In respect of Statutory dues:
 
 (a) According to the records of the Company, undisputed statutory dues
 including Provident Fund, Employees'' State Insurance, Income Tax, Sales
 Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any
 other statutory dues have been generally regularly deposited with the
 appropriate authorities. According to the information and explanations
 given to us, no undisputed amounts payable in respect of the aforesaid
 dues were outstanding as at March 31, 2012 for a period of more than
 six months from the date of becoming payable.
 
 (b) There is no disputed statutory dues payable by the company.
 
 10.  The Company does not have accumulated losses at the end of the
 financial year. The Company has not incurred any cash losses during the
 financial year covered by our audit and the preceding financial year.
 
 11.  Based on our audit procedures and according to the information and
 explanation given to us, the Company has not taken loans from
 Finanacial Institutions or Banks hence default in the repayment of its
 dues to a Financial Institutions and Bank is not applicable to the
 company.
 
 12.  According to the information and explanations given to us, no
 loans and advances have been granted by the Company on the basis of
 security by way of shares, debentures and other securities.
 
 13.  In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi/ mutual benefit
 fund/society. Accordingly, the provisions of clause 4 (xiii) of the
 Order are not applicable to the Company.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing in shares, securities, debentures and other
 investments. Accordingly, the provisions of clause 4 (xiv) of the Order
 are not applicable to the Company.
 
 15.  The Company has not raised any term loan during the year and there
 is no outstanding term loan during the year.
 
 16.  According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we are of
 the opinion that there are no funds raised on short-term basis that
 have been used for long-term investment purpose.
 
 17.  According to the information and explanations given to us, 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.
 
 18.  During the period covered by our audit report, the Company has not
 raised any money by public issues.
 
 19.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company has been noticed or reported during the year.
 
 
 
                                         For PRAKKASH MUNI & ASSOCIATES
 
                                                  Chartered Accountants    
 
                                         Firm Registration No.: 111792W
 
                                                                   Sd/-
 
                                                       PRAKKASH R. MUNI.
 
                                                                Partner
 
                                                  Membership No.: 30544
 
 Place : Mumbai
 
 Date : 29th May, 2012.