1.  We have audited the attached Balance Sheet of BHAGWATI BANQUETS AND
 HOTELS LIMITED as at 31st March 2011, and also 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''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 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 to the extent applicable.
 
 4.  Further to our comments in the Annexure referred to 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 it 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
 Companies Act, 1956;
 
 e.  on the basis of written representations 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 (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
 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 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 THE AUDITORS'' REPORT
 (REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)
 
 i.  (a) The Company has maintained proper record showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, these fixed assets have been physically
 verified by the management, in accordance with a phased program of
 verification, which in our opinion, is reasonable, considering the size
 of the Company and nature of its assets. The frequency of physical
 verification is reasonable and no material discrepancies were noticed
 on such verification.
 
 (c) The Company has not disposed off any substantial part of fixed
 assets during the year, so as to affect its going concern status.
 
 ii.  (a) As explained to us, the inventories have been physically
 verified by the management during the year. In our opinion, the
 frequency of such verification is reasonable.
 
 (b) In our opinion and according the information and explanation given
 to us, 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) The Company has maintained proper records of inventories. As
 explained to us, there was no material discrepancies noticed on
 physical verification as compared to the book records.
 
 iii. In respect of unsecured loans granted to companies covered in the
 register maintained under section 301 of the Companies Act, 1956 and
 according to the information and explanations given to us -
 
 (a) During the year, the Company has not given unsecured Loans to any
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956.
 
 (b) The rates of interest and other terms and conditions are prima
 facie not prejudicial to the interests of the company.
 
 (c) According the information and explanations given to us, the Company
 has not taken unsecured loans from any parties covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 (d) The rates of interest and other terms and conditions are prima
 facie not prejudicial to the interests of the company.
 
 iv. 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 the purchase of inventory, fixed assets and
 with regard to the sale of goods and services. During the course of our
 audit, we have not observed any continuing major weakness on such
 internal controls.
 
 v.  In respect of the contracts or arrangements referred to in Section
 301 of the Companies act 1956;
 
 (a) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements that need to be entered into the Register maintained under
 of Section 301 of the Companies Act, 1956 have been so entered in the
 register required to be maintained under that section;
 
 (b) Transactions are made in pursuance of such contracts or
 arrangements have been made at prices which are reasonable having
 regard to the prevailing market prices at the relevant date.
 
 vi. According to the information and explanations given to us, the
 Company has not accepted any deposits from the public during the year.
 Therefore the provisions of clause (vi) of paragraph 4 of the Companies
 (Auditor''s Report) Order, 2003 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. The maintenance of cost records has not been prescribed by the
 Central Government under Clause (d) of Sub-Section (1) of Section 209
 of the Act. Accordingly, the provisions of clause (viii) of paragraph 4
 of the companies (Auditor''s Report) Order, 2003 is not applicable to
 the company.
 
 ix. (a) According to the Information and explanation given to us, the
 Company is generally regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employee State Insurance Fund, Income Tax, Wealth Tax, Excise Duty,
 Sales Tax, Cess and any other statutory dues with the appropriate
 authorities.
 
 (b) According to the Information and explanation given to us, no
 undisputed amount payable in respect of statutory dues applicable to it
 were in arrears as at 31st March, 2011 for a period of more than six
 months from the date they became payable except income tax of Rs.
 357,85,200 for the financial year 2009-10.
 
 (c) According to the Information and explanation given to us, there are
 no dues of Provident Fund, Employee State Insurance Fund, Income Tax,
 Wealth Tax, Excise Duty, Sales Tax, Cess and any other statutory dues
 which have not been deposited on account of any dispute.
 
 Forum Where dispute 
 is pending             Name of Dues   Amount( Rs.)    Financial Year to
                                                    which amount relates
 
 Income Tax Appellate 
 Tribunal                Income Tax      34,00,000         2000-01
 
 Income Tax Appellate 
 Tribunal                Income Tax    1,99,91,065         2006-07
 
 x. The Company does not have accumulated losses as at 31st March, 2011.
 The Company has not incurred any cash losses in the financial year and
 in the immediately preceding financial year.
 
 xi. In our opinion and according to the explanations given to us, the
 Company has not defaulted in repayment of dues to a financial
 institution or bank.
 
 xii. In our opinion and according to the explanations given to us, the
 Company has not granted loans and advance on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 xiii. In our opinion, the company is not a chit fund or a Nidhi or
 Mutual Benefit Fund/Society; Accordingly, the provisions of clause
 (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003
 are not applicable to the company.
 
 xiv. In our opinion and according to the explanations given to us, the
 Company is not dealing in or trading in shares, securities, debentures
 and other investments. Therefore, the provisions of clause 4(xiv) of
 the Companies (Auditor''s Report) Order, 2003 are not applicable to the
 company.
 
 xv. In our opinion and according to the explanations given to us, the
 Company has not given guarantee for loans taken by others from bank or
 financial institutions.
 
 xvi. In our opinion and according to the explanations given to us, the
 term loans have been applied for the purpose for which the loans were
 obtained.
 
 xvii. In our opinion and according to the explanations given to us, on
 the basis of an overall examination of the Balance Sheet and Cash flow
 of the company, we report that no funds raised on short term basis have
 been used for long term investment.
 
 xviii. 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.
 
 xix.  During the year covered by our audit report, the Company has not
 issued any debentures.
 
 xx. During the year covered by our audit report, the Company has not
 raised any money by way of a public issue during the year.
 
 xxi. 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 course of our
 audit.
 
                                              For O. P. Bhandari & Co.
 
                                                Chartered Accountants
 
                                               Firm Regn. No. 112633W
 
 Place : Ahmedabad.
 
 Date : 13.08.2011                                 [ O. P. Bhandari ]
 
                                                           Proprietor
 
                                                 Membership No. 34409