1.  We have audited the attached Balance Sheet of Bharat Hotels Limited
 (the Company) as at March 31,2009 and also 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 Companys 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 (Auditors Report) Order, 2003 (as
 amended) 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 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, 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, 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;
 
 v. On the basis of the written representations received from the
 directors, as on March 31,2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956; and
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said 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 March 31, 2009;
 
 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 Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date
 
 Re: Bharat Hotels Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets were physically verified by the management in the
 previous year in accordance with a planned programme of verifying them
 once in three years 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) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) The following are the particulars of loans granted by the
 Company to companies, firms and other parties covered in the Register
 maintained under Section 301 of the Companies Act, 1956:
 
 SI.  Name of Party    Relationship with    Maximum        Year end
 No.                   Company              Amount         Balance
                       Rs.                                 Rs.
 
 1.  Jyoti Limited     Subsidiary          40,903,127      40,903,127
 2.  Udaipur Hotels 
     Limited           Subsidiary          97,219,422      97,219,422
 3.  Apollo Zipper 
     Limited           Subsidiary         536,697,857     536,697,857
 4.  Prime Cellular    
     Private Limited   Subsidiary         240,037,501     240,037,501
 5.  Prima Buildwell 
     Private Limited   Subsidiary          40,342,662      40,342,662
 6.  Bharat Hotels 
     (Thailand) 
     Company Limited   Subsidiary             618,755         618,755
 7.  Premium Farm 
     Fresh Produce
     Limited           Company in 
                       which director       1,500,000            -
                       is interested
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of loans granted, repayment of the principal amount and
 interest is as stipulated.
 
 (e) As informed, 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 Companies Act, 1956.
 
 (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 the nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. During the course of our audit, no major weakness has been
 noticed in the internal control system in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) In respect of transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs entered into during
 the financial year, because of the unique and specialized nature of the
 items involved and absence of any comparable prices, we are unable to
 comment whether the transactions were made at prevailing market prices
 at the relevant time .
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, 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
 the products of the Company.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 sales-tax, wealth-tax, service tax, customs duty, excise duty and cess
 have generally been regularly deposited with the appropriate
 authorities though there has been a slight delay in a few cases.
 
 (b) 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,
 wealth- tax, service tax, sales-tax, customs duty, excise duty, cess
 and other undisputed statutory dues were outstanding, at the year end,
 for a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the statute  Nature of  Amount  Period to which the  Forum where
                                                               dispute 
                       dues       (Rs)    amount relates      is pending
 
 Income tax 
 Act, 1961          Income tax  3,591,599   Previous year 
                                            2001-02           Delhi High     
                                                              Court
 Income tax 
 Act, 1961          Income tax    36,937    Previous year 
                                            2006-07           Commiss
                                                              ioner of 
                                                              Income tax
                                                             (Appeals)
 
 Finance 
 Act, 1994         Service tax   8,942,266  2004-05 to 
                                            2007-08           Commiss
                                                              ioner of 
                                                              Service tax
 Finance 
 Act, 1994         Service tax  4,947,499   2006-07           Commiss
                                                              ioner of 
                                                              Service tax
 
 Finance Act, 
 1994              Service tax  8,475,508    2007-08          Commiss
                                                              ioner of 
                                                              Service tax
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and on the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to any bank or debenture
 holder. The Company has no outstanding dues in respect of a financial
 institution.
 
 xii) According to the information and explanations given to us and
 based on the documents and records produced 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.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments.  Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has given guarantee for loans taken by others from banks; the
 terms and conditions whereof in our opinion are not prima-facie
 prejudicial to the interest of the Company.
 
 (xvi) Based on the information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained, though idle/surplus funds which were not required for
 immediate utilization have been gainfully invested in fixed deposits
 with scheduled banks. The maximum amount of idle/surplus fund invested
 during the year was Rs 1,299,901,542, of which Rs. 1,160,198,000 was
 outstanding at the end of the year.
 
 (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 no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or 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 covered by our audit report, the Company had issued 1000
 debentures of Rs. 1,000,000 each. The Company has created security in
 respect of debentures issued except for 250 debentures of Rs. 1,000,000
 each which have been issued towards the year end. As informed to us,
 the Company is in the process of creating security for these
 debentures.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) We have been informed that one of the employees of the Company
 had misappropriated funds amounting to Rs. 270,193 and sold rooms at
 low rates causing a loss of Rs. 1,512,400 during the year under audit.
 The Company has filed a case and the matter is pending in the High
 Court of Delhi. The Company has withheld full and final settlement
 amounting Rs. 18,358, has created provision against remaining amount
 and has also not recognized the revenues. Other than the above, based
 upon the audit procedures performed for the purpose of reporting the
 true and fair view of the financial statements and as per the
 information and explanations given by the management, we report that no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 
 For S.R. BATLIBOI & ASSOCIATES
 Chartered Accountants
 
 per Raj Agrawal
 Partner
 Membership No.: 82028
 
 Place: Gurgaon
 Date : 27th June, 2009