1) We have audited the attached balance sheet of Blue Coast Hotels
 Limited as at 31st March 2011 and the profit and loss account and also
 the cash flow statement for the period 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 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 as
 amended by the Companies (Auditor''s Report) (Amendment) order, 2004
 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 accounts;
 
 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 written representations received from the directors
 as on 31 st March, 2011 and taken on record by the board of directors,
 we report that none of the directors is disqualified as on 31 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;
 
 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 31 st March, 2011;
 
 (b) in the case of profit and loss account, of the loss 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 Auditors'' Report
 Referred to in paragraph (3) of our report of even date to the members
 of Blue Coast Hotels Limited on the Financial Statements for the year
 ended 31 st March, 2011
 
 (i) (a) The company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, all the fixed assets have been physically
 verified by the management during the year. As explained to us by the
 company, no material discrepancies were noticed on such verification.
 
 (c) During the period, the company has not disposed off substantial
 part of the fixed assets.
 
 (ii) (a) As explained to us, the inventory has been physically verified
 by the management during the year. In our opinion, the frequency of
 verification is reasonable.
 
 (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. As explained to us, the discrepancies noticed on
 verification between the physical stocks and the book records were not
 material and have been properly dealt with in the books of accounts.
 
 (iii) As per records of the company and as per information and
 explanations furnished to us, we are of the opinions that during the
 year, the company has neither granted nor taken any loans, secured or
 unsecured to/from companies, firms and other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956 except
 grant of interest free temporary loan/advance of Rs. 0.01 lacs and Rs.
 58.61 lacs to Blue Coast Hospitality Limited and Golden Joy Hotel
 Private Limited (both subsidiary companies).
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control system commensurate
 with the size of the company and the nature of its business with regard
 to purchases of inventory, fixed assets and with regard to the sale of
 goods and services. During the course of our audit, no major weakness
 has been noticed in the internal controls systems.
 
 (v) (a) Based on the audit procedures applied by us and 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, wherever applicable, 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 have been made at prices which are reasonable having
 regard to prevailing market prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the company has not accepted deposits from public and
 hence provisions of section 58Aand58AA of the Companies Act, 1956 are
 not applicable.
 
 (vii) In our opinion and according to the information and explanations
 given to us, the company has an internal audit system commensurate with
 the size of the company and nature of its business.
 
 (viii) As explained to us, the Central Government has not prescribed
 any cost records under Section 209 (1) (d) of the Companies Act, 1956
 for the company.
 
 (ix) (a) According to the records of the company, the company in
 general, is regular in depositing with appropriate authorities
 undisputed statutory dues including Provident Fund, Employees'' State
 Insurance, Income Tax, Sales-tax, Wealth-tax, Service tax, Custom duty,
 Excise duty, Cess and other statutory dues applicable to it except
 undisputed amount in respect of TDS which is outstanding in the books
 of accounts as on 31.03.2011, for a period of six months from the date
 the amount became payable amounting to Rs. 18.22 lacs. However, the
 company has deposited the same after 31.3.2011.
 
 (b) According to the information and explanations given to us and on
 the basis of our verification of books of accounts of the company, no
 amounts payable in respect of Income-tax, Sales-tax, Wealth tax,
 Service-tax Custom duty, Excise duty, Cess were outstanding, as at 31
 st March, 2011 due to any dispute.
 
 (x) The company has no accumulated losses as on 31st March, 2011 .The
 company has not incurred cash losses during the year covered by our
 audit and in the immediately preceding financial year.
 
 (xi) Based on our audit procedures and on the information and
 explanations give by the management, we are of the opinion that the
 company has not defaulted in repayment of dues to financial
 institutions and banks,
 
 (xii) Based on our examination of documents and records, we are of the
 opinion that 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/nidhi/mutual
 benefit fund/societies and hence provisions of clause (xiii) are not
 applicable to it.
 
 (xiv) In our opinion, the company is not dealing or trading in shares,
 securities, debentures and other investments hence provisions of this
 clause are not applicable to it.
 
 (xv) Based on our examination of the records of the company and as
 explained to us, we are of the opinion that the company has not given
 any guarantee for loans taken by others from bank or financial
 institutions.
 
 (xvi) Based on our examination of the records, we are of the opinion
 that the term loans have been applied for the purpose for which they
 were raised.
 
 (xvii) Based on our examination of the records, we are of the opinion
 that funds raised from short term basis were not used for long term
 investment.
 
 (xvii i) During the year the company has not made any preferential 
 allotment of shares to parties and companies covered in the register
 maintained under section 301 of the Act.
 
 (xix) During the year, the company has allotted 10000, 12% Non
 Convertible Debenture of Rs. 100000/- each to an Indian company for
 which the company has created the necessary security/charge. (Refer
 Note no. 2.1 of II of schedule XVI).
 
 (xx) During the year covered by our audit, the company has not raised
 any money by way of public issue.
 
 (xxi) Based upon the audit procedures performed and information and
 explanations given by the management, we report that no fraud on or by
 the company has been noticed or reported during the year.
 
 
                                         For M Kamal Mahajan And Co.
 
                                               (Firm Regn.No.06855N)
 
                                               Chartered Accountants
 
                                                   (S.K. Maheshwari)
 
 Place: New Delhi                                          (Partner)
 
 Date : 30th May, 2011                                 M. No. 504238