1. We have Audited the accompanying Balance Sheet of BLUE DIAMOND -
 SECURITIES & FINANCE LIMITED at 31st March, 2002 and the statement of
 Profit and Loss Account far the year ended, prepared in conformity
 with accounting principles generally accepted in India. These
 financial statements are the responsibility of the Companys
 management. Our responsibility is to express on opinion on these
 financial statements based on our audit.
 
 2. We conducted our audit in accordance with auditing standards
 generally accepted in India. These 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. We have obtained all the information and explanations which, to the
 best of our knowledge and belief, were necessary for the purpose of our
 audit.
 
 4. In our opinion, and to the best of our information and according to
 the explanations given to us, the accompanying financial statements ;
 
 a) give the information required by the Companies Act, 1956, in the
 manner so required; and
 
 b) give a true and fair view of the state of affairs of the Company at
 March, 31, 2002 and of its Profit and Loss account for the year then
 ended, in conformity with the accounting principles accepted in India.
 
 Further, the Balance Sheet and the statement of profit and Loss comply
 with the accounting standards referred to in Section 211(3C) of the
 Act and are in agreement with the books of account. In our opinion,
 the Company has maintained proper books of account as required by law
 in so far as appears from our examinations of those books.
 
 5. On the basis of information and explanations given to us and
 representations obtained by the Company and taken on record by the
 Board of Directors, as on March, 31, 2002 none of the directors are
 disqualified from being appointed as directors in terms of Section
 274(1)(g) of the Act.
 
 6. As required by the Manufacturing and other Companies (Auditors
 Report) order, 1998 issued by the Central Government of India in terms
 of Section 217(4A) of the Act, we enclose in the Annexure a statement
 on the matters specified in paragraphs 4 and 5 of the said order.
 
 ANNEXURE TO THE AUDITORS REPORT OF BLUE DIAMOND SECURITIES & FINANCE
 LIMITED
 
 (Referred to in Paragraph 1 of our report of even date)
 
 1. The company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets. The fixed
 assets of the company have been physically verified by the management
 during the year which in our opinion is reasonable, having regard to
 the size of the Company and the nature of its assets. According to the
 information furnished to us no material discrepancies have been noticed
 on such verification.
 
 2. None of the fixed assets of the company have been revalued during
 the year.
 
 3. The procedure of physical verification of stock followed by the
 management are reasonable and adequate in relation to the size of the
 company and the nature of its business.
 
 4. We, on the basis of the examinations of stock are satisfied, that
 such valuation is fair and proper in accordance with the normally
 accepted accounting principles.
 
 5. The company has taken unsecured loans, from the parties listed in
 the register maintained under section 301 of the Companies Act 1956.
 However, the rate of interest and the terms and condition are not prima
 facie prejudicial to the interest of the company. In terms of sub
 section (6) of section 370 of the Companies Act, 1956.
 
 6. As informed to us, the party to whom loans and advances in the
 nature of loans given, in absence of specified stipulations as regards
 to repayment the principal amount and interest thereon are repayable on
 demand.
 
 7. In our opinion and according to the information given to us internal
 control procedure is commensurate with the size of the company and the
 nature of its business with regard to the purchase and sale of shares.
 
 8. The Company is dealing in shares and proper records have been
 maintained and timely entries have been made therein of the transaction
 and contracts. The Company is holding the shares in its own name.
 
 9. The Company has not accepted any deposits from public within the
 meaning of Section 58A of the Companies Act, 1956 and rules made
 thereunder.
 
 10. No deduction on account of Provident Fund has been made during the
 year as the Provident Fund Act is not applicable to the Company.
 
 11. According to the information given to us there were no undisputed
 amount payable in respect of income tax, wealth tax, sales tax, custom
 duty and excise duty which have remained outstanding as at 31st March
 2002 for a period of more than six months from the date on which they
 became payable.
 
 12. During the course of our examination of the books of accounts
 carried out in accordance with general accepted auditing practice, we
 have not come across any personal expenses which have been charged to
 Profit and Loss Account not have been informed of such case by the
 management.
 
 13. The other provisions of the order are not applicable in case of
 this company.
 
                                                    K. M. Gulati & Co.
                                                 Chartered Accountants
 
 Place: Kolkata
 Dated: 2nd day of September, 2002                          Proprietor