1.  We have audited the attached Balance Sheet of DEEP INDUSTRIES
 LIMITED as at 31st March, 2011 and also 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 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 any 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 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 and on the basis of such
 checks of the books and records of the Company as we considered
 appropriate and according to the information and explanations given to
 us, 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 our knowledge and belief were necessary for the purpose 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 Profit & Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account of the Company ;
 
 (iv) In our opinion, the Balance sheet and 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 representation received from the directors,
 as on 31st March 2011 and taken on record by the Board of Directors of
 the Company and the information and explanations given to us, 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;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts subject to the effect
 of such adjustments, if any, as might have been required for and 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 ; and
 
 ii.  in the case of the Profit and Loss Account, of the profit for the
 year ended on that date ; and
 
 iii.  In the case of Cash Flow statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS’ REPORT (Referred to in paragraph 3 of the
 Auditors’ Report of even date to the members of Deep Industries Limited
 on the financial statements for the year ended 31st March, 2011.)
 
 1.  (a) The Company has maintained records showing full particulars
 including quantitative details and situation of its fixed assets.
 
 (b) As explained to us, a substantial portion of the fixed assets have
 been physically verified by the management during the year and no
 material discrepancies have been noticed on such verification.
 
 (c) In our opinion, the Company has not disposed off a substantial part
 of its fixed assets during the year and the going concern status of the
 Company is not affected.
 
 2.  (a) As per information and explanation given to us, inventory of
 spares and consumables has been physically verified by the management
 at the year end. In our opinion the frequency of verification is
 reasonable.
 
 (b) In our opinion the procedures of physical verification of inventory
 of spares and consumables 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 inventory records produced
 before us, in our opinion the Company is maintaining proper records of
 inventory .The discrepancies noticed on physical verification of
 inventory as compared to book records were not material and have been
 properly dealt with in books of accounts.
 
 3.  (a) The Company has given an unsecured loan to its subsidiary
 Company. In respect of the said loans the maximum amount outstanding at
 any time during the year is Rs 65,23,638/- and the year end balance is
 Rs 36,07,388/-. The company has not granted loans secured or unsecured
 to firms or other parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (b) In our opinion and according to the information and explanations
 given to us, terms and conditions of such unsecured loans are not prima
 facie prejudicial to the interest of the Company.
 
 (c) The principal amounts, are repayable on demand and there is no
 repayment schedule.
 
 (d) In respect on said loan, the same are repayable on demand and
 therefore the question of overdue amount does not arise.
 
 (e) 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. Consequently, requirement
 of clauses (iii)(f) and (iii)(g) of paragraph 4 of the Order are not
 applicable.
 
 4.  In Our opinion and according to the information and explanations
 given to us there exists an adequate Internal Control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of stores, raw materials including
 components, plant and machinery ,equipments and other assets and with
 regard to service provided by the Company, Further on the basis of our
 examination of the books and records of the Company, carried out in
 accordance with the auditing standards generally accepted in India, we
 have not observed any continuing failure to correct major weaknesses in
 the aforesaid internal control procedures.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the transactions made in pursuance of such
 contracts or arrangements referred to in Section 301 of the Companies
 Act, 1956 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 exceeding value of Rs. 5,00,000 have been entered into
 during the financial year at prices which are reasonable having regard
 to the prevailing market prices at the relevant time.
 
 6.  According to the information and explanations given to us, the
 Company has not accepted any deposits from the public within the
 meaning of section 58A and 58AA of the Companies Act, 1956 and the
 rules framed there under. Therefore, the provisions of Clause (vi) of
 paragraph 4 of the Order are not applicable to the Company.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size of the Company and nature of its business.
 
 8.  We are informed that maintenance of cost records has not been
 prescribed by the Central Government of India under clause (d) of
 subsection (1) of Section 209 of the Companies Act, 1956 in respect of
 the Company products. Hence, the provisions of Clause (viii) of
 paragraph 4 of the Order are not applicable to the Company.
 
 9.  (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is generally regular in depositing undisputed statutory dues including
 provident fund, investor education and protection fund, employees’
 state insurance, income tax, sales tax, wealth tax, service tax, custom
 duty, excise duty, cess and other material statutory dues to the extent
 applicable with the appropriate authorities in India. However, in case
 of delays in few instances the same has been deposited along with
 interest due thereon.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, there are no dues of income tax,
 wealth tax, sales tax, custom duty, excise duty and cess which have not
 been deposited on account of any dispute. The particulars of dues of
 service tax as at 31st March, 2011 which have not been deposited on
 account of a dispute, is as follows:
 
 Name of Statute     Nature of
                       Dues       Amount 
                                (Rs. Lacs)   Related Period   From
                                                              where
                                                             the dispute  
                                                              is pending
 
 Service tax     Short payment of   4.35    F.Y 2007-08 &    Service 
                                                             tax dept.
                 Service tax                F.Y 2008-09
 
 10.  The Company does not have any accumulated losses as at 31st March,
 2011 and has not incurred any cash losses during the financial year
 covered by our audit and in the immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to any
 bank.
 
 12.  In our opinion and according to the information and explanations
 given to us, the Company has not granted any loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 13.  In our opinion, the Company is not a chit fund or a nidhi /mutual
 benefit fund/ society. Therefore, the provisions of Clause (xiii) of
 Paragraph 4 of the Order are not applicable to the Company.
 
 14.  Based on our examination of the records and evaluation of the
 related internal controls, the Company has maintained proper records of
 transactions and contracts in respects of its investments, securities
 and other investments and timely entries have been made therein. All
 Shares, Securities and other investments have been held by the Company
 in its own name.
 
 15.  In our opinion and information and explanation given to us, the
 Company has not given guarantee for any loan taken by other from Bank/
 Financial Institutions which are prejudicial to the interest of the
 Company.
 
 16.  To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, the term
 loans & other facilities obtained during the year were, applied by the
 Company for the purpose for which they were obtained.
 
 17.  According to the information and explanations given to us and on
 the basis of overall examination of the Balance Sheet of the Company,
 in our opinion, there are no short term funds raised during the year
 which have been used for long term investment.
 
 18.  In our opinion and according to the information and explanations
 given to us, the Company has made preferential allotment of 22,50,000
 equity shares of Rs. 10 each at the price of Rs. 58 each to Companies
 covered in the register maintained under Section 301 of the Companies
 Act, 1956.
 
 19.  The Company has not issued any debentures. Therefore the
 provisions of Clause (xix) of paragraph 4 of the Order are not
 applicable to the Company.
 
 20.  The Company has not raised any monies by way of public issue
 during the year.
 
 21.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the auditing standards
 generally accepted in India, we have neither come across any instance
 of fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                            FOR AND ON BEHALF OF
 
                                             JAYESH M. SHAH & CO. 
 
                                            Chartered Accountants
                                            Firm Reg. no. 104173W
 
 Place  : Ahmedabad                              (JAYESH M. SHAH)
 
 Dat    : 2nd June, 2011                               Proprietor
 
                                                Mem. No. :  30638