We have audited the attached Balance Sheet of Kratos Energy &
 Infrastructure Ltd., as at 31st March''2011 and the Profit and Loss
 Account and the Cash flow Statement for the year ended on that date
 annexed thereto. Theses 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.
 
 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.  We report as follows:
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended by Companies (Auditor''s Report)(Amendment) Order 2004 issued by
 the Central Government of India, in terms of Section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters specified in the paragraphs 4 and 5 of the said Order .
 
 2. Further to our comments in the Annexure referred to in paragraph 1
 above.
 
 a) 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;
 
 b) 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 the 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 the 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 Director in terms of clause (g)
 of sub-section (1) of Section 274 of the Companies Act, 1956; .„.
 
 f) Attention is invited to the following:
 
 a) Note no.7 of schedule N regarding non payment of Turnover fee and
 interest thereon to SEBI
 
 b) Implication on profitability if any, due to unreconciled
 transactions of sundry Creditors and Advances & Deposits recoverable at
 the end of the year, as considerable part of these are remained
 unreconciled since long period.
 
 The effect of issues as referred in (b) could not be quantified and
 hence the effect on accounts of the same could not be ascertained.
 
 g) In our opinion and to the best of our information and according to
 the explanations given to us, subject to our comments in Paraf(a) and
 its consequential effect
 
 on profitability and financial statement and our comments in Paraf{b}
 above, the said statement of accounts, read together with the Company''s
 Accounting Policies and the Notes on Accounts thereon as defined in
 Schedule N, 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 Profit and Loss Account, of the Loss of the Company
 for the year ended on that date
 
 (iii) in the case of Cash Flow Statement, of the Cash Flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO THE AUDITOR''S REPORT
 
 Referred to in paragraph 1 of our report of even date
 
 1 a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed assets.
 
 b) Fixed assets have not been physically verified by the management
 during the year,
 
 c) During the year, the Company has not disposed of any fixed assets.
 
 2 Inventory register has not been maintained by the management, but as
 informed & certified by the management there is no stock lying in the
 hand at the year end.
 
 3 According to the information and explanations given to us,'' the
 company has not granted any unsecured loans to any of the companies
 /firms or other parties covered in the Register maintained under
 Section 301 of the Companies Act,1956 and as such Clause iii (a) to iii
 (d) are not applicable.
 
 iii (e) According to the information and explanations given to us,'' the
 company had taken unsecured loans of Rs. 635000/- from El Dorado
 Investments Co.P. Ltd. which is the opening balance of the previous
 year.  Also co. has taken unsecured loan of Rs.  1,01,83,801
 (cl. balance as on 31/03/11) from Amoha Traders P.Ltd. Theses are the
 parties covered in the Register maintained under Section 301 of the
 Companies Act, 1956 .  In our opinion, the terms & conditions of such
 unsecured loans are , not prima facie prejudicial to the interest of
 the company.
 
 4 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 nature of its business
 with regard to the purchase of fixed assets and for sale of '' goods and
 services. During the course of audit, we have not observed any
 continuing failure to correct major weakness in internal controls.
 
 5 According to the information and explanations given to us, there are
 certain transaction of trading purchases made in pursuance of the
 contracts or arrangements that are entered in the Register maintained
 under Section 301 of the Companies Act 1956.
 
 As per the information and explanation given to us , these purchase
 transitions are made at prices which are reasonable having regard to
 the prevailing market prices at the relevant time.
 
 6 The Company has not accepted any deposits from the public and
 consequently the provisions of Section 58A & 58AA of the Companies Act,
 1956 and rules framed there under and directions issued by the Reserve
 Bank of India, are not applicable.
 
 7 The company is not having any formal internal audit system during the
 year under, %: review. 5 According to the information and explanations
 given to us Central Government has not prescribed maintenance of cost
 records under Section 209(1) (d) of the Companies Act. 1956.
 
 9 i) The Company has been regular in depositing undisputed statutory
 dues including Income- Tax dues with the appropriate authorities and
 there were no arrears under the above head as on the balance sheet date
 except -1) that in the matter of Professional fees paid to Purva Share
 Reg.(I) P.Ltd. ,TDS is not deducted & therefore not paid till the date
 of Audit.
 
 ii) Keeping in view the present operations of the company the statutes
 relating to Wealth Tax, Customs Duty, Excise Duty, Investors Education
 and Protection Fund and Cess are not applicable to the Company.
 
 iii) There are no dues of Provident Fund, Employees State Insurance,
 Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess
 which have been disputed and lying pending as at the close of the year,
 as certified by the assesses.
 
 10 The Company has accumulated loss which is less than 50% of its net
 worth as at 31st March 2011. The Company has not incurred cash losses
 during the current financial year as well as in the immediately
 preceding financial year.
 
 11 In our opinion and according to the explanations given to us the
 Company has not borrowed any amounts from banks, financial institutions
 or from debentures holders during the year under Audit.
 
 12 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, Nidhi or Mutual
 Benefit Fund/Society. Therefore Clause 4(xiii) of the Companies
 (Auditors Report) Order 2003 is not applicable to the Company.
 
 14 Based on the records examined and according to the information and
 Explanations given to us, we are of the opinion that the Company has
 not entered into any type of transactions and contracts of dealing in
 securities during the year and therefore there are no changes
 incorporated in the existing records.
 
 15 Other clauses are not applicable to the company.
 
                                                    Sadhana D.Shah 
                                                    Chartered Accountants
 
 Place: Mumbai 
 
 Date :30 may 2011                                   Sadhana D.Shah
 
                                                       Propriet6r 
                                                       M.No.107275