1. We have audited the attached Balance Sheet of DQ Entertainment
 (International) Limited (''the Company'') as at March 31, 2011 and also
 the Profit & Loss account & 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 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'' (the ''Act'') 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 give in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 4. Without qualifying our report, we draw attention to Note No.6 (b) of
 Schedule 17(II) forming part of accounts wherein the basis of
 recognition of deferred tax asset on unabsorbed depreciation has been
 explained.
 
 5. Further to our comments in paragraph 3 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, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 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 March 31, 2011;
 
 b) in the case of the Profit & Loss account, of the profits of the
 company for the year ended on that date.
 
 c) In the case of the cash flow statement, of the cash flows of the
 company for the year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 [Referred to in paragraph 3 of the Auditors'' Report of even date to the
 members of DQ Entertainment (International) Limited on the financial
 statements for the year ended March 31, 2011]
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets of the company have been physically verified by
 the management during the year in accordance with a regular programme
 of verification and no material discrepancies between the book records
 and the physical inventory were noticed. In our opinion, the frequency
 of verification is reasonable.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the company
 and has not affected the going concern status of the company.
 
 (ii) The provisions of clause 4(ii) of the Companies (Auditor''s Report)
 Order, 2003 (as amended) are not applicable to the Company, in view of
 the nature of business activities carried on by the company.
 
 (iii)(a) As per our information and the explanations given to us, the
 Company has not granted / taken any loans, secured or unsecured to/
 from companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.  Accordingly,
 the provisions of Clauses 4(iii)(b), 4(iii) (c) and 4(iii)(d) of the
 Companies (Auditors'' Report) order, 2003 (as amended) are not
 applicable to the Company.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there exists an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of fixed assets and for sale of
 services. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 system of the Company.
 
 (v) (a) According to the information and explanations given to us,
 transactions that need to be entered into a register in pursuance of
 sec 301 of the Companies Act, 1956 have been so entered.
 
 (b) The transactions exceeding the value of Rs.  500000 in respect of
 any party in any one financial year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 (vii) In our opinion, the internal audit functions carried out during
 the year by a firm of Chartered Accountants appointed by the management
 have been commensurate with the size of the company and nature of its
 business.
 
 (viii) The provisions of clause 4(viii) of the Companies (Auditor''s
 Report) Order, 2003 (as amended) regarding maintenance of cost records
 are not applicable to the Company.
 
 (ix) (a) Undisputed statutory dues including provident fund, employees''
 state insurance, income-tax, sales- tax, wealth-tax, service tax,
 customs duty, have been regularly deposited with the appropriate
 authorities.  According to the information and explanations given to
 us, no undisputed amounts payable in respect of provident fund,
 employees'' state insurance, income- tax, wealth-tax, service tax,
 sales-tax, customs duty, 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 information and explanation given to us, there are
 no dues of income tax, sales-tax, wealth tax, service tax, customs
 duty, and cess which have not been deposited on account of any dispute
 except the following:
 
                           forum where dispute  Period to 
                                                which the amount involved
 statute    Nature of dues    is pending        amount 
                                                relates       (Rs.)
 
            Incometax - TDS
 Incometax                  Appellate Tribunal
            on payments 
              to non                             2008-09     9,642,147
 Act, 1961                     Hyderabad
            residents.
 
 (x) The provisions of clause 4(x) of the Companies (Auditor''s Report)
 Order, 2003 (as amended) regarding accumulated losses are not
 applicable to the Company.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to a
 financial institution or bank.  The company has not issued any
 debentures during the year.
 
 (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 (Auditor''s 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 (Auditor''s Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained, other than temporary deployment pending
 application.
 
 (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) According to the information and explanations given to us, 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. Accordingly, the provisions of clause 4(xviii) of the
 Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (xix) The Company has not issued any debentures during the year.
 Accordingly, the provisions of clause 4(xix) of the Companies
 (Auditor''s Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 (xx) The management has disclosed the end use of money raised by public
 issue and the same has been verified.
 
 (xxi) During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, 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 any such case by the management.
 
 
 Place: Hyderabad 
 
 Date: 10.08.2011