We have audited the attached Balance sheet of Encore Software Limited
 (the Company) as at March 31, 2012, the Profit and Loss Account and
 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.
 
 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 misstatements. 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 the Management as well as evaluating the overall financial Statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 As required by the Companies (Auditor''s Report) Order, 2003, as amended
 by the Companies (Auditor''s Report) ''(Amendment) Order, 2004 (the ''order''
 ) 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.
 
 Further to our comments in the Annexure referred to above, we report
 that:
 
 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 the law, have
 been kept by the Company so far as appears from our examination of
 those books;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statements
 dealt with by this report are in agreement with the books of accounts;
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statements 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 representation received from the
 Directors, as on March 31, 2012 and taken on record by the Board of
 Directors, we report that none of the Directors are disqualified as on
 March 31, 2012 from being appointed as a Director in terms Clause (g)
 of Sub-Section (1) of Section 274 of the Companies Act, 1956.
 
 f) The accounts of the Company have been prepared on going concern
 concept despite the complete erosion of Shareholders'' funds.
 
 g) In our opinion and to the best of our information and according to
 the explanations given to us, subject to preparation of accounts of the
 Company on '' going concern concept'' despite the complete erosion of
 shareholders'' funds the said accounts read together with the
 significant accounting policies and notes applicable are 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 so far as it relates to the Balance Sheet, of the state of
 affairs of the Company as at March 31, 2012;
 
 II.  In so far as it relates to the Profit and Loss Account of the loss
 of the Company for the year ended on that date.
 
 III. In case of the Cash Flow Statement of the Company of the cash
 flows for the year ended on that date.
 
 Annexure to the Auditors'' Report to the members of Encore Software
 Limited for the year ended March 31, 2012.
 
 (i) Fixed Assets
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and the situation of its fixed assets;
 
 (b) The Company has a phased programme of physical verification of
 fixed assets which, in our opinion is reasonable, having regard to the
 size of the Company and nature of its business, In accordance with such
 programme the Management has physically verified fixed assets during
 the year and no material discrepancies were noticed on such
 verification.
 
 (c) As per the information and explanation furnished to us, fixed
 assets are not disposed of during the year by the Company.
 
 (ii) Inventories:
 
 (a) The Management has conducted physical verification of inventories.
 In our opinion, the frequency of t verification is reasonable.
 
 (b) In our opinion and according to the information and explanation
 furnished to us, the procedures followed by the Management for the
 physical verification of inventories are reasonable and adequate in
 relation to the size of the Company and nature of its business.
 
 (c) In our opinion and according to the information and explanation
 furnished to us, the Company has maintained proper record of
 inventories. The discrepancies noticed between the physical stock and
 book records were not material.
 
 (iii) Loans:
 
 (a) The Company has not granted any loans secured or unsecured to
 Companies, firms or other parties '' listed in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 (b) The Company has taken the following loans from the parties listed
 in the Register maintained under section 301 of the Companies Act,
 1956.
 
 (i) An unsecured interest free loan from a Company in which maximum
 amount involved during the year was Rs. 3,32,849 and the year-end
 balance was Rs.3,32,849.
 
 (ii) An unsecured loan from a Director in which maximum amount involved
 during the year was Rs, 45,79,501/- and the year-end balance was Rs.
 35,00,179/-.
 
 (c) In our opinion, the terms and conditions on which an unsecured
 interest free loan taken was not, prima facie, prejudicial to the
 interest of the Company.
 
 (d) We have been informed that there is no stipulation as to repayment
 of the above referred unsecured interest free loan.
 
 (e) As there is no stipulation as regards to repayment of interest free
 unsecured loan taken by the Company from a Company listed in the
 register maintained under Section 301 of the Companies Act ,1956
 question of overdue outstanding does not arise.
 
 (iv) Internal Control Procedures:
 
 In our opinion and according to the information and explanations
 provided to us there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory, fixed assets and for
 sale of goods and services. During the course of our audit, we have not
 observed any continuing major weakness in such internal controls.
 
 (v) In respect of transactions covered under Section 301 of the
 Companies Act, 1956:
 
 (a) In our opinion and according to the information and explanations
 given to us, the transactions that need to be entered into the register
 maintained under Section 301 of the Companies Act, 1956 have been
 entered in the register;
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contacts and
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time;
 
 (vi) The Company has not accepted any deposits from the public and
 consequently, the directives issued by the Reserve Bank of India, the
 provisions of Section 58A; 58AA or any other relevant provisions of the
 Companies Act, 1956 and rules framed there under are not applicable.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of the business.
 
 (viii) Central Government has not prescribed maintenance of cost
 records under section 209 (1) (d) of the Companies Act, 1956 in respect
 of any of the activities of the Company.
 
 (ix) In respect of statutory dues:
 
 (a) According to the information and explanations given to us
 undisputed statutory dues including Provident Fund, investor education
 and protection fund, Employees'' State Insurance, Income-Tax,
 
 Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and
 any other statutory dues applicable have not been regularly deposited
 with the appropriate authorities. According to the information and
 explanation given to us, there are no outstanding statutory dues as at
 March 31, 2012 for a period of more than 6 months from the date of
 becoming payable except for
 
 Name of the    Nature of     Amount     Period to   Due Date    Date of
                                                                 Payment
 Statute        dues         (Rs.)       which the
                                         amount
                                         relates
 
 Central 
 Excise         Service Tax  Rs. 
                             6,271,650/  2009-10 
                                         and         Various     Not paid
                                                                 as on
 Act                                     2010-11     dates       the date
                                                                 of this
                                                                 report
 
 The above data has been furnished to the extent dues payable have been
 identified from the records of the Company.
 
 (b) According to the information and explanations provided to us, the
 disputed statutory dues that have not been deposited on account of
 disputed matters pending before appropriate authorities are as -
 under:
 
 Name of the    Nature of     Amount (Rs.)    Period to 
                                              which          Forum where
                                                             dispute
 Statute        dues                          the amount     is pending
                                              relates
 
 Income 
 Tax Act,       Income Tax    Rs.
                              68,77,586/-     2000-2001      Honorable
                                                             High Court
 1961                                                        of 1961
                                                             Karnataka
 
 (x) In our opinion, the accumulated losses of the Company are more than
 fifty percent of its net worth. The Company has cash losses during the
 year under review and also during the immediately preceding year.
 
 (xi) According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to the Banks. The
 Company has neither taken any loans from Financial Institutions nor
 issued any Debentures.
 
 (xii) Based on our examination and according to the information and
 explanations given 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. Accordingly, Clause 4 (xii) of the
 order is not applicable.
 
 (xiii) The Company is not a chit / nidhi / mutual benefit fund /
 society and Clause xiii of the Order is not applicable.
 
 (xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments. The investments made by the Company
 in the shares and other securities are in the name of the Company.
 
 (xv) On the basis of the information and explanations given to us the
 Company has not given any guarantee for loans taken by others from Bank
 or Financial Institutions;
 
 (xvi) Based on information and explanation given to us by the
 Management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 overall examination of the Balance Sheet and Cash Flow Statement of the
 Company, we report that no funds raised on short term basis have been
 used for long term investments.
 
 (xviii) During the year under review, the Company has not made
 preferential allotment of Shares to parties listed in the Register
 maintained under Section 301 of the Act.
 
 (xix) The-Company has not issued Debentures. Accordingly, Clause 4(xix)
 of the order is not applicable.
 
 (xx) The Company has not raised any money by public issues during the
 year. Accordingly, Clause 4(xx) of the order is not applicable.
 
 (xxi) Based on the audit procedures performed and information and
 explanations given to us by the Management, we report that no fraud on
 or by the Company has been noticed or reported during the course of our
 audit.
 
                                                  For Ishwar & Gopal 
 
                                               Chartered Accountants
 
                                                K V Gopalakrishnayya
 
 Place: Bangalore                                         Partner
 
 Date: May 30, 2012                             Membership No. 21748
 
                                        Firm Registration No 001154S