1.  We conducted our audit in accordance with the 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 as-
 sessing the accounting principles used and significant estimates made
 by Manage- ment, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 2.  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, we enclose in the Annexure a
 statement on the matters specified in para- graphs 4 and 5 of the said
 Order.
 
 3 Further to our comments in the Annexure referred to in paragraph 2
 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 purposes 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
 those 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 re- ferred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 (e) On the basis of 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 a Director in terms of clause
 (g) of sub-section (1) of Section 274 of the Compa- nies Act 1956;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 notes thereon give the informa- tion 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;
 
 (1) in the case of the Balance Sheet, of the State of affairs of the
 Company as at 31st March, 2011;
 
 (2) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (3) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE
 
 STATEMENT REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE TO THE
 SHAREHOLDERS OF FOMENTO RESORTS AND HOTELS LIMITED
 
 I.  (a) The Company has maintained proper records showing full
 particulars including quan- titative details and situation of fixed
 assets.
 
 (b) As explained to us considering the nature of fixed assets, the same
 have been physically verified by the Management at reasonable intervals
 during the year which in our opinion is reasonable. No material
 discrepancies were noticed on such veri- fication.
 
 (c) During the year no substantial part of fixed assets have been
 disposed off by the Company. Therefore, the provisions of clause 1(c)
 of the aforesaid Order, in our opinion, are not applicable to the
 Company.
 
 II (a) The inventory has been physically verified by the Management
 during the year. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventories followed by the Management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory. The
 discrepancies no- ticed on verification between the physical stocks and
 the book records were not material.
 
 III (a) The Company has not granted any loans secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 (b) Since the Company has not granted any loans as stated in paragraph
 III (a) above, Clause iii(b) to clause iii(d) of the order are not
 applicable.
 
 (c) The Company has taken interest free unsecured loans amounting to
 Rs. 1123.91 lakhs (Maximum amount outstanding during the year
 Rs.1123.91 lakhs) from two Companies listed in the register maintained
 under section 301 of the Companies Act, 1956.
 
 (d) Since the loans taken are interest free and without stipulation as
 to their repayment are prima facie not prejudicial to the interest of
 the Company.
 
 (e) In view of our comment in paragraph III (d) above, clause III (f) &
 (g) of the order is not applicable.
 
 IV In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory, fixed assets and with regard to the sale of
 goods and services. Further during the course of our audit, we have
 neither come across nor have we been informed of any continuing failure
 to correct major weak- nesses in internal control system.
 
 V (a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts or arrangements that need to be entered in
 the register maintained under Section 301 of the Companies Act, 1956
 have been so entered. In respect of service contract entered into with
 a private limited company for the period 1.4.2010 to 30.6.2010, the
 company has not obtained prior approval of the Central Gov- ernment as
 required under the proviso to section 297(1) of the Companies Act,
 1956. (refer note 8 of notes forming part of accounts)
 
 (b) According to the information and explanations given to us,
 transactions made in pursuance of Contracts or arrangements entered in
 the register maintained under Section 301 of the Companies Act, 1956
 and exceeding the value of rupees five lakhs in respect of any party
 during the year, have been made at prices which are reasonable having
 regard to prevailing market prices at the relevant time.
 
 VI In our opinion and according to the information and explanations
 given to us, the Com- pany has not accepted any deposits from the
 public as defined under section 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 and the rules framed there under.
 Further, during the course of our audit we have neither come across nor
 have we been informed of any order passed under the aforesaid Section
 by the Company Law Board or National Company Law Tribunal or RBI or any
 Court or any other Tribunal.
 
 VII In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 VIII The Central Government has not prescribed maintenance of cost
 records under section 209 (1)(d) of the Companies Act, 1956 for the
 Company.
 
 IX (a) The Company is regular in depositing with appropriate
 authorities undisputed Statutory dues including provident fund,
 investor education and protection fund, employees state insurance,
 income tax, sales tax, wealth tax, service tax, customs duty, excise
 duty, cess and other material statutory dues applicable to it.
 According to the information and explanations given to us, there are no
 undisputed amounts payable in respect of income tax, wealth tax,
 service tax, sales tax, customs duty, excise duty and cess which were
 outstanding as at 31st March, 2011 for a period of more than six months
 from the date they became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of income tax/sales tax/wealth tax/service tax/customs
 duty/excise duty/cess which have not been deposited on account of any
 dispute other than disputed expendi- ture tax as indicated below:
 
 Name of the Statute     Forum where dispute is Pending    Amount
 
 Expenditure Tax        i) High Court of Bombay,        Rs. 6,76,88,008/-
                           Panaji Bench, Goa.
 
 X The Company has no accumulated losses. The Company has not incurred
 cash losses during the financial year covered by our report and in the
 immediately pre- ceding financial year.
 
 X In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutions or Banks.  Further the Company has not issued
 any debentures and as such reporting re- garding default in repayment
 of the same does not arise.
 
 XII The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other similar
 securities.
 
 XIII In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/soci- ety Therefore, the provisions of Clause XIII of the
 aforesaid Order are not appli- cable to the Company.
 
 XIV In our opinion, the Company is not dealing in or trading in shares,
 securities, deben- tures and other investments. Accordingly, the
 provisions of Clause XIV of the afore- said Order are not applicable to
 the Company.
 
 XV The Company has not given any guarantee for the loans taken by
 others from banks or financial institutions during the year.
 
 XVI The Company has not obtained any term loans. Therefore the
 provisions of clause XVI of order are not applicable to the company.
 
 XVII According to the information and explanations given to us and on
 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
 investments.
 
 XVIII The Company has not raised any money by issue of shares during
 the year. There- fore, the provisions of Clause XVIII of the aforesaid
 Order are not applicable to the Company.
 
 XX The Company has not issued any debentures during the year under
 audit. Accord- ingly, the provisions of Clause XIX of the aforesaid
 Order are not applicable to the Company.
 
 XX The Company has not raised any money by way of public issue during
 the year.  Therefore, the provisions of Clause XX of the aforesaid
 Order are not applicable to the Company.
 
 XXI During the course of our examination of books of account carried
 out in accordance with generally accepted auditing practices, we have
 neither come across any in- stance of fraud on or by the Company nor
 have we been informed of any such case by the Management.
 
 For H.K.APARANJI
 
 CHARTERED ACCOUNTANTS 
 Firm Regd. No. 000199S
 
 MOHAN B. PYATI
 
 PARTNER
 M. No. 203120
 
 Place : Margao, Goa
 Date  : 6th August, 2011