Hotel Leela Venture

1 We have audited the attached Balance Sheet of HOTEL LEELAVENTURE
 LIMITED as at 31st March 2009, and also the Profit and Loss Account and
 the Cash Flow statement for the year ended as on that date, both
 annexed thereto. These financial statements are the responsibility of
 the Companys 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 misstatements. An audit
 includes examining, on a lest 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.
 
 3 As required by the Companies (Auditors Report) Order, 2003 as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004
 (the order) issued by the Central Government in terms of Section 227
 (4A) of the Companies Act, 1956 we give in the annexure, a statement on
 the matters specified in paragraphs 4 and 5 of the said order to the
 extent applicable.
 
 4 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 purposes of
 our audit.
 
 b In our opinion, proper books of account as required by law has been
 kept by the company so far as it appears from our examination of those
 books;
 
 c The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 accounting standards, to the extent applicable, referred to in
 subsection (3C) of the Section 211 of the Companies Act, 1956;
 
 e On the basis of written representations received from the directors,
 taken on record by the Board of Directors, we report that none of the
 directors is disqualified as at 31s March 2009 from being appointed as
 a director in terms of clause (g) of sub-section (1) of Section 274 of
 the Companies Act, 1956; and 
 
 f In our opinion, and to the best of
 information and according to the explanation given to us, the said
 
 Accounts, give the information required by the Companies Act, 1956 in
 the manner so required, subject to our inability to express an opinion
 on the impact of disputed interest income recognised as referred to in
 note 9 of schedule K to the accounts and read with other notes, give a
 true and fair view
 
 i.  in the case of Balance Sheet, of the state of affairs of the
 company as at 31 March 2009.
 
 i i in the case of Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 iii.  in the case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 (i) a. The Company has maintained proper records showing full
 particulars including quantitative details of fixed assts except
 particulars of location which needs to be updated.
 
 b.  Some of the fixed assets were physically verified during the year
 by the Management in accordance with a programme of verification, which
 in our opinion provides for physical verification of all the fixed
 assets at reasonable intervals. According to the information and
 explanations given to us, no material discrepancies were noticed on
 such verification.
 
 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 such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (ii) a. As explained to us, inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 b.  In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the company and nature of the business.
 
 c.  In our opinion and according to the information and explanation
 given to us, the Company has maintained proper records of inventories
 and no material discrepancies were noticed on physical verification.
 
 (iii) According to the information and explanations given to us, the
 Company has not granted/taken secured or unsecured loans to/from
 companies, firms or other parties covered in the Register maintained
 under Section 301 of the Companies Act, 1956
 
 (iv) 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 purchase of inventories and sale of goods and services.
 In our opinion internal control systems for purchase of fixed assets
 needs to be strengthened. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 controls.
 
 (v) To the best of our knowledge and belief and according to the
 information and explanations given to us, transactions to be entered in
 the register maintained under Section 301 of the Companies Act, 1956
 have been entered in the register.
 
 Transactions made in pursuance of such contracts or arrangements have
 been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time.  vi) In our opinion and
 according to the information and explanations given to us, the Company
 has not accepted deposits in terms of the provisions of Sections 58A
 and 58AA or any other relevant provisions of the Companies Act, 1956.
 
 (vii) In our opinion, the company has an adequate 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 in respect
 of any of the activities of the company.
 
 (ix) (a) According to the information and explanations given to us, the
 Company has generally been 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 any other material statutory
 dues with the appropriate- authorities during the year.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of the aforesaid dues were
 outstanding as on 31st March, 2009 for a period of more than six months
 from the date they became payable.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (c). According to the information and explanations given to us, details
 of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service
 Tax, Excise Duty and Cess which have not been deposited as on 31st
 March, 2009 on account of any dispute are given below:
 
 Name of Statute               Nature of                 Amount
                               the dues             (Rs. in Crores)
 
 Customs Act                 Custom Duty               0.50
                              and Penalty
 Customs Act                 Custom Duty               0.35
 
 Period to which            Forum where
 the amount relates         dispute is
 (Assessment years)         pending
 
 2000-2001                   Customs, Excise.
                            Service Tax
                            Appellate Tribunal
 1990-1991                  Customs, Excise,
                            Service Tax
                            Appellate Tribunal
 
 - The Company does not have accumulated losses. the Company lias not
 inclined cash losses during the financial year covered by our audit and
 in the immediately preceding financial year.
 
 (\i) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 the financial institutions, banks, and debenture holders
 
 (xii) In our opinion and according to the information and explanations
 given to us, no loans and advances have been granted by the Company on
 the basis of securities by way of pledge of shares, debentures and
 other securities.
 
 (xiii) The Company is not a chit fund/nidhi/mutual benefit
 fund/society. Accordingly, clause 1 (xiii) of the Companies (Auditors
 Report) Order, 2003 is not applicable to a company during the year
 under audit.
 
 (xiv) In our opinion and according to the information and explanations
 given to us the Company is not dealing in or trading in shares
 securities, debentures and other investments. Therefore the provisions
 of clause (4)(iv) of The Companies (Auditors Report) Order 2003 are not
 applicable to the Company.
 
 (xv) The Company has not given any guarantee lor loans taken by others
 from financial institutions or banks.
 
 (\vi) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were,prima facie, applied by the Company during
 the year for the purposes for which the loans were obtained.
 
 (xvii) According to the information and explanations given to us, and
 on an overall examination of the Balance Sheet of the Company, funds
 raised on short term basis have,prima facie, not been used during the
 year for long term investment.
 
 (xviii)During the year, the Company has not made any preferential
 allotment of shares to parties and Companies covered in the Register
 maintained under Section 30f of the Act.
 
 (xix) The Company has issued debentures during the year under review
 for which securities have not been created as on date. We have been
 informed that the Company is in process of creation of Securities.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (xxi) To the best of our knowledge and belief and according to the
 information and explanations given of us, no fraud on or by the Company
 was noticed or reported during the year.
 
 
                                                  For PICARDO & CO.
                                             Chartered Accountants
 
                                              K.V.Gopalakrishnayya
                                                          Partner
                                              Membership  No.21748
 
 Mumbai, 27st June ,2009