1.  We, M/s Purnachandra Rao & Co., Chartered Accountants, have audited
 the attached Balance Sheet of INCAP LIMITED, as at March 31, 2011 the
 Profit and Loss Account for the year ended on that date and also the
 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 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
 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 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.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 accounts 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 referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 5.  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 Companies Act, 1956.
 
 6.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 significant accounting policies and notes thereon give the infor-
 mation 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 Balance Sheet, of the state of affairs of the Company
 as at 31st March, 2011;
 
 b) In the case of Profit and Loss Account, of the loss for the year
 ended on that date; and
 
 c) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 
 ANNEXURE TO AUDITOR''S REPORT OF EVEN DATE
 
 Referred to in paragraph 3 of our report of even date to the members of
 Incap Limited on the Financial Statements for the year ended 31st
 March, 2011.
 
 i (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets;
 
 (b) All the assets have not been physically verified by the management
 during the year but there is a regular programme of verification which,
 in our opinion, is reasonable having regard to the size of the company
 and the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 (c) In our opinion and according to the Information and explanations
 given to us, no substantial part of fixed assets have not been disposed
 off by the Company during the year.
 
 ii. (a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) 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 noticed on verification between the physical stocks and
 the book records were not material.
 
 iii.  The company has not either granted or taken any loans secured or
 unsecured to / from companies, firms or other parties covered in the
 register maintained under section 301 of the 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 the nature of its
 business with regard to purchases of inventory, fixed assets and with
 regard to the sale of goods.  During the course of our audit, we have
 not observed any continuing failure to correct major weaknesses in
 internal controls.
 
 v.  According to the information and explanations given to us, we are
 of the opinion that the particulars of contracts or arrangements
 referred to in Section of 301 of the Companies Act, 1956 have been
 entered in the Register required to be maintained under that section.
 
 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 Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii. The Central Government has not prescribed the maintenance of cost
 records for any of the products of the company under Section 209(1) (d)
 of the Companies Act, 1956.
 
 ix. (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including Provident Fund, Income
 tax, Sales tax, Customs duty, Excise duty, Service tax, Cess and other
 material statutory dues applicable to it.
 
 (b) According to the information and explanation given to us, there are
 no dues of Sales tax, Service tax, Income tax, Customs duty and Excise
 duty which have not been deposited on account of any dispute.
 
 x.  No accumulated losses are there at the end of the financial year
 2010-11. The company has not incurred cash losses during the financial
 year covered by our audit and in the immediate preced- ing financial
 year.
 
 xi.  In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to the
 financial institution, bank or debentures holders.
 
 xii.  The Company has not granted any 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 chitfund or a nidhi/mutual
 benefit fund/society. Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) order, 2003 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 are not applicable to the company.
 
 xv.  The Company has not given gurantees for loans taken by others from
 banks and financial institutions during the year.
 
 xvi.  In our opinion the term loans have been applied for the purpose
 for which they were raised.
 
 xvii. According to the information and explanation 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. The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of act during the year.
 
 xix.  The Company has not issued debentures during the year. Hence
 clause (xix) is not applicable.
 
 xx.  The Company has not raised any money by way of public issues
 during the year.
 
 xxi. According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 course of our audit.
 
 
                                          For PURNACHANDRA RAO & CO.,
                                                Chartered Accountants
                                               Firm Regn. No. 002802S
                                                                 Sd/- 
                                                 (CA. G. BABU SRIKAR) 
                                                              Partner 
                                                         M.No. 202335
 
 VIJAYAWADA 
 May 30, 2011