We have audited the attached Balance Sheet of Indo Aquatics Limited as
 at 31st March 2009, and also the Profit and Loss Account and the Cash
 Flow Statement for the Year ended on that date 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 ouraudit.
 
 We conducted our audit in accordance with Auditing Standards generally
 accepted in India.Those standards require that we plan and perform
 theaudit to obtain reasonable assurance about whether the financial
 statements are free of material misstatement. Our audit includes
 examining, on a test basis, evidencesupportingtheamountsand disclosures
 in thefinancialstatements.  Our 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 forour opinion.
 
 As required by the Companies (Auditors Report) Order, 2003, as amended
 by the Companies ((Auditors 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 paragraphs4and 5 of thesaid order.
 
 Furthertoourcomments in the annexure referred toabove.we report that;
 
 I.  We have obtained all the information and explanations, which to the
 best of our knowledgeand belief were necessary forthe purpose of our
 Audit:
 
 II.  In our opinion, proper books of account as required by law have
 been kept by the company so far as it appears from our examination of
 such books.
 
 III.  The Balance Sheet, Profit and Loss Account and Cash Flow
 Statement referred to in the report are in agreement with the books of
 account.
 
 IV.  In our opinion,the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement comply with the mandatory 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 and taken on record by the Board of Directors, we report that
 none of the Directors is disqualified as on 31st March, 2009 from being
 appointed as Director in terms of clause(g)of Sub-section(l) of section
 274 of the Companies Act, 1956.
 
 VI.  Attention is invited to the following notes in the notes to
 accounts in schedule - K.
 
 a) Note No.1 (a) regarding preparation of accounts on principles
 applicable to a going concern.
 
 b) Note No.1 (C) regarding non-provision of interest on loans from
 banks & financial institutions at the original contracted rates.
 
 II.  Subject to our remarks in paragraph VI above and possible
 
 impact on the loss,assets and liabilities of the company, the accounts
 g ive a true and fair view:
 
 1) In case of Balance sheet, of the State of affairs of the company as
 at31 st March,2009
 
 2) In case of Profit and Loss Account, of the loss for the year ended
 onthatdaterand
 
 3) In case of the Cash flow statement, of the cash flows for the year
 ended on that date.
 
 INDO AQUATICS LIMITED
 
 ANNEXURETO THE AUDITORS REPORT
 
 (Referred to in Paragraph 3 of our report of even date)
 
 I) a) The company has maintained proper records showing full
 particulars including quantitative details and situation of 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) During the year the company has not disposed off any item of its
 fixed assets.
 
 ii) As there are no stocks of finished goods, raw-material, stores and
 spares, the matters specified in clauses (ii)(a), (ii)(b), and (ii)(c)
 of paragraph-? of the said Orderarenotapplicable.
 
 iii a) The Company has not granted any loans secured or unsecured, to
 any party. However, the Company had taken interest free loans in
 earlier years and also during the current year from the parties listed
 in the register maintained under section 301 of the companies Act,
 1956.The total outstanding amount of these loans taken from the
 saidpartiesasat31st,March,2009isRs.2,55,71,283/-
 
 b) As perthe information and explanations given,there are no specific
 terms and conditions attached to the above said loans regarding
 repayment.
 
 c) The company has not repaid the said loans.
 
 d) The entire amounts of the said loans other than the loans obtained
 during the year are long overdue.
 
 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 inventory; fixed assets and with regard to
 sale of goods. However,there are no sales during the year.
 
 v) During the year, there were no transactions exceeding the value of
 five lakh rupees in respect of each party which need to beentered in
 the register in pursuance of section 301 of the companies Act, 1956.
 
 vi) The company has not accepted any deposits from the public.
 
 vii) In our opinion, the company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii) According to the information and explanations given to us the
 Central Government has not prescribed the maintenance of cost records
 under section 209(1)(d) of the companies Act, 1956 for any of the
 products of the company.
 
 ix) a) As per the information and explanations given to us,the
 provisions of Employees Provident Fund Act and employees State
 Insurance Act are not applicable fortheyear under audit.
 
 b) According to the information and explanations given to us, no
 undisputed amount payable in respect of Income Tax, Wealth Tax,
 SalesTax,Customs duty, excise duty and cess which were in arrears, as
 at 31.03.2009 for a period of more than six months from the date they
 became payable.
 
 c) On the basis of the records made available to us and other
 information and explanations given, we report that the following are
 the disputed amounts of Excise Duty and IncomeTax.
 
                       Amount in Rs.   Name of the forum where 
                                       the dispute is pending
 
 ExciseDutyof         Rs. 25,60,989/- The Customs.Exciseand Service Tax 
 (including penalty of Rs.12,19,081)  AppellateTribunal, Bangalore
 IncomeTax of           Rs.6,70,813/- Income Tax Appellate tribunal,
                                      Hyderabad.
 
 x) The amount of accumulated losses at the end of the financial year is
 far in excess of the net worth of the company. During the year the
 Company has not incurred any cash loss. However it has incurred cash
 loss in the immediately preceding year
 
 xi) The company has defaulted in repayment of dues to the ICICI Bank
 which has assigned the debt in favour of Standard Chartered Bank and
 which in turn has again assigned the said debt in favour of Sri
 Venkatasesha Reddy.K. The total amount of the said dues as on 31st
 March 2009 as per the books of account of the Company excluding
 interest for the period from 1 April 2002 to 31st March
 2009,isRs.1866.40 lakhs.
 
 xii) The company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii) The company is not a chit/nidhi/benefit company
 
 xiv) The company is not dealing/Trading in Shares, Securities,
 Debentures and other investments.
 
 xv) According to the information and explanations given to us, the
 company has not given any guarantee for loans taken by others from
 banksorfinancial institutions.
 
 xvi) During the yearthecompany has not obtained any Term Loans.
 
 xvii) Based on the examination of the books of account and related
 records and according to the information and explanations provided to
 us,the company has not utilized funds raised on short term basis for
 long term investment and vice versa.
 
 xviii) The company has not made any fresh allotment of equity shares
 during the year.
 
 xix) The company has not issued any debentures.
 
 xx) During the year the company has not raised any money by public
 issue of its shares.
 
 xxi) According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 year.
 
 
                                           Chartered Accountants
                                                For Reddy & Balu
                                           Chartered Accountants
                                                            Sd/- 
 Place: Hyderabad                                   M Raja Reddy
 Date:27-04-2009                                         Partner
 ICAI                                        Membership No.23110