1.  We have audited the attached Balance Sheet of IOL NETCOM LIMITED
 hereinafter referred to as the Company as at 30th June 2011 and also
 the Profit and Loss Account of the Company and 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. The accounts have been prepared as to going concern
 concepts considering that the company is in the midst of restructuring.
 
 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 presentation of the
 financial statements. 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,
 issued by the Central Government of India in terms of Section 227 (4A)
 of the Companies Act, 1956, we enclose in the Annexure on the matters
 specified in paragraphs 4 and 5 of the said Order, to the extent they
 are applicable to the Company.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as under:
 
 (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 except as stated in paragraph 6 (ii) below.
 
 (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 referred to in sub-section (3C) of the section 211 of the
 Companies Act, 1956 except as stated in paragraph 6 below.
 
 5.  On the basis of the written representations received from the
 directors as on 30th June 2011 and taken on record by the Board of
 Directors, we report that none of the directors are disqualified as on
 30th June 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, Subject to
 
 i. Note No. 3 of schedule N regarding uncertainty of collection of
 sundry debtors of Rs. 3.82 Crores and consequential effect thereon.
 
 ii. In the absence of adequate information with respect to revenue
 recognized in the Financial Statements, we are unable to comment on the
 correctness or otherwise of the same. However, the Sale / Purchase &
 Losses are affected to their extent.
 
 iii. Note no 7 of schedule N, the said account read with significant
 accounting policies and notes to accounts, 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:
 
 a) In the case of the Balance Sheet, of the state of affairs of the
 company as at 30th June 2011.
 
 b) In the case of the Profit and Loss Account, of the loss for the year
 ended on the date; and
 
 c) In the case of the Cash Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE
 MEMBERS OF IOL NETCOM LIMITED ON THE FINANCIAL STATEMENT FOR THE YEAR
 ENDED 30th June 2011
 
 On the basis of such checks of the books of account and other records
 as we considered appropriate and the information and explanation given
 to us during the course of audit we report that-
 
 Fixed Assets:-
 
 1. The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 2.  During the year, Fixed Assets have not been physically verified by
 the management, in our opinion, the Company needs to implement a
 programme for physical verification of fixed assets having regard to
 the size of the Company and nature of its assets.
 
 3.  During the year, the Company has not disposed off a substantial
 part of the fixed assets.
 
 Inventories: -
 
 4.  The inventories have been physically verified during the year by
 the management. In our opinion having regard to the nature and location
 of the stocks, the frequency of the verification is reasonable.
 
 5.  The procedures of physical verification of stocks followed by the
 management were found reasonable and adequate in relation to the size
 of the Company and the nature of its business.
 
 6.  The Company is maintaining proper records of inventories. The
 discrepancies noticed on physical verification were not material in
 relation to the operations of the Company and the same have been
 properly dealt with in the books of account.
 
 Loans & Advances
 
 7.  The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956,
 Accordingly, paragraph 4 (iii) of the Order is not applicable to the
 Company.
 
 Internal Control
 
 8.  In our opinion and according to the information and explanations
 given to us, although the company has put in place the internal control
 procedures, the Company needs to strengthen the same to be commensurate
 with the size of the Company and the nature of its business for
 purchase of fixed assets and with regard to the sale of goods and
 services.  During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal controls.
 Further, refer paragraph 11 below regarding internal audit system.
 
 Transactions with parties under section 301 of the Companies Act, 1956
 
 9.  There are no contracts or arrangements, the particulars of which
 need to be entered into the register maintained under section 301 of
 the Companies Act, 1956, Accordingly, paragraph 4 (v) of the Order is
 not applicable.
 
 Public Deposits
 
 10.  The company has not accepted any deposit from the public
 attracting the provisions of Sections 58A and 58AA of the Companies Act
 1956 or the rules framed there under.
 
 Internal Audit
 
 11.  The company had put a formal internal audit system. However, in
 view of non-furnishing the internal audit reports from the internal
 auditor, we are unable to comment on the same.
 
 Cost Records
 
 12.  To the best of our knowledge and as explained, 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 services
 rendered by the Company, Accordingly, paragraph 4 (viii) of the order
 is not applicable.
 
 Statutory Dues
 
 13.  a) The Company has not been regular in depositing undisputed
 statutory dues including Provident Fund, Investor
 
 Education and Protection Fund, Employees State Insurance, Income tax,
 VAT, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and any
 other statutory dues with the appropriate authorities. Further, since
 the central government has till date not prescribed the amount of cess
 payable under section 441 A of the Companies Act, 1956, we are not in
 position to comment upon the regularity or otherwise of the Company in
 depositing the same.
 
 b) According to the information and explanation given to us, the extent
 of arrears which are outstanding, including interest and consequential
 penalty, if any, on the same, as at 30th June 2011 for a period of more
 than six months from the date they became payable are as follows.
  
                                                   Amount (Rs. In Lacs)
 
 Particulars                            2010-11             2009-2010
 
 TDS                                     152.98                753.90
 
 Provident Fund                           23.62                 23.62
 
 Professional Tax                         16.40                 16.40
 
 ESIC                                      9.57                  9.57
 
 c) There are no dues of Income Tax, VAT, Custom Duty, Wealth Tax,
 Service Tax or Cess as on 30th June 2011, which have not been deposited
 on account of any dispute.
 
 Accumulated Losses
 
 14.  The accumulated losses at the end of financial year are not more
 than fifty Five Percent of its net worth. The company has incurred cash
 losses amounting to Rs. 1.13 crores during the immediately preceding
 financial year.
 
 Repayment of Dues
 
 15.  The company has defaulted in repayment of dues to the financial
 institution.
 
 Utilization of Funds
 
 16.  On an overall examination of the balance sheet of the Company, no
 funds raised on short-term basis have been used for the purpose of long
 term investment.
 
 Miscellaneous
 
 17.  The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 Hence, paragraph 4(xii) of the order is not applicable.
 
 18.  In our opinion and according to the information and explanation
 given to us, the Company is not Chit Fund or Nidhi/ Mutual Benefit Fund
 / Societies. Accordingly paragraph 4(xii) of the order is not
 applicable.
 
 19.  According to the information and explanation given to us, the
 company is not dealing or trading in shares, securities, debentures,
 and other investments. Accordingly paragraph 4(xii) of the order is not
 applicable.
 
 20.  According to the information and explanation given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions. Accordingly paragraph 4(xii) of the
 order is not applicable.
 
 21.  During the year, the Company has not availed/obtained any fresh
 term loan. Accordingly, clause 4 (xvi) of the Order is not applicable.
 
 22.  The company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Act.
 
 23.  The Company has not created any securities in respect of
 debentures during the year.
 
 24.  The Company has not raised any money by public issues during the
 year. Accordingly paragraph 4(xii) of the order is not applicable.
 
 25.  We have neither come across any instance of fraud on or by the
 company noticed or reported during the year, nor have we been informed
 of any such case by management.
 
                                                      For DARGAR & CO.,
                                                  Chartered Accountants
 
                                                           FRN: 007289W
 
                                                           Vijay Dargar
 
                                                             Proprietor
                                                             M.N. 76191
 Place: Mumbai
 Date: November 14, 2011