We have audited the attached Balance Sheet of the iq infotech Limited,
 #134/A, 2nd Floor, 3rd cross, 6lh main, Industrial Suburb,
 Yeshwanthpur, Bangalore - 560 022, as at 31st March, 2011 and also the
 Profit and Loss Account and the Cash Flow Statement of the Company 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.
 
 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 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 of
 our opinion.
 
 As required by the Companies [Auditor''s Report] Order, 2003 (as
 amended) 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 paragraph 4 and
 5 of the said order to the extent applicable.
 
 Further to our comments in the Annexure referred to in paragraph 3
 above, we state 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
 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 the
 books.
 
 c.  The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of accounts.
 
 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 referred to in section 211 [3C] of Companies Act,
 1956.
 
 e.  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 2011 from
 being appointed as a Director in Terms of Clause [g] of sub-section [1]
 of section 274 of the Companies Act, 1956.
 
 f.  In our opinion and according to the information and explanations
 given to us, the accounts read together with the notes and accounting
 policies thereto, give the information required by the companies Act
 1956, in the manner so required and gives 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 on 31st March 2011.
 
 b.  In the case of the Profit and Loss Account of the Loss of the
 Company for the year ended on that date; and
 
 c.  In the case of the Cash Flow statement, of the cash flows for the
 year ended on that date.
  
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS'' REPORT TO THE
 MEMBERS OF THE iQ INFOTECH LIMITED FOR THE YEAR ENDED 31ST MARCH 2011
 
 1.  a) The Company has maintained records showing particulars including
 quantitative details and location of the fixed assets and the same is
 being updated.
 
 b) There is a regular program of physical verification, which in our
 opinion is reasonable, having regard to the size of the Company and the
 nature of fixed assets. No materials discrepancies have been noticed by
 the management in respect of the assets physically verified during the
 period.
 
 c) Company has not sold substantial part of fixed assets during the
 year. However, the company has sold the land and buildings belonging to
 it during the year and the same is reflected in the books of accounts.
 
 2.  a.  Inventories have 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 stocks followed by the
 management are 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
 book records were not material and have been properly dealt with in the
 books of account.
 
 3.  a.  As informed to us, the Company has not granted loans, secured
 or unsecured or unsecured to companies, firms or other parties covered
 in the register maintained under section 301 of the Companies Act,
 1956.
 
 b.  As the Company has not granted any loans during the year to the
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956 clause (b), (c) and (d) are not applicable
 
 c.  The Company has not taken unsecured loans during the period from
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956 and hence provisions relating to terms conditions
 and repayment are not applicable.
 
 4.  In our opinion, and according to the information and explanations
 given to us, there are internal control procedures with regard to
 purchase of raw materials, stores and spares, plant and machinery,
 equipment and other assets but it needs to be strengthened.
 
 5.  a.  All the transactions with parties covered under section 301 of
 the Companies Act, 1956 have been properly entered, if and when
 transaction takes place, in the register maintained under section 301
 of the Act.
 
 b. In our opinion and according to the information and explanations
 given to us, the Company has not entered into transactions of sale or
 purchase of goods, made in pursuance of contracts or arrangements
 entered in the register maintained under Section 301 of the Companies
 Act, 1956.
 
 6.  The Company has not accepted any deposits from the public during
 the year.
 
 7.  The company has an internal audit system and it needs to be
 strengthened.
 
 8.  Maintenance of cost records as per clause (d) of sub-section (1) of
 section 209 of the Companies Act is not applicable to the Company.
 
 9.  a.  In our opinion and according to the information and
 explanations given to us, the Company is not regular in depositing
 undisputed statutory dues including Provident Fund, Employees'' State
 Insurance, sales tax, service tax and Excise Duty with appropriate
 authorities. The company is generally regular in payment of Income Tax
 and Customs Duty.
 
 b. According to the information and explanations given to us,
 undisputed amounts payable in respect of the following except income
 tax, service tax, customs duty, excise duty and cess were in arrears,
 as at 31st March 2010, for a period of more than six months from the
 date they became payable;
 
 Service Tax              Rs. 2,73,387.00 
 
 PF                       Rs. 4,77,571.00 
 
 Tax Deducted at Source   Rs. 2,88,018.00
 
 10.  The Company''s accumulated losses at the end of the financial year
 is Rs. 13,57,71,963/.  The company has not incurred cash losses during
 the current year. In Immediately preceding financial year company has
 incurred cash loss of Rs.61,98,024/-
 
 11.  The company does not have any overdue outstanding to any financial
 institutions, banks or debenture holders during the year. 
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities. 
 
 13.  As the Company is not a chit fund, nidhi, mutual benefit fund or
 society the provisions of clause 4[xiii] of the Companies [Auditor''s
 Report] Order, 2003 is not applicable to the Company.
 
 14.  The Company is not dealing or trading in shares/securities/
 debentures and other investments.
 
 15.  The Company has not given any guarantees for loans taken by others
 from bank or financial institutions during the period under review.
 
 16.  In our opinion and according to the information and explanations
 given to us by the management, term loans are applied for the purpose
 for which the loans were obtained.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, we report
 that neither any short-term funds have been used for long-term purposes
 nor any long-term funds have been used to finance short-term assets
 except permanent working capital.
 
 18.  According to the information and explanations given to us, during
 the period covered by our audit report, the company has not made any
 preferential allotment of share to parties and companies covered in the
 register maintained under section 301 of the Act.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by way public issue during
 the year.
 
 21.  Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
                                           For Pal and Shanbhougue.,
                                               Chartered Accountants
                                                  (ICAI FRN 002528S)
 
                                                     K.R. SHANBHOGUE
                                                             Partner
                                               Membership No: 018578
 
 Place: Bangalore
 Date : 3rd September2011