1.  We have audited the attached Balance Sheet of Jagson Airlines
 Limited., as at 31st March, 2011, the Profit and Loss account and also
 the Cash Flow Statement of 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, 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 paragraphs 4 and 5 of the said
 order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i) 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;
 
 ii) 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;
 
 iii) the Balance Sheet, Profit and Loss account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 iv) 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 to the extent applicable;
 
 v) on the basis of 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;
 
 vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto, 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 31st March, 2011.
 
 b) in the case of the Profit and Loss Account, of the Loss 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 to 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.
 
 ii) a) The inventory consisting of Aircraft stores & spare parts,
 flight equipments and other miscellaneous items has been physically
 verified during 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 physical verification of inventory as compared
 to the book records were not material.
 
 iii) a) The Company has not granted any loans, secured or unsecured to
 Companies/firms or other parties as covered in the register maintained
 under Section 301 of the Companies Act 1956. Accordingly, Clause 4
 (iii) (b)to (d) of the order are not applicable.
 
 b) The Company has taken a loan Rs. 3279.96 Lacs from Jagson
 International Limited being a company covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 c) Rate of interest and other terms and conditions of loan taken by the
 company, are not prejudicial to the interest of the company
 
 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 tickets. During the course of our audit, we have
 not observed any continuing failure to correct major weaknesses in
 internal controls.
 
 v) a) In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in section 301 of the Act have been entered in the register required to
 be maintained under that section.
 
 b) In our opinion and according to the information and explanations
 given to us the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 vi) The company has not accepted any deposits from the public in terms
 of the provisions of section 58A and Section 58AA of the companies act,
 1956 and the rules frames thereunder. No order has been passed by the
 Company Law Board.
 
 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 by the company in terms of section 209(1) (d) of the Companies
 Act, 1956.
 
 ix) a) According to the information and explanation given to us, the
 company is regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, investor education
 and protection fund, income tax, sales tax, wealth tax, custom duty,
 excise duty, cess and other material statutory dues applicable to it.
 And there is no arrears at the year end.
 
 b) According to the information and explanation given to us, no
 undisputed amounts payable in respect of income tax, wealth tax, sales
 tax, customs duty, excise duty and cess were in arrears, as at 31st
 March, 2011 for a period of more than six months from the date they
 became payable.
 
 c) According to the information and explanation given to us there are
 no disputed dues of sales tax, income tax, customs duty, wealth tax,
 excise duty and cess, which are required to be deposited with the
 appropriate authorities.
 
 x) The company has an accumulated loss of Rs.3164 Lacs as at 31st March
 2011 and it has incurred a cash loss of Rs.489 Lacs in the financial
 year ended on that date.
 
 xi) In our opinion and according to the information and explanation
 given to us, the company has not defaulted in repayment of dues to
 bank(s). The company has not borrowed any funds from financial
 institution and by issue of debentures.
 
 xii) The company has not granted any loans and advances on the basis of
 security by the way of pledge of shares, debentures and other
 securities and hence we have no comments to offer in respect of clause
 4 (xii) of the Companies (Auditor''s Report) Order, 2003.
 
 xiii) In our opinion, the Company is not a chit fund or a nidhi mutual
 benefit fund / society. Therefore, the provisions of clauses 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 tradingin shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditor''sTteport) Order,
 2003 are not applicable to the company.
 
 xv) In our opinion and according to the information and explanations
 given to us, the company has given corporate guarantee for loans taken
 by M/s Jagson International Limited from State Bank of India.
 
 xvi) In our opinion, the term loans have been applied for the purpose
 for which they were raised.
 
 xvii) According to the information and explanations 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(s). No long-term funds have been used to finance short-term
 assets.
 
 xviii) The Company has not issued any debentures during the year nor
 there is any outstanding as on 31st March, 2011 and hence we have no
 comments to offer in respect of clause 4 (xix) of the Companies
 (Auditor''s Report) Order, 2003.
 
 xix)The company has not raised money by public issues in the recent
 past and hence we have no comments to offer in respect of clause 4 (xx)
 of the Companies (Auditor''s Report) Order, 2003.
 
 xx) According to the information and explanation given to us, no fraud
 on or by the company has been noticed or reported during the course of
 our audit.
 
                                        For Sanjay Kailash & Associates
 
                                                  Chartered Accountants
 
                                                         Sd/-
 
 Place: New Delhi                                  (Sanjay Mehra)
 
 Date : 27/07/2011                                      Prop.
 
                                               Membership No. 091866