1.  We have audited the attached Balance Sheet of Jaypee Hotels
 Limited, as at 31 st March 2008, the Profit and Loss Account and also
 the Cash Flow Statement for the year ended on that date annexed
 thereto. These financial statements are the responsibility of
 management of the Company. 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 the 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 (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 Act and on the basis of such checks as we considered appropriate
 and according to the information and explanations given to us, we give
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order to the extent applicable to the Company.
 
 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 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 section 211 of the
 Companies Act, 1956, to the extent applicable.
 
 e) On the basis of written representations received from the directors,
 as on 31st March, 2008 and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31st March,
 2008 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 to the best of our information and according to
 the explanations given to us, the said accounts read together with
 significant accounting policies and the notes thereon appearing in
 Schedule-22 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:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 st March, 2008;
 
 ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDITORS REPORT OF EVEN DATE TO
 THE MEMBERS OF JAYPEE HOTELS LIMITED ON THE FINANCIAL STATEMENTS FOR
 THE YEAR ENDED MARCH 31, 2008
 
 1.  The Company has maintained records showing full particulars
 including quantitative details and situation of fixed assets. The
 physical verification of assets was conducted at such intervals as was
 considered appropriate by the management. We have been explained that
 no material discrepancy was noticed. In our opinion the frequency of
 physical verification was reasonable having regard to the nature and
 size of its assets.
 
 Fixed Assets disposed off during the year were not substantial and
 therefore has not affected the going concern status of the Company.
 
 2.  Physical verification of inventory was carried out once during the
 year by the management, which in our opinion considered to be
 reasonable having regard to the size of the Company and the nature of
 its business.
 
 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.
 
 The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material and the discrepancies so noticed
 have been properly dealt with in the books of account.
 
 3.  a) The Company has not granted any secured or unsecured loan during
 the year to companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 b) The Company has not taken any secured or unsecured loan during the
 year from companies, firms or other parlies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 4.  In our opinion and according to the information and explanations
 given to us, there exists an adequate internal control system
 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 and services. Further, on the basis of our
 examination of the books and records of the Company and according to
 the information and explanations given to us, we have neither come
 across nor have we been informed of any continuing failure to correct
 major weaknesses in the internal control system of the Company.
 
 5.  a) According to the information and explanations given to us, we
 are of the opinion that the particulars of all contracts or
 arrangements that need to be entered into the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 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 prevailing market price at the relevant
 time.
 
 6.  According to the information and explanations given to us, the
 Company has not accepted any deposits from the public within the
 meaning of Section 58A and 58AA of the Companies Act, 1956 and the
 Rules framed there under or any other relevant provisions of the Act.
 As per the information and explanations given to us no order has been
 passed by the Company Law Board or National Company Law Tribunal or
 Reserve Bank of India or any Court or any other Tribunal against the
 company.
 
 7.  The Company has engaged professional firms to conduct the internal
 audit of the accounts of the Company and its various units and we feel
 it is adequate and commensurate with the size of the Company and the
 nature of its business.
 
 8.  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.
 
 9.  According to information and explanations given to us and on the
 basis of our examination of the books of account, the Company has
 generally been regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, investor education
 and protection fund, employees state insurance, income tax, sales tax,
 wealth tax, service tax, custom duty, excise duty, cess and any other
 statutory dues applicable to it.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of income tax, wealth tax,
 service tax, sales tax, customs duty, excise duty and cess were in
 arrears, as at 31.03.08 for a period of more than six months from the
 date they became payable.
 
 According to the information and explanations given to us, disputed
 demands for the assessment years 2001 -02, 2003-04 and demand by the
 Director General of Foreign Trade (DGFT) not deposited have been
 disclosed in note no. B(9) (i), (ii) and (i i) in Schedule 22 attached
 to Audited Financial Statements.
 
 10.  The Company does not have any accumulated losses at the end of
 financial year and has not incurred cash losses during the financial
 year and in the immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to any
 financial institution or bank.
 
 12.  In our opinion and according to the information and explanation
 given to us the Company has not granted loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 13.  In our opinion, considering the nature of activities carried on by
 the Company during the year, the provisions of any special statute
 applicable to chit fund / nidhi / mutual benefit fund / societies are
 not applicable to it.
 
 14.  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 Order are not applicable to the
 Company.
 
 15.  In our opinion and according to the information and explanations
 given to us the Company has not given any guarantee for loans taken by
 others from banks or financial institutions.
 
 16.  As per information and explanations given to us, Term _oan
 obtained from bank(s) have been utilised for the purposes, in
 compliance with the terms of sanction.
 
 17.  On the basis of review of an overall examination of the balance
 sheet of the Company, in our opinion and according to the information
 and explanations given to us, no funds raised on short term basis have
 been used for long term investment
 
 18.  According to the information and explanations given to us, the
 Company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under section 301 of the
 Companies Act, 1956.
 
 19.  According to the information and explanations given to us, the
 Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  Based upon the audit procedures performed and on the basis of
 information and explanations provided by the management, we report that
 no fraud on or by the Company has been noticed or reported during the
 year.
 
                                     For LC KAILASH AND ASSOCIATES 
                                             Chartered Accountants
 
 Place : New Delhi                                        LC.Gupta
 Date  : 15th April, 2008                    Sr. Executive Partner
                                                       (M.No. 5122)