We have audited the attached Balance Sheet of Kanani Industries Limited
 as at 31st March, 2011 and both the Profit and Loss Account and the
 Cash Flow Statement for the year ended on that date, which we have
 signed under reference to this Report. 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 the auditing standards
 generally accepted in India. Those Standards require that we plan &
 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 statements
 presentation. We believe that our audit provides a reasonable basis for
 our opinion and report thereto:
 
 1.  As required by the Companies (Auditors'' Report) Order, 2003 issued
 by the Central Government 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.
 
 2.  Further to our comments in the annexure referred to in the
 paragraph (1) above :
 
 (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 the law have
 been maintained by the company so far as appears from our examination
 of such books.
 
 (c) The balance sheet and the profit & loss account are in agreement
 with the books of account;
 
 (d) in our opinion, the profit & loss Account and the balance sheet
 comply with the Accounting Standards referred to in sub-section (3C) of
 section 211 of the Companies Act, 1956;
 
 (e) on the basis of written representations received from the directors
 of the company and taken on record by the Board of Directors, we report
 that none of the directors of the company is disqualified from being
 appointed as a director under 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 with notes
 thereon, give the information required under the Companies Act, 1956 in
 the manner so required give a true and fair view in conformity with the
 accounting principles generally accepted in India :
 
 (i) in the case of balance sheet, of the state of affairs as at 31st
 March 2011; and
 
 (ii) in the case of profit and loss account, of the profit for the year
 ended on that date.
 
 i. a) As informed by the management, the proper records of fixed assets
 showing full particulars including quantitative details and location of
 fixed assets are under updation and compilation.
 
 b) As explained to us, the fixed assets have been physically verified
 by the management during the year at regular intervals, which in our
 opinion is reasonable, having regard to the size of the company and
 nature of its assets. No material discrepancies were noticed on such
 physical verification.
 
 c) The company has not disposed of any part of its fixed assets during
 the year.
 
 ii.  a) The inventories have been physically verified during the year
 by the management. In our opinion, the frequency of verification is
 reasonable.
 
 b) in our opinion and according to information and explanation given to
 us, the procedures of physical verification of the company are
 reasonable and adequate having regard to the size of the company and
 nature of its business.
 
 c) in our opinion and according to the information and explanation
 given to us, the company is maintaining proper records of inventory.
 The discrepancies noticed on such verification between physical stocks
 and book records were not material and have been properly dealt with in
 the books of accounts.
 
 iii. a) The company has not granted any loans, secured or unsecured to
 Companies, firms or other parties covered in the register maintained
 under section 301of the Companies Act, 1956.
 
 b) The company has not taken any secured or unsecured loans from
 Companies, firms or other parties covered in the register maintained
 under section 301of the Companies Act, 1956.
 
 iv In our opinion and according to the information and explanation give
 to us, there is adequate internal control system commensurate with the
 size of the company and nature of its business with regard to purchase
 of inventory, fixed assets and also for the sale of goods & services.
 During the course of our audit, we have not observed any continuing
 failure to correct major weaknesses in internal control system.
 
 v. a) According to the information and explanations given to us, we are
 of the opinion that the transactions that are needed to be entered into
 the register in pursuance of 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 Company has not entered into any transactions
 exceeding Rs. 5,00,000/- in value made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956
 
 vi. In our opinion and according to the information and explanations
 given to us, the company has not accepted any deposit in contravention
 of section 58A and 58AA of the Companies Act, 1956 and the Companies
 (Acceptance of Deposits) Rules, 1975 and other relevant provisions of
 the Act. As informed to us, no order has been passed by the Company Law
 Board, National Company Law Tribunal or any Court or Tribunal.
 
 vii. The Company does not have an internal audit system. The management
 has informed us that steps are being taken to introduce internal audit
 system.
 
 viii. The Central Government has not prescribed maintenance of cost
 records u/s. 209(1)(d) of the Companies Act, 1956 for any of the
 product of the company.
 
 ix. a) The company is generally regular in depositing undisputed
 statutory dues including investor education protection fund, income
 tax, sales tax, service tax, wealth tax, custom duty, excise duty, cess
 and other material statutory dues with appropriate authorities,
 wherever applicable to it. The Company has yet to apply for
 registration with employees'' state Insurance authorities.
 
 b) According to the information and explanations given to us, as at
 31st March, 2011 no undisputed amounts payable in respect of
 income-tax, wealth tax, service tax, sales tax, custom duty, excise
 duty and cess were in arrears for a period exceeding six months from
 the date they became payable.
 
 c) As per the records of the company and in accordance with the
 information and explanation given to us, there are no dues of
 sales-tax, income-tax, custom duty, wealth tax, service tax, excise
 duty and cess which have not been deposited on account of any dispute.
 
 x. The Company does not have any accumulated losses. The company has
 not incurred cash losses during the current financial year or in the
 immediately preceding financial year.
 
 xi. In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to the
 bank. It has not borrowed any funds from financial institution or
 debenture holders.
 
 xii. The company has not granted any loans and/or advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 xiii. In our opinion, the company is not a chit fund or a nidhi/mutual
 benefit fund/society. Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 are not applicable to the
 company.
 
 xiv. In our opinion and according to Information and explanation given
 to us, the Company does not deal in shares, securities, debentures etc.
 
 xv. According to the information and explanation given to us, the
 company has not given guarantees for loans taken by others from banks
 or financial institutions.
 
 xvi. In our opinion, the company has not taken any term loan.
 
 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 the no funds raised on short-term basis have been used for long-
 term investments. No long term funds have been used to finance short
 term assets except permanent working capital.
 
 xviii.During the year under consideration, 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.
 
 xix. During the year, the company has not issued any debentures.
 
 xx.  During the year, the company has not raised any money by way of
 public issue.
 
 xxi. In our opinion, on the basis of audit conducted by us and in
 accordance with the information and explanations given to us, no fraud
 on or by the company has been noticed or reported during the course of
 our audit.
 
                                                        For RAVI & DEV
 
                                                 Chartered Accountants
                                                        (FRN: 108752W)
 
                                                   (DEVENDRA A. MEHTA)
 Place: Mumbai                                                 Partner
 
 Date: August 12, 2011                                     M. No.82325