1.  I have audited the attached balance sheet of M/s Kreon Finnancial
 Services Limited as at 31st March, 2012 and also the profit & 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. My responsibility is to
 express an opinion on these financial statements based on my audit.
 
 2.  I conducted my audit in accordance with auditing standards
 generally accepted in India. Those standards require that I 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 &
 disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by managements, as well as evaluating the overall financial statement
 presentation. I believe that my audit provides a reasonable basis for
 my opinion.
 
 3.  As required by the companies order, 2003, issued by the central
 govt. of India in terms of section 227 (4A) of the companies act, 1956,
 I give in the annexure, a statement on the matters specified in
 paragraphs 4 of the said order.
 
 4.  Further to my comments in the annexure referred to in Para 3 above,
 I report that:
 
 (a) I have obtained all the information and explanation, which to the
 best of my knowledge and belief were necessary for the purpose of my
 audit. In my opinion, proper books of accounts as required by law have
 been kept by the company so far as appears from my examination of such
 books.
 
 (b) the balance sheet, profit & loss account and cash flow statement
 dealt with by this report are in agreement with the book of account.
 
 (c) in my opinion, the balance sheet, profit & 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.
 
 (d) On the basis of the written representation received from the
 directors as on 31st March 2012 and taken on record by board of
 directors, I report that none of the directors is disqualified as on
 31st March, 2012 from being appointed as a director in terms of clause
 (g) of sub section (1) of section 274 of the companies act, 1956. as
 regards government nominee directors ,they are exempted from the
 provision of section 274 (1) (g) in view of general circular issued by
 the department of company affairs.
 
 5.  in my opinion and to the best of my information and according to
 the explanation given to me, the said accounts read with significant
 accounting policies and the other notes thereon, 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 case of the balance sheet of the state of affairs of the company
 as at 31st March, 2012;
 
 (ii) in case of profit & loss account of the loss for the year ended on
 that date, and
 
 (iii) in case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGARAPH 3 OF OUR REPORT OF EVEN DATE RE:
 KREON FINNANCIAL SERVICES LIMITED
 
 (I) In respect of its fixed assets:
 
 (a) The company has maintained proper records showing full particulars,
 including quantitative details & situation of fixed assets.
 
 (b) The company has physically verified certain assets during the year
 in accordance with a programme of verification, which in my opinion
 provides for physical verification of the fixed assets at reasonable
 intervals. According to the information & explanation given to me no
 material discrepancies were noticed on such verification.
 
 (c) In my opinion & according to the information & explanation given to
 me, the Company has not made any substantial disposals during the year.
 
 (II) In respect of its inventories:
 
 There are no inventory in the Company during the year.
 
 (III) (a) The company has neither granted nor taken any loan, secured
 or unsecured, to / from companies , firms and other parties covered in
 the register maintained under section 301 of the Act.
 
 (b) Since there are no such loans , the comments regarding terms and
 conditions, repayments of the principal, interest thereon and overdue
 amount are not required.
 
 (IV) In my opinion and according to the information and explanation
 given to me, there are adequate internal control procedures
 commensurate with the size of the company and nature of its business.
 
 (V) In my opinion and according to the information and explanation
 given to me, there are no transactions made in pursuance of contracts
 or arrangements entered in the register maintained under section 301 ,
 exceeding the value of Rs 5 lakhs, in respect of any party during the
 year.
 
 (VI) The company has not accepted any deposits from the public during
 the period under review.
 
 (VII) In my opinion, the company has adequate internal audit system
 commensurate with the size of business.
 
 (VIII) The Central Government has not prescribed maintenance of cost
 records by the Company under section 209(1) (d) of the Act.
 
 The company has been regular in depositing undisputed statutory dues,
 including provident fund, investor education and protection fund,
 employees'' state insurance, income-tax, sales- tax, wealth-tax, custom
 duty, excise duty, cess and other statutory dues with the appropriate
 authorities. According to the information and explanation given to me,
 no undisputed amounts payable in respect of income tax, wealth tax,
 sales tax, customs duty and excise duty were outstanding, at the year
 end for a period of more than six months from the date they became
 payable other than mentioned hereunder.
 
 According to the records of the Company, there are no outstanding Sales
 tax, Income tax act 1961, Customs duty, Wealth tax, excise duty on
 account of any dispute other than following:
 
 Financial 
 period                                       Forum where     Amount 
 to which the    Act        Nature of dues    dispute is     (Rs in 
                                                              Lakhs)
 amount relates 
 to                                           pending
 
                                              Madras High     30.68 
 1995-96        Income 
                Tax Act     Income Tax        Court - Stay
                                              obtained
 
 (X) The Company has made cash profit of Rs 4.89 lakhs during the year.
 The company have accumulated losses of Rs 72.21 lakhs at the end of the
 financial year to be adjusted against future profits.
 
 (XI) Based on my audit procedures and on the information and
 explanation given by the management, I am of the opinion that the
 company has not defaulted in the repayment of dues to financial
 institutions, banks and debenture holders.
 
 (XII) According to the information and explanations given to me, the
 company has given any loans and advances on the basis of security by
 way of Pronotes, post dated instruments, pledge of shares, debentures
 and other securities. The loans advanced are subject to confirmation.
 
 (XIII) In my opinion the company is not a chit fund or 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 my opinion the company is dealing in or trading in shares,
 securities, debentures and other investments. Accordingly, the company
 has complied with provisions of clause 4(xiv) of the Companies
 (Auditor''s Report) Order, 2003.
 
 (XV) According to the information and explanations given to me, the
 company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (XVI) There were no term loans obtained by the company during the year.
 
 (XVII) According to the cash flow statement and other records examined
 by me and the information and explanations given to me, on overall
 basis, funds raised on short term basis have, prima facie, not been
 used during the year for long term investment and vice versa, other
 than temporary deployment pending application.
 
 (XVIII) The company has made preferential allotment of 1122791 warrants
 in the year 2012. During the year an amount of Rs.1,68,41,870/- have
 been received towards the subscription the same.
 
 (XIX) The company has not issued any debentures and no securities and
 charges are required to be created.
 
 (XX) The company has not raised any money by public issue during the
 year.
 
 (XXI) To the best of my knowledge and belief and according to the
 information explanation given to me, no fraud on or by the company was
 noticed or reported during the year.
 
                                                K SUBRAMANYAM & CO., 
 
                                             CHARTERED ACCOUNTANTS,
 
                                                              Sd/-
 
 Place : Chennai                                     K SUBRAMANYAM
 
 Date : 30.05.2012                                      PROPRIETOR
 
                                             Membership No. 023663
 
                                              Firm Regn No.004146S