1.  We have audited the attached Balance Sheet of LANCOR HOLDINGS
 LIMITED as at March 31, 2011 and the Profit and Loss Account for the
 year ended on that date and Cash Flow Statement for the year under
 review annexed thereto. These financial statements are the
 responsibility of the Companys 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 misstatements. 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 (Auditors 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 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 account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 (iii) The Balance Sheet and 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 and Profit and Loss and Cash
 Flow statement account dealt with by this report comply with the
 accounting standard referred to in sub-section (3C) of section 211 of
 the Companies Act, 1956;
 
 (v) On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors of the Company, i.e.
 LANCOR HOLDINGS LIMITED as on March 31, 2011 is disqualified from being
 appointed for appointment as a director in the aforementioned Company
 in terms of clause (g) of sub-section (1) of Section 274 of the
 Companies Act, 1956 on the said date.
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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 March 31, 2011; and
 
 (b) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date, and
 
 (c) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure Re: LANCOR HOLDINGS LIMITED
 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 of fixed assets.
 
 (b) All the assets have been physically verified by the management
 during the year. The Programme of verification, 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.
 
 (c) The Company has not disposed off any substantial part of its fixed
 assets during the year.
 
 (ii) (a) The inventory has 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 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 has maintained proper records of inventory and no
 discrepancies were noticed on verification between the physical stocks
 and books of accounts.
 
 (iii) (a) The Company has granted interest free unsecured loans to one
 Company covered in the register maintained under Section 301 of the
 Companies Act, 1956. At the year-end, the outstanding balances of such
 loans aggregated to Rs. 100,284,954 and maximum amount outstanding
 during the year was Rs. 100,284,954.
 
 (b) According to the information and explanation given to us the terms
 & conditions of interest free loans given to the Company concerned in
 the register maintained under Section 301 of the Act are not
 prima-facie prejudicial to the interest of the Company.
 
 (c) According to the information and explanation given to us, no
 repayment schedule has been specified and accordingly the regularity in
 repayment of the principal amount, wherever applicable does not arise
 
 (d) As stated above, no repayment schedules have been specified and
 there are no overdue amounts in excess of Rupees one lakh.
 
 (e) The Company has taken unsecured loan from two Companies & one party
 covered in the register maintained under section 301 Companies Act,
 1956. The maximum amount involved during the year was Rs.26,758,640 and
 the year-end balance taken on loan from such party was Rs.582,393.
 
 (f) In our opinion the rate of interest and the terms and conditions on
 which loan has been taken from the party and the Company covered in the
 register maintained under section 301 of the Companies Act, 1956 are
 not prima- facie prejudicial to the interest of the Company.
 
 (g) According to the information and explanation given to us, no
 repayment schedule has been specified and accordingly the regularity in
 repayment of the principal amount, wherever applicable does not arise.
 
 (h) As stated above, no repayment schedules have been specified and
 there are no other due amounts in excess of Rupees one lakh.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business with
 regards to purchases of inventory, fixed assets and with regard to
 sale. During the course of our audit, we have not observed any
 continuing failure to correct major weakness in internal control
 system.
 
 (v) a) Based on the audit procedures applied by us and according to the
 information and explanation given to us, we are of the opinion that the
 Company has entered all the transactions required to be entered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 b) According to sub clause (v) (b) of clause 4 of the Order, 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 prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public;
 hence there is no question of complying with the provisions of sections
 58A, 58AA or any other provisions of the Companies Act, 1956 and the
 Companies (Acceptance of Deposits) Rules, 1975. As informed to us, no
 order has been passed by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or Court or any other Tribunal.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) According to the information and explanation provided to us, the
 Central Government has not prescribed maintenance of cost records under
 section 209(1) (d) of the Companies Act, 1956. Accordingly the
 provisions of clause 4(viii) of the Order are not applicable to the
 Company.
 
 (ix) (a) The Company is generally 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, customs
 duty, and other material statutory dues as applicable. No undisputed
 amounts payable in respect thereof are outstanding at the year end for
 a period of six months from the date they became payable except Rs.
 206,000 towards income tax.
 
 Name of the   Nature of    Amount   Period to            Date of
 Statute       Dues         (Rs)     which the  Due Date  Payment
                                     amount 
                                     relates
 
 Income tax    Tax
 Act,1961      Deduction   206,000   FY 2008-09 May 31,   Not yet paid
               at Source
 
 (b) According to the information and explanation given to us there are
 no dues of sales tax .income tax custom duty, wealth tax ,excise duty
 or cess except service tax which is under dispute and outstanding as on
 March 31,2011 and has been deposited in the month of April 2011 and May
 2011.
 
 Sl.
 No.  Name of the     Nature of    Forum where dispute is    Amount
      Statute         Dues         pending
 
 1.   Finance Act     Service Tax  Commissioner of          8,256,025 
      1994                         Service Tax
 
 (x) The Company has neither accumulated losses nor incurred cash losses
 during the financial year covered by our audit and in the immediately
 preceding financial year. In view of the same, the clause (x) of clause
 4 of the order regarding comparison of the net worth with accumulated
 losses is not applicable.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 banks or financial institutions. The Company has not issued debentures.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 (xiii) The Company is not a chit fund or nidhi / mutual benefit fund/
 society. Therefore, the sub clause (xiii) of clause 4 of the Order is
 not applicable to the Company.
 
 (xiv) The Company has maintained proper records of transactions and
 contracts in respect of its dealings in shares and other investments
 and timely entries have been made there in. All the other investments
 have been held by the company in its own name.
 
 (xv) As informed to us, the Company has not given guarantees for loans
 taken by others from banks or financial institutions.
 
 (xvi) In our opinion, the term loan has been utilized for the purpose
 for which it has been raised.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the financial statement of the Company, we
 are of the opinion that no funds raised on short term basis has been
 used for long term investment by the Company.
 
 (xviii) During the year, 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. Hence reporting whether the
 price of which shares have been issued are not prejudicial to the
 interest of the Company is not required.
 
 (xix) The Company has not issued debentures and hence the sub clause
 (xix) of clause 4 of the Order is not applicable.
 
 (xx) The Company has not raised money by public issue hence the sub
 clause (xx) of the clause 4 of the Order is not applicable to the
 Company.
 
 (xxi) According to the information and explanation given to us, no
 fraud on or by the Company has been noticed during the course of our
 audit.
 
 
                                              For G.M. Kapadia and Co.
                                                 Chartered Accountants 
                                         Firm Registration No: 104767W
 
                                                          K.Y.Narayana
                                                               Partner 
                                                  Membership No. 60639
 
 Chennai
 Dated: June 10, 2011