We have audited the attached Balance Sheet of Liberty Shoes Ltd. as on
 31st March, 2011, Profit & Loss Account for the year ended on that date
 and also the Cash Flow Statement for the year ended on that day 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.
 
 We conducted our audit in accordance with 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.
 
 As required by the Companies (Auditor''s 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 paragraph 4 and 5 of the said
 Order.
 
 1. Further to our comments in the annexure referred to above, we report
 that:-
 
 a) We have obtained all the information and explanation, which to the
 best of our knowledge and belief were necessary for the purpose of
 audit:
 
 b) 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 such
 books;
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by the Report are in agreement with the books of account as
 submitted to us;
 
 d) In our 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;
 
 e) On the basis of written representation received by us from the
 Directors of the Company as at 31st March, 2011 and taken on record by
 the Board of Directors, We report that no director is disqualified as
 on 31st March 2011 from being appointed as Director of the Company
 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 explanation given to us, the said Accounts gives the information
 required by the Companies Act, 1956, in the manner so required and
 gives 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 31st March 2011;
 
 ii) In the case of Profit& Loss Account, of the Company for the year
 ended on that date; and
 
 iii) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in para 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) During the year there exists a regular programme of verification of
 Fixed Assets and 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 verification.
 
 c) During the year, the Company has not disposed off any major part of
 the fixed assets. Thus the going concern status of the Company is not
 affected.
 
 II. a) As explained to us, the physical verification of the inventory
 was carried out at reasonable intervals by the Management.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventory, and the discrepancies noticed on verification between the
 physical stock & book records were not material in relation to the
 operation of the Company and the same have been properly deal with in
 the books of account.
 
 III. a) The company has not granted any loan to any Company, firm or
 parties listed in the register maintained under section 301 of the
 Companies Act, 1956.
 
 b) The provisions of clause 4 (iii) (b) of Companies (Auditor''s Report)
 (Amendment) Order, 2004 are not applicable to the Company.
 
 c) The provisions of clause 4 (iii) (c) of Companies (Auditor''s Report)
 (Amendment) Order, 2004 are not applicable to the Company.
 
 d) The provisions of clause 4 (iii) (d) of Companies (Auditor''s Report)
 (Amendment) Order, 2004 are not applicable to the Company.
 
 e) The Company had taken short term loan from one Company, M/s Geofin
 Investments Private Ltd. This Company is listed in the register
 maintained under section 301 of the Companies Act, 1956. The maximum
 amount involved during the year was Rs.10,00,00,000/- and the year-end
 balance of loan taken from such party was Rs.4,45,00,000/-.
 
 f) In our opinion, the rate of interest & other terms & condition on
 which loan has been taken from the above said Company listed in the
 register maintained under section 301 of the Companies Acr, 1956 is
 not, prima facie.  prejudicial to the interest of the Company.
 
 g) The Company has been regular in repaying the principal amount and
 payment of interest as stipulated.
 
 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 purchase of inventory, fixed assets and with
 regard to sale of goods and services. During the course of our audit,
 we have either come across nor we have been informed of any major
 weakness in the aforesaid internal control system.
 
 V. a) According to information and explanations given to us, we are of
 the opinion that the particulars of contracts or arrangements referred
 to in section 301 of Companies Act,1956 have been entered into the
 register maintained under section 301 of the Companies Act, 1956.
  
 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 during the year have been made at prices which
 are reasonable.
 
 VI. The Company has not accepted any deposit from the public as per the
 directives issued by Reserve Bank of India and the provisions of Section
 58 A, 58 AA or any other relevant provision of the Companies Act, 1956
 and rules framed there under.
 
 VII. In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 VIII. We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956 and are of the opinion that prima face the prescribed
 accounts and records have been made and maintained. We have not,
 however, made a detailed examination of the same.
 
 IX. a) According to the information and explanation given to us and on
 the basis of our examination of records of the Company, amounts
 deducted / accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Employee''s State Insurance,
 Investor Education and Protection Fund, Income Tax, Sales Tax/VAT,
 Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and other
 material statutory dues have been regularly deposited during the year
 by the Company with the appropriate authorities.
 
 b) There are no undisputed amount payable in respect of income Tax,
 Sales Tax/VAT, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess
 and other material statutory dues as at 31st March, 2011 which are
 outstanding for a period more than six months from the date they become
 payable.
 
 c) As at 31st March, 2011 according to the records of the Company and
 the information and explanations given to us. Following are the
 particulars of disputed dues on account of Excise Duty, Income Tax and
 VAT which have not been deposited:
 
 
 Nature of 
 Stalvte       Nature of 
                 dues         Amount 
                              (in Rs)       Period to 
                                            which the        Forum where
                                            amount           the dispute
                                            relates          is pending
 
 The Central    Excise       2,99,75,448    November 2004    Customer
                Duty                        to June 2005     Excise &
                                            and May-June     Service Tax
                                            2006             Appellate
                                                             Tribunal,
                                                             New Delhi
 
 The Central   Education        3,86,314    Financial        Customs, 
 Excise Act,   cess                         Year 2004-05     Excise & 
 1994                                                        Service Tax
                                                             Appellate
                                                             Tribunal,
                                                             New Delhi
 
 The Service   Service Tax      2,33,486    January 2005     Commissioner
 Tax Act, 1994 on GTA                       to March 2007    Appeals 
               Services                                      (Delhi-II)
                                                             New Delhi
 
 Punjab Value  Value Added     19,13,016    Financial Year   Deputy 
 Added Tax,    Tax on                       2006 - 2007      Commissioner
 2005          classification                                (Appeals)
               of goods at 
               different rate 
               of Tax
 
 Punjab Value  Value Added      22,30,998   Financial Year   Deputy 
 Added Tax,    Tax on                       2007 - 2008      Commissioner
 2005          classification                                (Appeals)
               of goods at  
               different rate 
               of Tax
 
 X. The Company does not have any accumulated losses as at 31st March
 2011. The Company has not incurred any cash losses during the financial
 year covered by our audit and 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 any
 financial institutions, bank or debenture holders.
 
 XII. The Company has not granted any loans and 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) (Amendment) Order, 2004 are not
 applicable to the Company.
 
 XIV. In our opinion the Company is not dealing in or trading in shares,
 securities, debentures and other investments.  Therefore, the
 provisions of clause 4 (xiv) of the Companies (Auditor''s Report)
 (Amendment) Order, 2004 are not applicable to the Company.
 
 XV. In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by subsidiary company from banks during the
 year are not prejudicial to the interest of the Company.
 
 XVI. According to the information and explanations given to us, the
 term loans have been applied for the purpose for which the loans 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.
 
 XVIII. According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and Companies covered in the register maintained under section 301 of
 the Companies Act, 1956.
 
 XIX. According to the information and explanations given to us, the
 Company has not issued any secured debentures during the year.
 
 XX. The Company has not raised any money through public issue during
 the year.
 
 XXI. According to 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 Pardeep Tayal & Co.
                                           Firm Registration No. 002733N
                                           Chartered Accountants
 
 Place: Libertypuram, Karnal                    Pradeep Tayal
 Dated: Friday, 12th August, 2011                  Partner
                                          Membership Number 081643