We have audited the attached Balance Sheet of LINAKS MICROELECTRONICS
 LTD.'' as at 31sl March'' 2012 and the Profit and Loss Account of the
 company for the year ended on that date'' annexed thereto. These
 financial statements are the responsibility of the management of the
 company. Our responsibility is to express an opinion on the financial
 statement based on our audit.  We conducted our audit in accordance
 with generally accepted auditing standard in India. These 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 statements. We believe that our audit provides a
 reasonable basis for our opinion.
 
 1.  As required by the Companies (Auditors'' Report) Order'' 2004'' we
 give in the Annexure'' a statement on the matters specified in the
 paragraphs 4 & 5 of the said Order'' to the extent applicable to the
 company.
 
 2.  Further'' to our comments referred to in paragraph (1) above and
 subject to fallowings (refer note no. 3(i) to (vi) of Notes to Accounts
 attached to and forming part of Balance Sheet):.
 
 That in computing Profit /Loss far the year'' Interest written off as
 per OTS Agreement'' on Secured Loans from Financial Institutions and
 State Bank of India'' for Rsl 171.55 Lac plus Rs. 32.07 lac lease rent
 written off have been shown as Extra Ordinary Income for the current
 year.
 
 That amounts written off as per OTS Agreement of Secured Loans from
 Financial Institutions and State Bank of India for Rs. 310.49 lac has
 been shown as Capital Receipt under the GroupReserves and Surplus.
 
 That no Interest on Unsecured Loan from M/S. Kala Holding is provided
 during the year due to dispute. In case of applying rate @ 18% simple
 rate of Interest'' Loss would be increased by Rs.l 1.47 Lac (app.).
 
 That no interest is provided on Funded CST & UPTT and Statutory Dues of
 PF& ESI as the Company has sought extension of relief in view of the
 pending approval of the Revised DRS.
 
 That no provision is made for loss on account of discarded/ obsolete
 Plant & Machinery.
 
 That no provision is made for loss due to diminution in value of
 inventory holdings. We report that:
 
 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.
 
 In our opinion'' the company has kept proper books of account as
 required by law as far as it appears from our examination of the books.
 
 The Balance Sheet and Profit and Loss account annexed with this report
 are in agreement with the books of account.
 
 In our opinion'' the Profit and Loss account and the Balance Sheet
 comply with the accounting standards referred to in sub section (3
 
 C) of section 211 of the Companies Act'' 1956.  On the basis of the
 written representations from the Directors'' taken on record by the
 Board of Directors '' none of the directors is disqualified as on 31SI
 March'' 2012'' from being appointed as a director under section 274
 (1)(g) of the Companies Act 1956.
 
 In our opinion and to the best of our information and according to the
 explanations given to us'' the said accounts read together with the
 notes thereon give the information required by the Companies Act'' 1956
 in the manner so required :.
 
 I.  In so far as it relates to the Balance Sheet'' of the state of the
 affairs of the Company as at 31s'' March'' 2012.
 
 II.  In so far as it relates to the Profit and Loss accounts of the
 Loss of the Company for the year ending on 31s1 March'' 2012.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in Paragraph 1 of our report of even date)
 
 (i) (a) The company is maintaining proper records showing full
 particulars'' including quantitative details and situation of fixed
 assets;
 
 (b) The fixed assets have been physically verified by the management at
 reasonable intervals; No material discrepancies were noticed on such
 verification;
 
 (c) No substantial part of fixed assets have been disposed off during
 the year''
 
 (ii) (a) Physical verification of inventory has been conducted at
 reasonable intervals by the management;
 
 (b) The procedures of physical verification of inventory followed by
 the management is reasonable and adequate in relation to the size of
 the Company and nature of its business;
 
 (c) The company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification;
 
 (iii) The company has not granted any loans'' secured or unsecured to
 companies'' firms or other parties covered in the register maintained
 under Section 301 of the Act.  However company has taken interest free
 unsecured loan from its managing director. The terms and conditions are
 not prejudicial to the interest of the company.
 
 (iv) There is an adequate internal control procedure commensurate with
 the size of the company and the nature of its business'' for the
 purchase of inventory and fixed assets and for the sale of goods.
 
 (v) There is no transaction that needs to be entered into a register in
 pursuance of Section 301 of the Act.
 
 (vi) The company has not accepted any deposits from the public''
 
 (vii) The company has an internal audit system commensurate with its
 size and nature of its business'' which needs to be strengthened.
 
 (viii) As stated in note no. 3(vii) of Notes to Accounts'' the company
 has not carried out any manufacturing activity.  and accordingly the
 cost audit records have not been maintained by the Company during the
 year under review.
 
 (ix) (a) As stated in note no. 3(viii) of Notes to Accounts'' the
 company is not regular in depositing Provident Fund payable Rs. 11.00
 lacs (previous year Rs. 10.02 lacs)'' ESI Payable Rs. 0.42 Lac (previous
 year Rs. 0.47 lac) and Gratuity payable Rs.2.5 lacs (approx.)
 outstanding as on 31.03.2012.
 
 (b) Sales Tax under disputes is Rs 63.35 Lac (Previous year Rs. 63.35
 Lac) a list is enclosed in Notes on Account under the head contingent
 liabilities'' without considering interest thereon.
 
 (x) The company has incurred cash losses in the year for Rs 28.76 lac
 and in the Preceding financial year for Rs. 20.00 Lac.
 
 (xi) In our opinion and as per the explanation given to us and subject
 to note no. 3(ix) of Notes to Accounts'' the company is a sick company
 under provisions of S1CA and Modified Draft Rehabilitation Scheme is
 under consideration with the Bench of BIFR. During the year the Company
 settled dues of all its Secured Lenders and fully paid to 1DBI'' PICUP.
 UPFC and partly paid to State Bank of India by financial assistance
 from Co.promoters/Strategic investors.
 
 (xii) The company has not granted any loans and advances on the basis
 of security.
 
 (xii) The company is not a chit fund company.
 
 (xiii) The company is not trading or dealing in shares'' securities''
 debenture and other investments.
 
 (xiv) The company has not given any guarantee for loans taken by
 others.
 
 (xv) The company has not applied for any term loan during the year.
 
 (xvi) The fund raised on short.term basis has not been used for
 long.term investments and vice versa.
 
 (xvii) The company has not made any preferential allotment of shares to
 parties and companies covered in the Register maintained under Section
 301 of the Act.
 
 (xviii) The company has not issued any debentures.
 
 (xix) The company has not raised any money by public issues during the
 year.
 
 (xx) No fraud on or by the company has been noticed or reported during
 the year.
 
                                            For S.R. Gupta & Co.
                                            Chartered Accountant
 
 Place: Lucknow                            (V.K. Gupta)
 
 Date: 29.06.2012                           Partner