We have audited the attached Balance Sheet of MESSRS.MAC CHARLES
 (INDIA) LIMITED (''the Company'') as at 31 March 2011 and also the Profit
 and Loss Account and Cash Flow Statement for the year ended on that
 date 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 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 statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 As required by the Companies (Auditor''s Report) Order, 2003, (''the
 Order'') as amended, issued by the Central Government in terms of
 sub-section (4A) of section 227 of the Companies Act, 1956, (''the Act'')
 we enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 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, subject to Note No.20 of Schedule No. 19 - Notes on Accounts -
 regarding non-confirmation of balances;
 
 (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, 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, Profit and 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 ;
 
 (v) On the basis of written representations received from the
 Directors, as on 31 March 2011 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31 March 2011 from being appointed as a Director in terms of clause (g)
 of sub-section (1) of section 274 of the Companies Act, 1956 ;
 
 (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 31 March 2011 ;
 
 (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 TO THE AUDITORS''REPORT DATED 28 JULY 2011
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets have been physically verified by the management
 during the year and no material discrepancies were noticed during such
 verification.
 
 (c) Fixed Assets disposed off during the year were not substantial.
 
 (ii) (a) Physical verification of inventory has been conducted by the
 management at reasonable intervals.
 
 (b) In our opinion, 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 is maintaining proper records of its inventory. The
 discrepancies noticed on physical verification of stocks as compared to
 book records are not material and have been properly dealt with in the
 books of account.
 
 (iii) (a) The Company has granted an unsecured loan to its wholly owned
 subsidiary. The maximum amount outstanding during the year was
 Rs.3,44,70,430/- and the year-end balance of the loan is
 Rs.3,25,98,614/-.
 
 (b) Having regard to the fact that the loan granted to its wholly owned
 subsidiary is interest free and unsecured and also that no
 agreement/contract is entered into with the subsidiary, the terms and
 conditions of loan granted to the subsidiary are in our opinion prima
 facie not prejudicial to the interests of the Company.
 
 (c) In the absence of an agreement/contract there is no stipulation as
 to repayment and as such paragraph 4(iii)(c ) of the order is not
 applicable to the Company in respect of repayment of the principal
 amount.
 
 (d) Since there is no stipulation regarding repayment of principal,
 paragraph 4(iii)(d) of the order is not applicable to the Company in
 respect of overdue amount in excess of rupees one lakh.
 
 (e) The Company has not taken any loans, secured or unsecured from
 companies, firms or parties covered in the register maintained under
 Section 301 of the Act.  Accordingly, paragraphs 4(iii)(e) to 4(iii)(g)
 of the Order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the company''s explanations that some of
 the items purchased are of special nature and suitable alternative
 sources are not readily available for obtaining comparable quotations,
 there is an adequate internal control system commensurate with the size
 of the company and the nature of its business with regard to purchase
 of inventory and fixed assets and the sale of goods and services.
 During the course of our audit, we have not observed any major weakness
 in such internal control system.
 
 (v) In respect of contracts or arrangements entered in the register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us :
 
 a) the particulars of contracts or arrangements referred to in Section
 301 that needed to be entered in the Register maintained under the said
 section have been so entered.
 
 b) where each of such transaction is in excess of Rs.5/- Lakhs in
 respect of any party, we are unable to comment whether such
 transactions have been made at prices which are reasonable having
 regard to the prevailing market prices at the relevant time since such
 transactions are in respect of certain purchases for which comparable
 quotations are not available.
 
 (vi) The Company has not accepted deposits to which the directives
 issued by Reserve Bank of India and provisions of Sections 58A, 58AA or
 any other relevant provisions of the Companies Act, 1956 and the rules
 framed thereunder apply.
 
 (vii) The Company has an internal audit system commensurate with its
 size and the nature of its business.
 
 (viii) As informed to us, the Central Government has not prescribed
 maintenance of cost records under Section 209 (l)(d) of the Companies
 Act, 1956, for the Company.
 
 (ix) (a) According to the records of the Company and the information
 and explanations given to us, the Company is regular in depositing
 undisputed statutory dues including Provident Fund, Investor Education
 and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax,
 Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other
 statutory dues with the appropriate authorities during the year.
 
 (b) To the best of our knowledge and belief and according to the
 information and explanations given to us, details of disputed statutory
 dues which has not been deposited in the case of Income Tax are given
 in the table below :
 
 SI.  Nature of      Period to 
                     Which the   Amount
 No.  Dues           Dispute
                     relates     in Rupees  Forum where the 
                                            Dispute is
                                            Pending          Remarks
 
 1    Income Tax    A.Y. 
                    1997-98      9,55,691   Honourable High
                                            Court of 
                                            Karnataka        The amount 
                                                             in dispute
                                                             is adjusted
                                                             by the 
                                                             Income Tax
                                                             Department
                                                             out of 
                                                             refund due
                                                             to the 
                                                             Company
 
 2    Income Tax    A.Y.
                    2001-02      9,54,168   Honourable High
                                            Court of
                                            Karnataka        The amount 
                                                             in dispute
                                                             is adjusted
                                                             by the
                                                             Income Tax
                                                             Department 
                                                             out of 
                                                             refund due
                                                             to the
                                                             Company
 
 3    Income Tax    A.Y.
                    2007-08     14,90,801  CIT (Appeals) - 
                                           III               The amount 
                                                             in dispute 
                                                             is adjusted
                                                             by the
                                                             Income Tax
                                                             Department
                                                             out of 
                                                             refund due
                                                             to the
                                                             Company
 
 4    Income Tax    A.Y.
                    2008-09     27,01,461  CIT (Appeals) - 
                                             III                  -
 
 (x) The Company has neither accumulated loss as at 31 March 2011 nor
 has it incurred any cash loss during the financial year ended on that
 date or in the immediately preceding financial year.
 
 (xi) The Company has not defaulted in repayment of dues to financial
 institution or bank.
 
 (xii) According to the information and explanations given to us, and
 records examined by us, during the year the company has not granted
 loan or advance on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 (xiii) The provisions of any special statute as specified under clause
 (xiii) of paragraph 4 of the Order are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the Company has not obtained any term loan during the
 year.
 
 (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 by the Company.
 
 (xviii)The Company has not made any preferential allotment of shares
 during the year.
 
 (xix) The Company has not issued any debenture during the year.
 
 (xx) The Company has not raised money by public issue during the year.
 
 (xxi) In our opinion and according to the information and explanations
 given to us, no fraud on or by the Company has been noticed or reported
 during the year.
 
 
                                       For K. B. Nambiar & Associates
 
                                                Chartered Accountants
 
                                             (Firm Regn. No. 002313S)
 
 Bangalore                                              V. V. Gabriel
 
 28 July 2011                                   Partner (M.No.213936)