1.  We have audited the attached Balance Sheet of M/s MARG LIMITED as
 on 31st March 2011 and the annexed Profit & Loss Account and Cash Flow
 Statement for the year ended 31st March 2011.  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.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted 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 misstatements. Our 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 (Auditor''s Report) Order, 2003, issued
 by the Central Government of India in terms of subsection (4A) of
 Section 227 of the Companies Act, 1956, we enclose in the annexure
 hereto a statement on the matters specified in paragraphs 4 and 5 of
 the said order to the extent they are applicable to this Company.
 
 4.  Further to the comments in the Annexure referred to above, we
 report that:
 
 a.  We have obtained all the information and explanations, which to the
 best of our knowledge were necessary for the purpose of our Audit.
 
 b.  In our opinion, proper books of accounts as required by law have
 been kept by the Company so far as it appears from our examination of
 the books.
 
 c.  The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the Books of Accounts
 of the Company.
 
 d.  According to the best of our information and explanations given to
 us, the Balance Sheet and Profit and Loss Account dealt with by this
 report are in compliance with the accounting standards referred to in
 Section 21K3C) of The Companies Act 1956, in so far as they are
 applicable to the Company.
 
 e.  On the basis of written representations received from the Directors
 of the company and taken on record by the Board of Directors, we report
 that none of the directors are disqualified as on 31st March 2011 from
 being appointed as a director U/s 274(l)(g) of the Companies Act, 1956.
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, the accounts read with the notes give the
 information required by the Companies Act, 1956 in the manner required
 and give a true and fair view,
 
 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 and Loss Account of the Profit for the year
 ended 31st March 2011; and
 
 iii. in the case of the Cash Flow Statement, of the Cash Flows for the
 year ended 31st March 2011.
 
 ANNEXURE TO AUDITORS'' REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT
 OF EVEN DATE TO THE SHAREHOLDERS OF MARG LIMITED
 
 1.  a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) The Company has a programme of Physical verification of Fixed assets
 over a period of three years which is, in our opinion, reasonable
 having regard to the size of the company and the nature of its assets.
 In accordance with this programme, certain fixed assets have been
 physically verified by the management during the year and no serious
 discrepancies have been noticed on such verification
 
 c) During the year, the company has not disposed off a substantial part
 of fixed assets.
 
 2.  a) As explained to us, physical verification of inventory has been
 conducted by the management, at the end of the year.
 
 b) The procedures of physical verification of inventory followed by the
 management are 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 the
 discrepancies noticed on verification between physical stocks and book
 stocks were not material.
 
 3.  a) The Company has not taken any loan from parties covered in the
 register maintained under section 301 of the Companies Act.
 
 b) The Company has granted unsecured loans to 79 Subsidiary companies
 covered in the register maintained under section 301 of the Companies
 Act. The maximum amount involved during the year was Rs. 677.39 Crores
 and the year end balance of loans granted to such companies was Rs.
 504.82 Crores.
 
 c) According to the information and explanations given to us, the rate
 of interest and other terms and conditions of the loans given are not
 prima facie, prejudicial to the interest of the company.
 
 d) According to the information and explanations given to us, the
 principal amount of the loan along with interest in respect of loan
 granted to the Subsidiary Companies, except three subsidiaries, is
 repayable on call.
 
 The Subsidiaries have made repayments during the year as and when calls
 were made by the Company.  In respect of three subsidiaries, the loan
 given by the company is sub-ordinated to the secured loans from Banks
 and Financial Institutions availed by such subsidiaries and accordingly
 the obligation to repay does not arise during the pendency of said
 secured loans.
 
 4.  In our opinion and according to the explanation given to us 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 & services. During
 the course of our audit, we have not observed any continuing failure to
 correct major weaknesses in internal control system.
 
 5.  a) According to the information and explanations given to us, we
 are of the opinion that the transactions that need to be entered into
 the register maintained under section 301 of the Companies Act, 1956
 have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us the transaction in pursuance of contracts or arrangements
 entered in the register maintained U/s 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 rates or value which are reasonable
 having regard to the prevailing market rates or values at the relevant
 time.
 
 6.  The Company has not accepted any deposits from the public in terms
 of provisions of sections 58A and 58AA and other relevant provisions of
 the Companies Act, 1956 and the Rules framed there under.
 
 7.  In our opinion, the Company has an internal audit system,
 commensurate with the size and nature of its business.
 
 8.  We have been informed that the Central Government has not
 prescribed the maintenance of Cost Records under the provisions of
 Section 209(l)(d) of the Companies Act, 1956.
 
 9. a) According to the records of the Company, apart from certain
 instances of delays, the company is regular in depositing with
 appropriate authorities undisputed statutory dues including Provident
 Fund, Employee''s State Insurance, Income Tax, Wealth Tax, Custom Duty,
 Cess, Sales Tax, Service Tax, and other material statutory dues
 applicable to it.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Wealth Tax,
 Service Tax, Sales Tax, Customs Duty and cess were in arrears as at
 31st March 2011, for a period of more than six months from the date
 they became payable.
 
 c) According to the records of the Company and the information and
 explanation given to us, the dues of Income Tax/Sales Tax/Customs
 Duty/Cess, which have not been deposited on account of any dispute, are
 as follows:-
 
 Income Tax Dues
 
 Income Tax
 
 Asst.        Departmen         Amount paid        Forum where
 Year          Demand           under protest     Dispute is pending
 
 2001-02      16,785,003        16,879,719        Madras High Court
 
 2002-03       8,926,848         9,659,367               CIT
 
 2007-08       1,340,625         13,40,625          ITAT, Chennai
 
 2008-09       52,76,990         52,76,990           CIT(Appeal)
 
 Tax Deducted at Source
 
 Asst.        Departmen         Amount paid        Forum where
 Year          Demand           under protest     Dispute is pending
 
 1996-97        21,503              4,931               ITO-TDS
 
 1997-98     2,368,619          2,317,682               ITO-TDS
 
 1998-99     1,628,830            842,934               ITO-TDS
 
 1999-00     1,857,640            581,282               ITO-TDS
 
 2000-01       442,820             65,440               ITO-TDS
 
 10.  The Company has no accumulated losses and has no cash losses
 during the financial year covered by our audit and the immediately
 preceding financial year.
 
 11.  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 and banks.
 
 12.  The Company has not granted any loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund /
 Society.
 
 14.  The Company is not dealing in or trading in shares, securities,
 debentures and other investments.
 
 15.  According to the information and explanations given to us, the
 Company has given guarantees aggregating to Rs. 2277.16 Crores for
 loans raised by others from Banks. In our opinion, the terms and
 conditions of the guarantees are prima facie not prejudicial to the
 interests of the company.
 
 16.  In our opinion and according to information and explanations given
 to us, the term loans have been applied for the purpose for which they
 were raised.
 
 17.  According to the information and explanations 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.
 
 18.  The Company has made preferential allotment of shares to parties
 and companies covered in the register maintained U/s 301 of the Act
 during the year. The price at which the shares have been issued is not
 prejudicial to the interest of the company.
 
 19.  During the year, the company has not issued any debentures and
 therefore the question of creating security or charge in respect
 thereof does not arise.
 
 20.  The Company has not made any public issue during the year covered
 under audit.
 
 21.  Based on the audit procedures performed and according to the
 information and explanations given to us, we report that no fraud on or
 by the Company was noticed or reported during the year.
 
 
 For K RAMKUMAR & CO.,
 
 Reg no:02830S
 
 Chartered Accountants
 
 R M V BALAJI
 
 Partner
 
 Membership no: 27476
 
 Place: Chennai
 
 Date : 29th August 2011