We have audited the attached Balance Sheet of MARGO FINANCE LIMITED as
 at March 31, 2011, the Profit & Loss Account and the Cash Flow
 Statement for the year ended on that date, which we have signed under
 reference to this report. These financial statements are the
 responsibility of the management of the Company. 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. 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 amount and
 disclosure 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 (Auditors'' Report) Order, 2003 issued by
 the Company Law Board in terms of Section 227(4A) of the Companies Act,
 1956, we enclose in the annexure a statement on the matters specified
 in the said order.
 
 Further to our comments in annexure referred to in paragraph 1 above :
 
 i) 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.
 
 ii) In our opinion, proper books of account as required by law have
 been kept by the Company so far as it appears from our examination of
 the said books.
 
 iii) The Balance Sheet, Cash Flow Statement and the Profit & Loss
 Account referred to in this report are in agreement with the books of
 account.
 
 iv) In our opinion the Balance Sheet, Cash Flow Statement and the
 Profit & Loss Account comply with the Accounting Standards referred to
 in sub-section (3C) of Section 211 of the Companies Act, 1956.
 
 v) In our opinion, and based on information and explanations given to
 us none of the directors are disqualified as on 31st March, 2011 from
 being appointed as 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 read with the notes
 thereon in Schedule 13, give the information required by the Companies
 Act, 1956 in the manner so required and give a true and fair view :
 
 a) In the case of Balance Sheet, of the State of affairs of the Company
 as at 31st March, 2011.
 
 b) In the case of Profit & Loss Account, of the profit of the Company
 for the year ended on that date.
 
 c) In the case of Cash Flow Statement of cash flows for the year ended
 on that date.
 
 Annexure referred to in paragraph 1 of the Auditors'' Report on the
 Accounts for the year ended 31st March, 2011.
 
 (i) (a) The company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, all the fixed assets have been physically
 verified by the management according to a regular program, which, in
 our opinion, is reasonable having regard to the size of the company and
 the nature of its assets. No material discrepancies with respect to
 book records were noticed on such verification.
 
 (ii) There is no inventory except the stocks under finance agreement,
 therefore the Clause No. (ii) (a), (b) and (c) of the order are not
 applicable to the company.
 
 (iii) The company has not received unsecured loans from companies,
 firms or other parties covered in the register maintained under Section
 301 of the Companies Act, 1956, however the company has granted
 unsecured loans to companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956,
 details of which are furnished hereunder:
 
 a) Following are the particulars of unsecured loans granted by the
 company:
 
 S.  Name of the Party     Amount         Year end      Maximum Balance
                                          Balance
 No.                      (Rs. In Lacs)   (Rs. In Lacs) (Rs. In Lacs)
 
 1.  Rini Investment 
     & Finance Pvt. Ltd.      2.30             0.70           1.50
 
 2.  Skyrise Properties 
     Private Limited           Nil          127.56*        127.56*
 
 * Including Interest
 
 In our opinion, rate of interest and other terms and conditions on
 which the loans have been received and granted are not prima facie
 prejudicial to the interest of the company.
 
 Parties to whom loans have been granted have repaid the principal
 amount as per stipulation, wherever applicable.
 
 (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 fixed assets. During the course of
 our audit, no major weakness has been noticed in the internal controls.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the transactions that need to be entered in 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 transactions made in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 and
 exceeding the value of rupees five lacs 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 given to us, the
 company has not accepted any deposits from the public within the
 meaning of Sections 58A and 58AA of the Companies Act, 1956 and the
 Companies (Acceptance of Deposit) Rules, 1975.
 
 (vii) In our opinion, the company has an adequate internal audit system
 commensurate with the size and the nature of its business.
 
 (viii) The provisions of Section 209(1 )(d) of the Companies Act, 1956
 regarding maintenance of cost records are not applicable to the
 company.
 
 (ix) (a) According to the records of the company, the company is
 regular in depositing with the appropriate authorities undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees State Insurance, Income Tax, Wealth Tax and
 other statutory dues applicable to it.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of income tax, were outstanding
 as at 31.03.2011 for a period of more than six months from the date
 they became payable.
 
 (x) The company does not have accumulated losses at the end of the
 financial year. The company has not incurred cash losses during the
 current financial year and in the immediately preceding financial year.
 
 (xi) Based on our examination of documents and records maintained by
 the Company the Company has not defaulted in payment of dues to Bank.
 
 (xii) Based on our examination of documents and records maintained by
 the company, we are of the opinion that since the company has not
 granted any loan and advance on the basis of security by way of pledge
 of shares, debentures and other securities, it is not required to
 maintain records in respect thereof.
 
 (xiii) In our opinion, the company is neither a chit fund nor nidhi /
 mutual benefit fund / society and hence clause 4 (xiii) of the order is
 not applicable to the company.
 
 (xiv) Based on our examination of records we are of the opinion that
 the company has maintained proper records of the transactions and
 contracts and timely entries have been made therein. The shares,
 securities, debentures and other securities have been held by the
 company in it''s own name.
 
 (xv) Based on our examination of the records, we are of the opinion
 that the company has not given guarantee for loans taken by others from
 banks or financial institutions.
 
 (xvi) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, we report
 that the no funds raised on short-term basis have been used for
 long-term investments. No long-term funds have been used to finance
 short-term assets except permanent working capital.
 
 (xvii) During the year 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.
 
 (xviii) During the year the company had not issued any debentures.
 
 (xix) During the year no money was raised by public issue.
 
 (xx) According to the information and explanations given to us, we
 report no fraud on or by the company has been noticed or reported
 during the course of our audit.
 
 
                                                  For AVK & ASSOCIATES
                                                 Chartered Accountants
 
                                                           Parul Gupta
                                                               Partner
                                                           FCA- 095539
                                         Firm Registration No. 002638N
 
 Place : Mumbai
 Dated : 17th May, 2011