We have audited the attached Balance sheet of NEPC India Limited as on
 31st March, 2011 and the Profit and Loss Account and the Cash Flow
 Statement of the Company for the year ended on that date annexed
 thereto, which we have signed under reference to this report. 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.
 
 1.  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.
 
 2.  As required by the Companies (Auditors Report) Order, 2003 as
 amended by Companies (Auditor''s Report) (Amendment) Order, 2004
 (together the Order) issued by the Central Government of India in
 terms of sub section 4A of section 227 of ''the Companies Act, 1956'' of
 India (the Act), and on the basis of such checks of the books and
 records of the Company as we consider appropriate and according to the
 information and explanations given to us, we give in the Annexure
 hereto a statement on the matters specified in Para 4 & 5 of the said
 Order to the extent applicable to the Company during the period.
 
 3.  Further to our comments in the Annexure referred to in Para 2
 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 purpose of our
 audit;
 
 ii) In our opinion, proper books of account as required by law have
 been maintained by the Company in respect of all material transactions
 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 the
 cash flow statement comply with the Accounting Standards referred to in
 sub-section (3C) of section 211 of the Companies Act, 1956 to the
 extent made mandatory, subject to what is stated in Note No.  II (3),
 II (08), II (11), II (12.2) in Schedule 18 Significant Accounting
 Policies and Notes on Accounts;
 
 v) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, we report that none of
 the director is 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;
 
 vi) Attention of the members is invited to the following notes which
 have been explained in Schedule 18, Significant Accounting Policies and
 Notes on Accounts:
 
 a) Note II.3: regarding pending confirmation and reconciliations, if
 any, in respect of certain debtors, loans and advances, bank balance,
 deposits and current liabilities;
 
 b) Note 11.08: regarding non-recognition of Impairment of Assets
 pertaining to the Airline Divison even though the conditions for the
 same exists which is in contravention with the provisions stipulated in
 Account Standard 28 - Impairment of Assets issued by the Institute of
 Chartered Accountants of India resulting in over statement of Fixed
 Assets and under statement of Losses for the year - Amount
 unascertainable (previous year Amount unascertainable).
 
 c) Note 11.10: regarding non-provision of retirement benefits in the
 financial statements on accrual basis which is in contravention with
 the provisions stipulated in Accounting Standard 15 Accounting for
 Retirements Benefits - Amount unascertainable (previous year Amount
 unascertainable).
 
 d) Note II.11.1: regarding non-provision of Deferred Taxes on the
 timing differences that may arise due to disallowance of certain
 expenses is in contravention with the provisions stipulated in
 Accounting Standard 22 - Taxes on Income - Amount unascertainable
 (previous year Amount unascertainable);
 
 vii) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts subject to what is
 stated in paragraph 3 (vi) above having consequential impact (presently
 unascertainable) on the profit for the Company and read together with
 other Significant Accounting Policies and other Notes thereon given in
 Schedule 18, give the information as 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 case of the Balance Sheet, of the State of Affairs of the Company
 as at 31st March, 2011
 
 b) In case of the Profit and Loss Account, of the Loss of the Company
 for the year ended on that date; and
 
 c) In the case of Cash Flow Statement, of the cash flow for the year
 ended on that date.
 
 Annexure to the Auditors'' Report
 
 (Referred to in paragraph 2 of our report of even date)
 
 In terms of the information and explanation given to us and the books
 and records examined by us and on the basis of such checks as we
 considered appropriate, we further report as under:
 
 (i) Fixed Assets:
 
 a) The Company is in the process of updating its records showing full
 particulars including quantitative details and situation of fixed
 assets on the basis of available information.
 
 b) During the year, the fixed assets have been physically verified by
 the management, during the course of updation of records, in accordance
 with the phased programme of verification adopted by the management.
 Discrepancies, if any, will be adjusted on updation of the said
 records.
 
 c) During the year, the Company has not disposed off substantial part
 of the fixed assets and the going concern status of the Company has not
 been affected.
 
 (ii) Inventories:
 
 a) During the year the management has conducted physical verification
 of inventories at regular intervals.
 
 b) The procedures of physical verification of Inventories followed by
 the management, in our opinion, 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 no
 material discrepancies were noticed on its physical verification.
 
 (iii) Loans & Advances either granted or taken
 
 a) (i) As per the records verified by us, the Company has not taken
 interest-free loans Secured or Unsecured from the parties covered in
 the register maintained under section 301 of the Companies Act,1956.
 
 (ii) The Company has granted interest-free advances to one of related
 parties covered in the register maintained under Section 301 of the
 Companies Act 1956, with maximum balance during the year of Rs.
 31,19,89,895/- and closing balance of Rs. 31,19,89,895.
 
 b) In our opinion, the other terms and conditions of the above advances
 are not prima facie prejudicial to the Company''s interests.
 
 c) The above advances are being repaid as per the stipulations wherever
 made or as rescheduled.
 
 d) Based on the representations received from the management, we are of
 the opinion that the Company has taken reasonable steps for the
 recovery of the above advances.
 
 (iv) Internal Controls
 
 Based on the information and explanations given to us, we are of the
 opinion that the internal control procedures prevailing in the Company
 need to be strengthened further to make them commensurate with its size
 and the nature of its business.
 
 During the course of our audit, we have not observed any continuing
 failure to correct major weaknesses in internal controls.
 
 (v) Transactions covered by Section 301:
 
 a) During the year the transactions that need to be entered into a
 register in pursuance of section 301 of the Act have been so entered by
 the Company;
 
 b) Based on information and explanations given to us, we are of the
 opinion that, each of these transactions have been made at prices which
 are reasonable having regard to the prevailing market prices at the
 relevant time;
 
 (vi) Public Deposits:
 
 In our opinion and according to the information and explanations given
 to us, the company has not accepted any deposits from the public to
 which the provisions of section 58A and 58AA or any other relevant
 provisions of the Act and the Companies Acceptance of Deposits Rules,
 1975 apply.
 
 (vii) Internal Audit:
 
 There is no formal internal audit system prevailing in the Company
 during the year under review.
 
 (viii) Cost Records:
 
 The Central Government has not prescribed for maintenance of cost
 records under section 209(1) (d) of the Companies Act, 1956.
 
 (ix) Statutory Dues:
 
 (a) Based on the records verified by us and as certified by the
 management, the Company has been generally regular in depositing
 undisputed statutory dues arising to the Company in respect of the
 Provident Fund, Investor Education and Protection Fund, Employees State
 Insurance, Sales Tax, Wealth Tax, Customs Duty, Service Tax, Cess and
 any other Statutory Dues during the period to the appropriate
 authorities. As at 31st March, 2011 except what is reported below,
 there were no undisputed dues which were outstanding for a period of
 more than six months from the date they became payable:
 
 SI. Name of      Nature of the    Amount    Period to which    Due date
 No. the statute      dues          Rs.        the amount
                                                relates
 
 1.  Income Tax   Tax Deducted                                 7th of the  
                                                                  month
     Act,1961      at Source      3,26,727      Various         following
                                                Periods        respective
                                                                 months
 
 (b) Following are the details of disputed statutory dues which have not
 been deposited on account of disputes as listed below:
 
 Sr. Nature of dues &    Period to which      Amount   Name of the Forum
                                                       under which
 No. Assessment Year     amount relates        (Rs.)   dispute is pending
 
 1   Sales Tax 
     (Including          F.Y. 2000-01         80,385   Sales Tax 
                                                       Appellate Tribunal
     Interest and 
     penalty
     Wherever 
     applicable)         F.Y. 2001-02         82,344   Sales Tax 
                                                       Appellate Tribunal
 
                         A.Y.1992-93          12,774   Income Tax 
                                                       Appellate Tribunal
 
 2.  Income Tax          A.Y.1993-94     1,33,39,000   Commissioner of
                                                       Income Tax
                                                       (Appeals)
 
                         A.Y.1994-95     4,52,69,296   Income Tax 
                                                       Appellate Tribunal
 (Including interest &   A.Y.2004-05          30,000   Income Tax 
                                                       Appellate Tribunal
 penalty, wherever       A.Y.2005-06          30,000   Commissioner Of
                                                       Income Tax
 applicable)                                           (Appeals)
 
 (x) Accumulated Losses
 
 The Company''s accumulated losses as at the close of the current year is
 more than fifty percent of its Net worth as on the said date.
 
 (xi) Loans against pledge of Securities:
 
 During the year under review, the Company has not granted any loans
 and/or advances on the basis of security by way of pledge of shares,
 debentures and other securities to any party.
 
 (xii) Applicability of special statute
 
 The provisions of any special statute applicable to Chit Fund, Nidhi
 and Mutual Benefit Society are not applicable to the Company during the
 year under review.
 
 (xiii) Dealing / trading in shares or Security
 
 As per the records made available to us and verified by us, the Company
 has not dealt with or traded in shares, securities, etc., during the
 year under review.
 
 (xiv) Guarantees given
 
 In our opinion, the terms and conditions of the guarantees given by the
 Company in respect of the loans taken by related parties from banks
 were not prejudicial to the interests of the Company.
 
 (xv) Application of Funds raised:
 
 a) During the year, the Company has not raised any new Term Loans.
 
 b) Based on our verification of the books of accounts, the information
 and explanations given to us, in this regard and on the overall
 examination of the balance sheet of the Company
 
 we are of the view that the funds raised on short-term basis by the
 Company have not been utilized for long term purposes and vice versa.
 
 (xvi) Preferential allotment
 
 During the year under review, the Company has not made any preferential
 allotment of equity shares to any party/concern listed in the Register
 maintained under Section 301 of the Companies Act,1956.
 
 (xvii) Security against Debentures
 
 The Company has not issued any debentures during the year under review.
 
 (xviii) End use of Public Issue Money:
 
 During the year, the Company has not raised any money by Public Issue.
 
 (xix) Frauds
 
 During the course of our examination of the books and records of he
 Company, carried out in accordance with the generally accepted auditing
 practices in india and according to the information and explanations
 given to us, we have neither come across any instance of material fraud
 on or by the Company, noticed or reported during the year nor have been
 informed of such case by the management
 
 For A. Nageswaran 
 
 Chartered Accountant
 
 Membership No. 200 / 23911
 
 Chennai,
 
 Dated : 29-07-2011