We have audited the attached Balance Sheet of ONWARD TECHNOLOGIES
 LIMITED (the Company) as at March 31, 2012, the Statement of Profit
 and Loss for the year ended on that date annexed thereto 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 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 standards on auditing issued
 by the Institute of Chartered Accountants of 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.
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of the Companies Act, 1956 and on the basis of such
 checks as we considered appropriate and according to the information
 and explanations given to us, we give in the Annexure a statement on
 the matters specified in paragraphs 4 and 5 of the Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph
 (1) above, we report that:
 
 a) 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;
 
 b) 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 such
 books;
 
 c) the Balance Sheet, the Statement of Profit and Loss and the Cash
 Flow Statement dealt with by this report are in agreement with the
 books of account;
 
 d) so far as appears from our scrutiny of books of account and other
 records, we are of the opinion that the Balance Sheet, the Statement of
 Profit and Loss 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;
 
 e) on the basis of the written representations received from the
 directors as on March 31, 2012 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2012
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 f) Without qualifying our opinion, we draw attention to Note 39 to the
 financial statements regarding the non- appointment of the full time
 Company Secretary;
 
 g) 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 subject to Note No. 26 and 39 of Notes to Financial
 Statements, 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:
 
 i) in the case of the Balance Sheet, of the state of the affairs of the
 Company as at March 31, 2012;
 
 ii) in the case of the Statement of Profit and Loss, of the profit for
 the year ended on that date; and
 
 i) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure referred to in paragraph 1 of our report of even date
 addressed to the Members of ONWARD TECHNOLOGIES LIMITED, on the
 financial statements for the year ended March 31, 2012.
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) As explained to us, physical verification of major fixed assets has
 been conducted by the management.  Further, in view of the above, the
 discrepancies, if any, between the book records and the physical
 verification have not been ascertained.
 
 (c) During the year, the Company has disposed some of its fixed assets.
 In our opinion and according to the information and explanations given
 to us, fixed assets disposed off were not substantial and therefore has
 not affected the going concern assumption.
 
 (ii) (a) The Company is a service company, primarily engaged in
 Mechanical Engineering designing and Information Technology services
 and consultancy, further in respect of trading activities of the
 Company, the products viz. Software are purchase only if counter orders
 are received from the customer, thus it does not caries any physical
 inventories as on balance sheet date. Thus, paragraph 4(ii) (a) and (b)
 of the Order (as amended) is not applicable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of movement of
 inventories.
 
 (iii) (a) According to the information and explanations given to us,
 the Company has not granted any unsecured loans to parties which are
 covered under the register maintained under Section 301 of the
 Companies Act, 1956.
 
 (b) The Company has taken loan from two companies whose names are
 listed in the register maintained under Section 301 of the Companies
 Act, 1956. The total amount involved was Rs 40,200,000.
 
 (c) The rate of interest and other terms and conditions of unsecured
 loans taken by the Company, are prima facie not prejudicial to the
 interest of the Company.
 
 (d) The terms of arrangement do not stipulate any repayment schedule
 for principle and interest thereon, however Onward Technologies Limited
 has unconditional right to defer the principal and interest amount as
 agreed by both parties. Accordingly, paragraph 4 (iii)(g) of the Order
 is not applicable to the Company in respect of repayment of the
 principal and interest amount.
 
 (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 inventory and fixed assets and for
 the sale of goods and service. We have neither come across nor have
 been informed of any major weaknesses in the internal control system in
 the aforesaid areas.
 
 (v) (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 that are required to be entered in the register in pursuance of Section
 301 of the Companies Act, 1956 have been so entered.
 
 (b) In our opinion and according to information and explanations given
 to us, the transactions made in pursuance of contracts or arrangements
 entered in the register maintained under Section 301 of the Companies
 Act, 1956 and exceeding the value of Rupees Five Lacs with any parties
 during the year have been made at prices, which are reasonable having
 regard to prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 Accordingly, paragraph 4(vi) of the Order (as amended) is not
 applicable.
 
 (vii) On the basis of internal audit report broadly reviewed by us, we
 are of the opinion that, the Company has an adequate internal audit
 system commensurate with the size and nature of its business.
 
 (viii) According to the information and explanations given to us, the
 Central Government has not prescribed maintenance of cost records under
 clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956
 for any of the products and services rendered of the Company.
 Accordingly, paragraph 4(viii) of the Order (as amended) is not
 applicable.
 
 (ix) (a) In our opinion, the Company is not 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 material statutory dues, as may be applicable, with the
 appropriate authorities as observed by us during the course of our
 examination of the books of account carried out in accordance with
 generally accepted auditing practices in India.  There were no dues on
 account of cess under Section 441A of the Companies Act, 1956 since the
 aforesaid section has not yet been made effective by the Central
 Government.
 
 (b) In our opinion and according to the information and explanations
 given to us, no undisputed amounts payable in respect of provident
 fund, investor education and protection fund, employees'' state
 insurance, income tax, sales tax, wealth tax, customs duty, excise
 duty, cess and any other material statutory dues, as may be applicable,
 were in arrears, as at March 31, 2012 for a period of more than six
 months from the date they became payable.
 
 (c) According to the information and explanations given to us, as at
 the end of the year, there are no dues on account of sales tax, income
 tax, customs duty, wealth tax, service tax, excise duty, cess and any
 other statutory dues as may be applicable, that have not been deposited
 on account of any dispute except as follows:-
 
 Sr.   Name of Statute    Nature of Dues        Year            Amount 
 No.                                                            involved 
                                                                 (Rs.)
 
 1.    Income Tax 
       Act, 1961          Transfer pricing      A.Y. 2006-07  38,394,111 
                          adjust ment and 
                          Disallo wance 
                          u/s 36 (10(va)
 
 2.    Income Tax 
       Act, 1961          Transfer pricing      A.Y. 2007-08  26,076,636 
                          adjustment
 
 3.    Central Sale 
       Tax                Non submission        F.Y. 2002-03     698,463  
                          of Form C 
 
 4.    Central Sale 
       Tax                Interest              F.Y. 2003-04     608,811
 
 
 5.    Maharashtra 
       State Tax on       Assessment            F.Y. 2007-08     579,128 
       Professions, 
       Trade,             Dues 
       Callings and 
       Employments
       Act, 1975
 
 6.    Income Tax 
       Act, 1961          Transfer 
                          Pricing               A.Y. 2008-09  48,482,500 
                          adjustments & 
                          disallowance 
                          u/s 43 (B)
 
 
 Name of Statute          Amount paid           Forum where
                          under protest         dispute is pending
 
 
 Income Tax Act,1961           -                CIT(Appeal), Mumbai
 
 Income Tax Act,1961           -                CIT(Appeal), Mumbai
 
 Central Sale Tax              -                JT.Comm of sale Tax
                                                Mumbai
 
 Central Sale Tax              -                JT.Comm of sale Tax
                                                Mumbai
 
 Maharashtra State
 Tax on professions
 Trade, Callings and
 Employments Act,
 1975                      150,000              Dt.Comm of sale
                                                Tax (Appeals)
 
 Income Tax Act,1961          -                 CIT(Appeal), Mumbai
 
 
 (x) The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses in current financial
 year as well as in the immediately preceding financial year.
 
 (xi) 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 institution or bank.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities. Accordingly, the provision of
 clause 4(xii) of the Order (as amended) is not applicable.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi mutual benefit
 fund / society. Therefore, the provisions of clause 4 (xiii) of the
 Order (as amended) are not applicable.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause 4 (xiv) of the Order (as amended) is not
 applicable.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the Company has given guarantees for loans taken by its
 wholly owned subsidiaries from banks or financial institutions.
 
 (xvi) In our opinion, prima facie the term loans have been applied for
 the purpose for which they were raised.
 
 (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 prima facie no funds raised on short-term basis have been used for
 long-term investment.
 
 (xviii) According to the information and explanations given to us, the
 Company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under section 301 of the
 Companies Act, 1956. Accordingly, paragraph 4 (xviii) of the Order (as
 amended) is not applicable.
 
 (xix) According to the information and explanations given to us, during
 the year, the Company has not issued debentures.  Accordingly,
 paragraph 4 (xix) of the Order (as amended) is not applicable.
 
 (xx) As the Company has not raised any money by way of public issue,
 disclosure requirement of the end use of money raised by public issue
 does not apply to the Company.
 
 (xxi) During the course of our examination of the books and records of
 the Company and according to the information and explanations given to
 us, we have neither come across any instant of fraud on or by the
 Company, noticed or reported during the course of our audit, nor have
 we been informed of such case by the management.
 
 For Kirtane & Pandit
 
 Chartered Accountants
 
 (Firm Registration Number: 105215W)
 
 Parag P. Pansare
 
 Partner
 
 Membership No.: 117309
 
 Mumbai, May 25, 2012