We have audited the attached Balance Sheet of PAL Credit & Capital
 Ltd., as at 31st March, 2012 and also the annexed Statement of Profit &
 Loss of the company for the year ended on that date annexed thereto and
 Cash Flow Statement for the year ended on that date. These financial
 statements are 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 (a) examining, on a test basis, evidence to support amounts
 and disclosures in the financial statements (b) assessing the
 accounting principles used in the preparation of financial statements
 (c) assessing significant estimates made by the management in the
 preparation of the financial statements and (d) evaluating overall
 financial statement presentation. We believe that our audit provides a
 reasonable basis for ouropinion.
 
 2.  As required by the Companies (Auditor''s Report) Order, 2003 and the
 Companies (Auditor''s Report) (Amendment) Order, 2004 issued by the
 Central Government in terms of Section 227(4A) of the Companies Act,
 1956, we enclose in the annexure a statement on the matters specified
 in paragraphs4&5ofthesaidOrder.
 
 3.  Further to our comments in the Annexure referred to in paragraph
 (2) 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 purposes
 of our audit;
 
 (b) In our opinion, Company has kept proper books of accounts, as
 required by law, so far as appears from our examination of the books of
 the Company;
 
 (c) The Balance sheet and the Statement of Profit and Loss and Cash
 Flow Statement referred to in this report are in agreement with the
 books of account of the Company;
 
 (d) In our opinion, the Balance Sheet, Statement of Profit & Loss and
 Cash Flow Statement dealt with by this report, comply with the
 accounting standards referred to in Section 211 (3C) of Companies Act;
 
 (e) On the basis of representation received from the directors as on
 31st March, 2012, and taken on record by the Board of Directors, in our
 opinion, none of the directors is disqualified as on 31st March, 2012
 from being appointed as director U/s 274(1 )(g) of Companies Act, 1956;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said Financial Statements, read
 together with the notes thereon, give the information required by the
 Companies Act, 1956 in the manner so required and present 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 affairs of the
 Company as at 31 st March, 2012,
 
 (ii) In the case of the Statement of Profit & Loss, of the loss of the
 Company for the year ended on that date, and
 
 (iii) In the case of the Cash Flow Statement, of the Fund Flow of the
 Company for the year ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 Referred to in paragraph (2) of our report of even date on the accounts
 for the year ended 31 st March, 2012 of M/s. PAL Credit & Capital Ltd.
 
 i) a) The Company has generally maintained the proper records showing
 full particulars including quantitative details and situation of fixed
 assets.
 
 b) All the assets have been physically verified by the management
 during the year.
 
 c) During the year, Company has not disposed any substantial part of
 fixed assets.
 
 ii) The Company has no inventory.
 
 iii) The Company has taken unsecured advance from the associate company
 covered in the register maintained under Section 301 of the Companies
 Act, 1956.
 
 (a) The Company has taken the unsecured advance from one associate
 Company and the amount is Rs.101.57 lakhs. (Previous Year Rs. Nil).
 
 (b) The rate of interest and other terms and conditions of unsecured
 advance taken by the Company are prima - facie not prejudicial to the
 interest of the Company.
 
 (c) The payment of principal amount and interest are not stipulated.
 
 iv) In our opinion and according to the information and explanation
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and nature of its business
 with regard to the purchase of inventory and fixed asset, and with
 regard to the sale of goods and securities. During the course of our
 audit, no major weakness has been noticed in the internal controls.
 
 v) In respect of transactions entered in the register maintained in
 pursuance of Section 301 of the Companies Act, 1956,
 
 a) Based on audit procedures applied by us, to the best of our
 knowledge and belief and according to the information and explanation
 given to us, we are of the opinion that the transactions that needed to
 be entered into the register maintained under Section 301 have been so
 entered.
 
 b) The transactions made in pursuance of such contracts or arrangements
 have been made at prices which are reasonable having regards to the
 prevailing markets prices at relevant time
 
 vi) In our opinion and according to the information and explanation
 given to us, the Company has not accepted deposits from the public and
 therefore, the provision of Section 58A and 58AA or any other relevant
 provisions of the Companies Act, 1956 and rules there under are not
 applicable to the Company. Since the Company has not defaulted in
 repayment of deposits, compliance of Section 58AA or obtaining any
 order from the Company Law Board or National Company Law Tribunal or
 Reserve Bank of India or any Court or any other Tribunal, does not
 arise.
 
 vii) In our opinion, the Company has internal audit system commensurate
 with the size and the nature of its business.
 
 viii) The Central Government has not prescribed the maintenance of cost
 records to the Company, under Section 209(1)(d)oftheCompaniesAct, 1956
 
 ix) a) According to the records of the Company and information and
 explanation given to us, the Company has been generally regular in
 depositing undisputed statutory dues including Provident Fund, Investor
 Education and Protection Fund, Employees'' State Insurance, Income Tax,
 SalesTax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and
 other statutory dues with the appropriate authorities during the year.
 
 b) Income Tax amounting to Rs. 26.54 Lakhs, which was not due, was
 outstanding as at 31st March, 2012.  Provision for this liability is
 made in the books of accounts.
 
 c) The Company has preferred an appeal to CIT(A) against the demand Rs.
 144 lakhs raised by Assessing Officer for Assessment Year 2008-09. The
 appeal is pending for hearing and disposal. The disputed liability has
 not been provided for.  
 
 x) The Company has accumulated losses at the end of the financial year
 which are more than fifty percent of its net worth, and has incurred
 cash loss during the immediately preceding financial year and the
 Company has incurred a cashiossof Rs. 199.35
 Lakhsforcurrentfinancialyear. .
 
 xi) The Company has not defaulted in repayments of dues to any
 financial institution or banks or debenture holders.
 
 xii) According to the information and explanation given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 xiii) The provision of any Special Statute applicable to Chit Fund,
 Nidhi or Mutual Benefit Fund / Societies is not applicable to the
 Company.
 
 xiv) a) Based on the records examined by us according to the
 information and explanation given to us, we are of the opinion that the
 Company is maintaining proper record of the transactions and contracts
 of dealing in shares and other investments and timely entries have been
 made in those records.  
 
 b) Based on our audit procedures and to the best of our knowledge and
 belief and according to the information and explanation given to us,
 the shares and other investments have been held by the Company in its
 own name.
 
 xv) According to the information and explanation given to us, the
 Company has not given any guarantee for loans taken by others from
 banks orfinancial institutions.
 
 xvi) To the best of our knowledge and belief.and according to the
 information and explanation given to us, no term loan was availed by
 the Company.
 
 xvii) According'' to the Cash Flow Statement and records examined by us
 and according to the information and explanation given to us, there is
 no short term loan availed by the Company.
 
 xviii) The Company has not made any preferential allotment of shares to
 parties and companies covered under register maintained under Section
 301 of the Companies Act, 1956, during the year.
 
 xix) According to the information and explanation given to us and the
 records examined by us, Company has not issued debentures.
 
 xx) The Company has not raised money by way of public issue during the
 year.
 
 xxi) To the best our knowledge and belief and according to the
 information and explanation given to us, no fraud on or by the Company
 was noticed or reported by the Company during the year.
 
 
 
                                             For M/s M. B. Agrawal & Co 
 
                                                  Chartered Accountants
 
                                                       Regi. No 100137W
 
                                                          M. B. Agrawal 
 
                                                                Partner 
 
                                                            M. No. 9045
 
 Place: Mumbai
 
 Date : 30th May, 2012