We have audited the attached Balance Sheet of M/S PARAGON FINANCE
 LIMITED as at 31st March 2012 and also the Profit & Loss Account and
 the Cash Flow Statement for the year ended on that date annexed
 thereto. 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 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.
 
 As required by Companies (Auditors Report) Order, 2003 (As amended)
 issued by the Central Govt. of India in terms of Section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters (as are applicable to the Company) specified in Paragraphs 4 &
 5 of the said order.
 
 Further to our 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 and belief, were necessary for the purposes 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 examinations of those
 books and proper returns adequate to the purposes of our audit have
 been received from the Branches;
 
 c) The Balance Sheet and the Profit & Loss Account and Cash Flow
 Statement dealt with by this Report are in agreement with this books of
 account;
 
 d) In our opinion, the Balance Sheet and Profit & Loss Account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards referred to in of Section 211(3C) of the Companies Act, 1956;
 
 e) On the basis of written representations received from the directors,
 as on 31st March, 2012, and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31st March,
 2012 from being appointed as a director in terms of section 274 (1)(g)
 of the Co. Act 1956;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts subject to notes to the
 accounts, give the information required by the Co. Act, 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 Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2012; and
 
 (ii) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date, and
 
 (iii) In the case of Cash Flow Statement, of the Cash Flow for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORSCREPORT
 
 (Referred to in paragraph (3) of our report of even date)
 
 1.  a) The Company has maintained 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 and there is a regular programme of verification which,
 in our opinion, is reasonable having regard to the size of company and
 the nature of its assets. No materials discrepancies were noticed on
 such verification.
 
 c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the company during the year.
 
 2.  a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable. The Company has received confirmation of Shares lying with
 depository participants at regular intervals.
 
 b) The procedures of physical verification of inventories followed by
 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. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 3.  a) The Company has not given any loans, secured or unsecured to
 Companies, Firms or other parties listed in the register maintained
 pursuant to provision of section 301 of the Companies Act, 1956.
 
 b) The Company had taken loan from sixteen companies/parties listed in
 the register maintained pursuant to provision of sections 301 of the
 Companies Act, 1956. The maximum amount involved during the year was 
 2078.15 lakhs and the year-end balance of loans taken from such parties
 was  1944.53 lakhs.
 
 c) In our opinion and according to the information and explanations
 given to us, the rate of interest, wherever applicable and other terms
 and conditions are not prima facie prejudicial to the interest of the
 company.
 
 d) In respect of loans taken by the company, the interest payments are
 regular and the principal amount is repayable on demand. There is no
 overdue amount in respect of such loans taken by the Company.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the company and the nature of its business with regard
 to purchases of inventory, fixed assets and with regard to the sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weakness in internal
 controls system.
 
 5.  a) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements, that needed to be entered into in the register maintained
 under section 301 of the Companies Act, 1956 have been so entered.
 
 b) No transaction of any amount of purchase of goods and materials and
 sale of goods, materials and services as aggregating to Rs. 5,00,000/-
 during the year has been made in pursuance of contracts or arrangements
 entered in the register maintained under Section 301 of the Companies
 Act, 1956.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has not taken any loan (Secured or Unsecured)
 nor has it accepted any deposit from the public within the meaning of
 Section 58A and Section 58AA or any other relevant provisions of the
 Companies Act, 1956.
 
 7.  In our opinion, the internal audit system of the company is
 commensurate with its size and nature of its business.
 
 8.  The Central Government of India has not prescribed the maintenance
 of cost records under section 209 (I) (d) of the Companies Act, 1956
 for any of the products of the company.
 
 9.  a) The company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education protection fund, employees istate insurance, income
 tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess
 and other material statutory dues applicable to it.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respects of Income -Tax, Wealth-Tax,
 Service Tax, Sales Tax, Custom Duty, Excise Duty and cess were in
 arrears, as at 31st March, 2012 for a period of more than six months
 from the date they became payable.
 
 c) According to the information and explanation given to us, there are
 no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax,
 Excise Duty and Cess, which have not been deposited on account of any
 dispute.
 
 10.  The company has no accumulated losses as at 31st March, 2012 and
 it has not incurred cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the records of the company examined by us and the
 information and explanations given to us, the company has not defaulted
 in repayment of dues to any bank as at the balance sheet date.
 
 12.  In our opinion, the company has not granted any loans and advances
 on the basis of security by way of pledge of shares, debentures and
 other securities. Accordingly, the provisions of clause 4 (xii) of the
 Companies (Auditors Report) Order, 2003 are not applicable to the
 company.
 
 13.  In our opinion, the company is not a chit fund or a nidhi/mutual
 benefit fund/society. Therefore. the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 are not applicable to the
 company.
 
 14.  The company has maintained proper records of transactions and
 contracts in respect of trading in shares, securities, debentures and
 other investment and timely entries have been made therein. All shares,
 securities, debentures and other investments have been held by the
 company in its own name except as permissible under section 49 of the
 Companies Act, 1956.
 
 15.  In our opinion, the company has not given any guarantees for loans
 taken by others from banks or financial institutions. Accordingly, the
 provisions of clause 4 (xv) of the Companies (Auditor''s Report) Order,
 2003 are not applicable to the company.
 
 16.  The company has not obtained any term loans.
 
 17.  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 investment.
 
 18.  In our opinion and according to the information and explanations
 given to us, the company has not allotted preferential shares during
 the year to any parties covered U/S 301 of the Companies Act, 1956.
 Accordingly, the provisions of clause 4 (xviii) of the Companies
 (Auditor''s Report) Order, 2003 are not applicable to the company.
 
 19.  The company has not issued any debentures during the year.
 
 20.  The company has not raised any money by way of public issue during
 the year.
 
 21.  According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 course of our audit.
  
                                            For, MANDAWEWALA & CO.
 
                                                    FRN : 322130E 
 
                                            Chartered Accountants
 
 1, British Indian Street
 
 1st Floor, Suite No. 110D
 
 Kolkata - 700 069.
 
 Dated: The 30th day of May, 2012
 
                                        (CA. ANIL KR. MANDAWEWALA)
 
                                                          Partner
 
                                                    M. No. 055939