1.  I have audited the attached Balance Sheet of Prajay Engineers
 Syndicate Limited, as at March 31, 2011 and also the Profit and 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. My responsibility is to express an opinion on
 these financial statements based on my audit.
 
 2.  I conducted my audit in accordance with auditing standards
 generally accepted in India. Those standards require that I 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. I believe that my audit provides a reasonable basis for
 my opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 issued
 by the Central Government in terms of Section 227(4A) of the Companies
 Act, 1956, I enclose in the annexure a statement on the matters
 specified in paragraphs 4 and 5 of the said Order.
 
 4.  Attention is drawn to the following:
 
 a.  Note B.18(a) of Schedule 18, in respect of Sundry Debtors,
 unsecured considered good outstanding for a period of more than six
 months amounting to Rs.26421.37 lacs. For the reasons stated therein, I
 am unable to comment on the realizations of the aforesaid debtors.
 
 b.  Note B.18(b) of Schedule 18, in respect of advances amounting to
 Rs.8514.32 lacs given towards purchase of land/development and
 Rs.1671.20 Lacs given to suppliers, etc outstanding from earlier years
 in respect of which no provision has been made for the reasons stated
 therein.
 
 5.  Subject to paragraph 4(a) and further to my comments in the
 annexure referred to in paragraph (3) above, I report that:
 
 a) I have obtained all the information and explanations which to the
 best of my knowledge and belief were necessary for the purposes of my
 audit;
 
 b) in my opinion, proper books of account as required by law have been
 kept by the company so far as it appears from my examination of those
 books;
 
 c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d) in my opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the accounting standards referred to in sub-section (3C) of
 Section 211 of the Companies Act, 1956;
 
 e) for recognizing profit on construction project under an agreement to
 sell, stage of completion is determined as a proportion that contract
 costs incurred for the work performed bear to the estimated total
 costs. Similarly contract revenue is recognized under the percentage of
 completion method measured by survey of work performed. Further,
 expected loss on contracts is recognized when it is probable that the
 total contract costs will exceed the total contract revenue. This
 practice is being consistently followed by the Company. For this
 purpose, total project/contract costs incurred, and cost to completion
 of projects/contracts which is arrived at by the management based on
 current technical data, forecast and estimate of net expenditure to be
 incurred in future including for contingencies, etc, which being
 technical matters have been relied upon by me.
 
 f) in my opinion and to the best of my information and according to the
 explanations given to me, the said accounts, read with the notes
 thereon, 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 affairs of the
 Company as at March 31, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 6. On the basis of written representations received from the directors
 as on March 31, 2011, and taken on record by the Board of Directors, I
 report that none of the directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in paragraph 3 of the Auditors'' Report of even date to the
 members of Prajay Engineers Syndicate Limited)
 
 The nature of the Company''s business/ activities during the year is
 such that clauses (xii), (xiii), (xiv), (xix) of paragraph 4 of the
 Companies (Auditor''s Report) Order, 2003 (CARO) are not applicable to
 the Company.
 
 (i) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 (b) As explained to me, all the fixed assets are physically verified by
 the management in a phased periodical manner, which in my opinion is
 reasonable, having regard to the size of the Company and the nature of
 its assets. According to the information and explanations given to me,
 no material discrepancies were noticed on such verification.
 
 (c) The fixed assets disposed off during the year, in my opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in my opinion, not affected the going concern
 status of the Company.
 
 (ii) (a) The inventories in respect of hotels and resorts have been
 physically verified by the management at the year end. In my opinion
 the frequency of verification is reasonable.
 
 (b) In my opinion and according to the information and explanations
 given to me, the procedures of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and nature of its business.
 
 (c) On the basis of my examination of the records of inventory, in my
 opinion, the Company is maintaining proper records of inventory and the
 discrepancies noticed on physical verification between the physical
 stocks and book records were not material in relation to the operations
 of the Company.
 
 (iii) (a) According to the information and explanations given to me,
 the Company has not granted any loan secured or unsecured to companies,
 firms or other parties covered in the register maintained under Section
 301 of the Companies Act, 1956 and accordingly clauses iii (b) to iii
 (d) of paragraph 4 of CARO are not applicable.
 
 (b) According to the information and explanations given to me, the
 Company has taken secured/unsecured loan from two parties covered in
 the register maintained under Section 301 of the Companies Act, 1956.
 The maximum amount of loan outstanding during the year was Rs.3277.50
 lacs and the balance as at the year end is Rs. 3277.50 lacs.
 
 (c) In my opinion and according to the information and explanations
 given to me, the terms and conditions of such loans are not, prima
 facie, prejudicial to the interest of the Company. There is no interest
 payable on the loans.
 
 (d) In respect of the loans taken, the principal amounts have not
 fallen due for payment.
 
 (iv) In my opinion and according to the information and explanations
 given to me, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventories and fixed assets and for the sale of goods and
 services. During the course of my audit, I have not observed any
 continuing failure to correct major weaknesses in internal control
 system.
 
 (v) (a) In my opinion, and according to the information and
 explanations given to me, the particulars of contracts or arrangements
 referred to in Section 301 of the Companies Act, 1956 have been entered
 in the register required to be maintained under that Section.
 
 (b) In my opinion and according to the information and explanations
 given to me, the transactions made in pursuance of such contracts or
 arrangements 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 the prevailing market prices at the
 relevant time.
 
 (vi) The company has accepted deposits from the public during the year
 and has complied with the provisions of sections 58A, 58AA and the
 rules framed there under.
 
 (vii) The Company has an internal audit system, the scope and coverage
 of which needs to be increased to make it commensurate with its size
 and nature of the business of the Company.
 
 (viii) I am informed that the Central Government has not prescribed
 maintenance of cost records under Section 209(1)(d) of the Companies
 Act, 1956.
 
 (ix) (a) According to records of the Company, the Company is generally
 regular in depositing undisputed statutory dues, including provident
 fund, employees'' state insurance, income-tax, sales-tax, wealth tax,
 service tax, customs duty, excise duty, cess and any other material
 statutory dues applicable to it.  There are no arrears of the aforesaid
 dues as at 31st March, 2011 outstanding for a period of more than six
 months from the date they became payable. There are no dues towards
 investor education and protection fund.
 
 (b) As at 31st March, 2011 according to the records of the Company and
 the information and explanations given to me, there are no dues of
 income tax, sales tax, wealth tax, service tax, customs duty, excise
 duty, and cess matters that have not been deposited on account of any
 dispute.
 
 (x) The Company does not have accumulated losses as at 31st March, 2011
 and has not incurred cash losses during the financial year ended on
 that date and in the immediately preceding financial year.
 
 (xi) In my opinion and according to the information and explanations
 given to me, the company, during the year, has not defaulted in
 repayment of dues to financial institutions and banks. There are no
 debentures as on the balance sheet date.
 
 (xii) According to the information and explanations given to me, the
 company has given guarantee, for loans taken by Prajay Properties
 Private Limited from banks or financial institutions, the terms and
 conditions whereof are not prejudicial to the interest of the company.
 
 (xiii) In my opinion and according to the information and explanations
 given to me, the term loans were applied for the purposes for which
 they were obtained.
 
 (xiv) According to the information and explanations given to me, and on
 an overall examination of the balance sheet of the Company, there are
 no funds raised on short term basis which have been used for long term
 investment.
 
 (xv) During the year, the Company has made preferential allotment of
 shares to parties and companies covered in the Register maintained
 under Section 301 of the Act. The price at which shares have been
 issued is not prejudicial to the interest of the Company.
 
 (xvi) The Company has not raised any money through a public issue
 during the year.
 
 (xvii) To the best of my knowledge and belief and according to the
 information and explanations given to me, no fraud on or by the Company
 was noticed or reported during the year.
 
                                                          S V RANGAN
 
                                                Chartered Accountant
 
                                               Membership No. 022037
 
 Place: Secunderabad
 
 Date: August 30, 2011