1.  I have audited the attached Balance Sheet of Prajay Engineers
 Syndicate Limited (the Company) as at March 31, 2012, the Statement
 of Profit and Loss and the Cash Flow Statement of the Company 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 misstatements. 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 39(a) of the Financial Statements, in respect of Trade
 Receivables, unsecured considered good outstanding for a period of more
 than six months amounting to Rs.27,213.09 lacs. For the reasons stated
 therein, I am unable to comment on the realizations of the aforesaid
 Receivables.
 
 b.  Note 39(b) of the Financial Statements, in respect of sale of
 constructed properties amounting to Rs.235.68 lacs. For the reasons
 stated therein, I am unable to comment on these sales.
 
 c.  Note 39(c) ofthe Financial Statements, in respect ofadvances
 amounting to Rs.7,858.42 lacs given to landlords/developers, and
 Rs.1,205.17Lacs 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 4(b), 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 Statement of Profit and Loss 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 Statement of Profit and Loss
 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 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, 2012;
 
 (ii) in the case of the Statement of Profit and 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 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, 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 Section 274(1)(g) 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.3,277.50
 lacs and the balance as at the year end is Rs. 3,277.50 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 prima
 facie 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 maJ