1.  We have audited the attached Balance Sheet of M/s. PRECISION
 ELECTRONICS LIMITED, New Delhi as at 31st March 2011 and the Profit &
 Loss Account and the Cash Flow Statement for the year ended on that
 date annexed thereto. These financial statements are the
 responsibilities of the company''s management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 2.  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 estimate made
 by the management as well as evaluating the overall financial statement
 presentation.  We believe that our audit provides a reasonable basis
 for our opinion.
 
 3.  As required by the Companies (Auditors'' Report) (Amendment) Order,
 2004 issued by the Central Government in terms of Section 227(4A) of
 the Companies Act, 1956, and on the basis of such checks as we consider
 appropriate and according to the information and explanation given to
 us, we enclose in the Annexure a statement on the matters specified in
 paras 4 & 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph-3
 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, the Company has kept proper books of accounts as
 required by law so far, as appears from our examination of these books.
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with the report are in agreement with the books of accounts.
 
 d) In our opinion, financial statements have been prepared in
 accordance with accounting standard referred to in Section 211(3C) of
 the Companies Act, 1956.
 
 e) On the basis of the written representations received from the
 directors and taken on record by the Board of Directors, we report that
 none of the director is disqualified as on 31 March 2011 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said Balance Sheet, Profit & Loss
 Account and Cash Flow Statement read with Accounting Policies and Notes
 to Accounts as per schedule—16 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 31stMarch, 2011.
 
 ii) In the case of the Profit & Loss Account of the Profit for the year
 ended on that date.
 
 iii) In the case of Cash Flow Statement, of the Cash Flows for the year
 ended on that date.
 
 Annexure to the Auditor''s Report of Precision Electronics Limited for
 the year ended on 31 March, 2011 referred to in Paragraph 3 of our
 report of even date:
 
 1.  (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets.
 
 (b) The Fixed Assets are physically verified by the management during
 the year based on a phased programme of verifying all assets over three
 years, which in our opinion is reasonable having regard to the size of
 the Company and the nature of its fixed assets. The discrepancies
 noticed on such verification were not material and have been properly
 dealt with in the books of account.
 
 (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 management has conducted physical verification of inventory
 at reasonable intervals.
 
 (b) In our opinion, the procedure for physical verification of
 inventory followed by the management is 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 physical verification were not material and
 have been properly dealt with in the books of account.
 
 3.  a) In our opinion and according to the information and explanations
 given to us, the Company has not granted any loans secured or unsecured
 to Companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 b) The Company has taken unsecured loan from Directors of the Company
 covered under the register maintained under Section 301 of the
 Companies Act, 1956.The maximum amount during the year was Rs.
 3,40,47,915/- (Previous year Rs. 2,90,47,915/-) and at the year end was
 Rs. 3,40,47,915/- (Previous year Rs. 2,90,47,915/-).As per the
 information made available to us the aforesaid loans taken by the
 company are repayable on demand. In our opinion and having regard to
 the loan taken by the company , the rate of interest and other terms
 and conditions wherever stipulated are not prima facie prejudicial to
 the interest of the company. In respect of aforesaid loans and advances
 there is no overdue amount as at the year end.
 
 4.  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 the nature of its
 business with regard to purchase ofinventory and fixed assets and sale
 of goods and services. During the course of our audit, no major
 weakness has been noticed in the internal controls.
 
 5.  In respect of transactions entered in the register maintained in
 pursuance of Section 301 of the Companies Act, 1956:
 
 a) To the best of our knowledge and belief and according to the
 information and explanations given to us, transactions that needed to
 be entered into the register have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us the transactions made in pursuance of contract/arrangement
 entered in the register maintained under Section 301 of the Companies
 Act, 1956, are at prevailing market prices at the relevant time.
 
 6.  The Company has not accepted any deposits from the public.
 
 7.  The Company has an internal audit system, which, in our opinion, is
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the rule made by the Central Government for the
 maintenance of the cost records under section 209 (I)(d) of the
 Companies Act, 1956 and are of the opinion prima facie, the prescribed
 account and records have been made and maintained. We have not, however
 carried out a detailed examination of the same.
 
 9.  a) According to the information and explanations given to us and on
 the basis of our examination of the books of account, the Company has
 been generally regular in depositing undisputed statutory dues
 including provident fund, employees state insurance, income tax, sales
 tax, wealth tax, excise duty, customs duty, service tax and any other
 statutory dues applicable, during the year with the appropriate
 authorities. There are no outstanding statutory dues as at 31st March,
 2011 for a period of more than six months from the date they become
 payable.
 
 b) As at balance sheet date there were no disputed dues of Sales Tax,
 VAT, Income Tax, Service Tax, Customs Duty, Wealth Tax, Excise Duty and
 Cess.
 
 10.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the current year as
 well as in the immediately preceding financial year.
 
 11.  The company has not defaulted in repayment of dues to any banks as
 at the balance sheet date.
 
 12.  The Company has not granted loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  As explained to us, the provisions of special statute applicable
 to Chit Fund, Nidhi or Mutual Benefit society are not applicable to the
 Company.
 
 14.  Based on our examination of records and information and the
 explanations given to us, the Company has not dealt/traded in shares,
 securities, debentures and other securities during the year.
 
 15.  In our opinion and according to the information and explanation
 given to us, the Company has not given any guarantee for loans taken by
 others from bank or financial institution.
 
 16.  To the best of our knowledge and belief and according to the
 information and explanations given to us the Term Loan taken during the
 year has been applied for the purpose for which it was obtained.
 
 17.  On the basis of information provided by the management and our
 examination, we are of the opinion that the funds raised on short-term
 basis have not been used for long-term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 parties or Companies covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 19.  The Company did not have any debentures outstanding during the
 year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 was noticed or reported during the year.
 
                                            For RAJENDRA K GOEL & CO.
                                               CHARTERED ACCOUNTANTS 
                                                    (ER. No. 001457N)
 
                                                            R.K.Goel
                                                            (Partner)
                                                  Membership No.6154
 
 Place: New Delhi 
 Date : 18th May 2011