We have audited the attached Balance Sheet of PRIME SECURITIES LIMITED
 as at March 31, 2012, the Profit & Loss Account and also the Cash Flow
 Statement for the year ended on that date annexed thereto. These
 financial statements are the responsibility of the Companys
 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 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. We believe that our audit provides a reasonable basis for
 our opinion.
 
 As required by the Companies (Auditors Report) Order, 2003 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 paragraphs 4 and 5 of the said Order.
 
 1.  Further to our comments in the annexure referred to in paragraph
 (1) above:
 
 i) 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;
 
 ii) In our opinion, proper books of account, as required by law, have
 been kept by the Company so far as appears from our examination of
 those books;
 
 iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards referred to in sub-section (3C) of section 211 of the
 Companies Act, 1956;
 
 v) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, we report that none of
 the directors are disqualified as on March 31, 2012 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956.
 
 2.  We draw attention to:
 
 • Note No. 24 relating to managerial remuneration which is subject to
 the approval of the Central Government; and,
 
 • Note No. 25 relating to non-provision of Companys investment in,
 and loans to, its subsidiary Primesec Investments Limited whose net
 worth has been eroded in view of the circumstances specified in the
 said note, in respect of which we are unable to express our opinion.
 
 3.  Subject to para 2 above, in our opinion and to the best of our
 information and according to the explanations given to us, the Balance
 Sheet, Profit and Loss Account and Cash Flow Statement 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 accounting principles generally accepted in India:
 
 a in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2012;
 
 b.  in the case of Profit and Loss Account, of the loss for the year
 ended on that date; and
 
 c.  in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
                                           
 ANNEXURE TO THE AUDITORS REPORT
 
 Referred to in Paragraph 3 of our report of even date
 
 i) a. The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b.  As explained to us, the fixed assets were physically verified by
 the management as at the year end and that discrepancies noticed have
 been properly dealt with in the books of account. In our opinion, such
 discrepancies were not material in nature and that the frequency of
 verification is reasonable having regard to the size of the Company and
 the nature of its assets.
 
 c.  During the year the Company has not disposed off any substantial
 part of its fixed assets.
 
 ii) According to the information and explanations given to us, the
 Company has neither granted nor taken any loan, secured or unsecured,
 to/from companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 iii) In our opinion and according to information and explanations given
 to us, there are adequate internal control procedures commensurate with
 the size of the Company and nature of its business with regards to
 purchase of fixed assets and sale of services. During the course of our
 audit, no major weakness has been noticed in the internal control.
 
 iv) According to the information and explanations given to us, there
 are no contracts or arrangements that need to be entered into a
 register maintained in pursuance of section 301 of the Companies Act,
 1956. Accordingly, paragraph 4(v)(a) and (b) of the Order is not
 applicable.
 
 v) The Company has not accepted any deposits within the meaning of the
 directives issued by the Reserve Bank of India and the provisions of
 Section 58A and 58AA of the Companies Act, 1956 and rules framed there
 under.
 
 vi) In our opinion, the Company has an internal audit system
 commensurate with the size of the Company and nature of its business.
 
 vii) According to the information and explanations given to us, the
 Central Government has not prescribed maintenance of cost records under
 Section 209 (1)(d) of the Companies Act, 1956.
 
 viii) a. According to the information and explanations given to us and
 the records of the Company examined by us, the Company is generally
 
 regular in depositing with the appropriate authorities undisputed
 statutory dues including provident fund, income tax, sales tax, service
 tax and other statutory dues applicable to it.
 
 b.  According to the information and explanations given to us no
 undisputed amounts payable in respect of aforesaid dues were
 outstanding as at 31st March, 2012 for a period more than six months
 from the date they became payable.
 
 c.  According to the information and explanations given to us, there
 are no statutory dues outstanding on account of any dispute as of 31st
 March, 2012
 
 ix) The Company does not have any accumulated loss as at the year end.
 However, the Company has incurred cash loss during the current
 financial year but there was no cash loss in the immediately preceding
 financial year.
 
 x) The Company has not defaulted in repayment of dues to a financial
 institution or a bank during the year.
 
 xi) The Company has not granted any loans or advances against security
 by way of pledge of shares, debentures and other securities.
 
 xii) The provisions of any Special Statute applicable to Chit Fund,
 Nidhi or Mutual Benefit Fund/Societies are not applicable to the
 Company.
 
 xiii) The Company has maintained proper records of the transactions and
 contracts in respect of the investments and timely entries have been
 made therein. Further, such investments have been held by the Company
 in its own name except in case of (a) shares given as margin for
 derivative transactions; (b) shares pledged as security for loan taken
 by the Company and its subsidiary; and (c) given to a party pending
 completion of a contract.
 
 xiv) The Company has given corporate guarantee to banks on behalf of
 its subsidiary company against the credit facilities availed by the
 subsidiary company. According to the information and explanations given
 to us, we are of the opinion that the terms and conditions thereof are
 not prima facie prejudicial to the interest of the Company.
 
 xv) Based on the overall examination of Balance sheet of the Company,
 as at 31st March 2012, we are of the opinion that there are no funds
 raised on short term basis that has been used for long term
 application.
 
 xvi) The Company has not made any preferential allotment of shares
 during the year to parties or companies covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 xvii) The Company has not raised any money by public issues during the
 year.
 
 xviii) According to the information and explanations given to us, no
 fraud on, or, by the Company has been noticed or reported during the
 year.  Looking to the nature of activities being carried on by the
 Company and also considering the nature of the matters referred to in
 the said Order, clauses no. (ii), (xvi) and (xix) of Paragraph 4 of the
 said Order are, in our opinion, not applicable to the Company.
 
 
                                           For Gandhi & Associates
                                             Chartered Accountants 
                                         Flegistration No. 102965W
 
                                                     Milind Gandhi
 
                                                           Partner 
 
                                             Membership No. 043194
 
 Mumbai, May 25, 2012