1.  We have audited the attached Balance Sheet of Punjab Communications
 Limited (“the Company'') as at 31st March 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. 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 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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of
 section 227 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.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that: (i) 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;
 
 (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) Subject to our observations in para (vii) below, we are of the
 opinion that 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) In terms of Government of India, Department of Corporate Affairs
 Notification No.  GSR 829(E) dated 21st October, 2003, Government
 companies are exempt from the applicability of provisions of Section
 274(1)(g) of the Companies Act, 1956;
 
 (vi) Since the Central Government has not issued any notification as to
 the rate at which the cess is to be paid under section 441A of the
 Companies Act, 1956 nor has it issued any rules under the said section
 prescribing the manner in which such cess is to be paid, no cess is due
 and payable by the Company.
 
 (vii) a) Attention is invited to Note No. 14 of schedule 23 regarding
 realization of investment of Rs. 700 lacs in the Bonds of UP Co-operative
 Spinning Mills Federation Ltd and interest of Rs. 968.43 lacs accruing up
 to 12.07.2005 consequent to the ex-parte decree awarded by Court
 against the UP State Government, which is pending for execution before
 the lower court. In view of the uncertainty involved in the realization
 of interest, the interest accrued amounting to Rs. 968.43 lacs up to
 12.07.2005 i.e. date of deposit of the decreed amount by the UP
 Government, and for the period subsequent thereto, has not been
 recognized as income.
 
 b) Reference is invited to Note No. 12 of schedule 23 regarding revenue
 recognition of Rs. 104.69 lacs in respect of sales for which risks and
 rewards of ownership have remained with the Company which is in
 contravention of Accounting Standard on AS-9 “Revenue Recognition”
 issued by the Institute of Chartered Accountants of India.
 
 c) As detailed at Accounting Policy 1(b) of Schedule 22, certain items
 of income and expenditure have been accounted for on cash basis. Impact
 of such treatment on profits of the year has not been ascertained.
 
 Subject to the above, we are of the opinion that to the best of our
 information and according to the explanations given to us, the said
 accounts, read together with 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;
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011; and
 
 b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date.
 
 c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 (As 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) As explained to us, fixed assets have been physically verified by
 the management at the end of the year.  Considering the size of the
 Company and nature of its fixed assets, no material discrepancies were
 noticed on such verification.
 
 c) The fixed assets disposed off during the year did not constitute a
 substantial part of the total fixed assets and therefore do not affect
 the going concern assumption.
 
 2.  a) As explained to us, the inventories were physically verified by
 the management at the end of the year.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 c) In our opinion and according to information and explanations given
 to us, the Company has maintained proper records of its inventories and
 the discrepancies noticed on physical verification between physical
 stock and book records were not material and have been adequately dealt
 with in the books of account.
 
 3.  The Company has neither granted any secured/unsecured loans to, nor
 taken secured/unsecured loans from, any Company, firm or other parties
 listed in the register maintained under section 301 of the Companies
 Act, 1956.
 
 4.  The Company has adequate internal control procedures commensurate
 with the size of the company and nature of its business with regard to
 purchase of stores, raw material including components, plant and
 machinery, equipment and other assets and for sale of goods. We have
 not come across any major weakness in internal control.
 
 5.  There are no transactions, which need to be entered in register
 maintained under section 301 of the Act.
 
 6.  The Company has not accepted any deposits from public during the
 year.
 
 7.  In our opinion, the internal audit system prevalent in the Company
 is commensurate with the size of the Company and the nature of its
 business.
 
 8.  We have been informed that the Central Government has not
 prescribed the maintenance of cost records under section 209(1)(d) of
 the Companies Act, 1956 in respect of any of the Company''s products.
 
 9.  a) According to the records of the Company, it is regular in
 depositing undisputed statutory dues including provident fund, investor
 education and protection fund, employees state insurance, income tax,
 sales tax, wealth tax, custom duty, excise duty, cess and other
 statutory dues with appropriate authorities. According to the
 information and explanations given to us, there are no undisputed
 amounts payable in respect of such statutory dues, which have remained
 outstanding as at 31st March 2011 for a period of more than six months
 from the date they became payable.
 
 b) According to the information and explanations given to us, there
 were no disputed amounts in respect of income tax, sales tax, custom
 duty, excise duty, etc which were outstanding in the books of accounts
 as at 31st March 2011 except for the following:
 
 (i) The excise duty demand including penalty and interest aggregating
 to Rs. 251.67 lacs (net of pre- deposit) is disputed and the appeal is
 pending before the Central Excise Tribunal;.
 
 The following demands have been raised in respect of disputed dues
 pending before various statutory authorities:
 
 (ii) The excise and custom duty demand of Rs. 30.20 lacs is disputed with
 excise and custom department.
 
 (iii) The Sales Tax demand including interest aggregating to Rs. 14.85
 lacs (net of pre-deposit) is disputed and the appeal is pending at the
 office of Deputy Commissioner, Commercial Taxes, Andhra Pradesh.
 
 10.  The Company does not have any accumulated losses. The Company has
 not incurred cash losses in the current financial year and in the
 immediately preceding financial year.
 
 11.  The Company has not defaulted in repayment of dues to any
 financial institution or bank or debenture holders.
 
 12.  The Company has not granted any loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to Chit fund,
 Nidhi or mutual benefit fund, society are not applicable to the
 Company.
 
 14.  The Company is not dealing or trading in shares, securities,
 debentures or other investments.  Hence, requirements of paragraph
 4(XIV) are not applicable to the Company.
 
 15.  According to information and explanations given to us, the Company
 has not given any guarantee in respect of loans taken by others from
 banks or financial institutions.
 
 16.  The Company has not obtained any term loans during the year.
 
 17.  According to the cash flow statement and other records examined by
 us and on the basis of information and explanations given to us, funds
 raised on short-term basis have not been used for long-term investment.
 
 18.  The company has not made preferential allotment of shares to
 parties covered in the register maintained under section 301 of the
 Companies Act.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money through public issue of
 shares during the year.
 
 21.  Based upon the audit procedures performed and information and
 explanations given to us by the management, we report that no fraud on
 or by the Company has been noticed or reported during the year.
 
                                           For Raj Gupta & Co.
 
                                        Chartered Accountants
 
                                                 FRN: 000203N
 
                                              Raj Kumar Gupta
 Place: Chandigarh                                    Partner
 
 Dated: November 02, 2011           Membership Number: 017039