1.  We have audited the attached Balance Sheet of M/S. RAINBOW
 FOUNDATIONS LIMITED, CHENNAI - 600 017 as at 31st March 2012 and also
 the Statement of Profit and Loss for the year ended on that date and
 the Cash Flow Statement for the year ended on that date, both annexed
 thereto. These financial statements are the responsibility of the
 Company''s Management. Our responsibility is to express an opinion on
 their financial statements based on our audit.
 
 2.  We have 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 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) Order, 2003, issued
 by the Company Law Board in terms of Section 227(4A) of the Companies
 Act, 1956, we enclose in the annexure a statement on the matters
 specified in the paragraphs 4 and 5 of the said order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above we state 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 proper books of account as required by law have been
 kept by the Company so far as it appears from our examination of books.
 
 c.  The Company''s Balance Sheet, the Statement of Profit & Loss and the
 Cash Flow Statement dealt with by this report are in agreement with the
 books of account.
 
 d.  In our opinion, the Balance Sheet, the Statement of Profit & Loss
 and the Cash Flow Statement dealt with by this report are in compliance
 with the accounting standards and the significant accounting policies
 referred to in Section 211 (3C) of the Companies Act, 1956, to the
 extent applicable to this Company.
 
 e.  On the basis of the written representation received from the
 directors, as on 31/03/2012, and taken on record by the board, we
 report that none of the Directors is disqualified as on 31/03/2012 from
 being appointed as Director under 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 accounts read together 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:
 
 1.  In the case of the Balance Sheet of the state of affairs of the
 Company as at 31st March 2012,
 
 2.  In the case of the Statement of Profit & Loss of the Profit of the
 Company for the year ended on that date and
 
 3.  In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
 In the case of M/s RAINBOW FOUNDATIONS LIMITED
 
 In terms of the Companies (Auditors'' Report) Order, 2003 issued by the
 Company Law Board and on the basis of such checks as we considered
 appropriate we further report that:
 
 i.
 
 a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 b) The Fixed Assets have been physically verified at the year end by
 the management and in our opinion the frequency of verification is
 reasonable and there was no discrepancy noticed on such verification by
 the management.
 
 c) Since there is no disposal of substantial part of its fixed assets
 during the year, paragraph 4 (i) (c) of the Companies (Auditors''
 Report) Order 2003 is not applicable.
 
 ii.
 
 a) The inventory has been physically verified during the year by the
 management. In our opinion, the frequency of verification is
 reasonable.
 
 b) 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) The company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 iii.
 
 a) According to the information and explanations given to us and in our
 opinion, during the year the Company has taken interest free unsecured
 loan from any one party listed under the register maintained under
 section 301 of the Companies Act, 1956 and the closing balance is Rs.
 73 Lakhs and the maximum amount outstanding was Rs. 86.50 Lakhs. The
 company has not granted unsecured loans to parties listed in the
 register maintained under section 301 of the Companies Act, 1956.
 
 b) In our opinion, the loan is interest free and other terms and
 conditions on which loan has been taken from companies, firms or other
 parties listed in the register maintained under section 301 of the
 Companies Act, 1956 are not, prima facie prejudicial to the interest of
 the company.
 
 c) The company is regular in repaying the principal amounts as
 stipulated and no interest is payable since the loan is interest free.
 
 iv. According to the information and explanations given to us and in
 our opinion, there is an adequate internal control procedure
 commensurate with the size of the Company and the nature of its
 business for the purchase of fixed assets and for the sale of flats and
 plots. Further, on the basis of our examination of the books and
 records of the company, we have neither come across nor have been
 informed of any continuing failure to correct major weakness in the
 aforesaid internal control procedure.
 
 v.  According to the information and explanations given to us and in
 our opinion, there are no transactions with any of the parties that
 need to be entered in the register maintained under section 301 of the
 Companies Act
 
 1956 (1 of 1956) .  vi.  According to the information and explanations
 given to us and in our opinion, the Company has not accepted any
 deposit from the public within the meaning of the Provisions of Section
 58A and 58AA of the Companies Act, 1956 and the rules framed there
 under and the directions issued by the Reserve Bank of India. No order
 has been passed by the Company Law Board.  vii.  According to the
 information and explanations given to us and in our opinion, the
 Company does not have an independent Internal Auditor. However they
 have an Internal Audit system commensurate with the size and nature of
 its business 
 
 
 viii.  According to information and explanations given to us, the
 Central Government has not prescribed the maintenance of cost records
 under section 209 (1) (d) of the Companies Act, 1956 for the company''s
 products.  ix.
 
 a. According to the information and explanations given to us and in our
 opinion, the Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues as applicable to it
 and there were no undisputed amount payable in respect of Income-Tax,
 Wealth Tax, Sales Tax, Customs Duty and Excise Duty outstanding as on
 31st March 2012, for a period of more than six months from the date
 they became payable.
 
 b. According to the information and explanations given to us and based
 on the records of the Company, as at 31s1 March 2012, there are no dues
 of wealth tax/ customs duty/excise duty/cess, which have not been
 deposited on account of any dispute. The particulars of Income Tax and
 Sales Tax as at 31st March 2012 which have not been deposited on
 account of dispute are as follows:
 
 Name of the   Nature  of Dues                 Amount under
 Statue                                        dispute not yet
                                               deposited Rs.  
 
 
 Income Tax 
 Act           Income tax including 
               interest till                      2,85,218
 1961          the date of assessment
 
 Income Tax 
 Act           Income Tax Along with Interest     2,25,291
 1961          till the date of Assessment
 
 Income Tax 
 Act           Income Tax Along with Interest     4,02,650
 1961          till the date of Assessment
 
 Income Tax 
 Act           Income Tax Along with Interest     3,33,003/-
 1961          till the date of Assessment
 
 Name          Period to which         Forum where the
               amount relates          dispute is pending
 
 Income Tax 
 Act            AY 2002-03             The Hon''ble Madras 
                                       High court, Chennai
 
 Income Tax 
 Act            AY 2002-03             The Commissioner of 
                                       income Tax (Appeals)
 
 Income Tax 
 Act            AY 2006-07             The Commissioner of
                                       Income Tax (Appeals)
 
 Income Tax 
 Act            AY 2007-08             The Commissioner of
                                       Income Tax (Appeals)
 
 x.  According to the information and explanations given to us and in
 our opinion, the Company does not have
 
 any accumulated losses as at 31st March 2012 and has not incurred any
 cash losses in the financial year
 
 ended on that date or in the immediately preceding financial year.  xi.
 According to the information and explanations given to us and in our
 opinion, during the year, the Company
 
 has not defaulted in repayment of dues to any financial institution or
 bank and there are no debenture
 
 holders.  I
 
 xii.  According to the information and explanations given to us and in
 our opinion, the Company has not granted
 
 any loan or advance by way of pledge of shares, debentures and other
 securities and hence paragraph 4
 
 (xii) of the Order is not applicable xiii.  According to the
 information and explanations given to us and in our opinion, the
 Company is not a nidhi/ mutual benefit fund/society, paragraph 4
 
 (xiii) of the Order is not applicable 
 
 xiv.  According to the information and explanations given to us and in
 our opinion, the Company is not dealing or trading in shares,
 securities, debentures and other investments, paragraph 4
 
 (xiv) of the Order is not applicable 
 
 xv.  According to the information and explanations given to us and in
 our opinion, the Company has not given any guarantee for loans taken by
 others from bank or financial institutions.  
 
 xvi.  According to the information and explanations given to us and in
 our opinion, the term loans have been applied for the purpose for which
 they were raised. 
 
 xvii.  According to the information and explanations given to us and in
 our opinion, on the basis of overall examination of the Balance Sheet
 of the Company, there were no funds raised on a short - term basis
 which have been used for long - term investment and vice versa.  
 
 xviii. According to the information and explanations given to us and 
 in our opinion, the Company has not made any preferential allotment 
 of shares during the year to any party and hence paragraph 4 (xviii) 
 of the Order is not applicable 
 
 xix.  According to the information  and explanations given to us and 
 in our opinion, the Company has not  issued any debenture during the 
 year and hence paragraph 4 (xix) of the Order is not applicable
 
 xx. According to the information and explanations given to us and in
 our opinion, the Company has not raised any money during the year by
 way of public issue, paragraph 4 (xx) of the Order is not applicable
 
 xxi. To the best of our knowledge and according to the information and
 explanations given to us and the records of the Company examined by us,
 no fraud on or by the Company was noticed or reported during the year.
 
 Place : Chennai               For JAIN BAFNA AND CO
 
 Date : 11th August 2012      (Chartered Accountants)
 
                               j (S. MUTHUKUMAR)
 
                              (Partner)  
 
                               Firm Reg No:010657 S