We have audited the attached balance sheet of M/S. RAJESH EXPORTS
 LIMITED as at 31st March 2011, and the profit and loss account and 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; our responsibility is to express an opinion on
 these financial statements based on our audit.  We conducted our audit
 in accordance with the 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.  We report
 as follows
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 issued
 by the Central government in terms of sub-section (4A) of Section 227
 of the Companies Act, 1956, and on the basis of such checks and
 verification of the books of accounts as we consider necessary and to
 the best of our knowledge and according to the information and
 explanations given to us during the course of our audit, we enclose in
 the Annexure a statement on the matters specified in paragraphs 4 and 5
 of the said order.
 
 2.  Further to our comments in the Annexure referred to in Paragraph 1
 above.
 
 a) 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.
 
 b) In our opinion, the company has kept proper books of account as
 required by law so far as appears from our examination of the books.
 
 c) The Balance Sheet, Profit and Loss account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account.
 
 d) In our opinion, the Profit and Loss account, Cash Flow Statement and
 Balance Sheet comply with the mandatory Accounting Standards referred
 to in sub-section (3C) of section 211 of the Companies Act, 1956.
 
 e) 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 31st 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 Knowledge and according to the
 information and explanations given to us, the said accounts give the
 information required by the Companies Act, 1956, in the manner so
 required and Subject to; (i) that the Company has adopted the
 Accounting Policy with regard to accounting of interest income on
 interest bearing loans other than bank deposits from accrual to cash
 basis, as a result of which the profit for year has been understated by
 Rs.33,08,58,0681 -(as stated in Para A.6 in schedule ''S'');(ii) that
 during the year 99.055 Kilos of gold jewellery is charged off from the
 Stocks as same is not recoverable from some of the employees and (Hi)
 that there is no value addition in sales made in SEZ Unit of the
 Company in the quarter ended 31st March 2011, read with other notes in
 Schedule ''S'' annexed to the audited accounts, give a true and fair
 view: 
 
 i) In the case of the balance sheet, of the state of affairs of the
 company as at 31st March 2011 and 
 
 ii) In the case of the profit and loss account, of the profit for
 the year ended on that date; 
 
 iii) In the case of cash flow statement, of the cash flow of the
 company for the year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE OF THE
 AUDITOR''S TO THE MEMBERS OF M/S. RAJESH EXPORTS LIMITED, BANGALORE, ON
 THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2011.
 
 1.  The company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets but
 identification mark on the individual assets is not displayed. The
 Company has drawn up a programme of Physical verification of Fixed
 Assets which in our opinion is reasonable having regard to the size of
 the Company and the nature of its assets. Fixed assets were physically
 verified by the Management during the year and no material
 discrepancies were noticed on such verification.  Substantial part of
 the fixed assets has not been disposed off during the year.
 
 2.  As explained to us, Inventories held by the company have been
 physically verified by the management at regular intervals during the
 year.
 
 In our opinion and according to the information and explanations given
 to us, the procedures of physical verification followed by the
 management are reasonable and adequate in relation to the size of the
 company and the nature of its business.
 
 The Company has maintained proper records of inventories. As explained
 to us, there were no discrepancies noticed on physical verification of
 inventory as compared to the book records.
 
 3.  As per the information and explanations furnished by the
 Management, the company has not granted any loans to companies or other
 parties listed in the register maintained under section 301 of the
 Companies Act, 1956.
 
 The Company has taken loan from the parties listed in the register
 maintained under section 301 of the Companies Act, 1956. These loans
 were taken from three parties and the amount outstanding as at the year
 end is Rs.384,176,838/- and maximum amount taken at any time of the
 year is Rs.388,226,838/-.  The rate of interest and other terms and
 conditions of these loans taken are not prima facie prejudicial to the
 interest of the company. The payment of principle amount and interest
 thereon are also regular wherever stipulated.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business, for the purchase of inventory and fixed assets and for the
 sale of goods and services. During the course of our audit, no major
 weakness has been noticed in the internal controls.
 
 5.  In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in section 301 of the companies Act, 1956, if any, have been entered in
 the register maintained under section 301 of the companies Act, 1956.
 The transactions made in pursuance of such contracts or arrangements,
 exceeding the value of rupees five lakhs in respect of any party during
 the year, if any, have been made at prices which are reasonable having
 regard to prevailing market prices at the relevant time.
 
 6.  The Company has accepted deposits from an individual and the
 directives issued by the Reserve Bank of India and the provisions of
 Section 58A and 58AA or any other relevant provisions of the Companies
 Act 1956 and the rules framed there under, where applicable, have been
 complied with. The Company Law Board has not passed any order with
 regard to public deposits.
 
 7.  In our opinion, the company has internal audit system commensurate
 with the size and the nature of its business.
 
 8.  The company has maintained cost records and accounts as prescribed
 by the Central Government under section 209 (1) (d) of the Companies
 Act, 1956.We have broadly reviewed the accounts and records of the
 company in this connection and are of the opinion that prima facie the
 prescribed accounts and records have been made and maintained. However,
 we have not made a detailed examination of the same.
 
 9.  According to the records of the Company, the Company is generally
 regular in depositing undisputed statutory dues including Provident
 Fund, Investor Education and Protection Fund, Employees'' State
 Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs
 Duty, Excise duty, Cess and other statutory dues, as applicable to it,
 with the appropriate authorities.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of aforesaid dues were
 outstanding at the year end for a period of more than six months from
 the date they became payable. Based on information and explanations
 given to us, we furnish hereunder the particulars of disputed aforesaid
 dues which have not been deposited: -
 
 Name of       Nature of    Amount in    Period to 
                                         which        Forum where
 the Statute   the dues       Rs.        the amount 
                                         relates      dispute is 
                                                      pending
 
 Karnataka 
 Sales         Sales Tax     1,54,702      2001-02    First Appellate 
                                                      authority
 Tax Act
 
    -Do-         -Do-        1,00,000      2002-03        -Do-
 
    -Do-         -Do-        2,24,355      2003-04        -Do-
 
 Income Tax 
 Act          Income Tax 26,23,25,771      2007-08    The Commissioner
                                                          Appeals
 
 Income Tax 
 Act          Income Tax 18,84,18,119      2008-09    The Commissioner
                                                      Appeals
 
 ESI of 
 Karnataka       ESI        89,27,290      04/2000 to
                                           03/2003    The Appellate
                                                      Authority ESI,
                                                      Karnataka
 
 ESI of 
 Karnataka       ESI        37,78,409      04/06 to 
                                           09/07      The Appellate
                                                      Authority ESI, 
                                                      Karnataka
 
 Service Tax Service Tax  3,67,24,590     2006-07     The Appellate 
                                                      Tribunal,
             and penalty                              Customs, Excise
                                                      and
                                                      Service Tax
 
 10.  The Company has no accumulated losses and has not incurred any
 cash losses during the financial year covered by our audit or in the
 immediately preceding financial year.
 
 11.  As per information furnished by the management, the company has
 not defaulted in repayment of dues to banks, financial institutions and
 debenture holders.
 
 12.  According to the information and explanations given to us, the
 Company has maintained adequate documents and records in cases where
 the Company has granted loans on the basis of security by way of pledge
 of shares, debentures and other securities.
 
 13.  The company is not a chit fund or a nidhi/mutual benefit
 fund/society and hence clause 4 (xiii) of Companies (Auditor''s Report)
 Order 2003 is not applicable to the company.
 
 14.  In our opinion, the Company is not a dealer or a trader in shares,
 securities, debentures and other investments.
 
 15.  The company has not given guarantees for loans taken by others
 from banks or financial institutions.
 
 16.  The Company did not have any outstanding term loans at the year
 end of the year. However, the company has a sum of Rs. 765,872,000/-
 outstanding as on 31st March 2011 as FCCB issue proceeds shown under
 the head ''Unsecured Loan'' in Schedule ''E'' annexed to the accounts and
 the same is kept with bank deposits in Foreign currency till it''s
 utilization.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment by the company.
 
 18.  During the year, the company has not made any preferential
 allotment of shares to parties and companies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 19.  The company has not created any security or charge in respect of
 debentures/bonds issued.
 
 20.  The Company has not raised any money through a public issue during
 the year.
 
 21.  In our opinion and according to the information and explanations
 given to us, no fraud by or against the Company has been noticed or
 reported during the year except that 99.055 Kilos of gold jewellery was
 mishandled by the employees.
 
 
 
                                             For P.K. RUNGTA & CO.,
 
                                             Chartered Accountants
 
                                                      Sd/-
 
                                               (CA P.K. RUNGTA)
 
 Place: Bangalore                                  Proprietor
 
 Date: 30th May 2011                         Membership No. 051184