We have audited the attached Balance Sheet of Raunaq Automotive
 Components Limited as at 31st March, 2011 and also the Profit & Loss
 Account and the Cash Flow statement for the Financial 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 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 mis-statement. 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.
 
 1.  As required by the Companies (Auditor''s Report) Order 2003, as
 amended by Companies (Auditor''s Report) Amendment Order 2004 (together
 the ''Order'') issued by the Central Government of India in terms of
 section.  227 (4A) of the Companies Act, 1956, we annex hereto a
 Statement on the matters specified in paragraphs 4 & 5 of the said
 Order to the extent applicable and based on such checks we considered
 appropriate.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 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 purposes 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 those
 books.
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow statement
 dealt with by this report are in agreement with the books of account.
 
 d) On the fem. if of the written representation / information received
 from the Director* »- on 31st March 2011, and taken on record by the
 Board of Directors, we report that none of the Directors is
 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.
 
 e) 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.
 
 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 & fair view in conformity
 with the accounting principle generally accepted in India:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 company as at 31st March, 2011;
 
 ii) in the case of the Profit & Loss Account, of the profit of the
 Company for the Financial Year ended on that date; and
 
 iii) in the case of Cash Flow statement, of the Cash Flows for the Year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 Referred to in paragraph 1 of our report of even date.
 
 1.  a) The Company has maintained proper records showing full
 particulars, including quantitative details and location, of fixed
 assets.
 
 b) According to the information & explanations given to us, the fixed
 assets of the Company have been physically verified by the management
 as at the end of the financial year and no serious discrepancy has been
 found on such verification. In our opinion, having regard to the size
 of the company and the nature of its assets the system of verification
 of the Fixed Assets of the company is reasonable.
 
 c) Since there is no disposal of substantial part of the Fixed Assets
 during the Year, paragraph 4(i)( c) of the Companies (Auditor''s Report)
 Order 2003 (hereinafter referred to as the order) is not applicable.
 
 2.  a) The inventories, except for stocks lying with third parties
 where certificates confirming stocks have been received in respect of
 most of the stocks held, have been physically verified by the
 management during the year at reasonable interval.
 
 b) In our opinion and according to information & 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) On the basis of our examination of the records of inventory, we are
 of the opinion that the company is maintaining proper records of
 Inventory. According to information & explanations given to us, the
 discrepancies noticed on verification between the physical stock and
 books record, which in our opinion were not material, have been
 properly dealt with in the Books of Accounts.
 
 3.  a) According to the information & explanations given to us, the
 company has not granted any loans secured or unsecured to companies,
 firm or other parties listed in the registers maintained under Section
 301 of the Companies Act, 1956; and
 
 b) Since the company has not granted any loans secured or unsecured
 during the period covered under audit, Paragraph No.4(iii) (b)of the
 order is not applicable.
 
 c) The company has been pursuing civil suit against Mr. JPS Kanwar for
 the recovery of Rs.488.88 lacs outstanding against him.
 
 d) The company has not taken any loan during the period covered under
 Audit from companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956. However, the
 company had taken Interest Free Secured Deferred Sales Tax Loan of
 Rs.732.02 lacs from PICUP, during previous years, (please refer to Note
 No.6(b) of schedule 17 Part B also). -
 
 e) In our opinion, the terms & conditions on which Loans referred to
 above had been taken are prima facie not prejudicial to the interest of
 the company; and
 
 f) The loan is interest free deferred sales tax loan and as per the
 terms and conditions of the loan, the repayment of the Principal amount
 has been started as per repayment schedule.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory and fixed assets and for sale of goods and
 services. During the course of our Audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 system.
 
 5.  a) According to the information and explanations given to us we are
 of the opinion that the particulars of contracts or arrangements that
 need to be entered into the register maintained under section 301 of
 the Companies Act 1956 have been so inserted.  b) In our opinion and
 according to the information and explanations given to us, the
 transactions made in pursuance of contracts and arrangements entered in
 the register maintained under section 301 of the Companies Act 1956 and
 exceeding the value of Rs. 5 lacs during the year for each party have
 been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 during the year under consideration.
 
 7.  In our opinion, the company has an adequate Internal Audit system
 commensurate with the size and the nature of its business.''
 
 8.  We have generally reviewed the books of accounts maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of the cost records under section 209(1)(d) of the
 Companies Act, 1956. We are of the opinion that prima facie the
 prescribed accounts and records are being maintained. We are not
 required for detailed examinations of the records maintained &
 accordingly, we have not examined the same in details.
 
 9.  According to the information and explanations given to us, and
 according to the records of the Company, the company is regular in
 depositing with appropriate authorities undisputed statutory dues
 including provident fund, investor education and protection fund,
 employees state Insurance, Income Tax, Tax Deducted at source,
 professional tax, sales tax, wealth tax, service tax, custom duty,
 excise duty, octroi charges, property tax, water tax, license fees,
 works contract tax, cess and other material statutory dues applicable
 to it.
 
 10 In our opinion, the company does not have accumulated losses at the
 end of Financial year 31st March, 2011.  The company has not incurred
 any cash losses during the financial year covered by our audit and in
 the immediately preceding Financial year.
 
 11 In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to the
 Financial Institutions / Banks.
 
 12 Since the company has not granted any loans or advances on the basis
 of security by way of pledge of shares, debentures and other
 securities, paragraph 4(xii) of the order is not applicable.
 
 13 As the Company is not a nidhi / mutual benefit fund / society,
 paragraph 4(xiii) of the order is not applicable.
 
 14 Since the company is not dealing or trading in shares, securities,
 debentures and other investments, paragraph 4(xiv) of the order is not
 applicable.
 
 15 Since the company has not given any guarantee for loans taken by
 others from bank / Financial Institutions, paragraph 4(xv) of the order
 is not applicable.
 
 16 As per records of the Company the Term Loans / Corporate Loans
 obtained by it during the period covered under audit have been applied
 for the purpose for which they were obtained.
 
 17 According to the information and explanation given to us and on an
 overall examination of the balance sheet of the company, we report that
 the company has not used any funds raised on short-term basis for
 long-term investments.
 
 18 According to the records of the company and the information and
 explanations provided by the management, 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 Since the company has neither issued any debentures nor has created
 any securities during the year, Paragraph 4 (xix) of the order is not
 applicable.
 
 20 . The company has not raised any money by Public issues during the
 period covered under audit.
 
 21 Based upon the audit procedures performed and the information and
 explanations given by the management, we report that no fraud on or by
 the company has been noticed or reported during the year.
 
 
                                                For A SACHDEV & Co.
 
                                              Chartered Accountants
                                      Firm Registration No. 001307C
 
                                                     Sd/-
 Place :    Noida                               (B K AGARWAL)
 Date  :   31st May, 2011                          PARTNER
 
                                             Membership No.90771