1.  We have audited the attached Balance Sheet of THE SANDESH LIMITED
 (the Company) as at 31st March, 2011, 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
 Companys 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 (Auditors Report) Order, 2003 (the
 Order) 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 in paragraph 3
 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, proper books of accounts as required by law, have
 been kept by the Company so far as appears from our examination of
 those books;
 
 c.  The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with books of
 account of the Company;
 
 d.  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;
 
 e.  On the basis of written representations received from the
 directors, as on March 31, 2011 and taken on record by the Board of
 Directors, we report that none of directors is disqualified as on March
 31, 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 information and according to
 the explanations given to us, the said accounts read together with the
 Significant Accounting Policies and other 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:
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 company as at March 31, 2011;
 
 ii.  in the case of the Profit and Loss Account, of the profit of the
 company for the year ended on that date: and
 
 iii.  in case of the Cash Flow Statement, of cash flows for the year
 ended on that date.
 
 ANNEXURE TO AUDITORS REPORT [Referred to paragraph 3 of our report of
 even date]
 
 1.  In respect of its fixed assets.
 
 a.  The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 b.  As explained us, the fixed assets have been physically verified by
 the management once in a year which we consider reasonable having
 regard to the size of the company and the nature of its assets.
 According to the information and explanations given to us, no material
 discrepancies were noticed on such verification.
 
 c.  In our opinion, the Company has not disposed of substantial part of
 fixed assets during the year.
 
 2.  In respect of its inventories.
 
 a.  As explained to us, the inventories have been physically verified
 by management at reasonable intervals.
 
 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 were reasonable and adequate in relation to
 the size of the company and the nature of its business.
 
 c.  In our opinion and according to the information and explanations
 given to us, the company has maintained proper records of its
 inventories. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.
 
 3.  a.  In respect of loans granted to parties covered in the register
 maintained u/s 301 of the Companies Act, 1956.  According to the
 information and the explanations given to us, the company has not
 granted any loans or advances in the nature of loans, secured or
 unsecured to companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.  Consequently,
 requirement of clauses {iii (a) to (d)} of the paragraph 4 of the
 Companies (Auditors Report) Order, 2003 are not applicable.
 
 b.  In respect of loans taken from parties covered in the register
 maintained u/s 301 of the Companies Act, 1956.
 
 a.  The Company has taken loans from eighteen parties listed in the
 register maintained under section 301 of the Companies Act, 1956. The
 aggregate maximum amount involved was Rs. 11920.95 Lacs and year end
 balance was aggregating to Rs. 10 Lacs.
 
 b.  In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions of the
 loans obtained are not prima facie prejudicial to the interest of the
 Company.
 
 c.  In respect of the loan taken by the Company, interest payments are
 regular and principal amount is repayable on demand.
 
 4.  In respect of internal control.
 
 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 with regard to
 purchases of inventory, fixed assets and with regard to 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.  In respect of transactions need to be entered into a register
 maintained under section 301 of the Companies Act, 1956.
 
 a.  According to the information and explanations given to us, we are
 of the opinion that the particulars of all contracts or arrangements
 that need to be entered into the register maintained under section 301
 of the Companies Act, 1956 have been so entered.
 
 b.  In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of Rs. 5 Lacs in
 respect of any party during the year have been made at prices which are
 reasonable having regard to prevailing market prices at the relevant
 time.
 
 6.  In respect of deposits from public.
 
 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 within the meaning of sections 58A, 58AA or any other relevant
 provisions of The Companies Act, 1956 and the Companies (Acceptance of
 deposits) Rules, 1975. We are informed that, no order has been passed
 by the Company Law Board or National Company Law Tribunal or Reserve
 Bank of India or any Court or any other Tribunal.
 
 7.  In respect of internal audit system.
 
 In our opinion, the Company has an internal audit system commensurate
 with the size and nature of business.
 
 8.  In respect of maintenance of cost records.
 
 As informed to us, the maintenance of cost records has not been
 prescribed by the Central Government under clause (d) of sub section
 (1) of section 209 of the Companies Act, 1956, in respect of the
 activities carried by the Company.
 
 9.  In respect of statutory dues.
 
 a. According to the records of the Company, the Company is regular in
 depositing with appropriate authorities undisputed statutory dues
 including provident fund, employees state insurance, income tax, sales
 tax, wealth tax, service tax, custom duty and other material statutory
 dues applicable to it.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441A of the Companies Act, 1956,
 we are not in position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 b.  According to the information and explanations given to us, no
 disputed amounts payable in respect of income tax, sales tax, wealth
 tax, service tax and customs duty were in arrears, as at March 31, 2011
 for a period of more than six months from the date they became payable.
 
 c.  According to the information and explanation given to us, there are
 no dues of income tax, wealth tax, service tax and customs duty which
 have not been deposited on account of any dispute. In respect of sales
 tax, details of disputed dues which have not been deposited are given
 hereunder:
 
 Name of      Nature of    Amount    Period to which     Forum where
 the Statute the dues     (Rs. In
                            Lacs)    the amount relates  dispute is
                                                         pending
 
 Sales Tax 
 Act          Sales Tax     4.09      F.Y. 1995 – 96     VAT – Tribunal
 
 10.  In respect of accumulated losses and cash losses.
 
 The company does not have accumulated losses at the end of the
 financial year. The Company has not incurred cash losses during the
 financial year covered by audit and in the immediately preceding
 financial year.
 
 11.  In respect of dues to financial institution / banks / debentures.
 
 Based on our audit procedure and the information and explanations given
 by the management, we are of the opinion that the Company has not
 defaulted in repayment of dues to bank.
 
 12.  In respect of loans and advances granted on the basis of security.
 
 In our opinion and according to the information and explanation given
 to us, no loans and advances have been granted by the Company on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 13.  In respect of provisions applicable to Chit fund / nidhi / mutual
 benefit funds / societies.
 
 The Company is not a chit fund or a nidhi / mutual benefit fund /
 society. Therefore, the reporting requirement of clause 4(xiii) of the
 Companies (Auditors Report) Order 2003 is not applicable to the
 Company.
 
 14.  In respect of dealing or trading in shares, securities, debentures
 and other investments.
 
 In our opinion and according to the information and explanation given
 to us, the Company has maintained proper records of transactions and
 contracts in respect of trading in shares / units of mutual funds and
 timely entries have been made therein. All shares / units of mutual
 fund have been made by the Company in its own name.
 
 15.  In respect of guarantee given for loans taken by others.
 
 According to the information and explanations given to us, the Company
 has not given any guarantee for loans taken by others from banks or
 financial institutions.
 
 16.  In respect of application of term loans.
 
 The Company has not obtained term loan during the year.
 
 17.  In respect of fund used
 
 According to the information and explanations given to us and on an
 overall examination of the Balance Sheet of the Company, we are of the
 opinion that funds raised on short – term basis prima facie not been
 used for long term investment.
 
 18.  In respect of preferential allotment of shares
 
 During the year, the Company has not made preferential allotment of
 shares to parties and Companies covered in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 19.  In respect of securities created for debentures
 
 The Company has not issued any debentures during the year.
 
 20.  In respect of end use of money raised by public issues
 
 The Company has not raised any money by way of public issue during the
 year.
 
 21.  In respect of fraud
 
 According to the information and explanations given to us, no fraud on
 or by the Company has been noticed or reported during the course of our
 audit.
 
                                             For, MANUBHAI & Co.
 
                                          Chartered Accountants
 
                                 Firm registration no: 106041W
 
                                               (K. B. Solanki)
 
 Place:Ahmedabad                                      Partner
 
 Date :May 19, 2011                     Membership No. 110299