We have audited the attached Balance Sheet of the SER INDUSTRIES
 LIMITED, Chikkakuntanahalli Village, Kodiyalakarenahalli Post, via
 Bidadi, Ramanagar District, Karnataka - 562 109 as at 31st March, 2011
 and also the Profit and Loss Account and the 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 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 of
 our opinion.
 
 As required by the Companies [Auditor''s Report] Order, 2003 (as
 amended) 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 paragraph 4 and
 5 of the said order to the extent applicable.  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
 audit.
 
 b.  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 the
 books.
 
 c.  The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of accounts.
 
 d.  In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in section 211 [3C] of Companies Act,
 1956.
 
 e.  On the basis of the written representations received from the
 Directors, 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.
 
 f.  In our opinion and as per the information and explanations given to
 us, the said Balance Sheet and the Profit and Loss Account, read
 together with the notes thereon, give the information required by the
 Companies Act, 1956, in the manner so required give a true and fair
 view in conformity with the accounting principles generally accepted in
 India.
 
 a.  In the case of Balance Sheet, of the state of affairs of the
 Company as on 31st March 2011.
 
 b.  In the case of the Profit and Loss Account of the Loss of the
 Company for the year ended on that date; and
 
 c.  In the case of the Cash Flow statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS'' REPORT TO THE
 MEMBERS OF THE SER INDUSTRIES LIMITED FOR THE YEAR ENDED 31st MARCH
 2011
 
 1.  a.  The Company has maintained proper records showing full
 particulars including quantitative details and location of the fixed
 assets.
 
 b.  There is a regular program of physical verification, which in our
 opinion is reasonable, having regard to the size of the Company and the
 nature of fixed assets.  No materials discrepancies have been noticed
 in respect of the assets physically verified during the period.
 
 c.  The Company has not disposed off substantial part of its fixed
 assets during the year.
 
 2.  a.  Inventories (Stores and Spares) have been physically verified
 during the year by the Management at regular intervals.  In our opinion
 the frequency of verification is reasonable.
 
 b.  In our opinion and according to the information given to us, the
 procedures of physical verification of inventory ( Stores and Spares)
 followed by the Management are reasonable and adequate in relation to
 the size of the Company and nature of its business.
 
 c.  The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification
 
 3.  a.  As informed to us, the Company has not granted any loans,
 secured or unsecured to the companies, firms or other parties covered
 in the register maintained u/s 301 of the Companies Act.  
 
 e.  As informed to us, the Company has not taken any loans, secured or
 unsecured from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act.  As the
 company neither accepted nor granted any loan, sub clause (b), (c),
 (d), (f) and (g) of this clause are not applicable.
 
 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 with regard to purchase of stores and spares, plant and
 machinery, equipment and other assets and with regard to freight
 collection and payment.  There is no continuing failure to correct
 major weaknesses in internal control.
 
 5.  a.  All the transactions with parties covered under section 301 of
 the Companies Act, 1956 have been properly entered, if and when
 transaction takes place, in the register maintained under section 301
 of the Act.
 
 b.  In our opinion and according to the information and explanations
 given to us, the Company has not entered into transactions of purchase
 of goods, materials or services and sale of goods, materials or
 services, the aggregate value of which exceeding rupees five lakhs,
 made in pursuance of contracts or arrangements entered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 6.  The Company has not accepted any deposits from the public during
 the year.
 
 7.  The Company has an internal audit system and in our opinion, the
 same is commensurate with the size and nature of its business.
 
 8.  To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of subsection (1) of section 209 of the Companies Act, 1956.
 
 9.  a.  The Company is generally regular in depositing undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees'' State Insurance, income Tax, Wealth Tax,
 Service Tax with appropriate authorities.  The Company is not covered
 under the provisions of Custom Duty, Excise Duty and Sales Tax.
 
 b.  According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees
 State Insurance, Income Tax, Wealth Tax, Service Tax, Sales Tax, Cess
 and other undisputed statutory dues were outstanding at the year end
 for a period of more than six months from the date they became payable,
 except as disclosed below which has not been deposited by the Company
 on account of dispute.
 
 Name of the        Nature of         Amount
 Statute            the Due           Due(Rs)
 
 Income Tax Act.    Income Tax        137.76 lakhs
 
 Name of the         Period to which     forum where
 Statue              the amount relates  dispute pending
 
 Income Tax Act.     A.Y. 2008-09        CIT (Appeals)
 
 10.  The Company has incurred cash loss during the financial year under
 review and in the financial year immediately preceding the financial
 year also.  The Company does not have accumulated losses at the end of
 the financial year under review.
 
 11.  The Company has not obtained any credit facility from any banks /
 financial institutions nor has any outstanding debentures.
 
 12.  According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities,
 
 13.  In our opinion, the Company is not a chit fund or a nidhi / mutual
 benefit fund / society.  Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 14.  The Company has maintained proper records of the transactions and
 contracts for trading / dealing in shares and securities and timely
 entries has been made therein
 
 15.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 16.  The Company did not have any term loan outstanding during the
 year.
 
 17.  As the Company has not raised any funds during the year under
 review, no comments are made on utilization of short term borrowings
 for long term use and vice versa.
 
 18.  The Company has not made any preferential allotment of shares
 during the year.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by way public issue during
 the year.
 
 21.  Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 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 course of our audit.
 
 
                                            For G. V. Sunder & Co.
                                            Chartered Accountants 
                                            Firm Regn. No. 007248S
 
                                            G. V. Sunder
                                            Partner 
                                            Membership No. 019190
 
 Place : Bangalore 
 Date  : 24-05-2011