We have audited the attached Balance Sheet of SOUTHERN ONLINE
 BIO TECHNOLOGIES LTD as at 31st March, 2011 and also the Profit & Loss
 Account for the year ended on the date annexed thereto and the cash
 flow statement for the year ended on that date. 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 statement. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall statement
 presentation. We believe that our audit provides a reasonable basis of
 our opinion.
 
 As required by the Companies (Auditors Report) Order 2003 and as
 amended by the
 
 Companies (Auditor''s Report)(Ainendment) Order 2004, issued by the
 Central Government of India in terms of the 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.
 
 Further to our comments in the Annexure referred to above, we report
 that:
 
 (i) 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,
 
 (ii) 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
 those books;
 
 (iii) TheBa lance Sheet & Profit & LossAccount dealt with by this
 report are in agreement with the books of account
 
 (iv) In our opinion, the Balance Sheet, Profit & Loss Account dealt
 with by this report comply with the Accounting standards referred to in
 sub-section (3C) of Section 211 of Companies Act, 1956 ,
 
 (v) On the basis of written representations received from the
 Directors, as 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 Director in terms of clause(g)
 of sub- section(l) of section 274 of the Companies Act,1956 ;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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;
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 (b) In the case of the Profit & Loss Account, of the Profit for the
 vear ended on that date;
 
 And
 
 (c) In the case of the Cash Flow, of the cash flows for the year ended
 on that date;
 
 ANNEXURE TO THE AUDITORS REPORT
 
 I. (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets.
 
 (b) As explained to us, the fixed assets have been physically verified
 by the management at reasonable intervals and no material discrepancies
 between the book records and the physical inventory have been noticed
 on such verification.
 
 (c ) The Inventory has not disposed off substantial part of the Fixed
 Assets during the year.
 
 (a) The Company has been physically verified during the year and in our
 opinion, the frequency of verification is reasonable.
 
 (b) In our opinion, the procedures of physically verification of
 inventory 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 and as
 explained to us, no material discrepancies were noticed on physical
 verification of stocks as compared to book records.
 
 III, (a) The Company has not granted any loans, secured or unsecured to
 Companies, Firms or other Parties covered in the register maintained
 LT/ s.301 of the Companies Act, 1956.
 
 (b) As the Company has not granted any loans, the clause of whether the
 rate of interest & other terms and conditions on which loans have been
 granted to parties listed in the register maintained under section 301
 is prejudicial to the interest of company is not applicable.
 
 (c) As no loans are granted by company the clause of receipt of
 interest & principal amount from parties is not applicable to the
 company.
 
 (d) Mo loans have been granted to Companies, Firms & other parties
 listed in the register U/s.3Dl of the Companies Act, 1956, hence
 overdue amount of more than rupees one lac does not arise and the
 clause is not applicable.
 
 (e) The Company has not taken loans, secured or unsecured from
 Companies, and other Parties covered in the register maintained U/s.301
 of the Companies Act, 1956.
 
 (f) As the company has not taken any loans, the clause of whether the
 rate of interest &. other terms and conditions on which loan have been
 taken from parties listed in the register maintained under section 3D1
 is prejudicial to the interest of company, is not applicable.
 
 (g) As no loans are taken by the company, the clause of repayment of
 interest & principle amount to parties, is not applicable to the
 company.
 
 IV.  In our opinion and according to the information and explanations
 given to us, there are generally adequate internal control systems
 commensurate with the size of the company and the nature of its
 business with regard to purchase of Inventory & fixed assets and for
 sale of goods and services. There is no continuing failure by the
 company to correct any major weaknesses in internal control.
 
 V.  a) In our opinion according to the information and explanations
 given to us, since no contracts or arrangements referred to in section
 301 of the companies Act, 1956 have been made by the company in respect
 of any party in the financial year, the entry in the register u/s 301
 of the companies act 1956 does not arise.
 
 b) According to the information and explanations given to us, as no
 such contracts or agreements made by the company, the applicability of
 the clause of charging the reasonable price having regard to the
 prevailing market prices at fJie reverent time does not arise.
 
 VI. The Company has not accepted any deposits from the public and hence
 the applicability of the clause of directives issued by the Reserve
 Bank of India and provisions of section 58A, 58AA or any other relevant
 provisions of the Act and the rules framed there under does not arise.
 As per information and explanations given to us the order from the
 Company Law Board or National Company Law Tribunal or Reserve Bank of
 India or any Court or any other Tribunal has not been received by the
 Company
 
 VII. In our opinion, the company is having internal audit system,
 commensurate with its size and nature of its business.
 
 VIII. In respect of the Company, the Central Government has not
 prescribed maintenance of cost records under clause (d) of sub-section
 (1) of section 209 of the Companies Act, 1956.
 
 IX.  a) The Company is regular in depositing statutory dues including
 PF, Income Tax, Sales Tax, Excise Duty, Cess and any other statutory
 dues with the appropriate authorities and at the last of the financial
 year there were no amounts outstanding which were due for more than 6
 months from the date they became payable.
 
 b) According to the information and explanations given to us, no
 undisputed amounts are payable in respect of PF, Income Tax, Sales Tax
 , Excise Duty , Cess and any other statutory dues as at the end of the
 period, for a period more than six months from the date they became
 payable.
 
 X.  The Company has been registered for a period of not less than 5
 years, and the company has no accumulated losses at the end of the
 financial year and the company has not incurred cash losses in this
 financial year and in the immediately preceding financial year.
 
 XI.  According to information and explanations given to us, the Company
 has not defaulted in repayment of dues to financial Institutions or
 banks.
 
 XII. According to the information and explanations given to us, the
 Company has not granted any loans or advances on the basis of security
 by way of pledge of shares, debentures and other securities and hence
 the applicability of the clause regarding maintenance of adequate
 documents in respect of loans does not arise.
 
 XIII, This clause is not applicable to this Company as the Company is
 not covered by the provisions of special statute applicable to Chit
 Fund in respect of Nidhi/Mutual Benefit Fund/Societies.
 
 XIV. According to the information and explanations given to us, tiie
 company is not dealing or trading in shares, securities, Debentures and
 other investments and hence the provisions of clause 4(xiv) of the
 Companies (Auditor''s Report) Order 2003, are not applicable to the
 Company,
 
 XV According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken hy others trom
 Banks or Financial Institutions and hence the applicability of this
 clause regarding terms and conditions which are prejudicial to the
 interest of the company does not arise.
 
 XVI. According to the information and explanations given to us, the
 Term Loans were applied by the company for the purpose for which the
 loans were obtained.
 
 XVII, According to the information and explanations given to us, no
 funds are raised by the Company on short-term basis, f lence the clause
 of short term funds being used for long-term investment does not arise.
 
 XVIII.  According to the information and explanations given to us, 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 and the price at which shares have been issued
 is not prejudicial to the interest of the Company.
 
 XIX.  According to the information and explanations given to us, the
 company does not have any debentures and hence the applicability of the
 clause regarding the creation of security or charge in respect of
 debentures issued does not arise.
 
 XX.  According to information and explanations given to us, the company
 has not raised money by way of public issues during the year; hence the
 clause regarding the disclosure by the management on the end use of
 money raised by Public Issue is not applicable.
 
 XXI. According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the year
 under audit.
 
                                                  For P. MURALI & CO.,
                                                 CHARTERED ACCOUNTANTS
                                                          FRN: 007257S
 
 Place : Hyderabad                                P. Murali Mohana Rao
 Date  : 30.05.2011                                            Partner