SQL Star International

1.  We have audited the attached Balance Sheet of SQL STAR
 INTERNATIONAL LIMITED as at 31st March 2009, the Profit and Loss
 Account and also 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 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.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 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 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) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account.
 
 (iv) 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.
 
 (v) On the basis of written representations received from the
 directors, as on 31st March 2009 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31 st March 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) 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 31 st March 2009;
 
 (b) in the case of the Profit and Loss Account, of the LOSS 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 to the Auditors Report
 
 (Referred to in paragraph 3 of our report of even date)
 
 i) a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets
 
 b) These fixed assets have been physically verified by the management
 at reasonable intervals which, in our opinion, is reasonable having
 regard to the size of the Company and the nature of its business and
 assets. No material discrepancies were noticed on verification.
 
 c) No substantial part of fixed assets has been disposed off during the
 year.
 
 ii) a) Inventories have been physically verified during the year by the
 management. In our opinion, the frequency of verification is
 reasonable.
 
 b) 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) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 book records have been properly dealt with in the books of accounts and
 were not material.
 
 iii) a) The Company has not granted secured/unsecured loan to a Company
 covered in the register maintained under section 301 of the Companies
 Act, 1956.
 
 b) The Company has taken unsecured loan from two companies covered in
 the register maintained under section 301 of the Companies Act,
 1956.The amount outstanding at the end of the year is Rs. 938.98 lakhs
 including interest of Rs. 68.98 lakhs.
 
 c) In our opinion, the rate of interest and other terms and conditions
 on which loans have been taken are not, prima facie, prejudicial to the
 interest of the Company.
 
 d) The Company is regular in repaying the principal amounts as
 stipulated however interest has not been paid from March, 2008 onwards.
 
 e) The Company has requested for waiver of interest by the lenders.
 
 iv) 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 purchases of inventory and fixed assets and for
 the sale of goods and services. During the course of our audit, we have
 not observed any continuing failure to correct major weaknesses in
 internal controls.
 
 v) The Company has not entered in to any contracts or arrangements with
 any parties referred to under Section 301
 
 of the Companies Act 1956.
 
 vi) The Company has not accepted deposits from public and therefore the
 provisions of section 58A, 58AA and
 
 other relevant provisions of the Companies Act, 1956 are not
 applicable.
 
 vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii) The Central Government has not prescribed the maintenance of cost
 records under Section 209 (1) (d) of the
 
 Companies Act, 1956
 
 ix) a) Undisputed statutory dues including Provident Fund, Income Tax,,
 Service Tax and Cess have not been regularly deposited with the
 appropriate authorities and there have been delays in a number of cases
 except in respect of Investor Education and Protection Fund,Employess
 State Insurance, Sales Tax and Wealth Tax.
 
 b) The arrears of statutory dues as at the last day of the Financial
 year outstanding for a period of more than six months from the day it
 is payable is detailed below:
 
 Name of the          Nature of          Amount     Period to which the
 Statute               Dues             Rs. lacs    amount relates
 Income Tax        TDS                  586,880/-       August,2008
 Income Tax        Interest on Delay   2,34,117/-       April to
                   remittance of TDS                    August 2008
 Office of the     Service Tax         2,080,611/-      June,2008
 Commissioner of
 Customsand        Service Tax         3,709,991/-      July,2008
 Central Excise,   Service Tax         2,730,576/-      August,2008
 Service Tax
 Division          Service Tax           474,755/-      September,2008
 
 Name of the        due date        Date of
 Statute                            payment
 Income Tax         07.09.2008
 Income Tax         07.09.2008
 
 Office of the      05.07.2008      30.05.2008
 Commissioner of
 Customs and        05.08.2008      30.05.2008
 Central Excise,    05.09.2008
 Service Tax
 Division           05.10.2008
 
 c) According to the information and explanations given to us, there are
 no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service
 Tax, Excise Duty and Cess which have not been deposited on account of
 any dispute other than the following:
 
 Name of the Statute        Nature of Dues Amount  Forum where 
                                           Rs.lacs  dispute is 
                                                      pending
 The Income Tax Act, 1961   Income Tax       71.47 Commissioner of
                                                   IncomeTax Appeals
 The Andhra Pradesh General  Sales Tax       21.65 Sales Tax Appellate
 Sales Tax Act, 1957                                Authorities
 Total                                       93.12
 
 x) The Company has accumulated losses, as at 31st March 2009. The
 Company has not incurred cash losses in the
 
 financial year under report or incurred cash loss in the immediately
 preceding financial year.
 
 xi) The Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders
 
 xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures
 
 and other securities
 
 xiii) The Company is not a chit fund or a nidhi / mutual benefit fund /
 society.
 
 xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments.
 
 xv) The Company has given Guarantee for loan obtained by International
 SQL Star Pte Ltd wholly owned subsidiary
 
 and the terms and conditions of the guarantees are prima-facie not
 prejudicial to the interest of the Company.
 
 xvi) The term loans have been applied for the purpose for which they
 were obtained.
 
 xvii) According to the information and explanations given to us and on
 overall examination of the financial statements
 
 of the Company as at 31st March, 2009, we report that funds raised on
 short-term basis have not been used for long-term investment.
 
 xviii The Company has not made preferential allotment of shares given
 to parties and Companies covered in the
 
 register maintained under section 301 of the Companies Act, 1956
 
 xix) The Company has not issued any debentures during the year.
 
 xx) The Company has not raised money by public issues during the year
 
 xxi) 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 Maharaj N. R. Suresh & Co.,
                                                Chartered Accountants
                                                        N. R. Suresh
 Place : Hyderabad                                            Partner
 Date  : June 30, 2009                                   M. No. 21661