1.  We have audited the attached Balance Sheet of SRM Energy Limited as
 at March 31, 2011 and also the Profit and Loss Account of the Company
 for the year ended on that date and Cash Flow Statement of the Company
 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 misstatements. 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 (the Act), we enclose in the
 Annexure a statement on the matters specified in paragraphs 4 and 5 of
 the said Order.
 
 4.  Without qualifying our opinion we draw attention to Note B-13 of
 the Notes to Accounts in the financial statements with regard to the
 preparation of the financial statements on a going concern assumption.
 The Company incurred a net loss of Rs. 4,054,549 during the year ended
 31.3.2011 and as of that date, the Companys net worth has been
 substantially eroded. The companys ability to continue as a going
 concern is dependent on the factors mentioned in note therein and no
 adjustment have been made accompanying financial statements.
 
 5.  Further to our comments in paragraph 3 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 the section 211
 of the Companies Act, 1956
 
 (v) On the basis of the 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 the directors are 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.
 
 (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 case of the Balance Siheet, of the state of affairs of the
 company as at March 31, 2011;
 
 (b) In case of the profit and loss account, of the loss for the year
 ended on that date; and
 
 (c) In case of the Cash flow statement, of the cash flows for the year
 ended on that date.
 
 Referred to in paragraph 3 of the Auditors Report of even date to the
 members of SRM Energy Ltd. on the financial statements for the year
 ended 31st March 2011
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets of the Company have been physically verified by
 the management and no material discrepancies between the book records
 and the physical inventory have been noticed. In our opinion the
 frequency of verification is reasonable.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the company during the year.
 
 (ii) The Company did not carry any inventory during the year hence
 clause 4(ii)(a), 4(ii)(b) and
 
 4(ii) (c) of the Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (Hi) (a) As informed, the Company has not granted any loans, secured or
 unsecured to companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.  and hence
 clauses 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the Companies (Auditors
 Report) Order, 2003 (as amended) are not applicable to the Company.
 
 (b) As informed, the Company has taken interest free unsecured loan
 from one party covered in the register maintained under section 301 of
 the Companies Act, 1956. The maximum amount involved during the year
 was Rs. 416,304,851 and the year-end balance of loan taken from such a
 party was Nil.
 
 (c) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (d) In respect of the above loan there are no stipulations as to
 repayment. However the loan has been converted into share application
 money during the year.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there exists an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of fixed assets. During the course of
 our audit, no major weakness has been noticed in the internal control
 system in respect of these areas.  During the course of our audit, we
 have not observed any continuing failure to correct weakness in the
 aforesaid internal control system of the Company.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (v\) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) In our opinion and according to the information and explanation
 provided to us, the Central Government has not prescribed the
 maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Act.
 
 (ix) (a) Undisputed statutory dues of income tax have not been
 regularly deposited with the appropriate authorities and there have
 been delay in many cases. The provisions relating to employees state
 insurance and provident fund are not applicable to the company.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441 A of the Companies Act, 1956,
 we are not in a position to comment upon he regularity or otherwise of
 the Company in depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of income-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.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441 A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax account of any dispute,are as follows:
 
 Name of the   Nature of    Amount (Rs)    Period to     Forum where
 
 statute         dues                      which the     dispute
 
                                          amount relates is pending
 
 Income Tax 
 
 Act ,1961     Income Tax  Rs.184,962     A.Y 2006-2007  CIT(Appeals) 14
 
 Income Tax 
 
 Act ,1961     Income Tax  Rs. 305,352    A.Y 2005-2006  CIT(Appeals) 14
 
 Income Tax 
 
 Act ,1961     Income Tax  Rs. 462,795    A.Y 2004-2005  CIT(Appeals) 14
 
 Income Tax 
 
 Act ,1961     Income Tax  Rs. 113,813    A.Y 2003-2004  CIT(Appeals) 14
 
 (x) The Companys accumulated losses at the end of the financial year
 are more than fifty percent of its net worth and it has incurred cash
 losses during the financial year covered by our audit and the
 immediately preceding financial year.
 
 (xi) The Company has not borrowed any amount during the year from
 banks, financial institution or debenture holders. Hence the provisions
 of clause 4(xi) of the Companies (Auditors Report) Order, 2003 (as
 amended) are not applicable to the Company.
 
 (xii) 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.
 
 (xiii) 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 (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company
 
 (xv) In our opinion and 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 during the year.
 
 (xvi) The Company has not obtained any term loans.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that funds of Rs. 15,860,565 raised on short-term basis have been used
 for long-term investment.
 
 (xviii) According to the information and explanation given to us the
 Company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under section 301 of the
 Act.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company did not raise any money by way of public issue during
 the year.
 
 (xxi) During the course of our examination of the books and records of
 the company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                                 For Haribhakti & Co.
 
                                                Chartered Accountants 
 
                                                       FRN NO.103523W
 
                                                         Sarah George
 
                                                              Partner 
 
                                                  Membership No.45255
 
 Place: Mumbai.  
 
 Date: April 18,2011.