We have audited the attached Balance Sheet of SWAN ENERGY LIMITED as at
 31st March, 2011 and the Profit and Loss Account and also the Cash Flow
 Statement of the Company for the year ended 31st March, 2011, 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.
 
 1.  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.
 
 2.  As required by the Companies (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (together the Order), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of ''The Companies Act 1956'' of
 India (the ''Act'') and on the basis of such checks of the books and
 records of the Company as we considered necessary and appropriate and
 according to the information and explanations given to us during the
 course of audit, we enclose in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the said Order.
 
 3.  Further to our comments in the Annexure referred to 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 purpose of our
 audit;
 
 b.  In our opinion, proper books of accounts as required by law have
 been kept by the Company so far as it appears from our examination of
 those books.
 
 c.  The Balance Sheet, the Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  In our opinion, the Balance Sheet, the Profit and Loss Account and
 Cash Flow Statement dealt with by this report are in compliance with
 the Accounting Standards (AS) referred to in Section 211 (3C) of the
 Companies Act, 1956.
 
 e.  On the basis of information and explanations given to us and
 representations received from the directors of the Company and taken on
 record by the Board of Directors, we report that no director is
 disqualified from being appointed as director of the Company under
 clause (g) of sub section (1) of Section 274 of the Companies Act,
 1956.
 
 4.  In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements, read with
 note No. B-6 of Schedule 12, relating to disclosure of the amount
 payable to small scale industrial undertakings, 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 the Company''s
 affairs as at 31st March, 2011;
 
 (b) In the case of the Profit & Loss Account, of the Profit of the
 Company for the year ended on that date,
 
 (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 (2) 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.  According to the information and explanation given to us, the
 Company has formulated the regular program of verification by which all
 the assets of the Company are verified in a phase manner, which in our
 opinion, is reasonable having regard to the size of the Company and
 nature of its assets and no material discrepancies were noticed.
 
 c.  According to the information and explanation given to us,
 substantial part of fixed assets has not been disposed of by the
 Company during the year
 
 (Ii) a. As explained to us, the management has conducted physical
 verification of traded items at reasonable Intervals during the year.
 In respect of land as stock in trade, we are informed that verification
 has been conducted as to the area and title of the land.
 
 b.  In our opinion and according to the information and explanation
 given to us, the procedure of physical verification of traded items and
 stock in trade followed by the management are reasonable and adequate
 in relation to the size of the company and nature of its business.
 
 c.  On the basis of examination of inventory records, in our opinion,
 the Company has maintained proper records of inventory, the
 discrepancies noticed on verification between the physical stock and
 book records were not material and the same has been properly dealt
 with in the books of accounts.
 
 (Iii) a. During the year, the company has availed loan of Rs. 1,610
 lakhs from a Company covered in the Register maintained u/s. 301 of the
 Companies Act, 1956.
 
 During the year, the Company has granted loan of Rs. 820 lakhs to a
 Company covered in the Register maintained u/s. 301 of the Companies
 Act, 1956.
 
 b. In our opinion, the rate of interest and other terms and conditions
 of loan taken by the Company are not prima facie prejudicial to the
 interest of the Company. Repayment is regular.
 
 (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 purchase of inventory/material, fixed assets and
 for the sale of goods/flats/offices and services. Further on the basis
 of our examination of books and records of the Company and according to
 the information and explanation given to us, we have neither come
 across nor have been informed of any continuing failure to correct
 major weaknesses in the aforesaid internal control procedures
 
 (v) In our opinion and according to the information and explanations
 given to us, there are no transactions of
 
 purchase of goods and materials and sale of goods, materials and
 services aggregating during the period to Rs.  5,00,000 or more in
 respect of each party, in pursuance of contracts or arrangements
 entered in the register maintained Under Section 301 of the Companies
 Act, 1956.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any
 
 deposits from the Public to which the directives issued by the Reserve
 Bank of India and provisions of Section 58A and Section 58AA of the
 Companies Act 1956 and the Rules made there under are applicable.
 
 (Vii) In our opinion, the Company has an Internal Audit System
 commensurate with the size and nature of its business.
 
 (viii) As informed to us, for the present business activities of the
 Company, the maintenance of Cost records under
 
 Section 209 (1) (d) of the Companies Act, 1956, is not required.
 
 (Ix)a. According to the information and explanation provided to us, the
 company is generally regular in depositing with appropriate authorities
 undisputed statutory dues including Provident Fund, Investor Education
 and Protection Fund, Income Tax, Value Added Tax, Wealth tax, Excise
 duty, Cess and other material statutory dues applicable to it.
 
 b. According to the information and explanations given to us, there are
 no dues of Sales Tax, Service tax, Custom Duty, Wealth Tax, Excise duty
 or cess outstanding on account of any dispute, other than disputed
 Income tax demand as under:
 
 Sr.  
 No. Assessment  Nature of Dues   Amount (Rs. In Lacs)   Forum where case 
     Year                                                is pending 
 
 1.  2003-04     Income tax             16.50                 ITAT
 
 2.  2006-07     Income tax            343.20                 ITAT
 
 (X) As at the balance sheet date, the company does not have any
 accumulated losses. The company has not incurred cash losses during the
 year under report, and has also not incurred cash loss in the preceding
 financial year.
 
 (Xi) According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to banks and financial
 institutions during the year.
 
 (Xii) According to the information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debenture and other securities.
 
 (Xiii) According to the information and explanations given to us and in
 our opinion, the Company is not a chit fund or nidhi/ mutual benefit
 fund/ society. Therefore, the provisions of clause 4 (xiii) of the
 order are not applicable to the Company.
 
 (Xiv) According to the information and explanations given to us, the
 Company has dealt in and/or traded in shares, securities, debentures
 and other investments during the year. Proper records have been
 maintained of the transactions and timely entries have been made
 therein. The investments have been held by the Company in its own name.
 
 (Xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loan taken by others from bank
 or financial institution.
 
 (Xvi) In our opinion and according to the information and explanation
 given to us, the Company had applied the term loans for the purpose for
 which the loan was obtained.
 
 (Xvii) In our opinion and according to the information and explanation
 given to us and on an overall examination of the Balance Sheet and Cash
 Flow Statement of the Company, we report that no funds raised on the
 short term basis have been utilized for long term investment.
 
 (Xviii) According to the information and explanations given to us, the
 Company had not made any preferential allotment of shares to parties
 and companies covered in the Register maintained U/s. 301 of the
 Companies act 1956.
 
 (Xix) According to the information and explanations given to us, the
 Company has not issued any secured debentures, therefore the provisions
 of clause (xix) of the order are not applicable to the Company.
 
 (XX) During the period covered by our audit report, the Company has not
 raised any money by way of public issue, therefore the provisions of
 clause (xx) of the order are not applicable to the Company.
 
 (XXi) To the best our knowledge and belief, according to the
 information and explanation given to us and based on the audit
 procedures performed, we report that no material fraud on or by the
 Company has been noticed or reported during the course of our audit.
 
                                               For V. R. Renuka & Co.
 
                                                Chartered Accountants
  
                                        Firm Registration No. 108826W
 
                                                         V. R. Renuka
 
                                                           Proprietor
 
 Mumbai, 12th August 2011                                  M.N. 32263