We have audited the attached Balance Sheet of M/s. Vatsa Education
 Limited as at 31st July, 2004 and the Profit and Loss Account 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.
 
 1. 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 the 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 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
 hereto 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 in paragraph
 (2) 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
 these books.
 
 c) The balance sheet and Profit & 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, Profit & Loss Account and Cash
 Flow Statement dealt with by this report comply with the mandatory
 Accounting Standard referred in sub section (3C) of section 211 of the
 Companies Act, 1956.
 
 e) We are unable to comment as we have not received written
 representation, from the Directors of the company, as on 31st July,
 2004, regarding disqualification as a directors of the company in terms
 of clause (g) of sub-section (1) of section 274 of the Companies Act.
 1956.
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said accounts read together with the
 Significant Accounting Policies and other notes thereon give the
 information required by the Companies Act, 1956, in the manner so
 required, and present a true and fair view, in conformity with the
 accounting principles generally accepted in India :
 
 (i) in the case of the Balance Sheet, of the State of Affairs of the
 Company as at 31st July, 2004 and,
 
 (ii) in the case of the Profit & Loss Account of the Profit of the
 Company for the Year ended on that date.
 
 (iii) in the case of cash flow statement of the cash flows for the year
 ended on that date.
 
                                              FOR A. R. VISHWAKARMA CO.
                                                  Chartered Accountants
 
 Place : Kalyan                                       A. R. VISHWAKARMA
 Date : 24th September, 2004                                 Proprietor
 
 ANNEXURE TO THE AUDITORS REPORT
 
 1. In respect of its fixed assets :
 
 a. The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets on the
 bases of available information.
 
 b. As explained to us, the fixed assets have been physically verified
 by the management during the year in a phased periodical manner, which
 in our opinion is reasonable, having regard to the size of the Company
 and nature of its assets. No material discrepanicies were noticed on
 such physical verification.
 
 c. In our opinion, the Company has not disposed of substantial part of
 fixed assets during the year and the going concern status of the
 Company is not affected.
 
 2. In respect of its inventories :
 
 a. As explained to us, Inventories have been physically verified by the
 management at regular intervals during the year.
 
 b. In our opinion and according to the information and explanation and
 explanations given to us, 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 has maintained proper records of inventories. As
 explained to us, there were no material discrepancies noticed on
 physical verification of inventory as compared to the book records.
 
 3. In respect of loans, secured or unsecured, granted or taken by the
 Company to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 a. The Company has not granted loans and has not taken loans from the
 parties covered in the register maintained u/s. 301 of the Companies
 Act, 1956.
 
 b. In our opinion and according applicable and other terms and
 conditions are not prima facie prejudicial to the interest of the
 Company.
 
 c. In respect of loans granted by the Company to one party, the amount
 has been repaid of loans granted by the Company to one party, the
 amount has been repaid during the year. In respect of the other party,
 a wholly owned subsidiary of the Company, the loan is interest free and
 is repayable on demand. In respect of loans taken by the Company, the
 interest payments are regular and the principal amount is repayable on
 demand.
 
 d. There is no overdue amount in respect of loans taken by the Company.
 In respect of loans given by the Company, these are repayable on demand
 and therefore the question of overdue amounts does not arise.
 
 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 for the purchase of inventory, fixed assets and also for the
 sale of goods. During the course of our audit, we have not observed any
 major weaknesses in internal controls.
 
 5. In respect of transactions covered under Section 301 of the
 Companies Act, 1956.
 
 a. In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements, that needed to be entered into in the register maintained
 under Section 301 of the Companies Act, 1956 have been so entered.
 
 b. In our opinion and according to the information and explanations
 given to us, there are no transactions in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act 1956 aggregating during the year to Rs. 500000/- or
 more in respect of any party.
 
 6. The Company has not accepted any deposits from the public.
 
 7. In our opinion, the internal audit system of the Company is
 commensurate with its size and nature of its business.
 
 8. The Central Government has prescribed maintenance of Cost Records
 under Section 209(1)(d) of the Companies Act, 1956 in respect of
 certain manufacturing activities of the Company. We have broadly
 reviewed the accounts and records of the Company in this connection and
 are of the opinion, that prima facie, the prescribed accounts and
 records have been made maintained. We have not, however, made a
 detailed examination of the same.
 
 9. In respect of statutory dues :
 
 a. According to the records of the Company, undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees' State Insurance, Income-Tax, Sales tax, Wealth Tax, Customs
 Duty, Excise Duty, Cess and other statutory dues have been generally
 regularly deposited with the appropriate authorities.  According to the
 information and explanations given to us, no undisputed amounts payable
 in respect of the aforesaid dues were outstanding as at 31st July 2004
 for a period of more than six months from the date of becoming payable.
 
 b. There are no undisputed statutory dues.
 
 10. The Company has no accumulated losses and has not incurred any cash
 losses during the financial year covered by our audit or in the
 immediately preceding financial year.
 
 11. Based on our audit procedures and according to the information and
 explanation given to us, we are of the opinion that the Company has not
 defaulted in repayment of dues to financial institutions, banks or
 debenture holders.
 
 12. In our opinion and according to the information and explanation
 given to us, no loans and advances have been granted by the Company 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. Thereof, clause-4 (xiii) of the Companies
 (Auditor's Report) Order 2003 is not applicable to the Company.
 
 14. The Company has maintained proper records of transactions and
 contracts in respect of trading in securities, debentures and other
 investments and timely entries have been made therein. All shares,
 debentures and other investments have been held by the Company in its
 own name.
 
 15. The Company has given guarantees for loans taken by other from
 banks or financial institutions.  According to the information and
 explanations given to us, we are of the opinion that the terms and
 conditions thereof are not prima-facie prejudicial to the interests of
 the Company.
 
 16. The Company has not raised any new term loans during the year. The
 term loans outstanding at the beginning of the year were applied for
 the purposes for which they were raised.
 
 17. According to the information and explanations given to us and on an
 overall examination of the Balance Sheet of the Company, we are of the
 opinion that the Company has not utilized any amount from short term
 sources towards repayment of long-term borrowings and acquisition of
 fixed assets.
 
 18. During the year, 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.
 
 19. The Company has not issued debentures so the question of creating
 securities does not arise.
 
 20. The Company has not raised any money by way of public issue during
 the year.
 
 21. In our opinion and according to the information and explanations
 given to us, no fraud on or by the Company has been noticed or reported
 during the year, that causes the financial statements to be materially
 misstaked.
 
                                              FOR A. R. VISHWAKARMA CO.
                                                  Chartered Accountants
 
                                                      A. R. VISHWAKARMA
                                                             Proprietor
 
 Place : Kalyan
 Date : 24th September, 2004