We have audited the attached Balance Sheet of M/s. VELAN HOTELS
 LIMITED, TIRUPUR as at 31st March, 2012 and also the Profit and Loss
 Account and the Cash Flow Statement 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.
 
 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 management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 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, a statement
 on the matters specified in paragraphs 4 and 5 of the said Order.
 
 (i) 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 ;
 
 (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 and subject to our remarks as contained above, the
 Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with
 by this report comply with the accounting standards referred in the
 Companies Accounting Standard Rules, 2006 read with Section 211 (3C) of
 the Companies Act, 1956 ;
 
 (v) In our opinion and based on information and explanations given to
 us, none of the directors is disqualified as on 31st March 2012, from
 being appointed as directors 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, read together with the
 Significant Accounting Policies and other Notes thereon, give, subject
 to Clause(iv) above, 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, 2012 ;
 
 (b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date ; and
 
 (c) in the case of Cash Flow Statement, of the cash flow for the year
 ended on that date.
 
 Annexure Referred to in Paragraph No. 3 of our Report of even date.
 
 (i) In respect of Fixed Assets :
 
 (a) The Company is maintaining proper records showing full particulars
 including quantitative details and situation of Fixed Assets.
 
 (b) The Fixed Assets have been physically verified by the management at
 reasonable intervals and we are informed that no material discrepancies
 have been noticed on such verification.
 
 (c) The Fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial portion of fixed assets of the Company.
 
 (ii) In respect of Inventories :
 
 (a) Stock of stores, provisions, crockeries, beverage, etc., have been
 physically verified by the management at reasonable intervals during
 the year.
 
 (b) In our opinion and according to the information 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 is maintaining proper records of inventory and no
 material discrepancies have been noticed on physical verification of
 inventory as compared to book records.
 
 (iii) (a) The Company has not granted any loan to companies, firms or
 other parties listed in the register maintained under section 301 of
 the Companies Act, 1956 and hence the provisions of clause 4(iii)(b),
 (c)&(d) are not applicable.
 
 (b) The company has taken loans (unsecured) from companies, firms, or
 other parties covered in the register maintained u/s 301 of the Act.
 
 1.  No. of Parties : 2
 
 2.  Aggregate amount : Rs. 28.31 Lakhs
 
 (c) In our opinion, the rate of interest and other terms and conditions
 are not prima facie prejudicial to the interest of the company.
 
 (d) The company is regular in the repayment of both the principal and
 the interest.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the company and the nature of its business for the
 purchase 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 control
 system.
 
 v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars
 
 of contracts and arrangements that need to be entered 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, the transactions during the year made in pursuance of
 contracts or arrangements entered in the Register maintained under
 Section 301 of the Companies Act, 1956, are at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) The company has not accepted any deposit from the public and hence
 clause 4(vi) of the Order is 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 for the products of the company under section 209(1)(d) of
 the Companies Act, 1956.
 
 (ix) In respect of statutory dues:
 
 (a) Except in the case of Provident Fund and Employees State Insurance,
 the company is regular in depositing the undisputed statutory dues
 including Income tax, Sales tax, Wealth tax, Service tax, Customs Duty
 and Cess and other statutory dues with appropriate authorities.
 
 (b) In our opinion and according to the information and explanations
 given to us, there are no disputed statutory dues including Income tax,
 Sales tax, Wealth tax, Service tax, Customs Duty and Cess as at the
 year end.
 
 (x) The company has not incurred cash losses in the financial year
 covered by our audit and in the immediately proceeding financial year.
 
 (xi) The Company has not defaulted in repayment of dues to Banks.
 
 (xii) In our opinion and 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, debentures and other
 securities.
 
 (xiii) In our opinion, the Company is not a Chit Fund or a Nidhi/Mutual
 Fund/Society and therefore, the provisions of clause 4(xiii) of the
 Companies (Auditor''s Report) Order, 2003 are not applicable to the
 company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, 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 (Auditor''s Report) Order,
 2003 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/financial institutions during the year.
 
 (xvi) During the year, term loans raised have been used for the purpose
 for which the loan is availed.
 
 (xvii) In our opinion and according to the information and explanations
 given to us and also on an overall examination of the Balance Sheet of
 the Company, the funds raised during the year on short term basis have
 not been used for long term investments.
 
 (xviii) In our opinion and 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, during the
 year.
 
 (xix) The company has not issued any debentures and hence clause 4(xix)
 of the Companies (Auditor''s Report) Order, 2003 is not applicable to
 the company.
 
 (xx) We have verified the end use of money raised by public issue as
 disclosed in the additional notes - point no (u) to the financial
 statement.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the company has been reported during the year.
 
 
 
 
                                             for P. S. Krishnan & Co.
                                                Chartered Accountants 
                                                         FRN. 001532S
 
                                                   (G. Krishnamurthi)
                                                              Partner
                                               (Membership No: 23896)
 
 Place: Tirupur 
 Date : 30.05.2012