1) We have audited the attached Balance Sheet of Zicom Electronic
 Security Systems Limited as at March 31, 2011, related Profit and Loss
 Account and the Cash Flow statement for the year ended on that date
 annexed thereto. These financial statements are responsibility of the
 Company''s management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2) 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.
 
 3) As required by the Companies (Auditors'' Report) Order, 2003 as
 amended by the Companies (Auditors'' Report) Amendment Order, 2004
 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 to the extent applicable to the company during the year.
 
 4) Further to our comments in the Annexure referred to in Para 3 above,
 we report as follows:
 
 a) 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;
 
 b) In our opinion, proper books of account 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 the 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
 the 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;
 
 e) On the basis of 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 is 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;
 
 f) In our opinion and to the best of our information and according to
 the explanations provided to us, the said financial statements, read
 with Significant Accounting Policies and Notes forming part of the
 Accounts in Schedule – 16 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:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 iii) in case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure referred to the Auditors'' Report (Referred to in paragraph 3
 of our report of even date)
 
 In terms of the information and explanations given to us and the books
 and records examined by us and on the basis of such checks as we
 consider appropriate, we further report as under:
 
 1) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 As explained to us, the fixed assets have been physically verified by
 the management as per a phased programme of verification. In our
 opinion, the frequency of verification is reasonable having regard to
 the size of the Company and the nature of its fixed assets. The
 discrepancies noticed on such verification were not material and have
 been properly dealt with in the Company''s books of accounts.
 
 The Fixed assets disposed off during the year by the Company were not
 substantial and therefore do not affect the going concern assumption.
 
 2) As explained to us, the management has conducted physical
 verification of inventory at reasonable intervals during the year.
 
 In our opinion, the procedures of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 In our opinion, the Company is maintaining proper records of inventory.
 The discrepancies noticed on such verification between physical
 inventories and the book records which were material in relation to the
 operations of the Company have been properly dealt with in the
 Company''s books of account.
 
 3) According to the information and explanations provided to us and as
 per the records examined by us, during the year, the Company has
 granted unsecured loan to a bodies corporate and recovered in full
 unsecured loans given in earlier years from three other bodies
 corporate representing the parties listed in the register maintained
 under Section 301 of the Companies Act, 1956. The aggregate maximum and
 closing balances of these parties are Rs. 12,367.85 Lacs and Rs. 1,313.12
 Lacs respectively.
 
 In our opinion, the rate of interest wherever applicable and other
 terms and conditions of the aforesaid loans are not prima facie
 prejudicial to the interests of the Company.
 
 Based on the information and explanations provided to us, in our
 opinion, the parties to whom the above loans were given are (i) regular
 in repayment of principal and interest, as applicable (ii) there was no
 overdue principal as at the close of the year and (iii) reasonable
 steps were taken by the Company to recover the loans.
 
 During the year, the Company has not taken any loan secured or
 unsecured from the parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 4) In our opinion and according to the information and explanations
 provided to us, having regard to the explanations that some of the
 items of plant and equipments purchased are of special nature and
 suitable alternative sources do not exist for obtaining comparable
 quotations, the internal control procedures are commensurate with the
 size of the Company and the nature of its business, for the purchase of
 inventory, other fixed assets and for the sale of goods and provision
 of services. During the course of our audit, we have not come across
 any major weakness in the internal controls prevailing in the Company.
 
 5) Based on the audit procedures applied by us and according to the
 information and explanations provided by the management, we are of the
 opinion that all the particulars of contracts or arrangements that need
 to be entered into the register maintained under Section 301 of the
 Companies Act, 1956 have been so entered.
 
 In our opinion, the transactions made in pursuance of such contracts or
 arrangements have been made at reasonable prices having regard to the
 prevailing market prices at the relevant time.
 
 6) As per the records verified and based on explanations given to us,
 the Company has not accepted any deposits from the public within the
 meaning of Sections 58A, 58AA or any other relevant provisions of the
 Companies Act, 1956 and the rules framed thereunder.
 
 7) In our opinion, the Company has a formal internal audit system.
 However, the same needs to be strengthened, both in respect of scope
 and coverage, in order to make it commensurate with the size of the
 Company and nature of its business.
 
 8) According to the information and explanations given to us, the
 Central Government has not prescribed for the maintenance of the cost
 records under Section 209 (1) (d) of the Companies Act, 1956, for any
 of the products of the Company.
 
 9) According to the information and explanations provided to us and on
 the basis of our examination of the books of account, the Company has
 been generally regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income tax, Value Added Tax, Customs Duty,
 Wealth Tax, Service Tax, Cess and other statutory dues during the year
 with the appropriate authorities. As at the year end, there are no
 undisputed dues remaining payable for a period of more than six months
 from the date they became payable.
 
 As per explanations provided to us and according to the records of the
 Company, the following are the particulars of disputed dues on account
 of Value Added Tax (Sales Tax) and Works Contract Tax that have not
 been deposited:
 
 Name of the 
 Statute          Nature of Dues    Amount    Period to 
                                              which the  Forum where 
                                                         the dispute is
                                  (Rs. in Lacs) amount
                                              relates    pending
 
 Sales Tax Act  Classification
                Dispute              0.22    2002 – 2003 Deputy Commiss
                                                         -ioner Appeals
 
 Sales Tax Act  Non-submission of
                Statutory Forms      0.69    2002 – 2003 Deputy Commiss
                                                         -ioner Appeals
 
 Sales Tax Act  Levy of Penalty      1.38    2002 - 2003 Assistant 
                                                         Commissioner
                                                         Appeals
 
 Works Contract 
 Tax            Disallowance of
                WCT TDS certificates 1.64    2002 – 2003 Deputy Commissi
                                                         -oner Appeals
 
 Works Contract 
 Tax            Disallowance of
                WCT TDS certificates 2.18    2002 – 2003 Deputy Commissi
                                                          -oner Appeals
 
 Works Contract 
 Tax            Disallowance of
                WCT TDS certificates 2.13    2003 – 2004 Deputy Commissi
                                                         -oner Appeals
 
 Sales Tax Act  VAT-Karnataka        1.42    2007 – 2008 Joint Commiss
                                                          -ioner
                                                         Enforcement-
                                                         Karnataka
 
 10) The Company does not have accumulated losses at the end of the
 current financial year nor has it not incurred any cash losses in the
 current / immediately preceding financial year.
 
 11) Based on our audit procedures, books of account and as explained to
 us, we are of the opinion that, during the year, the Company has not
 defaulted in repayment of dues to any financial institution or bank. No
 debentures were issued or were outstanding during the year.
 
 12) As explained 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 during the year.
 
 13) In our opinion the nature of activities of the Company does not
 attract any special statute applicable to chit fund and nidhi / mutual
 benefit fund / societies.
 
 14) As per the records of the Company, the Company has not dealt with
 or traded in shares, securities, debentures and other investments. The
 investments of the Company are held in its name.
 
 15) According to the information and explanations provided to us and
 the records examined by us, the Company has given guarantee for loan
 taken by a subsidiary from bank to the extent of Rs. 10,303.50 Lacs. In
 our opinion, the terms and conditions of such guarantees are not prima
 facie prejudicial to the interests of the Company.
 
 16) As per the records and based on the explanations provided to us, in
 our opinion, the term loans were applied by the Company for the purpose
 for which they were obtained.
 
 17) On the basis of overall examination of the records and cash flows
 of the Company, in our opinion, the funds raised on short-term basis
 have not been used for long- term investment.
 
 18) During the year, the Company has not made any preferential
 allotment of equity shares to the parties covered in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 19) As per the records verified, no debentures were issued or were
 outstanding during the year.
 
 20) During the year, the Company has not raised any money through
 public issue.
 
 21) Based upon the audit procedures performed and the information and
 explanations provided by the management, we report that no fraud on or
 by the Company has been noticed or reported during the course of our
 audit.
 
 For Malpani & Associates
 
 Chartered Accountants Firm Registration No. 120438 W
 
 Shyam Malpani
 Proprietor
 Membership No. 34171
 Mumbai, dated May 19, 2011