Auditor Report of Velan Hotels Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of M/s.Velan Hotels Limited which comprise the Balance Sheet as at 31st March 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the company in accordance with the Accounting Principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding assets of the company and for preventing and detecting frauds and other irregularities, selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent and design, implementation and maintenance of internal financial control that were operating effectively for ensuring the accuracy and completeness of accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstance, but not for the purpose of expressing an opinion on whether the company has in place adequate internal control system over financial reporting and the operating effectiveness of such controls An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 31st March 2015;

ii) in the case of Profit and Loss Account , of the loss for the year ended on that date; and

iii) in the case of Cash Flow Statement, of the Cash Flow for the year ended on that date Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015, issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Companies Act 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

a. We have sought and 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 appears from our examination of those books;

c. the Balance Sheet ,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 financial statements comply with the Accounting Standards specified under section 133 of the Companies Act,2013, read with rule 7 of the Companies (Accounts) Rules, 2014.

e. on the basis of written representations received from the directors as on 31st March, 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015, from being appointed as a director in terms of sub-section(2) of Section 164 of the Companies Act, 2013.

ANNEXURE

i) a) 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.

ii) a) 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, 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.

iii) The Company has not granted any loans, secured or unsecured to Companies/ firms or other parties covered in the registered maintained under section 189 of the Companies Act 2013.

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) In respect of statutory dues:

a) The company is not generally regular in depositing the undisputed statutory dues, i.e. Provident Fund, Employees State Insurance, Income tax, Sales Tax, , Wealth Tax ,Service Tax, Duties of Customs, Duty of Excise, Value Added Tax, Cess and any 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, Duties of Customs, Duty of Excise, Value Added Tax, Cess as at the year end.

c) In our opinion and according to the information and explanation given to us , the company is not required to transfer amounts to Investor Education and Protection Fund.

vi) The accumulated losses at year end are however less than fifty percent of its networth. However during the year the company has incurred cash losses. The company has not incurred cash losses during the immediately preceding previous year.

vii) The Company has defaulted in repayment of dues to Banks, which has been classified as NPA Since 01.04.2014:

Name of Bank Balance due (Rs. Balance due in Crore) Principal (Rs. in Crore) Interest

Allahabad Bank - Tirupur Branch 42.43 8.62

Andhra Bank - Coimbatore Branch 39.74 7.04

viii) According to the information and explanations given to us, no fraud on or by the company has been reported during the year.

ix) According to information and explanation furnished to us , clauses (v) (vi) (x) and (xi) of the Order 2015 are not applicable to the entity.

P.S.KRISHNAN & CO Chartered Accountants FRN 001532S

(G.Krishnamurthi) Place : TIRUPUR Partner Date : 28.05.2015 (Membership No. 23896)

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Mar 31, 2014

We have audited the accompanying financial statements of M/s.Velan Hotels Limited which comprise the Balance Sheet as at 31st March 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the company in accordance with the Accounting Principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956, read with General Circular 15/2013 dated 13 September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act,2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 31st March 2014;

(ii) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date; and

(iii) in the case of Cash Flow Statement, of the Cash Flow for the year ended on that date Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003, as amended, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. As required by Section 227(3) of the Act, 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 appears from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss 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 and Loss Account and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act 1956,read with General Circular 15/2013 dated 13 September 2013 in respect of Section 133 of the Companies Act,2013; and

e. on the basis of written representations received from the directors as on 31st March, 2014 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014, from being appointed as a director in terms of clause(g) of sub- section^) of Section 274 of the Companies Act, 1956.

Annexure

(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 disposal of fixed assets during the year under consideration is not substantial.

(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. 393.48 Lakhs

(c) In our opinion, the 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) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(vii) In respect of statutory dues:

(a) The company is not generally regular in depositing the undisputed statutory dues, i.e. Provident Fund, Employees State Insurance, Service Tax, Income tax, Sales tax, Cess and other statutory dues with appropriate authorities. However the delays have been made good before year end.

(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, Service tax, and Cess as at the yearend.

(viii) The Company has not defaulted in repayment of dues to Banks, except the following :

Balance due Balance due Remarks Name of Bank (Rs in Lakhs) (Rs in Lakhs) (Delay in No of Principal Interest Months)

Allahabad Bank 138.00 381.84 6 Tirupur Branch

Andhra Bank 92.00 304.75 5 Coimbatore Branch

(ix) During the year, the term loans raised from Banks have been used for the purpose for which the same is availed.

(x) 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 and vice versa.

(xi) According to the information and explanations given to us, no fraud on or by the company has been reported during the year.

(xii) According to information and explanation furnished to us , clauses (v) (vii) (x) (xii) (xiii) (xiv) (xv) (xviii) (xix) & (xx) of the Order 2003 are not applicable to the entity.

Place : Tirupur for P.S.Krishnan & Co Date : 30.05.2014 Chartered Accountants FRN 001532S (G.Krishnamurthi)

Partner (Membership No: 23896)

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Mar 31, 2012

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

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Mar 31, 2011

We have audited the attached Balance Sheet of M/s. VELAN HOTELS LIMITED.TIRUPUR as at 31st March,2011 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 2011 from being appointed as directors in terms of Clause (g) of su-- 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(vi) 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 31 st March, 2011;

(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) During the year, there is no disposal of any substantial portion of fixed assets of the Company.

(ii) In respect of Inventories:

(a) The 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 : 3

2. Aggregate amount : Rs. 68.67 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 payment 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) Duringtheyear new term loans 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) During the year, the company has not raised any money by way of public issue

(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 : 28.06.2011

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Mar 31, 2010

We have audited the attached Balance Sheet of M/s. VELAN HOTELS LIMITED,TIRUPUR as a 31st March,2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on tha date annexed thereto. These financial statements are the responsibility of the Companys management. Ou 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 Standard require that we plan and perform the audit to obtain reasonable assurance about whether the financia 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 financia statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in term 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 & Los Account and Cash Flow Statement dealt with by this report comply with the accounting standard 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 2010 from being appointed as Directors in terms of Clause (g) of sub section (1) of section 274 of the Companies Act, 1956 ; (vi) Attention is invited to Note No:14 of the Notes forming part of the accounts in respect non-disclosure o information required under Micro, Small and Medium Enterprises Development Act,2006

(vii) 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 subjec to clause(vi) 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 31 st March, 2010 ;

(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) During the year, there is no disposal of any substantial portion of fixed assets of the Company. (ii) In respect of Inventories :

(a) The 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 : 4

2. Aggregate amount : Rs. 193.52 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 payment 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 (Auditors 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 (Auditors 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 new term loans 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 (Auditors Report) Order 2003, is not applicable to the Company.

(xx) During the year, the company has not raised any money by way of public issue

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been reported during the year.

Place: Tirupur for P.S.Krishnan & Co

Date : 23.07.2010 Chartered Accountants

FRN 001532S

(G.Krishnamurthi)

Partner

(Membership No: 23896)

P.S.Krishnan & Co 40A,Appachinagar Main Road ,

Chartered Accountants Tirupur 641 607.

Phones: 0421 - 2227526 (5 Lines)