Auditor Report of Vintage Cards & Creations Ltd.

Mar 31, 2010

1. We have audited the attached Balance Sheet of VINTAGE CARDS & CREATIONS LIMITED as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys 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 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, issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. 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 except for the items mentioned in d (i) to (v) below.

b) 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 such 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) We further report that:

i) All balances of debtors, creditors, advances given, current liabilities and fixed deposits pledged with the sales tax authorities are subject to confirmation, reconciliation and consequential adjustments, if any.

ii) In absence of proper records, we are unable to comment on the valuation of the inventories. We have placed the reliance on the management representation in this regard.

iii) The Company had received Rs.91.00 lacs from various parties and had shown it as equity share application money. In absence of any Board resolution or any other documentation we are unable to comment on the nature of these amounts received and the treatment of the same in computation of EPS.

iv) The company has not taken approval of Central Government for payment of Managerial Remuneration (Rs.22.80 Lacs).

v) Refer Schedule S - Note No. 14 of Notes to Accounts: The Company is yet to issue Convertible Warrants till the date of this report.

e) 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.

f) In our opinion and to the best of our information and according to the explanations given to us, and subject to (d) above, the said accounts read with the notes thereon, 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, 2010;

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

iii) in the case of the Cash Row Statement, of the cash flows of the Company for the year ended on that date.

5. On the basis of the written representations received from the Directors as on March 31,2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31,2010, from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditors Report

As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we further report that:

1. Fixed Assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except in case of Disposal of Fixed Assets.

b) As per information and explanations given to us and in our opinion, the fixed assets have not been physically verified by the management at reasonable intervals. Due to this, we are unable to comment on whether any material discrepancies were noticed and if so, whether the same have been properly dealt with in the books of account.

c) In our opinion and as per the information and explanations given to us, there was no significant disposal of fixed assets during the year to affect the going concern assumption.

2. Inventory:

a) The company has not conducted physical verification of inventory during the year. Due to this we are unable to comment on whether the procedures of physical verification of stock are reasonable and adequate in relation to the size of the company and the nature of Its business.

b) The Company has not maintained proper records of inventory. In absence of proper records, we are unable to comment about the discrepancies, if any, between the physical stock and book stock.

3. Loans and Advances:

a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in register maintained under section 301 of the Companies Act, 1956.

b) The question of commenting on the rates of interest and other terms and conditions of the loans granted being prejudicial to the interest of the Company, receipt of regular principal and interest and reasonable steps taken for recovery of principal and interest does not arise.

c) The Company has taken loans from its wholly owned subsidiary company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs.1.04 lacs and the year-end balance is Rs.0.86 lacs.

d) As informed to us, the loans taken from the wholly owned subsidiary company were interest free loans.

e) In respect of loan taken from subsidiary company, we are unable to comment upon the regularity in payment of principal amount, as the terms of repayment have not been stipulated.

4. In our opinion, internal control system of the Company needs to be strengthened in order to be commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanation given to us, we have not observed any continuing failure to correct major weakness in the internal control system except in the areas of inventory and fixed assets.

5. a) According to the information and explanation given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b) In our opinion and according to the information and explanation given to us, the contracts or arrangements entered in to the register maintained under section 301 of Companies Act, 1956 are reasonable having regard to the prevailing market prices at the relevant time and there are no transaction exceeding the value of Rs.5,00,000/- in respect of any party during the year.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of section 58A, 58AA, or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

7. In our opinion, the Company needs to strengthen the internal audit system considering the size of the Company and the nature of its business.

8. As informed to us, the Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, for any of the products of the Company.

9. Statutory Dues

a) According to the information and explanation given to us, and as per records of the Company, in our opinion the Company is not regular in depositing undisputed statutory dues, including dues pertaining to Investor Education and Protection Fund, Provident Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth Tax, Value Added Tax, Service Tax, Custom Duty, Cess and any other material statutory dues as applicable with the appropriate authorities. We have been informed that the undisputed dues in respect of Income Tax, Profession Tax, Sales Tax, Employees State Insurance and Provident Fund were in arrears, as on March 31, 2010 for a period of more than six months from the date they became payable. The details are as follows:

Name of Statute Nature of dues Period to which Amount Rs. amount relates

Income Tax Act, 1961 TDS on Salary 2006-07 2,69,700

2007-08 6,46,223

2008-09 5,81,229

2009-10 3,83,724

TDS on Rent 2006-07 3,24,088

2007-08 62,724

2008-09 1,59,051

2009-10 12,321

TDS on contracts 2006-07 4,697

2007-08 1,77,125

2008-09 1,17,911

2009-10 14,642

TDS on Professional Fees 2007-08 2,39,613

2008-09 1,72,564

2009-10 33,160

TDS on Commission 2007-08 40,086

2008-09 38,303

2009-10 11,347

TDS on Royalty 2006-07 25,923

2007-08 16,64,850

2008-09 7,63,500

Tax Collected at Source 2008-09 1,196

Various Sales Tax Acts Sales tax dues Up to September 200946,51,817 Profession Tax Act, 1975 Profession Tax 2007-08 1,35,000

2008-09 91,190

2009-10 25,115

Employees Provident Fund and Provident Fund dues 2006-07 6,86,971 Miscellaneous Provisions Act, 1952 2007-08 6,22,314

2008-09 4,20,777

2009-10 1,10,811

Employees State Insurance Act ESIC dues 2007-08 7,219

2008-09 26,309

2009-10 12,751

Service Tax Service Tax Payable 2006-07 18,96,313

2007-08 22,40,311

Research and Development Cess R&D Cess Upto September 2009 5,54,950

b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Value Added Tax, Customs Duty, Excise Duty or Cess outstanding on account of any dispute other than the following:

Name of Statute Amount (Rs.) Forum where dispute is pending

Sales Tax Act 27,34,595 Assistant Commissioner of Commercial Taxes

Sales Tax Act 20,71,218 Maharashtra Sales Tax Tribunal

Income Tax Act 15,53,557 Commissioner (Appeals)

10. According to the information and explanations given to us, the Company has accumulated losses as at the end of the financial year which exceed fifty per cent of Its net worth and It has Incurred cash losses in the current financial year and the Immediately preceding financial year.

11. According to the information and explanations given to us and based on the documents and records produced before us, there has been no default in the repayment of dues to banks. There are no dues to financial institutions or debenture holders.

12. According to the information and explanations given to us and based on the documents and records produced before us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund / societies.

14. In our opinion and according to the information and explanations given to us, the Company does not deal or trade in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. The Company has not taken any new term loan during the year.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Cash Flow Statement and other records examined by us, the Company has not used funds raised on short-term basis for long term investment.

18. 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.

19. According to the information and explanations given to us, during the year covered by our audit report, the Company has not issued any secured debentures.

20. The Company has not raised any money through a public issue during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have been informed of such case by management.

FOR HIMANSHU PATEL & ASSOCIATES CHARTERED ACCOUNTANTS

(Firm Regn. No.: 127319W)

CA. Himanshu J. Patel Membership No: 118924.

Date: May 30, 2010 Place: Pune.