Auditor Report of Cityman Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Cityman Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Profit and Loss Statement and the Cash Flow Statement for the year ended on that date and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the company in accordance with accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the general circular 15/2013 dated 13th September 2013 of 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 statement. 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, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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:

(a) in the case of the Balance Sheet of the state of affairs of the Company as at March 31, 2014;

(b) in the case of the profit and Loss statement, of the Loss for the year ended on that date: and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULARITY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") as amended issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the 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 account 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 Statement 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 Statement and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and,

(e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, 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 INDEPENDENT AUDITOR''S REPORT Referred to in paragraph 1 of our report of even date on the accounts of CITYMAN LIMITED, BANGALORE for the year ended March 31, 2014.

In terms of Companies ( Auditor''s Report) Order 2003,issued by the Government of India, in terms of section 227(4A) of Companies Act,1956, we further report, on the matters specified in paragraph 4 and 5 of the said order, to the extent applicable to the Company, that :

1. We are informed that detailed records showing quantitative particulars and situation of fixed assets are being updated. We are also informed that physical verification was conducted of plant and machinery, furniture and fittings and other major assets by the management during the year and no material discrepancies were noticed on such verification.

2. None of the fixed assets have been revalued during the year.

3. The company has not disposed off any fixed assets during the year.

4. The company is maintaining proper records of inventory.

5. We are informed that physical verification of inventory was conducted at reasonable intervals by the management during the year.

6. According to the information and explanations given to us and in our opinion, the procedure for physical verification of stock followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

7. The discrepancies noticed on verification between the physical stock and records were not material having regard to the size of the company and operations of business of the company.

8. In our opinion and on the basis of our examination of the stock records and having regard to the information and explanations given to us, the valuation of stock is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as in the previous year.

9. (a) We are informed that the company has not taken or granted any loans, secured or unsecured from/ to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 except those mentioned in (b) and (c) below and trade advances in the course of regular trade as per commercial expediency and the terms and conditions of which are in our opinion, not prima facie prejudicial to the interest of the company

(b) The company has given Rs. 12 lakhs as interest free refundable deposit to a partnership firm in which the Managing Director is a partner for using the brand name owned by them for a period of 99 years in addition to royalty payment of 1 % of the turnover of the company under the brand name to the above firm for using it''s brand name.

(c) The company has taken an interest free long term borrowing of Rs.1507.00 lakhs from the Managing Director, which is to be either repaid or converted into equity as per relevant and applicable SEBI and other guidelines.

(d) The above payment mentioned in (b) and loan mentioned in (c) have been approved by the shareholders of the company.

10. In respect of loans and advances in the nature of loans given/taken by the company, the company / parties are generally repaying the principal amounts and interest as per terms of granting / receiving the same.

11. There is no overdue repayable advance amount of Rupees One Lakh or more due from any party listed in the register maintained under section 301 of the Companies Act, 1956.

12. In our opinion and according to the information and explanations given to us, there are adequate internal control procedure commensurate with the size of the company and the nature of it''s business with regard to purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

13. The company has neither purchased nor sold any goods and materials or services in pursuance of contracts or arrangement entered in the register maintained under section 301 of the Companies Act, 1956 during the year under reference.

14. As explained to us unserviceable or damaged stores, raw materials and finished goods are determined by the management and provisions have been made in the accounts for the loss so determined.

15. We are informed that the company has not accepted any deposits from public during the year.

16. We are informed that the company has no realizable scrap, which is material. There are no by-products.

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

18. According to the information and explanations given to us and as per the records of the company and on the basis of test checks conducted by us, no personal expenses have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practices.

19. The company is not a sick industrial unit within the meaning of clause (o) of sub section 1 of section 3 of the sick industrial companies (special provisions) Act, 1985.

20. As per the records, the company has a reasonable system of recording the receipts, issues and consumption of materials and stores and allocating materials consumed to relative jobs, commensurate with the size of the company and nature of it''s business.

21. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956, for the year under reference.

22. According to the information and explanations given to us, employees coming within the purview of ESI and EPF Acts are not presently employed with the company.

23. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund and employees state insurance, investor education and protection fund, sales tax, income tax and other statutory dues applicable to it, except interest on Income Tax amounting to Rs.16.46 lakhs for assessment years 1997 - 98 and 1998 - 99.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty which have remained outstanding as at 31st March, 2014 for a period of more than six months from the date they become payable, except interest on Income Tax amounting to Rs.16.46 lakhs for assessment years 1997 - 98 and 1998 - 99.

(c) There is no disputed dues of sales tax, income tax, customs duty, wealth tax, excise duty and cess, which have not been deposited by the company.

24. The company has an accumulated loss of Rs.23,92,91,260/- as at the end of the financial year and has incurred a cash loss of Rs.29,72,137/- during the financial year and has incurred a cash loss of Rs. 40,68,164/- during the immediately preceding financial year. The accumulated loss of the company is more than 50% of it''s net worth amounting to Rs.11,79,69,000/- 25. The company has not taken any term loan from financial institutions or banks, nor has issued any debentures during the year under reference. There are no dues from the company to any bank or financial institution as at March 31, 2014.

26. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence we have no comments to offer in respect of clause 4 (xii) of the Companies (Auditor''s Report) Order, 2003.

27. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

28. In our opinion, 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.

29. In our opinion and according to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions and hence we have no comments to offer in respect of clause 4 (xv) of the Companies (Auditor''s Report) Order, 2003.

30. The company has not obtained any term loans. Accordingly the question of reporting on its application does not arise.

31. According to the information and explanations given to us and on an overall examination of the balance sheet of the company as at March 31, 2014, we report that no funds raised on short-term basis have been used for long-term investment and also that no long-term funds have been used to finance short-term assets except working capital.

32. The company has neither issued any debentures during the year nor there is any outstanding debentures as on March 31, 2014 and hence we have no comments to offer in respect of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003.

33. The Company has not raised any money through public issue during the year and accordingly clause (xx) of the Companies (Auditor''s Report) Order 2003, as amended is not applicable for the Current year.

34. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For CHANDY & ZACHERIA Chartered Accountants FRN: 000664S

THANKACHAN ZACHERIAS LLB, FCA, CISA, DISA. Camp: Bangalore Partner Date: 29.05. 2014 M. No. 023421

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Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of City man Limited ("the Company") which comprise the Balance Sheet as at March 31, 2013, and the Profit and Loss statement and the Cash Flow Statement for the year ended on that date and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the company in accordance with accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). 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 statement. 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 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:

(a) in the case of the Balance Sheet of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the profit and Loss statement, of the Loss for the year ended on that date: and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other Legal and Regularity Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central

Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure

a statement on the matters specified in paragraphs 4 and 5 of the 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 account 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 statement 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 statement and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the director as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March

31, 2013, 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 INDEPENDENT AUDITOR''S REPORT

Referred to in paragraph 1 of our report of even date on the accounts of CITYMAN LIMITED, Bangalore, for the year ended March 31, 2013.

In terms of Companies ( Auditor''s Report) Order 2003,issued by the Government of India, in terms of section 227(4A) of Companies Act,1956, we further report, on the matters specified in paragraph 4 and 5 of the said order, to the extent applicable to the Company, that :

1. We are informed that detailed records showing quantitative particulars and situation of fixed assets are being updated. We are also informed that physical verification was conducted of plant and machinery, furniture and fittings and other major assets by the management during the year and no material discrepancies were noticed on such verification.

2. None of the fixed assets have been revalued during the year.

3. The company has not disposed off any fixed assets during the year.

4. The company is maintaining proper records of inventory.

5. We are informed that physical verification of inventory was conducted at reasonable intervals by the management during the year.

6. According to the information and explanations given to us and in our opinion, the procedure for physical verification of stock followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

7. The discrepancies noticed on verification between the physical stock and records were not material having regard to the size of the company and operations of business of the company.

8. In our opinion and on the basis of our examination of the stock records and having regard to the information and explanations given to us, the valuation of stock is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as in the previous year.

9. (a) We are informed that the company has not taken for granted any loans, secured or unsecured from/

to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 except those mentioned in (b) and (c) below and trade advances in the course of regular trade as per commercial expediency and the terms and conditions of which are in our opinion, not prima facie prejudicial to the interest of the company

(b) The company has given Rs. 12 lakhs as interest free refundable deposit to a partnership firm in which the Managing Director is a partner for using the brand name owned by them for a period of 99 years in addition to royalty payment of 1 % of the turnover of the company under the brand name to the above firm for using its brand name.

(c) The company has taken an interest free long term borrowing of Rs.1475.50 lakhs from the Managing Director, which is to be either repaid in the next five years or converted into equity as per relevant and applicable SEBI and other guidelines.

(d) The above payment mentioned in (b) and loan mentioned in (c) have been approved by the shareholders of the company.

10. In respect of loans and advances in the nature of loans given/taken by the company, the company/ parties are generally repaying the principal amounts and interest as per terms of granting/receiving the same.

11. There is no overdue repayable advance amount of Rupees One Lakh or more due from any party listed in the register maintained under section 301 of the Companies Act, 1956.

12. In our opinion and according to the information and explanations given to us, there are adequate internal control procedure commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

13. The company has neither purchased nor sold any goods and materials or services in pursuance of contracts or arrangement entered in the register maintained under section 301 of the Companies Act, 1956 during the year under reference.

14. As explained to us unserviceable or damaged stores, raw materials and finished goods are determined by the management and provisions have been made in the accounts for the loss so determined.

15. We are informed that the company has not accepted any deposits from public during the year.

16. We are informed that the company has no realizable scrap which is material. There are no by-products.

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

18. According to the information and explanations given to us and as per the records of the company and on the basis of test checks conducted by us, no personal expenses have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practices.

19. The company is not a sick industrial unit within the meaning of clause (o) of sub section 1 of section 3 of the sick industrial companies (special provisions) Act, 1985.

20. As per the records, the company has a reasonable system of recording the receipts, issues and consumption of materials and stores and allocating materials consumed to relative jobs, commensurate with the size of the company and nature of its business.

21. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956, for the year under reference.

22. According to the information and explanations given to us, employees coming within the purview of ESI and EPF Acts are not presently employed with the company.

23. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund and employees state insurance, investor education and protection fund, sales tax, income tax and other statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty which have remained outstanding as at March 31, 2013 for a period of more than six months from the date they become payable.

(c) There is no disputed dues of sales tax, income tax, customs duty, wealth tax, excise duty and cess, which have not been deposited by the company except income tax demand of Rs.20,96,325/-.

24. The company has an accumulated loss of Rs.23,41,86,757/- as at the end of the financial year and has incurred a cash loss of Rs.40,68,164/- during the financial year and has incurred cash loss of Rs. 42,68,363/- during the immediately preceding financial year. The accumulated loss of the company is more than 50% of its net worth amounting to Rs.11,79,69,000/-

25. The company has not taken any term loan from financial institutions or banks, nor has issued any debentures during the year under reference. There are no dues from the company to any bank or financial institution as at March 31, 2013.

26. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence we have no comments to offer in respect of clause 4 (xii) of the Companies (auditor''s report) Order, 2003.

27. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (auditor''s report) Order, 2003 are not applicable to the company.

28. In our opinion, 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.

29. In our opinion and according to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions and hence we have no comments to offer in respect of clause 4 (xv) of the Companies (auditor''s report) Order, 2003.

30. The company has not obtained any term loans. Accordingly the question of reporting on its application does not arise.

31. According to the information and explanations given to us and on an overall examination of the balance sheet of the company as at March 31, 2013, we report that no funds raised on short-term basis have been used for long-term investment and also that no long-term funds have been used to finance short-term assets except working capital.

32. The Company has not raised any money through public issue during the year and accordingly clause (xx) of the Companies (Auditor''s Report ) Order 2003,as amended is not applicable for the Current year.

33. The company has neither issued any debentures during the year nor there is any outstanding debentures as on March 31,2013 and hence we have no comments to offer in respect of clause 4 (xix) of the Companies (auditor''s report) Order, 2003.

34. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For CHANDY & ZACHERIA

Chartered Accountants

FRN.NO. 000664S

Thankachan Zacherias, LLB, FCA, CISA, DISA

Camp: Bangalore Partner

Date:12.08.2013 M. No. 023421

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Mar 31, 2011

We have audited the attached Balance Sheet of CITYMAN LIMITED as at 31st March, 2011 and the Profit and Loss Account for the year ended on that date annexed there to and report that:

1. 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.

2. We conducted our audit in accordance with accounting standards generally accepted in India. These 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, evidences 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 issued by the Central Government of India in terms of sub-section 4 A of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us during the course of our audit, we enclose in the annexure, a statement on the matters specified in paragraph 4 & 5 of the said order to the extent applicable to the company.

4. Further to our comments in the Annexure referred to in paragraph 3 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. Proper books of account as required by law have been kept by the company so far as it appears from our examination of such books.

c. The Balance Sheet and the Profit and Loss Account referred to in this report are in agreement with the books of account.

d. In our opinion, the Profit and Loss Account and Balance Sheet comply with the accounting standard referred to in sub - section 3 C of Section 211 of the Companies Act, 1956.

e. On the basis of the written representation received from the Directors as on 31st March, 2011 and taken on the record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 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 given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and also give a true and fair view in conformity with the accounting principles generally accepted in India.

i) in so far as it relates to the Balance Sheet, of the state of affairs of the company as at 31st March, 2011 and,

ii) in so far as it relates to the Profit and Loss Account, of the Loss of the company for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT

Referred to in paragraph 1 of our report of even date on the accounts of CITYMAN LIMITED, for the year ended 31st March. 2011.

1. We are informed that detailed records showing quantitative particulars and situation of fixed assets are being updated. We are also informed that physical verification was conducted of plant and machinery, furniture and fittings and other major assets by the management during the year and no material discrepancies were noticed on such verification except loss of land by encroachment, which has been properly dealt within the books of account.

2. None of the fixed assets have been revalued during the year.

3. The company has disposed off only the obsolete fixed assets during the year and is retaining all unimpaired fixed assets and in the opinion of the board of directors the fixed assets disposed off during the year do not amount to substantial portion of the total usable fixed assets.

4. The company is maintaining proper records of inventory.

5. We are informed that physical verification of inventory was conducted at reasonable intervals by the management during the year.

6. According to the information and explanations given to us and in our opinion, the procedure for physical verification of stock followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

7. The discrepancies noticed on verification between the physical stock and records were not material having regard to the size of the company and operations of business of the company.

8. In our opinion andonthebasisofour examination of the stock records and having regard to the information and explanations given to us, the valuation of stock is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as in the previous year.

9. (a) We are informed that the company has not taken or granted any loans, secured or unsecured from/to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 except trade advances in the course of regular trade as per commercial expediency and the terms and conditions of which are in our opinion, not prima facie prejudicial to the interest of the company

(b) The company has given Rs.12 lakhs as interest free refundable deposit to a partnership firm in which one of the director is a partner for using the brand name owned by them for a period of 99 years in addition to royalty payment of 1% of the turnover of the company under the brand name to the above firm for using its Brand name.

(c) The above payments mentioned in (b) have been approved by the shareholders of the company.

10. In respect of loans and advances in the nature of loans given/taken by the company, the company/parties are generally repaying the principal amounts and interest as per terms of granting/receiving the same.

11. There is no overdue repayable advance amount of Rupees One Lakhs or more due from any party listed in the register maintained under section 301 of the Companies Act, 1956.

12. In our opinion and according to the information and explanations given to us, there are adequate internal control procedure commensurate with the size of the company and the nature of it's business with regard to purchase of inventory, fixed assets and with regard to the sale goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

13. The company has neither purchased nor sold any goods and materials or services in pursuance of contracts or arrangement entered in the register maintained under section 301 of the Companies Act, 1956 during the year under reference.

14. As explained to us unserviceable or damaged stores, raw materials and finished goods are determined by the management and provisions have been made in the accounts for the loss so determined.

15. We are informed that the company has not accepted any deposits from public during the year.

16. We are informed that the company has no realizable scrap which is material. There are no by-products.

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

18. According to the information and explanations given to us and as per the records of the company and on the basis of test checks conducted by us, no personal expenses have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practices.

19. The company is not a sick industrial unit with in the meaning of clause (o) of subsection 1 of section 3 of the sick industrial companies (special provisions) Act, 1985.

20. As per the records, the company has a reasonable system of recording the receipts, issues and consumption of materials and stores and allocating materials consumed to relative jobs, commensurate with the size of the company and nature of its business.

21. As per the records, the company has a reasonable system of allocating man-hours utilized to the relative jobs, commensurate with the size of the company and nature of its business.

22. As per the records, there is a reasonable system of authorization at proper levels and an adequate system of internal control commensurate with the size of the company and nature of its business on issue of stores and allocation of stores and labour to job.

23. Damaged goods were determined in the class of goods traded in by the company and adequate provision has been made in accounts for the loss so determined.

24. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956, for the year under reference.

25. According to the information and explanations given to us, employees coming with in the purview of ESI and EPF Acts are not presently employed with the company.

26. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund and employees state insurance, investor education and protection fund, sales tax, income tax and other statutory dues applicable to it, except income tax dues of Rs. 18,57,000/- and interest there on from April 2008.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty which have remained outstanding as at 31st March, 2011 for a period of more than six months from the date they become payable except income tax payable, Rs. 18,57,000/- and interest there on from April 2008.

(c) There is no disputed dues of sales tax, income tax, customs duty, wealth tax, excise duty and cess, which have not been deposited by the company except income tax demand of Rs. 18,57,000/-

27. The company has an accumulated loss of Rs.22,58,26,800/- as at the end of the financial year and has incurred a cash loss of Rs.47,13,380/- during the financial year and has incurred cash loss of Rs. 77,44,330/- during the immediately preceding financial year.

28. The company has not taken any term loan from financial institutions or banks, nor has issued any debentures during the year under reference. There are no dues from the company to any bank or financial institution as at 31st march 2011.

29. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence we have no comments to offer in respect of clause 4 (xii) of the Companies (auditor's report) Order, 2003.

30. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (auditor's report) Order, 2003 are not applicable to the company.

31. In our opinion, 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.

32. In our opinion and according to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions and hence we have no comments to offer in respect of clause 4 (xv) of the Companies (auditor's report) Order, 2003.

33. The company has not obtained any term loans. Accordingly the question of reporting on its application does not arise.

34. According to the information and explanations given to us and on an overall examination of the balance sheet of the company as at 31st march 2011, we report that no funds raised on short-term basis have been used for long-term investment and also that no long-term funds have been used to finance short-term assets except working capital.

35. The company has not made any preferential allotment of shares to parties and companies listed in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the question of reporting on whether the price at which such shares have been issued is prejudicial to the interest of the company does not arise.

36. The company has neither issued any debentures during the year nor there is any outstanding debentures as on 31st March, 2011 and hence we have no comments to offer in respect of clause 4 (xix) of the Companies (auditor's report) Order, 2003.

37. The company has not raised money by public issue during the year and hence we have no comments to offer in respect of clause 4 (xx) of the Companies (auditor's report) Order, 2003.

38. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For CHANDY & ZACHERIAS Chartered Accountants FRN.NO. 000664S

(Thankachan Zacherias) Partner M. No. 023421

Camp : Bangalore Date : 03.09.2011

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Mar 31, 2010

We have audited the attached Balance Sheet of CITYMAN LIMITED as at 31st March, 2010 and the Profit and Loss Account for the year ended on that date annexed there to and report that:

1. 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 accounting standards generally accepted in India. These 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, evidences 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 issued by the Central Government of India in terms of sub-section 4A of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us during the course of our audit, we enclose in the annexure, a statement on the matters specified in paragraph 4 & 5 of the said order to the extent applicable to the company.

4. Further to our comments in the Annexure referred to in paragraph 3 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. Proper books of account as required by law have been kept by the company so far as it appears from our examination of such books.

c. The Balance Sheet and the Profit and Loss Account referred to in this report are in agreement with the books of account.

d. In our opinion, the Profit and Loss Account and Balance Sheet comply with the accounting standard referred to in sub - section 3 C of Section 211 of the Companies Act, 1956.

e. On the basis of the written representation received from the Directors as on 31st March, 2010 and taken on the record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 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 given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and also give a true and fair view in conformity with the accounting principles generally accepted in India.

i) in so far as it relates to the Balance Sheet, of the state of affairs of the company as at 31st March, 2010 and,

ii) in so far as it relates to the Profit and Loss Account, of the Loss of the company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred tp in paragraph 3 of our repprt of even date on the accounts of CITYMAN LIMITED. for the year ended 31st Margh,:2QlQ.

1. We are informed that detailed records showing quantitative particulars and situation of fixed assets are being updated. We are also informed that physical verification was conducted of plant and machinery, furniture and fittings and other major assets by the management during the year and no material dis- crepancies were noticed on such verification.

2. None of the fixed assets have been revalued during the year.

3. The Company has disposed only the obsolete fixed assets during the year and is retaining all unim- paired fixed assets and in the opinion of the board of directors the fixed assets disposed during the year do not amount to substantial portion of the total fixed assets.

4. The company is maintaining proper records of inventory.

5. We are informed that physical verification of inventory was conducted at reasonable intervals by the management during the year.

6. According to the information and explanations given to us and in our opinion, the procedure for physi- cal verification of stock followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

7. The discrepancies noticed on verification between the physical stock and records were not material having regard to the size of the company and operations of business of the company.

8. In our opinion and on the basis of our examination of the stock records and having regard to the information and explanations given to us, the valuation of stock is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as in the previous year.

9. (a) We are informed that the company has not taken or granted any loans, secured or unsecured from/

to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 except trade advances in the course of regular trade as per commercial expediency and a foreign currency loan of Rs.23,28,205/- taken from one of the former directors, and the terms and conditions of which are in our opinion, not prima facie prejudicial to the interest of the company

(b) The company has given Rs.12 lakhs as interest free refundable deposit to a partnership firm in which one of the director is a partner for using the brand name owned by them for a period of 99 years in addition to royalty payment of 1 % of the turnover of the company under the brand name to the above firm for using its Brand name.

(c) The above payments mentioned in (b) have been approved by the shareholders of the company.

10. In respect of loans and advances in the nature of loans given/taken by the company, the company/ parties are generally repaying the principal amounts and interest as per terms of granting/receiving the same.

11. There is no overdue repayable advance amount of Rupees One Lakhs or more due from any party listed in the register maintained under section 301 of the Companies Act, 1956.

12. In our opinion and according to the information and explanations given to us, there are adequate inter- nal control procedure commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

13. The company has neither purchased nor sold any goods and materials or services in pursuance of contracts or arrangement entered in the register maintained under section 301 of the Companies Act, 1956 during the year under reference.

14. As explained to us unserviceable or damaged stores, raw materials and finished goods are determined by the management and provisions have been made in the accounts for the loss so determined.

15. We are informed that the company has not accepted any deposits from public during the year.

16. We are informed that the company has no realizable scrap which is material. There are no by-products.

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

18. According to the information and explanations given to us and as per the records of the company and on the basis of test checks conducted by us, no personal expenses have been charged to revenue ac- count, other than those payable under contractual obligations or in accordance with generally accepted business practices.

19. The company is not a sick industrial unit with the meaning of clause (o) of subsection 1 of section 3 of the sick industrial companies (special provisions) Act, 1985.

20. As per the records, the company has a reasonable system of recording the receipts, issues and con- sumption of materials and stores and allocating materials consumed to relative jobs, commensurate with the size of the company and nature of its business.

21. As per the records, the company has a reasonable system of allocating man-hours utilized to the rela- tive jobs, commensurate with the size of the company and nature of its business.

22. As per the records, there is a reasonable system of authorization at proper levels and an adequate system of internal control commensurate with the size of the company and nature of its business on issue of stores and allocation of stores and labour to job.

23. Damaged goods were determined in the class of goods traded in by the company and adequate provi- sion has been made in accounts for the loss so determined..

24. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956, for the year under reference.

25. According to the information and explanations given to us, employees coming with in the purview of ESI and EPF Acts are not presently employed with the company.

26. (a) According to the records of the company, the company is regular in depositing with appropriate

authorities undisputed statutory dues including provident fund and employees state insurance, investor education and protection fund, sales tax, income tax and other statutory dues applicable to it, except income tax dues of Rs.35,51,000/- and interest there on from April 2008.

(b) According to the information and explanations given to us, there are no undisputed amounts pay- able in respect of income tax, wealth tax, sales tax, customs duty and excise duty which have remained outstanding as at 31 st March, 2010 for a period of more than six months from the date they become payable except income tax payable, Rs.35,51,000/- and interest there on from April 2008.

(c) There is no disputed dues of sales tax, income tax, customs duty, wealth tax, excise duty and cess, which have not been deposited by the company except income tax demand of Rs.35,51,000/-

27. The company has an accumulated loss of Rs.22,10,77,270/- as at the end of the financial year and has incurred a cash loss of Rs.77,44,330/- during the financial year and has incurred cash loss of Rs. 27,80,982/- during the immediately preceding financial year.

28. The company has not taken any term loan from financial institutions or banks, nor has issued any debentures during the year under reference. The company has settled all its dues to banks during the year and there are no dues from the company to any bank or financial institution as at 31st march 2010.

29. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence we have no comments to offer in respect of clause 4 (xii) of the Companies (auditors report) Order, 2003.

30. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (auditors report) Order, 2003 are not applicable to the company.

31. In our opinion, 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.

32. In our opinion and according to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions and hence we have no comments to offer in respect of clause 4 (xv) of the Companies (auditors report) Order, 2003.

33. The company has not obtained any term loans. Accordingly the question of reporting on its application does not arise.

34. According to the information and explanations given to us and on an overall examination of the balance sheet of the company as at 31st march 2010, we report that no funds raised on short-term basis have been used for long-term investment and also that no long-term funds have been used to finance short- term assets except working capital.

35. The company has not made any preferential allotment of shares to parties and companies listed in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the question of report- ing on whether the price at which such shares have been issued is prejudicial to the interest of the company does not arise.

36. The company has neither issued any debentures during the year nor there is any outstanding debentures as on 31st March, 2010 and hence we have no comments to offer in respect of clause 4 (xix) of the Companies (auditors report) Order, 2003.

37. The company has not raised money by public issue during the year and hence we have no comments to offer in respect of clause 4 (xx) of the Companies (auditors report) Order, 2003.

38. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For CHANDY & ZACHERIAS

Chartered Accountants

FRN.NO. 000664S

(Thankachan Zacherias)

Camp: Bangalore Partner Date:01.09. 2010 M. No. 023421