Auditor Report of Pal Credit & Capital Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Pal Credit & Capital Limited ("the Company"), which comprise the Balance Sheet as at March 31st, 20l4, and 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

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 the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular l5/20l3 dated 13th September, 20I3 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.

Auditors'' 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 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 31st, 2014; and

b) in the case of the Statement of Profit and Loss, 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 Regulatory 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, 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, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular l5/20l3 dated 13th September, 20I3 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e) on the basis of written representations received from the directors as on March 31st, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31st, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and

f) since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has

it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure to Independent Auditors'' Report

Referred to in paragraph 1 under the heading of ''Report on other Legal and Regulatory Requirements'' of Our Report of even date to the Members of Pal Credit & Capital Limited, on the accounts of the company for the year ended 31st March, 2014

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

1. In respect of its fixed assets

a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

c) In our opinion and according to the information and explanations given to us, no substantial part of the fixed asset has been disposed during the year.

2. In respect of inventories

The Company has no inventory.

3. a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

b) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has taken unsecured advances from associate company listed in the register maintained under Section 301 of the Companies Act, 1956.

c) The Company has taken the unsecured advance from one associate Company wherein the year-end balance is Rs. 186.16 Lakhs (Maximum balance during the year Rs. 186.16 lakhs (Previous Year (31st March, 2013) Rs.154 lakhs).

d) The rate of interest and other terms and conditions of unsecured advance taken by the Company are prima - facie not prejudicial to the interest of the Company.

e) The payment of principal amount and interest are not stipulated.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of fixed assets and payment for expenses. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of Contracts or Arrangements referred to in Section 301 of the Companies Act, 1956,

a) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of Contracts or Arrangements that needed to be entered into 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 explanation given to us, the transactions made in pursuance of Contracts or Arrangements that needed to be entered into the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five lakhs in respect of each party during the year have been made at prices which appear reasonable as per information available with the company.

6. According to the information and explanation given to us the Company has not accepted any deposits from the public therefore the provision of clause VI of paragraph 4 of the order are not applicable to the company.

7. As per information and explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. As per information and explanation given by the management, maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956.

9. In respect of statutory dues.

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information & explanations given us no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months from the date of becoming payable.

(b) According to the information and explanations given to us, there are no dues which are not deposited on account of dispute in respect of Income Tax, Wealth Tax, Sales Tax, Excise, Service Tax, Customs Duty and Cess in arrears, as at March 31st, 2014 for a period of more than six months from the date they became payable.

10. The Company has accumulated losses at the end of the year which is more than fifty percent of its net worth and has incurred cash loss of Rs. 39.22 Lacs during the year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

12. 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.

13. The Company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company has Investments. Proper records and timely entries have been maintained in this regard and further investments specified are held in their own name.

15. According to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has no outstanding debentures during the year under audit.

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

21. Based on the audit procedures performed and the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For M. B. Agrawal & Co. Chartered Accountants FRN: 100137W

M. B. Agrawal Partner M. No. 9045 Place:Mumbai Date: 29/05/2014

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Mar 31, 2012

We have audited the attached Balance Sheet of PAL Credit & Capital Ltd., as at 31st March, 2012 and also the annexed Statement of Profit & Loss of the company for the year ended on that date annexed thereto and Cash Flow Statement for the year ended on that date. These financial statements are responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. 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 (a) examining, on a test basis, evidence to support amounts and disclosures in the financial statements (b) assessing the accounting principles used in the preparation of financial statements (c) assessing significant estimates made by the management in the preparation of the financial statements and (d) evaluating overall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.

2. As required by the Companies (Auditor's Report) Order, 2003 and the Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs4&5ofthesaidOrder.

3. Further to our comments in the Annexure referred to in paragraph (2) 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 purposes of our audit;

(b) In our opinion, Company has kept proper books of accounts, as required by law, so far as appears from our examination of the books of the Company;

(c) The Balance sheet and the Statement of Profit and Loss and Cash Flow Statement referred to in this report are in agreement with the books of account of the Company;

(d) In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report, comply with the accounting standards referred to in Section 211 (3C) of Companies Act;

(e) On the basis of representation received from the directors as on 31st March, 2012, and taken on record by the Board of Directors, in our opinion, none of the directors is disqualified as on 31st March, 2012 from being appointed as director U/s 274(1 )(g) of Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and present 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 31 st March, 2012,

(ii) In the case of the Statement of Profit & Loss, of the loss of the Company for the year ended on that date, and

(iii) In the case of the Cash Flow Statement, of the Fund Flow of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph (2) of our report of even date on the accounts for the year ended 31 st March, 2012 of M/s. PAL Credit & Capital Ltd.

i) a) The Company has generally maintained the proper records showing full particulars including quantitative details and situation of fixed assets.

b) All the assets have been physically verified by the management during the year.

c) During the year, Company has not disposed any substantial part of fixed assets.

ii) The Company has no inventory.

iii) The Company has taken unsecured advance from the associate company covered in the register maintained under Section 301 of the Companies Act, 1956.

(a) The Company has taken the unsecured advance from one associate Company and the amount is Rs.101.57 lakhs. (Previous Year Rs. Nil).

(b) The rate of interest and other terms and conditions of unsecured advance taken by the Company are prima - facie not prejudicial to the interest of the Company.

(c) The payment of principal amount and interest are not stipulated.

iv) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to the purchase of inventory and fixed asset, and with regard to the sale of goods and securities. During the course of our audit, no major weakness has been noticed in the internal controls.

v) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956,

a) Based on audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanation given to us, we are of the opinion that the transactions that needed to be entered into the register maintained under Section 301 have been so entered.

b) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regards to the prevailing markets prices at relevant time

vi) In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from the public and therefore, the provision of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules there under are not applicable to the Company. Since the Company has not defaulted in repayment of deposits, compliance of Section 58AA or obtaining any order from the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, does not arise.

vii) In our opinion, the Company has internal audit system commensurate with the size and the nature of its business.

viii) The Central Government has not prescribed the maintenance of cost records to the Company, under Section 209(1)(d)oftheCompaniesAct, 1956

ix) a) According to the records of the Company and information and explanation given to us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, SalesTax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities during the year.

b) Income Tax amounting to Rs. 26.54 Lakhs, which was not due, was outstanding as at 31st March, 2012. Provision for this liability is made in the books of accounts.

c) The Company has preferred an appeal to CIT(A) against the demand Rs. 144 lakhs raised by Assessing Officer for Assessment Year 2008-09. The appeal is pending for hearing and disposal. The disputed liability has not been provided for.

x) The Company has accumulated losses at the end of the financial year which are more than fifty percent of its net worth, and has incurred cash loss during the immediately preceding financial year and the Company has incurred a cashiossof Rs. 199.35 Lakhsforcurrentfinancialyear. .

xi) The Company has not defaulted in repayments of dues to any financial institution or banks or debenture holders.

xii) According to the information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) The provision of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund / Societies is not applicable to the Company.

xiv) a) Based on the records examined by us according to the information and explanation given to us, we are of the opinion that the Company is maintaining proper record of the transactions and contracts of dealing in shares and other investments and timely entries have been made in those records. "

b) Based on our audit procedures and to the best of our knowledge and belief and according to the information and explanation given to us, the shares and other investments have been held by the Company in its own name.

xv) According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks orfinancial institutions.

xvi) To the best of our knowledge and belief.and according to the information and explanation given to us, no term loan was availed by the Company.

xvii) According' to the Cash Flow Statement and records examined by us and according to the information and explanation given to us, there is no short term loan availed by the Company.

xviii) The Company has not made any preferential allotment of shares to parties and companies covered under register maintained under Section 301 of the Companies Act, 1956, during the year.

xix) According to the information and explanation given to us and the records examined by us, Company has not issued debentures.

xx) The Company has not raised money by way of public issue during the year.

xxi) To the best our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported by the Company during the year.



For M/s M. B. Agrawal & Co

Chartered Accountants

Regi. No 100137W

M. B. Agrawal

Partner

M. No. 9045

Place: Mumbai

Date : 30th May, 2012

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Mar 31, 2011

We have audited the attached Balance sheet of PAL Credit & Capital Ltd., as at 31st March, 2011 and also the annexed Profit & Loss Account of the company for the year ended on that date annexed thereto and Cash Flow Statement for the year ended on that date. These financial statements are responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. 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 (a) examining, on a test basis, evidence to support amounts and disclosures in the financial statements (b) assessing the accounting principles used in the preparation of financial statements (c) assessing significant estimates made by the management in the preparation of the financial statements and (d) evaluating overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditors Report) Order, 2003 and the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.

3. Further to our comments in the Annexure referred to in paragraph (2) 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 purposes of our audit;

(b) In our opinion, Company has kept proper books of accounts, as required by law, so far as appears from our examination of the books of the Company;

(c) The Balance sheet and the Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account of the Company;

(d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report, comply with the accounting standards referred to in Section 211(3C) of Companies Act;

(e) On the basis of representation received from the directors as on 31st March 2011, and taken on record by the Board of Directors, in our opinion, none of the directors is disqualified as on 31st March 2011 from being appointed as director U/s 274(1)(g) of Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and present 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, 2011,

(ii) In the case of the Profit & Loss Account, of the loss of the Company for the year ended on that date, and

(iii) In the case of the Cash Flow Statement, of the Fund Flow of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph (2) of our report of even date on the accounts for the year ended 31st March 2011 of M/s. PAL Credit & Capital Ltd.

i) a) The Company has generally maintained the proper records showing full particulars including quantitative details and situation of fixed assets.

b) All the assets have been physically verified by the management during the year.

c) During the year, Company has not disposed any substantial part of fixed assets.

ii) The Company has no inventory.

iii) The Company has neither taken loans from nor granted any loans, secured or unsecured to companies, firms, or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(a) However the Company has placed the inter corporate deposits with one associate Company and the amount is Rs 69 lakhs. (Previous Year Rs. 80 lakhs).

(b) The rate of interest and other term and condition of inter corporate deposit given by the Company are prima - facie not prejudicial to the interest of the Company.

(c) The receipts of principal amount and interest are regular.

iv) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to the purchase of inventory and fixed asset, and with regard to the sale of goods and securities. During the course of our audit, no major weakness has been noticed in the internal controls.

v) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956,

a) Based on audit procedure applied by us, to the best of our knowledge and belief and according to the information and explanation given to us, we are of the opinion that the transactions that needed to be entered into the register maintained under Section 301 have been so entered.

b) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regards to the prevailing markets prices at relevant time.

vi) In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from the public and therefore, the provision of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules there under are not applicable to the Company. Since the Company has not defaulted in repayment of deposits, compliance of Section 58AA or obtaining any order from the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, does not arise

vii) In our opinion, the Company has internal audit system commensurate with the size and the nature of its business.

viii)The Central Government has not prescribed the maintenance of cost records to the Company, under Section 209(1)(d) of the Companies act, 1956

ix) a) According to the records of the Company and information and explanation given to us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities during the year.

b) i) An application was made to Honble Settlement Commission in past for the disputed income tax demands for the Accounting Years 1992-93, 1993-94 and 1995-96. As per the provisions of the Finance Act 2007, as the application of the company was not disposed off by settlement Commission by 31/03/2008, the same was abated and proceedings went back to Income Tax Department. Honble Bombay High Court on petitions filed by certain other assessees, whose application to Settlement Commission was also similarly abated declared such abatement arbitrary and the abatements are cancelled. Based on this judgement the Company approached Settlement Commission to recall the proceedings from Income Tax Department. Settlement Commission has withdrawn abatement. Amounts being paid as tax till 31-03-2011 are fully provided in the books of accounts. Pending demands being contested in appeals amounting to Rs. 1191.85 Lakhs are not provided for. The same will be provided if finally determined as payable on disposal of the appeal.

ii) The Company has preferred an appeal to CIT(A) against the demand of Rs. 144 Lakhs raised by Assessing Officer for Assessment Year 2008-09. The appeal is pending for hearing and disposal.

x) The Company has accumulated losses at the end of the financial year which are more than fifty percent of its net worth, and has incurred cash loss during the immediately preceding financial year and the Company has incurred a cash loss of Rs. 17.72 Lakhs for current financial year.

xi) The Company has not defaulted in repayments of dues to any financial institution or banks or debenture holders.

xii) According to the information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) The provision of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund / Societies is not applicable to the Company.

xiv)a) Based on the records examined by us according to the information and explanation given to us, we are of the opinion that the Company is maintaining proper record of the transactions and contracts of dealing in shares and other investments and timely entries have been made in those records.

b) Based on our audit procedures and to the best of our knowledge and belief and according to the information and explanation given to us, the shares and other investments have been held by the Company in its own name.

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

xvi) To the best of our knowledge and belief and according to the information and explanation given to us, no term loan was availed by the Company.

xvii) According to the Cash Flow Statement and records examined by us and according to the information and explanation given to us, there is no short term loan availed by the Company.

xviii) The Company has not made any preferential allotment of shares to parties and companies covered under register maintained under Section 301 of the Companies Act, 1956, during the year.

xix) According to the information and explanation given to us and the records examined by us, Company has not issued Debentures.

xx) The Company has not raised money by way of public issue during the year.

xxi) To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported by the Company during the year.

For M.B. Agrawal & Co. Chartered Accountants Regi No. 100137W

M. B. Agrawal Partner M.No. 9045

PLACE : MUMBAI DATE : 30th May, 2011

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Mar 31, 2010

We have audited the attached Balance sheet of PAL Credit & Capital Ltd., as at 31st March, 2010 and also the annexed Profit & Loss Account of the company for the year ended on that date annexed thereto and Cash Flow Statement for the year ended on that date. These financial statements are responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. 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 (a) examining, on a test basis, evidence to support amounts and disclosures in the financial statements (b) assessing the accounting principles used in the preparation of financial statements (c) assessing significant estimates made by the management in the preparation of the financial statements and (d) evaluating overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditors Report) Order, 2003 and the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.

3. Further to our comments in the Annexure referred to in paragraph (2) 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 purposes of our audit;

(b) In our opinion, Company has kept proper books of accounts, as required by law, so far as appears from our examination of the books of the Company;

(c) The Balance sheet and the Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account of the Company;

(d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report, comply with the accounting standards referred to in Section 211(3C) of Companies Act;

(e) On the basis of representation received from the directors as on 31st March 2010, and taken on record by the Board of Directors, in our opinion, none of the directors is disqualified as on 31st March 2010 from being appointed as director U/s 274(1)(g) of Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and present 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, 2010,

(ii) In the case of the Profit & Loss Account, of the loss of the Company for the year ended on that date, and

(iii) In the case of the Cash Flow Statement, of the Fund Flow of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph (2) of our report of even date on the accounts for the year ended 31st March 2010 of M/s. PAL Credit & Capital Ltd.

I) a) The Company has generally maintained the proper records showing full particulars including quantitative details and situation of fixed assets.

b) All the assets have been physically verified by the management during the year.

c) During the year, Company has not disposed any substantial part of fixed assets.

ii) The Company has no inventory.

iii) The Company has neither taken loans from nor granted any loans, secured or unsecured to companies, firms, or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(a) However the Company has placed the inter corporate deposits with one associate Company and the amount is Rs 80 lakhs. (Previous Year Rs. 100 lakhs).

(b) The rate of interest and other term and condition of inter corporate deposit given by the Company are prima - facie not prejudicial to the interest of the Company.

(c) The receipts of principal amount and interest are regular.

iv) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to the purchase of inventory and fixed asset, and with regard to the sale of goods and securities. During the course of our audit, no major weakness has been noticed in the internal controls.

v) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956,

a) Based on audit procedure applied by us, to the best of our knowledge and belief and according to the information and explanation given to us, we are of the opinion that the transactions that needed to be entered into the register maintained under Section 301 have been so entered.

b) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regards to the prevailing markets prices at relevant time.

vi) In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from the public and therefore, the provision of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules there under are not applicable to the Company. Since the Company has not defaulted in repayment of deposits, compliance of Section 58AA or obtaining any order from the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, does not arise

vii) In our opinion, the Company has internal audit system commensurate with the size and the nature of its business.

viii)The Central Government has not prescribed the maintenance of cost records to the Company, under Section 209(1)(d) of the Companies Act, 1956

ix) a) According to the records of the Company and information and explanation given to us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investors Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities during the year.

b) An application was made to Honble Settlement Commission in past for the disputed income tax demands for the Accounting Years 1992-93, 1993-94 and 1995-96. As per the provisions of the Finance Act 2007, as the application of the company was not disposed off by settlement Commission by 31/03/2008, the same was abated and proceedings went back to Income Tax Department. Honble Bombay High Court on petitions filed by certain other assessees, whose application to Settlement Commission was also similarly abated declared such abatement arbitrary and the abatements are cancelled. Based on this judgement the Company approached Settlement Commission to recall the proceedings from Income Tax Department. Settlement Commission has withdrawn abatement. Amounts being paid as tax till 31-03-2010 are fully provided in the books of accounts. Pending demands being contested in appeals amounting to Rs. 1191.85 Lakhs are not provided for. The same will be provided if finally determined as payable on disposal of the appeal.

x) The Company has accumulated losses at the end of the financial year which are more than fifty percent of its net worth, and has incurred cash loss during the immediately preceding financial year and the Company has incurred a cash loss of Rs. 28.37 Lakhs for current financial year.

xi) The Company has not defaulted in repayments of dues to a financial institution or banks or debenture holders.

xii) According to the information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii)The provision of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund / Societies is not applicable to the Company.

xiv)a) Based on the records examined by us according to the information and explanation given to us, we are of the opinion that the Company is maintaining proper record of the transactions and contracts of dealing in shares and other investments and timely entries have been made in those records.

b) Based on our audit procedures and to the best of our knowledge and belief and according to the information and explanation given to us, the shares and other investments have been held by the Company in its own name.

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

xvi) To the best of our knowledge and belief and according to the information and explanation given to us, no term loan was availed by the Company.

xvii) According to the Cash Flow Statement and records examined by us and according to the information and explanation given to us, there is no short term loan availed by the Company.

xviii)The Company has not made any preferential allotment of shares to parties and companies covered under register maintained under Section 301 of the Companies Act, 1956, during the year.

xix) According to the information and explanation given to us and the records examined by us, Company has not issued Debentures.

xx) The Company has not raised money by way of public issue during the year.

xxi) To the best our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported by the Company during the year.

For M.B. Agrawal & Co.

Chartered Accountants

Regi No. 100137W

Place: Mumbai M. B. Agrawal

Date: 16th July, 2010 Partner

M.No. 9045