Auditor Report of Pretto Leather Industries Ltd.

Mar 31, 2010

1. We have audited the attached Balance Sheet of PRETTO LEATHER INDUSTRIES LIMITED as at 31st March, 2010 and me related Profit and Loss Account for the year ended on that date annexed thereto. which we have signed undor reference to this report. These Financial Statements based on our audit.

2. We conducted our audit in accordance with the 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 also includes assessing the accounting principle used as no 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 Reports Order 2003 issued by the Central Government of India in terms of sub-section (4a) of Section 227 of the Companies Act, 1956 of India (The Act) and on the basis of such checks as we considered appropriate and according to the mforrnation and explanations given to us, we give in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in paragraph 3 above, we report that:

4.1 We have obtained all the information and explanations which to the best of our knowledge belief were necessary for the purpose of our audit:.

4.2 In our opinion, proper books of account as required by law have been kept by the Branch so far as appears from our examination of those books;

4.3 The Balance Sheet and Profit and Loss Account dealt with by •this report are in agreement with the books of account;

4.4 In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in subsection (3C) of Section 211 of the Act: ,

4.5 On the basis of the written representation received from directors as on 31st March, 2010 and taken on record by the Board of Director, We report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as Directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 and

4.6 Subject to note no. I (e) regarding change in the method of accounting for future gratuity, In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act, and give a true and fair view in conformity with the accounting principles generally accepted in India;

i) in the case of the Balance Sheet, of the State of affairs of the Branch as at 31st March, 2010;

ii) In case of the Profit ana Loss Account, of the Profit for the year ended on that date;

ANNEXURE TO AUDITORS REPORT

(Referred to paragraph 3 of the Auditors Report of the even date to the members of PRETTO LEATHER INDUSTRIES LIMITED on the financial statements for the years ended march 31st, 2010

1. a) The company is maintaining proper records showing full particulars including quantitative details and situation of its fixed assets.

b) The management informed us that they have physically verified fixed assets in the norma! course of the business at regular interval no material discrepancies between the book records and the physical inventory have been noticed in respect of the assets physically verified.

c) In our opinion and according to the information and explanations given to us, a substantial part of part fixed assets have not been disposed off by the company during the year

2. a)The inventory consisting of stock of tyres & tubes diesel, stores & spare parts were physically verified by the managment during the years. In our opinion ,the frequency of the verification is reasonable.

b) In our opinion , the procedures of physically verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business

c) On the basic of our examination of the inventory records ,in our opinion ,the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. a) According to the information and explanations given to us, the company has , during the year not granted any loans secured or unsecured to company ,firms or other parties covered in the register maintained under Section 301 of the Companies Act. 1956. In our opinion, the requirements of paragraph 3 (b) (c) and (d) of the order are not applicable to the Company.

b) According to the information and explanations given to us, the company has, during the year not taken any loan secured or secured from companies, firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

Accordingly, in our opinion, the requirements of paragraph 3(f) and (g) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us. there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct majaor weakness in the aforesaid internal control procedures.

5. a) in our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance of Section 301 of Act, have been so entered.

b) in our opinion and according to the information and explanations given to us the transactions made in pursuance of contracts or arrangements entered into the register in pursuance of Section 301 of the Act.

6. in our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Provisions of Section 58A & 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1957. According to the information and explanation given to us, no order under the aforesaid Sections has been passed by the Company Law Board or National Company Law tribunal or Reserve Bank of India or any court or any other tribunal, on the Company.

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

8. The Central Government has not prescribed the maintenance of cost records under clause (d) sub-section (1) of Section 209 of the Act.

9. A) according to the information and explanations given to us and the records of the Company examined by us. in our opinion the Company is generally regular in depositing the undisputed statutory dues including providend fund, investor education fund protect on fund. employees state insurance income tax. sales tax. service tax. wealth tax. customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

b) According to the records of the Company and the information and explanations given to us, the Company does not have any disputed dues on account income tax, sales tax service tax wealth tax customs duty, excise duty cess as at March, 3Ist 2010 have no dues.

10. The Company does not have accumulated losses as at March 31. 2010 and has not incurred cash losses during the financial year ended on that date or in the immediately preceding financial year.

11. According to the record of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12. Based on our examination of the records and the information and explanation given to us by the company has not granted any loans and advances on the basis of security by way of pledge of the shares debentures and other securities.

13. The provision of any special statute applicable to the chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company

14. in our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other Investments, hence the requirements of para (xiv) of the order are not applicable to the Company.

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

16. According to the information and explanations giver, to us on an overall basis, the terras loan taken by the company have been applied for the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which nave been used for a long term investments.

18. The Company has not made any preferential allotment of shares to parties and companies in the register maintained under section 301 of the Act during the year.

19. The Company not issued any debentures.

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

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

For and on behalf of the

R K Saxena & Company Charteretd Accountants

PR Saxena Membership No. 096441

Date 01/09/2010

---

Mar 31, 2009

1. We have audited the attached Balance Sheet of PRETTO LEATHER INDUSTRIES LIMITED as at 31st March, 2009 and the related Profit and Loss Account for the year ended on that date annexed thereto, which we have signed under reference to this report. These Financial Statements based on our audit.

2. We conducted our audit in accordance with the 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 also includes assessing the accounting principle used as 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 (Auditor's Report) Order 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of India (The Act) and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we give in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in paragraph 3 above, we report that:

4.1 We have obtained all the information and explanations, which to the best of our knowledge belief, were necessary for the purpose of our audit;

4.2 In our opinion, proper books of account as required by law have been kept by the Branch so far as appears from our examination of those books;

4.3 The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

4.4 In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in subsection (3C) of Section 211 of the Act;

4.5 On the basis of the written representation received from directors as on 31st March, 2009 and taken on record by the Board of Director, We report that none of the Directors is disqualified as on 31st March 2009 from being appointed as Directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 and

4.6 Subject to note no. 1 (e) regarding change in the method of accounting for future gratuity, In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act, and give a true and fair view in conformity with the accounting principles generally accepted in India;

i) In the case of the Balance Sheet, of the State-of affairs of the Branch as at 31 March, 2009;

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

ANNEXURE TO AUDITORS REPORT

(Referred to paragraph 3 of the Auditors Report of the even date to the members of PRETTO LEATHER INDUSTRIES LIMITED on the financial statements for the years ended march 31, 2009

1. a) The company is maintaining proper records showing full particulars including quantitative details and situation of its fixed assets.

b) The management informed us that they have physically verified fixed assets in the normal course of the business at regular interval .no material discrepancies between the book records and the physical inventory have been noticed in respect of the assets physically verified.

c) In our opinion and according to the information and explanations given to us, a substantial part of part fixed assets have not been disposed off by the company during the year

2. a)The inventory consisting of stock of tyres & tubes, diesel, stores & spare parts were physically verified by the management during the years, in our opinion ,the frequency of the verification is reasonable.

b) In our opinion , the' procedures of physically verification of invention followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c) On the basic of our examination of the inventory records ,in our opinion ,the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. a) According to the information and explanations given to us, the company has.,-during the year not granted any loans secured or unsecured to company ,firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. In our opinion, the requirements of paragraph 3 (b) (c) and (d) of the order are not applicable to the Company.

b) According to the information and explanations given to us, the company has, during the year not taken any loan secured or secured from companies, firms or other parties covered in the. Register maintained under section 301 of the Companies Act, 1956. Accordingly, in our opinion, the requirements of paragraph 3(f) and (g) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the company, and" according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct majaor weakness in the aforesaid internal control procedures.

5. a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance of Section 301 of Act, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance of Section 301 of the Act.

6. In our opinion and according to the information and explanations given to us-, the Company has not accepted any deposits from the public within the meaning of Provisions of Section 58A & 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1957. According to the information and explanation given to us, no order under the aforesaid Sections has been passed by the Company Law Board or National Company Law tribunal or Reserve Bank of India or any court or any other tribunal, on the Company.

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

8. The Central Government has not prescribed the maintenance of cost records under clause (d) sub-section (1) of Section 209 of the Act.

9. A) according to the information and explanations given to us and the records of the Company examined by us, in our opinion the Company is generally regular in depositing the undisputed statutory dues including provided fund, investor education fund protection fund, employees state insurance, income tax, sales tax, service tax, wealth tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

b) According to the records of the Company and the information and explanations given to us, the Company does not have any disputed dues on account income tax, sales tax service tax wealth tax customs duty, excise duty cess as at March, 31st 2009 have no dues.

10. The Company does not have accumulated losses as at March 31, 2009 and has not incurred cash losses during the financial year ended on that date or in the immediately preceding financial year.

11. According to the record of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12. Based on our examination of the records and the information and explanation given to us by the company has not granted any loans and advances on the basis of -security by way of pledge of the shares debentures and other securities.

13. The provision of any special statute applicable to the chit fund/7nidhi/mutual benefit fund/societies are not applicable to the Company

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments, hence the requirements of para (xiv) of the order are not applicable to the Company.

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

16. According to the information and explanations given to us on an overall basis, the terms loan taken by the company have been applied 'or the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for a long term investments.

18. The. Company has not made any preferential allotment of shares to parties and companies in the register maintained under section 301 of the Act during the year.

19. The Company not issued any debentures.

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

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

For and on behalf of the

R K Saxena & Company

Chartered Accountants

P R Saxena

Membership No. 096441

Place: Date : 01/09/2009

---

Mar 31, 2008

1. We have audited the attached Balance Sheet of PRETTO LEATHER INDUSTRIES LIMITED as at 31st March, 2008 and the related Profit and Loss Account for the year ended on that date annexed thereto, which we have signed under reference to this report. These Financial Statements based on our audit.

2. We conducted our audit in accordance with the 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 also includes assessing the accounting principle used as nd 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 (Auditor's Report) Order 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of India (The Act) and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we give in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in paragraph 3 above, we report that:

4.1 We have obtained all the information and explanations, which to the best of our knowledge belief, were necessary for the purpose of our audit;

4.2 In our opinion, proper books of account as required by law have been kept by the Branch so far as appears from our examination of those books;

4.3 The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

4.4 In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in subsection (3C) of Section 211 of the Act;

4.5 On the basis of the written representation received from directors as on 31st March, 2008 and taken on record by the Board of Director, We report that none of the Directors is disqualified as on 31st March, 2008 from being appointed as Directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 and

4.6 Subject to note no. 1 (e) regarding change in the method of accounting for future gratuity. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act, and give a true and fair view in conformity with the accounting principles generally accepted in India;

i) In the case of the Balance Sheet, of the State of affairs of the Branch as at 31 March, 2008;

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

ANNEXURE TO AUDITORS REPORT

(Referred to paragraph 3 of the Auditors Report of the even date to the -* members of PRETTO LEATHER INDUSTRIES LIMITED on the financial statements for the years ended march 31, 2008

1. a) The company is maintaining proper records showing full particulars including quantitative details and situation of its fixed assets.

b) The management informed us that they have physically verified fixed assets in the normal course of the business at regular interval .no material discrepancies between the book records and the physical inventory have been noticed in respect of the assets physically verified.

c) In our opinion and according to the information and explanations given to us, a substantial part of part fixed assets have not been disposed off by the company during the year

2. a)The inventory have not consisting any material were physically verified by the management during the years. In our opinion ,the frequency of the verification is reasonable.

b) In our opinion , the procedures of physically verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c) On the basic of our examination of the inventory records ,in our opinion ,the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. a) According to the information and explanations given to us, the company has , during the year not granted any loans secured or unsecured to company ,firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. In our opinion, the requirements of paragraph 3 (b) (c) and (d) of the order are not applicable to the Company.

b) According to the information and explanations given to us, the company has, during the year not taken any loan secured or secured from companies, firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956. Accordingly, in our opinion, the requirements of paragraph 3(f) and (g) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of fts business for the purchase of inventory, fixed assets and for the sale, of goods and services. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control procedures.

5. a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance of Section 301 of Act, have been so entered.

b) In our opinion and according to the information and explanations given .to us, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance of Section 301 of the Act.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Provisions of Section 58A "& 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1957. According to the information and explanation given to us, no order under the aforesaid Sections has been passed by the Company Law Board or National Company Law tribunal or Reserve Bank of India or any court or any other tribunal, on the Company.

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

8. The Central Government has not prescribed the maintenance of cost records under clause (d) sub-section (1) of Section 209 of the Act.

9. A) according to the information and explanations given to us and the records of the Company examined by us, in our opinion the Company is generally regular in depositing the undisputed statutory dues including provided fund, investor education fund protection fund, employees state insurance, income tax, sales tax, service tax, wealth tax, customs duty, - excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

b) According to the records of the Company and the information and explanations given to us, the Company does not have any disputed dues on account income tax, sales tax service tax wealth tax customs duty, excise duty cess as at March, 31st 2008 have no dues.

10. The Company does not have accumulated losses as at March 31, 2008 and has not incurred cash losses during the financial year ended on that date or in the immediately preceding financial year.

11. According to the record of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12. Based on our examination of the records and the information and explanation given to us by the company has not granted any loans and advances on the basis of security by way of pledge of the shares debentures and other securities.

13. The provision of any special statute applicable to the chit fund//nidh I/mutual benefit fund/societies are not applicable to the Company

14. In our opinion and according to the information and explanations given to us, the Company is net a dealer or trader in shares, securities, debentures and other investments, hence the requirements of para (xiv) of the order are not applicable to the Company.

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

16. According to the information and explanations given to us on an overall basis, the terms loan taken by the company have been applied for the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for a long term investments.

18. The Company has not made any preferential allotment of shares to parties and companies in the register maintained under section 301 of the Act during the year.

19. The Company not issued any debentures.

20. The Company has not raised arty money by public issues during the year.

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

For and on behalf of the RK Saxena & Associates Chartered Accountants

P R Saxena Partner Membership No. 096441

Place: Delhi Date 01/09/2008