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Auditor Report of Gammon Infrastructure Projects Ltd.

Sep 30, 2014

We have audited the accompanying Consolidated Financial Statements of Gammon Infrastructure Projects Limited (''GIPL'' or ''the Company'') and its Subsidiaries, Joint Venture Companies and Associates (GIPL Group), which comprise the Consolidated Balance Sheet as at September 30, 2014, the Consolidated Statement of profit and Loss and the Consolidated Cash Flow Statement for the period then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation of these Consolidated Financial Statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Company in accordance with accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the Consolidated 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 Consolidated 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 Consolidated Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated Financial Statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the Consolidated 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 presentation of the Consolidated Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the efectiveness 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 Consolidated Financial Statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.

Basis for qualified Opinion

As detailed in note 36 and note 37 to the Consolidated Financial Statements, with respect to two projects where the authorities have unilaterally terminated the Concession Agreement against which these projects are taking steps to claim compensation/relief as per the Concession Agreement. The GIPL Group''s exposure to these projects is Rs. 812,718,363/-. As the outcome of these matters is uncertain, we are unable to determine the recoverability of said amounts and its consequential impact on the Consolidated Financial Statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible efects of the matter described in the Basis for qualified Opinion paragraph, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Consolidated Balance Sheet, of the state of afairs of the GIPL Group as at September 30, 2014;

(b) in the case of the Consolidated Statement of profit and Loss, of the loss of the GIPL Group for the period ended on that date; and

(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the GIPL Group for the period ended on that date.

Emphasis of Matter:

Without qualifying our opinion, we report that:

a. The GIPL Group has incurred a net loss after tax of Rs. 402,514,954/- for the nine month period ended September 30, 2014 and as of that date the GIPL Group''s current liabilities exceeded current assets by Rs. 6,273,378,209/-. These conditions, along with other matters as set forth in Note 40 of the Consolidated Financial Statements, indicate the existence of an uncertainty as to timing and realisation of cash fow. This matter was also referred to our earlier reports issued for the quarter ended March 31, 2014, June 30, 2014, and for the nine months period ended December 31, 2013.

b. We invite attention to Note 39 of the Consolidated Financial Statements, regarding unilateral termination and closure of Concession in a project, which is subject to pending litigations/arbitrations at various forums which may impact the carrying value of assets of the project assets. The GIPL Group''s exposure towards the said project is of Rs. 178,712,578/- and a corporate guarantee of Rs. 79,661,810/-. Pending conclusion on this legal matters, no adjustments have been made in the Consolidated Financial Statements.

c. We invite attention to Note 35 of the Consolidated Financial Statements, in relation to intention to exit one of the hydro power projects at Himachal Pradesh and seeking a claim of an amount against the amount spent on the project. The GIPL Group''s project has cited reasons for non-continuance on account of reasons beyond its control. The GIPL Group is negotiating with its client for an amicable settlement on beneficial terms. The GIPL Group''s exposure towards the said project is of Rs. 673,145,933/-. Pending conclusion between the parties, no adjustments have been made in the Consolidated Financial Statements.

d. We invite attention to Note 41 of the Consolidated Financial Statements, which states that the one of its joint ventures companies has incurred a net loss of Rs. 30,393,909/- during the nine month period ended September 30, 2014 and, as of that date, JV has also defaulted in repayment of its debt obligations to the lenders. These conditions, along with other matters as set forth in Note 41, indicate the existence of a material uncertainty that may cast significant doubt about JV''s ability to continue as a going concern.

e. We invite attention to Note 42 of the Financial Statements, regarding the excess remuneration to the extent of Rs. 20,855,390 paid to the managerial persons beyond the limits specified in schedule XIII to the Companies Act, 1956 / Schedule V to the Companies Act 2013. The said amount has been charged to statement of profit and loss for the period. The excess amount is subject to approval from the Central Government.

Other Matter

We did not audit the financial statements of:

a. certain subsidiaries, whose financial statements refect total assets (net) of Rs. 16,035,539,629/- as at September 30, 2014, total revenues of Rs. 1,006,567,973/- and net cash outflows amounting to Rs. 3,316,552 for the period then ended.

b. certain associates, whose financial statements refect total profits (net) of Rs. 1,792,039/- for the period ended September 30, 2014, the GIPL Group''s share in the profits of such associates being Rs. 546,926/-.

The above mentioned financial statements have been audited by other auditors whose reports have been furnished to us by the Management, and our opinion is based solely on the reports of the other auditors. Our opinion is not qualified in respect of this matter.

We did not audit the financial statements of:

a. certain joint venture companies, whose financial statements refect total assets (net) of Rs. 1,353,741/- as at September 30, 2014 and net cash outflows amounting to Rs. 50,562/- for the period then ended. The GIPL Group''s share of such total assets (net) and total net cash outflows being Rs. 170,850/- and Rs. 19,214/-, respectively.

b. One associate, whose financial statements refect total loss of Rs. 36,982/- for the period ended September 30, 2014, the GIPL Group''s share in the losses of such associate being Rs. 18,121/-.

The above mentioned financial statements are based on unaudited financial statements certified as approved by the respective Boards of Directors of these companies have been furnished to us by the Management and our report in so far as it relates to the amounts included in respect of the joint venture companies and associate is based solely on such approved unaudited financial statements. Our opinion is not qualified in respect of this matter.

In respect of the other subsidiaries and joint venture companies, the audit has been conducted by either of us and the audit of GIPL has been conducted by us jointly.

For Natvarlal Vepari & Co. For S.R. Batliboi & Co. LLP

Firm Registration Number:106971W ICAI Firm Registration Number:301003E Chartered Accountants Chartered Accountants

N Jayendran per Jayesh Gandhi Partner Partner M. No. 40441 M. No. 37924 Mumbai, Dated : November 18, 2014 Mumbai, Dated: November 18, 2014


Dec 31, 2013

We have audited the accompanying Financial Statements of Gammon Infrastructure Projects Limited ("the Company"), which comprises the Balance sheet as at December 31, 2013 and the Statement of Profit and Loss and the Cash Flow Statement for the period April 1, 2013 to December 31, 2013 ("Period"), and a summary of significant accounting policies and other explanatory notes.

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 notified under the Companies Act, 1956 read with General Circular 15/2013 dated September 13, 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances 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 reasonable 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 December 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss for the period ended on that date; and

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

Emphasis of Matter:

a. Without qualifying our opinion, we invite attention to Note 35 to the financial statements, in relation to notice served by the Company''s subsidiaries for closure of two projects. The Company''s exposure including Equity contributions and advances is amounting to Rs. 40,60,52,000/- (excluding guarantees of Rs. 38,91,00,000/-). Pending conclusion between the parties, no adjustments have been made in the financial statements.

b. The Company incurred a net loss after tax of Rs. 139,666,403/- during the nine months period ended December 31, 2013 and, as of that date, the Company''s current liabilities exceeded its current assets by Rs. 4,570,946,831/-. Management''s plans to address the uncertainty as to the timing and realisation of cash flows are discussed in Note 36. Our opinion is not qualified in this matter

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 Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. As required by Section 227(3) of the Companies Act 1956, we report that:

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

ii) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of the books;

iii) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013; and

v) On the basis of the written representation received from the directors and taken on record by the Board of Directors, we report that none of the directors are disqualified as on December 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 on the said date.

Annexure to the Auditors'' Report

(Referred to in our report of even date)

Re: Gammon Infrastructure Projects Limited

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

(b) Fixed assets have been physically verified by the management during the period and no material discrepancies were identified on such verification.

(c) There was no disposal of a substantial part of fixed assets during the period.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the period.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and as per the report of the site auditors provided to us, no material discrepancies were noticed on such verification.

(iii) (a) The Company has granted loans to 13 parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the period was Rs. 6,089,578,427/- and the period-end balance of loans granted to such parties was Rs. 4,598,398,794/-.

(b) In our opinion and according to the information and explanations given to us, the rate of interest, wherever charged and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the loans granted, repayment of the principal amount and interest is as stipulated.

(d) There is no overdue amount of loans granted to companies, forms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has taken loan from 4 companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the period was Rs. 2,908,583,977/- and the period-end balance of loans taken from such parties was Rs. 2,873,183,977/-.

(f) In our opinion and according to the information and explanations given to us, the rate of interest, wherever charged and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) The payment of the principal and interest is as stipulated. Where the loans taken are re-payable on demand, as informed to us, the lenders have not demanded repayment of any such loan during the period, and thus, there has been no default on the part of the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the rendering of services. The activities of the Company do not involve sale of goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) All the transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time and the nature of services rendered by such parties.

(vi) The Company has not accepted any deposits from the public during the period under audit, and consequently the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable. There is no order that has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in respect of the said sections.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty which were outstanding, at the period end, for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, the following Tax / duty etc has not been deposited on account of dispute.

Name of the Statute Nature of the dues Amount Period to which it Forum where relates Dispute is pending

Income Tax Act 1961 Demand under 18,90,89,058 A.Y. 2005- 06 to Commissioner of u/s 153A A.Y. 2011- 12 Income-Tax (Appeals)

Income Tax Act 1961 Demand of Penalty 1,34,40,400 A.Y. 2007- 08 Commissioner of u/s 271 1(c) Income-Tax (Appeals)



(x) The Company has no accumulated losses at the end of the financial period and it has incurred cash losses in the current period, however it has not incurred any cash losses in immediately preceding financial year.

(xi) Based on our audit procedures and as per 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 or bank. The Company did not have any outstanding dues in respect of debenture holders during the period.

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

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

(xiv) In our opinion and the information given to us , the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by its subsidiary companies from banks, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 2,482,721,831/-raised on short term basis in the form of unsecured loans and other current liabilities have been used for long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956 and therefore the provisions of clause 4(xviii) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xix) The Company did not issue any debentures during the period and therefore the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xx) The Company has not raised any money by public issues during the period and accordingly clause 4(xx) of Companies (Auditors'' Report) Order, 2003 is not applicable.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the period.



For Natvarlal Vepari & Co. For S.R. Batliboi & Co. LLP

ICAI Firm Registration Number: 106971W ICAI Firm Registration Number : 301003E

Chartered Accountants Chartered Accountants



N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

Mumbai, Dated : March 1, 2014 Mumbai, Dated : March 1, 2014


Mar 31, 2013

Report on Financial Statements

We have audited the accompanying Financial Statements of Gammon Infrastructure Projects Limited ("the Company"), which comprises the Balance sheet as at 31st March, 2013 and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

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 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 fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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 reasonable basis for our 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 Statement of Profit and Loss, of the profit 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 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. As required by Section 227(3) of the Companies Act 1956, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our Audit.

ii) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of the books.

iii) The Balance Sheet, Statement of Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

iv) In our opinion, the Balance Sheet, Statement of Profit and Loss Account and the Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v) On the basis of the written representation received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2013 from being appointed as a director in terms of Clause (g) of Sub-section (1) of section 274 of the Companies Act, 1956 on the said date.

Annexure to the Auditors'' Report

(Referred to in our report of even date)

Re: Gammon Infrastructure Projects Limited

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

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and as per the report of the site auditors provided to us, no material discrepancies were noticed on such verification.

(iii) (a) The Company has granted loans to 11 parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 5,033,493,446/-, and the year-end balance of loans granted to such parties was Rs. 4,926,264,896/-.

(b) In our opinion and according to the information and explanations given to us, the rate of interest, wherever charged and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the loans granted, repayment of the principal amount and interest is as stipulated.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has taken loan from 4 companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year wasRs. 2,442,945,291/- and the year-end balance of loans taken from such parties wasRs. 1,677,245,291/-

(f) In our opinion and according to the information and explanations given to us, the rate of interest, wherever charged and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) The payment of the principal and interest is as stipulated. Where the loans taken are re-payable on demand, as informed to us, the lenders have not demanded repayment of any such loan during the year, and thus, there has been no default on the part of the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the rendering of services. The activities of the Company do not involve sale of goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) All the transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time and the nature of services rendered by such parties.

(vi) The Company has not accepted any deposits from the public during the year under review, and consequently the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty which were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, the following Tax / duty etc has not been deposited on account of dispute.

Name of the Statute Nature of the dues Amount Period to which it Forum where relates Dispute is pending

Income Tax Act 1961 Demand u/s 153 A 205,089,058 A.Y. 2005-06 to Commissioner of A.Y. 2011-12 Income Tax (Appeals)

Income Tax Act 1961 Demand of Penalty 13,440,400 A.Y. 2007-08 Commissioner of u/s 271 1(c) Income Tax (Appeals)

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per 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 or bank. The Company did not have any outstanding dues in respect of debenture holders during the year.

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

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

(xiv) In our opinion and the information given to us , the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by its subsidiary companies from banks, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to^ 2,029,998,908 raised on short term basis in the form of unsecured loans and other current liabilities have been used for long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956 and therefore the provisions of clause 4(xviii) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xix) The Company did not issue any debentures during the year and therefore the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xx) The Company has not raised any money by public issues during the year and accordingly clause (xx) of Companies (Auditors'' Report) Order, 2003 is not applicable.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For Natvarlal Vepari & Co. For S.R. Batliboi & Co. LLP

ICAI Firm Registration Number: 106971W ICAI Firm Registration Number : 301003E

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

Mumbai, Dated : May 24, 2013 Mumbai, Dated : May 24, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Gammon Infrastructure Projects Limited ("the Company") as at March 31, 2012 and the related Statement of Profit and loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a Statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i) 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;

ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books;

iii) The Balance Sheet, Statement of Profit and loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet, Statement of Profit and loss and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors, as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of Clause (g) of Sub-section (1) of section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(b) in the case of Statement of Profit and loss of the profit for the year ended on that date; and

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

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in our report of even date)

Re: Gammon Infrastructure Projects Limited

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

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and as per the report of the site auditors provided to us, no material discrepancies were noticed on such verification.

(iii) (a) The Company has granted loans to 9 parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 2,610,468,770/-, and the year-end balance of loans granted to such parties was Rs. 2,597,468,770/-.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(c) In respect of the loans granted, repayment of the principal amount and interest is as stipulated.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has taken loan from three companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.1,228,670,000/- and the year-end balance of loans taken from such parties was Rs. 1,064,945,291/-

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) The loans taken are re-payable on demand. As informed to us, the lenders have not demanded repayment of any such loan during the year, and thus, there has been no default on the part of the Company. The payment of interest is as stipulated.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the rendering of services. The activities of the Company do not involve sale of goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public during the year under review, and consequently the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, cess were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per 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 or bank. The Company did not have any outstanding dues in respect of debenture holders during the year.

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

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

(xiv) 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 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by its subsidiary companies from banks, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company.

(xvi)Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 1,789,170,597/- raised on short term basis in the form of unsecured loans have been used for long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) We have verified that the end use of money raised by public issue is as disclosed in Note 28 to the financial statements.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For Natvarlal Vepari & Co. For S.R. Batliboi & Co.

Firm Registration Number : 106971W Firm Registration Number : 301003E

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

Mumbai, Dated : May 9, 2012 Mumbai, Dated : May 9, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of Gammon Infrastructure Projects Limited ("the Company") as at March 31,.2011 and the related Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report] Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a Statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

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

li) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of the books;

lii) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

iv) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (30 of section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors, as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of Clause |g) of Sub-section (1) of section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so require and give a true and fairview in conformity with the accounting principles generally accepted in India:

(a) in the case of Balance Sheet of the state of affairs of the Company as at March 31, 2011;

(b) in the case of Profit and Loss Account of the profit 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.

Annexure to the Auditors' Report (Referred to in our report of even date) Re: Gammon Infrastructure Projects Limited

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

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

lb) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and as per the report of the site auditors provided to us, no material discrepancies were noticed on such verification.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a] to (d) of the Companies (Auditor's Report] Order, 2003 (as amended) are not applicable to the Company and hence not commented upon.

(e) The Company had taken loan from three companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1/36,200,000 and the year-end balance of loans taken from such parties was Rs. 736,200,000.

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) The loans taken are re-payable on demand.

(iv) In our opinion and according to the information and explanations given to us there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the rendering of services. The activities of the Company do not involve sale of goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five Lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

Ivi] The Company has not accepted any deposits from the public during the year under review, and consequently the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable.

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

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under clause Id) of sub-section (1) of section 209 of the Companies Act, 1956.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax and other material statutory dues applicable to it though there has been slight de-lay in a few cases.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales- tax, customs duty, excise duty cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

[c] According to the information and explanations given to us, there are no dues of income tax, sales- tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on accountof any dispute.

(xj The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year

(xi] Based on our audit procedures and as per 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. The Company did not have any outstanding dues towards any bank or debenture holders during the year.

Ixii] According to the information and explanations given to us and based on the documents and records produced 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.

Ixiii) 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 (as amended] are not applicable to the Company.

(xiv) 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 las amended) are not applicable to the Company.

(xv] According to the information and explanations given to us, the Company has given guarantee for loans taken by its subsidiary companies from banks, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii] According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to f.574,648,385 raised on short term basis in the form of unsecured loans have been used for long-term investments.

IxviiilThe Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956 Therefore, the provisions of clause 4-fxviii] of the Companies (Auditor's Report) Order. 2003 (as amended] are not applicable to the Company.

(xix] The Company did not have any outstanding debentures during the year. Therefore, the provisions of clause iixix) of the Companies (Auditors Report! Order, 2003 las amended) are not applicable to the Company.

(xx) We have verified the end use of money raised by public issues as disclosed in the note C 3 (b) of schedule 19 to the financial statements.

[xxi] Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Natvarlal Vepari & Co. For S. R. Batliboi & Co.

Firm Registration Number: 106971W Firm Registration Number : 301003E

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M. No. 40441 M. No. 42650

Mumbai, Dated : May 19, 2011 Mumbai, Dated : May 19, 2011


Mar 31, 2010

1. We have audited the attached Consolidated Balance Sheet of Gammon Infrastructure Projects Limited (GIPL or the Company) Group (the Group or GIPL Group), as at March 31, 2010, and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow statement for the year ended on that date annexed thereto. These Consolidated Financial Statements are the responsibility of GIPLs management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of

a. certain subsidiaries whose financial statements reflect total assets of Rs. 4,223,235,116 as at March 31, 2010 and total income of Rs. 1,209,378,163 and cash flows of Rs. 41,732,311 for the year then ended;

b. certain joint venture Companies whose financial statements reflect total assets of Rs. 2,264,645,944 as at March 31, 2010, the total income of Rs. 70,533,500 and cash flows amounting to Rs. 10,935,020 for the year then ended, the Companys share of such assets, total income and cash flows being Rs. 1,127,402,394, Rs. 35,266,750 and Rs. 2,934,883 respectively and

c. certain associates whose financial statements reflect a total loss Rs. 10,028,959 for the year ended March 31, 2010, the Groups share in the losses of such associates being Rs. 3,342,488.

The above mentioned financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors except for certain joint ventures whose financial statements reflect total assets of Rs. 1,464,903,745 as at March 31, 2010, total income of Rs. 70,533,500 and cash flows of Rs. (11,316,333) for the year then ended, the Groups share of such assets, total income and cash flows being Rs. 732,451,873, Rs. 35,266,750 and Rs. (5,658,167) respectively, which are based on unaudited financial statements certified by the respective managements of the said joint ventures.

In respect of the other subsidiaries, the audit has been conducted by either of us and the audit of GIPL has been conducted by us jointly.

4. We report that the Consolidated Financial Statements have been prepared by GIPLs management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated financial statements, AS 23, Accounting for Investments in Associates in Consolidated Financial Statements and AS 27, Financial Reporting of Interests in Joint Ventures notified pursuant to the Companies (Accounting Standards) Rules, 2006.

5. Without qualifying our opinion, we draw attention to Note B 4(b)(i) of Schedule 19 of the Consolidated Financial Statements regarding the Early Completion Bonus accrued by two subsidiary Companies in earlier years and included in sundry debtors at March 31, 2010. The outcome of the matter cannot be presently determined and hence no provision for any liability has been made in the financial statements.

6. Based on our audit and on consideration of reports of other auditors on the financial statements and of the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the consolidated Balance Sheet, of the state of affairs of the GIPL Group as at March 31, 2010;

b. in the case of the consolidated Profit and Loss Account, of the profit of the GIPL Group for the year ended on that date; and

c. in the case of the consolidated Cash Flow Statement, of the cash flows of the GIPL Group for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in our report of even date) Re: Gammon Infrastructure Projects Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verification;

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and as per the report of the site auditors provided to us, no material discrepancies were noticed on such verification.

(iii) As informed, the Company has not taken or granted any fresh loan from/to any party covered in the Register maintained under Section 301 of the Companies Act 1956. Hence clause (iii) and of para 4 of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the rendering of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.

(v) a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into a register in pursuance of section 301 of the 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 such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public during the year under review, and consequently the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable.

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

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956.

(ix) (a) The Company is generally regular in

depositing Provident Fund, Income tax and service tax dues with the appropriate authorities though there has been a slight delay in a few cases. The provisions of the investor education and protection fund, employees state insurance, sales- tax, customs duty and excise duty are not applicable to the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, there are no undisputed arrears of outstanding statutory dues as at the last day of the financial year for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us there are no dues of provident fund, income tax and service tax which have not been deposited on account of any dispute.

(x) The Company does not have any accumulated losses at March 31, 2010 and has not incurred cash losses in current year and the previous year.

(xi) The Company does not have any borrowings from banks and Financial institutions and therefore clause (xi) of para 4 of the Order is not applicable.

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

(xiii) The Company is not a chit fund or a nidhi/ mutual benefit fund/society and accordingly clause (xiii) of para 4 of the Order is not applicable.

(xiv) 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 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us the Company has given guarantee for loans taken by its subsidiary company from banks which is not prejudicial to the interests of the company.

(xvi) The Company has not taken any term loans and therefore clause (xvi) of para 4 of the Order is not applicable.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares during the year to parties covered in the Register maintained under section 301 of the Act and therefore clause (xviii) of the said Order is not applicable.

(xix) The Company has not issued any debentures and accordingly clause (xix) of the said Order is not applicable.

(xx) We have verified the end use of money raised by public issues as disclosed in the note C 3 (b) of schedule 19 to the financial statements.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



For Natvarlal Vepari & Co. For S.R. Batliboi & Co.

Firm Registration Number Firm Registration Number

109671W 301003E

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

Mumbai, Mumbai,

Dated : May 21, 2010 Dated : May 21, 2010

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