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Auditor Report of GTL Infrastructure Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of GTL INFRASTRUCTURE LIMITED ("the Company"), which comprise the Balance sheet as at 31st March, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies act, 2013 ("the Act") with respect to the preparation of these standalone 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 Principles Generally Accepted in India (Indian GAAPs), including Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 of the 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 whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at 31st March, 2015 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the:

a. Note no. 29 regarding outstanding trade receivables and other current assets, which are subject to confirmation but considered good for the reasons mentioned therein.

b. Note no. 30 regarding Scheme of Arrangement under section 391 to 394 of the Companies Act, 1956 pending for the necessary modifications and approvals and preparation of financial statements without giving any effect of this scheme and to give the effect as and when the scheme becomes effective.

c. Note no. 31 regarding preparation of the financial statements of the Company on a going concern basis notwithstanding the fact that the Company has been incurring cash losses and its net worth has been substantially eroded as on the Balance Sheet date. These financial statements have been prepared on a going concern basis for the reasons stated in the said note. The appropriateness of assumption of going concern is critically dependent upon the Company's ability to raise requisite finance/generate cash flows in future to meet its obligations.

d. Note no. 22.1 regarding Managerial Remuneration, which is subject to the approval of Central Government.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) The going concern matter described in subparagraph (c) under the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on 31st March, 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note No. 26 and 27 to the standalone financial statements.

ii. The Company does not have any longterm contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of GTL Infrastructure Limited on the accounts for the year ended 31st March, 2015)

i. In respect of its fixed assets:

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

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of its business. No material discrepancies were noticed on such physical verification as compared with the available records.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management. In our opinion the frequency of verification is reasonable.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the register maintained under section 189 of the Act:

a. The Company has given advances in the nature of loan to one such party, and as per the information and explanations given to us, the above advances along with the interest are not due for repayment.

b. As the loan is repayable on demand, the question of overdue amount does not arise.

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 sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (v) of paragraph 3 of the Order are not applicable to the Company.

vi. According to the information and explanations given to us, the Central Government has not prescribed the cost records to be maintained under sub-Section (1) of Section 148 of the Act in respect of activities carried on by the Company. Therefore the provisions of Clause (vi) of paragraph 3 of the Order are not applicable to the Company.

vii. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues with the appropriate authorities during the year. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable except in case of Gram Panchayat and Municipal Corporation dues of Rs. 30,607,185 and Rs. 2,734,926 respectively.

b. The disputed statutory dues of Income tax, Sales tax, Wealth tax, Service tax, Duty of Customs, Duty of Excise, Value added tax and Cess aggregating to Rs. 101,399,353 that have not been deposited on account of Disputed matters pending before appropriate authorities are as under:

Name of the Nature of the Period to which the Amount Statute Dues amount relates (in Rs.)

Central Sales Sales Tax/ 2008-09 9,128,394 Tax Act, 1956 Trade Tax/VAT 2006-07, 2009-10 981,928 and Sales Tax and Entry Tax & 2010-11 Acts of various 2009-10 77,979 states

2007-08 to 2011-12 81,505,729

2007- 08 & 2009-10 2,733,283

2008- 09 to 2010-11 2,366,759 and 2013-14 & 2014-15

2010-11 to 2010-11 4,605,281

Total 101,399,353

Name of the Forum where dispute is pending Statute

Central Sales High Court Tax Act, 1956 Sales Tax Tribunal and Sales Tax Acts of various Commissioner (Appeals) states Deputy Commissioner (Appeals)

Additional Commissioner (Appeals)

Joint Commissioner (Appeal)

Sr. Joint Commissioner Sales Tax

(*) Net of amount deposited under protest

c. There is no delay in transferring amounts, required to be transferred, to Investor Education and protection fund in accordance with the relevant provision of the Companies Act, 1956 and rule made there-under.

viii. The Company has accumulated losses at the end of the financial year which are more than fifty percent of its net worth. The Company has incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

ix. Based on our audit procedures and information and explanations given by the management, and considering the Corporate Debt Restructuring (CDR) scheme and other restructuring schemes with foreign lender and FCCB holders, we are of the opinion that as on 31st March, 2015 the Company has not defaulted in repayment of dues to financial institutions and banks, except in the repayment of the principal amount of secured rupee term loan of Rs. 146,649,026 where the period of default was less than 30 days and interest thereon of Rs. 31,807,844 where the period of default was more than 60 days .

x. The Company has given corporate guarantees aggregating to Rs. 8,310,000,000 for loan taken by Chennai Network Infrastructure Limited (CNIL), an Associate / erstwhile subsidiary of the Company, from banks and financial institutions as at 31st March, 2015. CNIL is in the process of the amalgamation with the Company as mentioned in Note No. 30 to the standalone financial statements. The management is of the opinion that since these guarantees were given when CNIL was the subsidiary of the Company and CNIL is getting merged with the Company, the terms and conditions of the Corporate Guarantee are not prejudicial to the interest of the Company. We are, however, unable to comment on the same.

xi. The Company has not raised any new term loans during the year under audit. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year have been applied for the purposes for which they were raised.

xii. In our opinion and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For Chaturvedi & Shah For Yeolekar & Associates Chartered Accountants Chartered Accountants Firm Reg. No. - 101720W Firm Reg. No. - 102489W

R. Koria S. S. Yeolekar Partner Partner Membership No. - 35629 Membership No. - 36398

Place: Mumbai Date: 6th May, 2015


Mar 31, 2014

We have audited the accompanying financial statements of GTL INFRASTRUCTURE LIMITED ("the Company"), which comprises Balance sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Principles Generally Accepted in India (Indian GAAPs), including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of corporate affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: -

i. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2014;

ii. in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Emphasis of Matter We draw attention to the:

a. Note No. 34 regarding Scheme of Arrangement under section 391 to 394 of the Act pending for the necessary modifications and approvals and preparation of financial statements without giving any effect of this scheme and to give the effect as and when the scheme becomes effective.

b. Note No. 35 regarding preparation of the financial statements of the Company on a going concern basis notwithstanding the fact that the Company has been incurring cash losses and its net worth has been substantially eroded as on the Balance Sheet date. These financial statements have been prepared on a going concern basis for the reasons stated in the said note. The appropriateness of assumption of going concern is critically dependent upon the Company''s ability to raise requisite finance/generate cash flows in future to meet its obligations.

c. Note No. 12.1 regarding capital advance given to certain vendors, in respect of which the Company is negotiating with them for the recovery of these advances. The management is confident of recovering substantial amount out of these advances and the provision for doubtful advances aggregating to Rs.600,000,000 against same has been considered sufficient by them.

d. Note No. 11.3 regarding the book value of non-current investments being lower than their carrying value and non provision for diminution in value of these investments for the reasons mentioned therein.

e. Note No. 33 regarding outstanding trade receivables and other current assets, which are subject to confirmation but considered good for the reasons mentioned therein.

Our opinion is not qualified in respect of these matters

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required under provisions of section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the

Accounting Standards referred to in sub-section (3C) of section 211 of the Act read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of corporate affairs in respect of section 133 of the Companies Act, 2013.

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

Annexure to Auditors'' Report

(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of GTL Infrastructure Limited on the accounts for the year ended 31st March, 2014)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year which has an impact on the going concern status of the Company.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the Act:

a. The Company has given advances in the nature of loan to a party in respect of which maximum amount involved during the year was Rs. 3,391,395,602 and the year-end balance was Rs. 2,265,493,079.

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

c. As per the information and explanations given to us, the above advances are repayable on demand.

d. As the loans are repayable on demand, the question of overdue amounts does not arise.

e. The Company has not taken loans from any such parties hence provisions of sub clause (e) to (g) are not applicable to the Company for the year under audit.

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, fixed assets and also for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. Based on information and explanation given to us, in our opinion, the transactions made in pursuance of the contracts or arrangements, entered in the register maintained under section 301 of the Companies Act, 1956, and aggregating during the year to Rs. 5 lacs or more in respect of each party, have been made at prices, which are reasonable. The Company has not entered into transactions of similar nature with any other party.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence 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 for the year under audit.

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 cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Government of India under section 209(1) (d) of the Act and are of the opinion that prima facie the prescribed records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at March 31,2014 for a period of more than six months from the date they became payable except for Gram Panchayat and Municipal Taxes aggregating to Rs. 35,025,705.

b. The disputed statutory dues aggregating to Rs. 1,455,004,166 that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Nature of the Period to which the amount Amount Statute Dues relates (in Rs.) (*)

Central Sales Tax Sales Tax/Trade 2008-09 9,128,394 Act, 1956 and Tax/VAT and Entry Sales Tax Acts of Tax 2006-07, 2009-10 & 2010-11 981,928 various states

2009-10 12,229,970

2007-08 to 2010-11 11,284,961

2007- 08 & 2009-10 2,733,283

2008- 09 to 2010-11 2,170,358

2009- 10 to 2010-11 14,355,055

Central Excise Service Tax 2006-07 to 2011-12 1,402,120,217 Act,1944

Total 1,455,004,166

Name of the Statute Forum where dispute is pending

Central Sales Tax Act, 1956 and Sales Tax Acts of various states High Court

Sales Tax Tribunal

Appellate Commissioner, Sales Tax (Appeal )

Deputy Commissioner (Appeals)

Additional Commissioner (Appeals)

Joint Commissioner (Appeal)

Sr. Joint Commissioner Sales Tax

Central Excise Act,1944 Commissioner (Appeals) Service Tax

Total

(*) Net of amount deposited under protest as mentioned in Note No. 30 to the financial statements.

x. The Company has accumulated losses at the end of the financial year, which is more than fifty percent of its net worth. The Company has incurred cash losses during the year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures, information and explanations given by the management, and considering the Corporate Debt Restructuring (CDR) scheme and other restructuring schemes with foreign lender and FCCB holders, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or bond holders except for overdue amount of interest aggregating to Rs. 653,625,908 due to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company 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 are not applicable to the Company.

xiv. 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 & other investments. The Company has maintained proper records of transactions and contracts in respect of investments in shares and Mutual funds and timely entries have been made therein. All the investments in shares and mutual funds have been held by the Company in its own name.

xv. The Company has given corporate guarantee aggregating to Rs. 8,310,000,000 for loans taken by Chennai Network Infrastructure Limited (CNIL), an Associate/erstwhile subsidiary of the Company, from banks and financial institutions as at 31st March, 2014. CNIL is in the process of the amalgamation with the Company as mentioned in Note No. 34 to the financial statements. The management is of the opinion that since these guarantees were given when CNIL was the subsidiary of the Company and CNIL is getting merged with the Company, the terms and conditions of the Corporate Guarantee are not prejudicial to the interest of the Company. We are, however, unable to comment on the same.

xvi. The Company has not raised any new term loans during the year under audit. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year have been applied for the purposes for which they were raised.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at March 31,2014, related information as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis have not prima facie been utilized for long term purposes.

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

xix. During the year, the Company has not issued any debenture and hence clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

xx. During the year covered by our report the Company has not raised any money by public issue.

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

For Chaturvedi & Shah For Yeolekar & Associates

Chartered Accountants Chartered Accountants

Firm Reg. No. - 101720W Firm Reg. No. - 102489W

R. KORIA S. S. YEOLEKAR

Partner Partner

Membership No. - 35629 Membership No. - 36398

Place: Mumbai Date : May 21,2014


Mar 31, 2013

Report on the Financial statement

We have audited the accompanying financial statements of GTL INFRASTRUCTURE LIMITED ("the Company”)'' which comprises Balance Sheet as at March 31'' 2013'' the Statement of Profit and Loss and Cash Flow Statement for the year then ended'' and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position'' financial performance and cash flows of the Company in accordance with the Accounting Principles Generally Accepted in India (Indian GAAPs)'' including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act'' 1956 ("the Act”). This responsibility includes the design'' implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement'' whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on

Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment'' including the assessment of the risks of material misstatement of the financial statements'' whether due to fraud or error. In making those risk assessments'' the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management'' as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. opinion

In our opinion and to the best of our information and according to the explanations given to us'' the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: -

i. in the case of the Balance Sheet'' of the state of affairs of the Company as at March 31'' 2013;

ii. in the case of the Statement of Profit and Loss'' of the loss of the Company for the year ended on that date; and

iii. in the case of the Cash Flow Statement'' of the Cash Flows for the year ended on that date.

emphasis of Matter

We draw attention to Note No.30 regarding Scheme of Arrangement under section 391 to 394 of the Act pending for the necessary modifications and approvals and preparation of account without giving any effect of this scheme and to give the effect as and when the scheme becomes effective. Our opinion is not qualified in respect of 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 Act'' we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required under provisions of section 227(3) of the Act'' we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet'' Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account

d. in our opinion'' the Balance Sheet'' Statement of Profit and Loss'' and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

e. On the basis of written representations received from the directors as on March 31'' 2013'' and taken on record by the Board of Directors'' none of the directors is disqualified as on March 31'' 2013'' from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

Annexure to Auditors’ Report

(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements” of our report of even date)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars'' including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us'' the Company has physically verified certain assets'' in accordance with a phased program of verification'' which in our opinion is reasonable'' having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

c. In our opinion'' the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us'' inventories have been physically verified by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us'' the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records'' we are of the opinion that the Company is maintaining proper records of inventory. As explained to us'' there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii. According to the information and explanations given to us'' the Company has not granted or taken loans'' secured or unsecured'' to or from companies'' firms or other parties covered in the register maintained under section 301 of the Act. Accordingly'' clause (iii) of Paragraph 4 of the Companies (Auditors’ Report) Order 2003 is not applicable to 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'' fixed assets and also for the sale of services. During the course of our audit'' we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act'' 1956:

a. In our opinion and according to the information and explanations given to us'' the transactions made in pursuance of contracts or arrangements'' that need to be entered in the register maintained under section 301 of the Companies Act'' 1956 have been so entered.

b. Based on information and explanation given to us'' in our opinion'' the transactions made in pursuance of the contracts or arrangements'' entered in the register maintained under section 301 of the Companies Act'' 1956'' and aggregating during the year to Rs. 5 lacs or more in respect of each party'' have been made at prices'' which are reasonable. The Company has not entered into transactions of similar nature with any other party.

vi. According to the information and explanations given to us'' the Company has not accepted any deposits from the public and hence 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 for the year under audit.

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 cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules'' 2011 prescribed by the Government of India under section 209 (1) (d) of the Act and are of the opinion that prima facie the prescribed records have been maintained. We have'' however'' not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues'' including Provident Fund'' Employees’ State Insurance'' Income tax'' Sales tax'' Wealth tax'' Service tax'' Customs Duty'' Excise Duty'' Cess and any other statutory dues with the appropriate authorities during the year. According to the information and explanations given to us'' no undisputed amounts payable in respect of such statutory dues were outstanding as at March 31'' 2013 for a period of more than six months from the date they became payable except for Gram Panchayat and Municipal Taxes aggregating to Rs. 22''963''394.

b. The disputed statutory dues aggregating to Rs. 59''417''478 that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the statute Nature of the Dues period to which the Amount Forum where dispute is pending amount relates (in Rs.) (*)

Central Sales Tax Act'' 1956 and Sales Tax/ Trade Tax/ 2007-08 to 2010-11 50''759''937 Deputy Commissioner (Appeals) Sales Tax Acts of various states VAT and Entry Tax 2007-08 & 2009-10 2''733''283 Additional Commissioner (Appeals)

2008-09 to 2010-11 4''942''330 Joint Commissioner (Appeal)

2006-07 '' 2009-10 & 981''928 Sales Tax Tribunal

2010-11

total 59''417''478

(*) Net of amount deposited under protest as mentioned in Note No. 25 to the financial statements.

x. The Company has accumulated losses at the end of the financial year'' which is less than fifty percent of its net worth. The Company has incurred cash losses during the year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures'' information and explanations given by the management'' and considering the Corporate Debt Restructuring (CDR) scheme and other restructuring schemes with foreign lender and FCCB holders'' we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions'' banks or bond holders.

xii. In our opinion and according to the explanations given to us and based on the information available'' no loans and advances have been granted by the Company 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 are not applicable to the Company.

xiv. 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 & other investments. The Company has maintained proper records of transactions and contracts in respect of investments in shares and Mutual funds and timely entries have been made therein. All the investment in shares and mutual funds have been held by the Company in its own name.

xv. The Company has given corporate guarantee aggregating to Rs. 10''810''000''000 for loans taken by Chennai Network Infrastructure Limited (CNIL)'' the erstwhile subsidiary of the Company'' from banks and financial institutions as at 31st March'' 2013. CNIL is in the process of the amalgamation with the Company as mentioned in Note no.30 to the financial statements. The management is of the opinion that since these guarantees were given when CNIL was the subsidiary of the Company and CNIL is getting merged with the Company'' the terms and conditions of the Corporate Guarantee are not prejudicial to the interest of the Company. We are'' however'' unable to comment on the same.

xvi. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

xvii. On the basis of review of utilization of funds'' which is based on overall examination of the Balance Sheet of the Company as at March 31'' 2013'' related information as made available to us and as represented to us'' by the management'' we are of the opinion'' that funds raised on short term basis have not prima facie been utilized for long term purposes.

xviii. During the year'' the Company has made preferential allotment of 71''329''113 equity shares of Rs. 10/- each on conversion of 9''016''000 Compulsorily Convertible Debentures (CCDs) to a Company covered in the Register maintained under Section 301 of the Act. According to the information & explanation given to us these shares are issued in terms of Corporate Debt Restructuring Scheme and in accordance with Securities and Exchange Board of India (Issue Of Capital and Disclosure Requirements) Regulations'' 2009 and accordingly'' the prices at which these shares are issued are not prima facie prejudicial to the interest of the Company.

xix. The Company had created security in respect of 110''162''087 Compulsorily Convertible Debentures (CCDs) issued during the year. Subsequently these CCDs got converted in to Equity Shares of the Company and as on March 31'' 2013 no CCDs were outstanding.

xx. During the year covered by our report the Company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us'' no fraud on or by the Company was noticed or reported during the course of our audit.

For chaturvedi & shah For yeolekar & Associates

Chartered Accountants Chartered Accountants

Firm Reg. No. - 101720W Firm Reg. No. - 102489W

R. Koria s. s. yeolekar

Partner Partner

Membership No. – 35629 Membership No. – 36398

Mumbai Date: 9th May 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of GTL INFRASTRUCTURE LIMITED, as at March 31, 2012 and also the Statement of Profit and Loss and Cash Flow Statement of the Company 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (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.

4. Without qualifying our opinion we draw your attention to the

i. Note No. 27 regarding Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956 pending for the necessary approvals and preparation of accounts without giving any effects of this scheme and to give the effects as and when the scheme will be effective.

ii. Note No. 4.3 regarding the accounting treatment of redemption premium on Foreign Currency Convertible Bonds (FCCB).

5. Further to our comments in Annexure referred to in para 3 above, we report that:

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

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

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

d) In our opinion the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the directors as on March 31, 2012 and taken on records 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.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(ii) in the case of Statement of Profit and Loss, of the Loss of the Company for the year ended on that date; and (iii) 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 Paragraph 3 of our Report of even date)

As required by the Companies (Auditor's Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that;-

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. The discrepancies noticed at the time of such verification were properly dealt with in the books of accounts.

c. During the year, the Company has disposed off certain Fixed Assets. However, it has no effect on the going concern status of the Company.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii. According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured to or from companies, firms or parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clause (iii) of Paragraph 4 of the Companies

(Auditors' Report) Order 2003, is not applicable to 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, fixed assets and also for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations given to us, there is no contract or arrangement referred to in section 301 of the Companies Act, 1956 that need to be entered in the register required to be maintained under that section.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

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

viii. The Central Government has not prescribed maintenance of cost records, for the year, under section 209 (1) (d) of the Companies Act, 1956 in respect of any of the services provided by the Company.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at March 31, 2012 for a period of more than six months from the date they became payable except for dues relating to Gram panchayat tax and municipal tax aggregating to Rs. 8,477,476.

c. The disputed statutory dues aggregating to Rs. 132,061,680 that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Period to which the Amount (in Rs) Forum where dispute Name of the Statute Nature of the Dues amount relates (*) is pending

2006-07 to 2010-11 65,964,066 Deputy Commissioner (Appeals)

Central sales Tax Act, 1956 and Sales Tax / Trade Tax / 2007-08 to 2009-10 7,587,993 Additional Commissioner (Appeals)

Sales Tax Acts of various states VAT and Entry Tax 2008-09 42,482,942 Joint Commissioner (Appeal)

2006-07 and 2008-09 16,026,679 Sales Tax Tribunal Total 132,061,680

(*) Net of amount deposited under protest as mentioned in Note No. 25 (v) to Financial Statements.

x. The Company has accumulated losses at the end of the financial year, which is less than fifty percent of its net worth. The Company has incurred cash losses during the year but had not incurred cash losses in the immediately preceding financial year.

xi. Based on our audit procedures, information and explanations given by the mangagement and considering the Corporate Debt Restructuring (CDR) scheme, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, banks or bond holders except for Foreign Currency Term Loan of Rs. 277,890,240 in respect of which the repayment terms have since been amended w.e.f. May 14, 2012 and after taking into consideration such revised terms, there is no overdue amount.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company 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 is not applicable to the Comapny.

xiv. The Company has maintained proper records of transactions and contracts in respect of shares and other securities and timely entries have been made therein. The investments are held by the Company in its own name.

xv. The Company has given corporate guarantees aggregating to Rs. 10,810,000,000 for loans taken by the subsidiary company from banks and financial institutions as at 31st March, 2012. The subsidiary is in the process of the amalgamation with the Company as mentioned in Note No. 25. The management is of the opinion that the terms and conditions are not prejudicial to the interests of the Company- We are, however, unable to comment on the same.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been used for the purpose for which they were raised.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at March 31, 2012, related information as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis have not prima facie been utilized for long term purposes.

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

xix. During the year, the Company has not issued any debenture and hence clause 4 (xix) of Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

xx. During the year covered by our report the Company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For CHATURVEDI & SHAH For YEOLEKAR & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Reg. No. - 101720W Firm Reg. No. - 102489W

R. KORIA S. S. YEOLEKAR

Partner Partner

Membership No. - 35629 Membership No. - 36398

Mumbai

Date : May 17, 2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of GTL INFRASTRUCTURE LIMITED, as at March 31,2010 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order. 2003 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, 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 Annexure referred to in para 3 above, we report that:

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

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

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

d) In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

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

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and notes thereon, in particular Note No. 9 of Schedule P regarding the accounting treatment of redemption premium on Foreign Currency Convertible Bonds (FCCB), give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

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

iii) 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 Paragraph 3 of our Report of even date)

As required by the Companies (Auditors Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:-

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

c. During the year, the Company has disposed off certain Fixed Assets. However it has no effect on the going concern status of the company. ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

iii. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the companies Act 1956:

a. The Company has not granted any loan to such parties. Consequently the provisions of clauses (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Companies (Auditors Report) Order, 2003 are not applicable.

b. The Company has taken loan from a party covered in the register maintained under section 301 of the Companies Act, 1956 in respect of which maximum amount involved during the year and year end balance was Rs. 2,800,000,000.

c. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loan taken are not prima facie prejudicial to the interest of the Company.

d. The principal amount of loan taken and interest thereon were not due for payment as on 31st March, 2010 and hence question of overdue amount does not arise.

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, fixed assets and also for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations given to us, there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered in the register required to be maintained under that section.

vi. According to information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India andthe provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

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

viii. The Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of any of the services provided by the Company. Therefore the provisions of Clause (viii) of paragraph 4 of the Companies (Auditors) Report Order, 2003 are not applicable.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at March 31,2010 for a period of more than six months from the date they became payable.

c. The disputed statutory dues aggregating to Rs. 42,887,287 that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Statute Nature of the Dues Period to which Amount (in Rs.) Forum where dispute

the amount relates (*) is pending

The Punjab VAT Act, 2005 Sales Tax 2007-08 165,683 Deputy Excise & Taxation Commissione (Appeal)

The Andhra Pradesh VAT Act, 2005 Sales Tax 2008-09 18,128,394 Deputy Commissioner of Taxes (Appeal)

The Uttar Pradesh VAT Act, 2008 Sales Tax 2008-09 23,554,908 Joint Commissioner of Taxes (Appeal)

The Madhya Pradesh VAT Act, 2002 Entry Tax 2006-07 1,038,302 Deputy Commissioner of Taxes (Appeal)

Total 42,887,287

l Net nf amnnnt riennsiteri nnrler nrntest as mentioned innote 1 nf schedule P tr Amounts

x. The Company has accumulated losses at the end of the financial year, which is less than fifty percent of its net worth. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or bond holders.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company 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 (Auditors Report) Order, 2003 is not applicable to the Company.

xiv. The Company has maintained proper records of transactions and contracts in respect of shares and other securities and timely entries have been made therein. The investments are held by the Company in its own name.

xv. According to the information and explanations given to us, as on 31st March, 2010 the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purpose for which they were raised or pending utilisation been temporarily kept with banks.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at March 31, 2010, related informations as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis have not prima facie been utilized for long term purposes.

xviii. During the year the company has made preferential allotments of 106,058,940 equity shares of Rs. 10 each, against the conversion of preferential convertible warrants, at a price of Rs. 40 per share to a Company covered under register maintained under section 301 of the Companies Act, 1956. According to the information & explanation given to us these shares are issued in terms of Securities And Exchange Board Of India (Disclosure And Investor Protection) Guidelines, 2000 and accordingly, the prices at which these shares are issued are not prima facie prejudicial to the interest of the company.

xix. During the year, the Company has not issued any debenture and hence clause 4 (xix) of Companies (Auditors Report) Order, 2003 is not applicable to the Company.

xx. We have verified the end-use of money raised by issue of Foreign Currency Convertible Bonds and the same is disclosed by the management in Note no. 9 of Schedule P to accounts.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Yeolekar & Associates

Chartered Accountants Chartered Accountants

R. Koria S. S. Yeolekar

Partner Partner

Membership No. - 35629 Membership No. - 36398

Firm Reg. No. - 101720W Firm Reg. No. - 102489W

Mumbai

Date: April 29,2010



 
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