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Auditor Report of Ortel Communications Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Ortel Communications Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, 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 information.

Management's Responsibility for the 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 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, including the 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 de- tecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and mainte- nance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the ac- counting 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these 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 auditors' 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 financial 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 controls 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 Company's Directors, 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 financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 gener- ally accepted in India, of the state of affairs of the Company as at 31st March, 2015, its profit and its cash flows for the year ended on that date.

Other Matter

The financial statements of the Company for the year ended 31st March, 2014 were audited by M/s Lovelock & Lewes who expressed an unmodified opinion on those statements on 30th June, 2014. Our opinion is not modified in respect of this matter.

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 explana- tions which to the best of our knowledge and belief were neces- sary 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 examina- tion 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 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. 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 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act;

f. 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 infor- mation 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 - Refer Note 29 and 41 to the financial statements;

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foresee- able losses;

(iii) There were no amounts which were required to be trans- ferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' in our Independent Auditor's Report of even date, to the members of Ortel Communications Limited on the financial statements for the year ended 31st March, 2015)

(i)

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

b) According to the information and explanations given to us, the management of the Company physically verifies its fixed assets annually (except a significant portion of cables and network equipment for which, as explained to us, physical verification is not practicable), which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification of fixed assets during the year.

(ii)

(a) According to the information and explanations given to us, the inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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. As explained to us, there were no material discrepancies on physical verification of inventory as compared to the book records.

(iii) According the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, including the management's explanation that there are certain items of inventory/fixed assets which are of special/ proprietary nature for which suitable alternative sources do not exist, 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 neither come across nor have we been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) According to the information and explanations given to us, the Company has not accepted any deposits from the public.

(vi) The maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act. We have broadly reviewed such records and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the records of the Company, amounts deducted/accrued in the books of account in respect of 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 other material statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were in arrears as at 31st March,2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues as at 31st March, 2015 of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess, which have not been deposited on account of any dispute, are as follows:

Name of the Nature of dues Amount Period to statute which (Rs. in the amount lakhs) relates

(Financial Year)

Income Tax Tax and Interest Act, 1961 for 25.11* 2005-06 non deduction of tax deducted at source

Income Tax Tax and Interest Act, 1961 for 27.73** 2006-07 non deduction of tax deducted at source

Income Tax Tax and Interest Act, 1961 for 30.78 2008-09 non deduction of tax deducted at source

Income Tax Tax and Interest Act, 1961 for 91.52 2010-11 non deduction of tax deducted at source

Finance Act, Service Tax 103.56 2006-07 1994 and interest thereon



Finance Act, Service Tax 108.05 2007-08 1994 and interest thereon



Finance Act, Service Tax 71.97 2008-09 1994 and interest thereon



Name of the Forum where the statute dispute is pending

Income Tax Commissioner of Income Act, 1961 Tax, (Appeal), Bhubaneshwar

Income Tax Commissioner of Income Act, 1961 Tax, (Appeal), Bhubaneshwar

Income Tax Commissioner of Income Act, 1961 Tax, (Appeal), Bhubaneshwar

Income Tax Commissioner of Income Act, 1961 Tax, (Appeal), Bhubaneshwar

Finance Act, Commissioner of Central 1994 Excise, Customs & Service Tax, Bhubaneshwar

Finance Act, Commissioner of Central 1994 Excise, Customs & Service Tax, Bhubaneshwar

Finance Act, Commissioner of Central 1994 Excise, Customs & Service Tax, Bhubaneshwar

* An amount of Rs.16.28 lakhs has been deposited in this regard.

** An amount of Rs.16.93 lakhs has been deposited in this regard.

(c) According to the information and explanations given to us, there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(viii) The accumulated losses of the Company are not less than fifty percent of its net worth as at 31st March, 2015 and it has not incurred cash losses during the financial year ended on that date and in the immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given to us by the management, we are of the opinion that during the year the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has not issued any debentures as at the balance sheet date.

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

(xi) In our opinion and according to the information and explanations given to us, term loans have been prima facie applied for the purposes for which they were obtained.

(xii) 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 to us by the management, we report that we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the management.

For Haribhakti & Co. LLP Chartered Accountants ICAI Firm Registration No.103523W

Anand Kumar Jhunjhunwala Partner Membership No. 056613 Bhubaneswar 20th April, 2015

 
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