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Auditor Report of Suryachakra Power Corporation Ltd.

Mar 31, 2015

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

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 CompaniesAct, 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, 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 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.

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 the 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 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 the 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 qualified audit opinion on the financial statements.

Basis for Qualified Opinion

Attention is invited to:

(a) Note - 33 to the financial statements regarding revenue from Andaman & Nicobar Administration (A&N Administration) -pendingfinal agreement with A&NAdministration, we are unable to comment on the extent of ultimate recoverability ofRs.49,344,300/- withheld by A&N Administration during the year ended March 31, 2015(year ended 31.03.2014: Rs.5,32,99,282)and the total receivables including interest accrued thereon as at March 31, 2015of Rs.35,80,82,014/ - (31.03.2014: Rs.30,87,37,714) on account of amounts withheld which are subject to confirmation by the A&N Administration.

(b) Note 34(a) to the financial statements regarding the company s assessment that no provisioning is required against the carrying amounts of its investments in subsidiary Suryachakra Global Enviro Power Limited Rs. 22,27,79,241, despite the complete erosion of its net worth and continued suspension of operations for the reasons stated in the said note. We are unable to comment on the recoverability of the carrying amounts of the said investment or advances.

(c) Note 34(b) to the financial statements regarding its investment in Suryachakra Energy (Chhattisgarh) Private Limited, a wholly owned subsidiary of the company - Rs. 36,48,00,725. Completion and implementation of the power project of Suryachakra Energy (Chhattisgarh) Private Limited depends on the ability of the management to infuse the requisite funds. Hence, we are unable to comment on the recoverability of the carrying amounts of the said investment.

(d) Note 34(c) to the financial statements regarding advances to Suryachakra Global Ventures Limited(SGVL), a wholly owned subsidiary of the company incorporated in Hong Kong Rs. 70,59,96,278 which in turn has advanced the said amount to M/s Symphony Trading and Investment Limited(STIL), Hong Kong for acquiring coal mines for the company/SGVL during the quarter ended June 2011. In the absence of information regarding financial worthiness of STIL/securities in favour of the company, we are unable to comment on the extent of recoverability of the advance.

(e) Note 35 to the financial statements regarding advances to Suryachakra Thermal Energy (Andhra) Private Limited Rs.3,06,61,484 and Suryachakra Thermal Energy (Madhya Pradesh) Private Limited Rs.3,81,01,314 which are considered good and fully recoverable for the reasons stated therein. We are unable to comment on the extent of the ultimate recoverability.

(f) Note 36 to the financial statements regarding capital advances considered good and fully recoverable for the reasons stated therein. We are unable to comment on the extent of ultimate recoverability.

(g) Note 37to the financial statements regarding non-provision of interest on loans from certain lenders on account of legal cases filed by them for recovery of their dues. We are unable to comment on the extent of interest expense and loss for the year ended March 31, 2015 and the cumulative liability and cumulative reserves and surplus up to March 31, 2015.

(h) Note 39to the financial statements regarding the non-availability of confirmation of balances for secured loans, trade payables, creditors for capital goods and loans and advances. In the absence of confirmation of balances, we are unable to comment on the impact of adverse variances, if any, as at March 31, 2015.

The consequential impact of the above matters on the loss for the year and the retained earnings as at March 31,2015 is indeterminable.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, 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 atMarch 31, 2015 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention toNote - 38 to the financial statements regarding the winding up petition filed by one of the unsecured creditors of the Company, which is pending for hearing before the Honourable High Court of Andhra Pradesh.

Our opinion is not modified in respect of this matter.

Report Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor's Report) Order, 20015 ("the Order") issued by the Central Government of India in terms of Section 143 (11) of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraph3 of the Order.

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) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, 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) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, 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 matters described in the Basis for Qualified Opinion paragraph above, and matters described in the Emphasis of Matters 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 31 March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

h) 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 - Refer Note 37 & 38 to the financial statements

ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii) The following are the instances of delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company

(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) The management has conducted physical verification of major assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification

(ii) In respect of its inventories:

a) The inventories consisting of raw materials, stores, spares and consumables 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) In our opinion and according to the information and explanation given to us, and on the basis of our examinations of the inventory records, the Company is maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has granted secured and unsecured loans and advances to companies covered in the register maintained under Section 189 of the Act.

a) According to the information and explanations given to us, the terms of the arrangement do not stipulate any repayment schedule for principal and interest.

b) Hence, there is no overdue amount in respect of the above loans.

(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 with regard to purchase of inventories and fixed assets and for sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weakness in internal control system.

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

(vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records prescribed under Section 148(1) of the Act and we are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

fvu) a) The company is not regular in depositing undisputed statutory dues including Provident Fund, Income tax, Sales tax , Service Tax and material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, the provisions of employees state insurance, wealth tax custom duty, excise duty and cess are not applicable to the company at present. The following undisputed amounts were in arrears as at March 31, 2015 for a period of more than six months from the date they became payable:

Rupees

Tax Deduction at Source 47,32,154

Service Tax 5,90,280

Provident Fund 53,966

VAT 5,46,250

b) According to the information and explanations given to us, there were no dues of Income Tax / Sales Tax / Wealth Tax / Service Tax / Custom Duty / Excise Duty / Cess which have not been deposited on account of any dispute.

c) In our opinion and according to the information and explanations given to us, the amounts required to be transferred to investors education and protection fund, in accordance with the relevant provisions of the companies Act-1956 ( 1 to 1956) and rules made there under has been transferred to such fund within time.

(viii) Subject to the effects of the matters described in the Basis for Qualified Opinion paragraph of our report of even date, the accumulated losses of the Company at the end of the financial year are not less than 50% of its net worth and it has incurred cash losses in the financial year under report and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks. The period and the amount of default have been set out in the Appendix to this report.

(x) In our opinion and according to the information and explanations given to us, the Company has given guarantees for loans taken by its subsidiary from banks or financial institutions. The terms and conditions of the guarantees given by the company for loans taken by one of its subsidiaries from Bunge Emissions Fund Limited are prima facie not prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans availed by the Company during the earlier years have been applied for the purpose for which the loans were obtained.

(xii) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us,no instance of fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

for M BHASKARA RAO & CO. Chartered Accountants Firm Registration No. 000459 S

V.K. MURALIDHAR PARTNER Hyderabad, May 27, 2015 Membership No.201570








Mar 31, 2014

We have audited the accompanying financial statements of Surychakra Power Corporation Limited ("the Company"), which comprise the Balance Sheet as at March comprise the Balance Sheet as at March31, 2014, the Statement of Profit and Loss Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanartory information.

Management''s Responsibility for the Consolidated 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 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 '' Responsibility:

Our responsiblility is to express 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 Judgement, 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 approprateness of accounting policies used and the reasonableness of the accounting estimates made by mangement, as well as evaluating the overall presenation 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.

Basis for Qualified Opinion

Attention is invited to:

(a) Note - 32 to the financial statements regarding revenue from Andaman & Nicobar Administration (A&N Administration) - pending final agreement with A&N Administration, we are unable to comment on the extent of ultimate recoverability of Rs. 5,32,99,282/- withheld by A&N Adminstration during the year ended March 31, March 2014 (year ended 31.03.2013 : Rs. 5,25,87,325) and the total receivables including interest accrued thereon as at March 31,2014 of Rs. 30,87,37,714/- (31.03.2013 : Rs. 25,40,07,355) on account of amounts withheld which are subject to confirmation by the A& N Administration.

(b) Note 33(a) to the financial statements regarding the company''s assessment that no provisioning is required against the carrying amounts of its long term investments and loans extended to its subsidiary Suryachakra Global Enviro Power Limited - Rs.113,18,60,401, for the reasons stated in the said note. We are unable to comment on the recoverability of the carrying amounts of the said investment or advances.

(c) Note 33(b) to the financial statements regarding its investment in Suryachakra Energy (Chattisgarh) Private Limited, a wholly owned subsidiary of the company -Rs.36,48,00,725. Completion and implementation of the power project of Suryachakra Energy (Chhattishgarh) Priavate Limited depends on the ability of the management to infuse the requisite funds. Hence, we are unable to comment on the recoverability of the carrying amounts of the said investment.

(d) Note 33(c) to the financial statements regarding advances to Suryachakra Global Ventures Limited (SGVL), a wholly owned subsidiary of the company incorporated in Hong Kong - Rs. 70,59,96,278 which in turn has davanced the said amount to M/s Symphony Trading and Investement Limited (STIL), Hong Kong for acquiring coal mines for the company / SGVL during the quarter ended June 2011. In the absence of information regarding financial worthiness of STIL/securities in favour of the company, we are unable to comment on the extent of recoverability of the advance.

(e) Note 35 to the financial statements regarding non-provision of interest on loans from certain lenders on account of legal cases filed by them for recovery of their dues. We are unable to comment on the extent of interest expense for the year ended March31,2014 and the cumulative liability up to March 31, 2014.

(f) Note 36 to the financial statement regarding the non-availability of confirmation of balances for secured loans, trade payables, creditors for capital goods and loans and advances. In the absence of confirmation of balances, we are unable to comment on the impact of adverse variances, if any, as at March 31,2014.

The consequential impact of the above matters on the loss for the year and the retained earnings as at March 31, 2014 is indeterminable.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statement 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 for the year ended on that date; and

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

Emphasis of Matter

We draw attention to Note - 34 to the financial statement regarding the winding up petition filed by one of the unsecured creditors of the Company, which is pending for hearing before the Honourable High Court of Andhra Pradesh.

Our opinion is not qualified in respect of the above matter.

Report Other Legal and Regulatory Requirements:

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

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

i) We have obtained all the inforamtion 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 those books;

iii) 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;

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

v) 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.

SURYACHAKRA POWER CORPORATION LIMITED ANNEXURE TO THE AUDITORS'' REPORT (STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE)

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

b) According to the information and explanations given to us, the management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the Company, during the year, has not disposed off substantial part of fixed assets. Hence, the provisions of clause 4 (i) (c) of the Order is not applicable to the company.

(ii) a) The inventories consisting of raw materials, stores, spares and consumables 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) In our opinion and according to the information and explanation given to us, and on the basis of our examinations of the inventory records, the Company is maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) a) According to the information and explanations given to us, the company has granted secured / unsecured loans and advances to six parties covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs.134,75,54,880 and the year-end balance of the loan granted to such parties was Rs. 102,46,35,363.

b) In our opinion and according to the information and explanations given to us, the terms and conditions on which the loans and advances have been granted are not prima facie prejudicial to the interests of the Company.

c) According to the information and explanations given to us, the terms of the arrangement do not stipulate any repayment schedule for principal and interest.

d) There is no overdue amount in respect of the above loans.

e) According to the information and explanations given to us, the Company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 3 (e), (f) and (g) of the Order are 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 with regard to purchase of inventories and fixed assets and for sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weakness in internal control system.

(v) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements (except secured/unsecured loans and advances granted to the parties stated in para (iii) above), referred to under section 301 of the Act, that need to be entered into the register maintained under section 301 of the Act have been so entered.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from public. Accordingly, the provisions of clause 4(vi) of the Order is not applicable to the company.

(vii) In our opinion and according to the information and explanations given to us, the scope and coverage of the internal audit system needs to be strengthened to make it commensurate with the size and the nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records prescribed under Section 209(1)(d) of the Act and we are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

(ix) a) The company is not regular in depositing undisputed statutory dues including Provident Fund, Investor Education

and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, the following undisputed amounts were in arrears as at March 31, 2014 for a period of more than six months from the date they became payable:

Rupees

Tax Deduction at Source 56,42,391

Service Tax 4,28,397

Provident Fund 1,68,936

VAT 5,46,250

b) According to the information and explanations given to us, there were no dues of Income Tax / Sales Tax / Wealth Tax / Service Tax / Custom Duty / Excise Duty / Cess which have not been deposited on account of any dispute.

(x) Subject to the effects of the matters described in the Basis for Qualified Opinion paragraph of our report of even date, the accumulated losses at the end of the year does not exceed 50% of its net worth at the end of the year. The company has incurred cash losses in the financial year under report; however, the company has incurred cash losses in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks. Details of the same are stated in the Appendix to this report.

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

(xiii) In our opinion, the Company is not a Chit Fund / Nidhi / Mutual Benefit Fund / Society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the company.

(xiv) In our opinion and according to information and explanations given to us, the Company does not deal or trade in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the company for loans taken by one of its subsidiaries from banks or financial institutions are prima facie not prejudicial to the interests of the Company.

(xvi) To the best of our knowledge and belief and according to information and explanations given to us, in our opinion, the term loans availed during the earlier years by the Company were, prima facie, applied by the Company for the purposes for which the loans were obtained.

(xvii) According to 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 purposes.

(xviii) During the year under report, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

(xix) According to the information and explanations given to us, no debentures have been issued by the Company. Hence, the provisions of clause 4(xix) of the Order are not applicable to the Company.

(xx) In our opinion and according to the information and explanations given to us, the Company has not raised any money by public issue during the year. Hence, the provisions of clause 4(xx) of the Order are not applicable to the Company.

(xxi) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us, no instance of fraud on or by the Company was reported during the year, nor have we been informed of such case by the management.

for M BHASKARA RAO & CO.

Chartered Accountants Firm Registration No. 000459 S

V.K. MURALIDHAR

Partner

Hyderabad, May 30, 2014 Membership No.201570


Jun 30, 2012

1. We have audited the attached Balance Sheet of Suryachakra Power Corporation Limited as at June 30, 2012, the 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 the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 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. Attention is invited to:

(a) Note 34 to the financial statements regarding revenue from Andaman & Nicobar Administration (A&N Administration) - pending final agreement with A&N Administration, we are unable to comment on the extent of ultimate recoverability of Rs.10,13,89,890/- withheld by A&N Administration for the year ended June 30, 2012 (31.03.2011: Rs. 5,94,94,972)and the total receivables as at June 30, 2012 of Rs.17,76,78,168 (31.03.2011: Rs. 8,59,04,780) which are subject to confirmation by the A&N Administration. The total interest accrued on such disagreements which are subject to confirmation by the A&N Administration is Rs.12,75,74,329 (31.03.2011: Rs.12,75,74,329).

(b) Note 35 to the financial statements, relating to coal trading receivables (discontinued operation) regarding which we are unable to comment on the extent of realisability of the dues.

(c) Note 36 relating to the Company's assessment that no provision against the carrying amounts of its long term investment and loans extended to its subsidiaries "Suryachakra Global Enviro Power Limited"Rs.116,93,13,308; "Suryachakra Energy (Chhattisgarh)Private Limited" Rs.35,66,32,225and "Suryachakra Global Ventures Limited" Rs.85,01,25,548 is presently necessary, for the reasons stated in the said note. We are unable to comment on the extent of the impairment of the said investment / advances.

The consequential impact of the above matters on the loss for the year ended June 30, 2012 and the retained earnings as at June 30, 2012 is indeterminable.

5. Without qualifying our opinion, we draw attention to:

Note 37 to the financial statements regarding winding up petition filed by one of the unsecured creditors which is pending for hearing before the Honourable High Court of Andhra Pradesh.

6. Further to our comments in the Annexure referred to in paragraph (3) 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 those books;

iii) 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;

iv) In our opinion, the Balance Sheet, Statement of Profit and Loss and 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 written representations received from the directors, as on June 30, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on June 30, 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) Subject to our comments at para 4 above, in our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with "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 June 30, 2012;

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 of the Company for the year ended on that date.

SURYACHAKRA POWER CORPORATION LIMITED ANNEXURE TO THE AUDITORS' REPORT

(STATEMENT REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE)

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

b) According to the information and explanations given to us, the management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the Company, during the year, has not disposed off substantial part of fixed assets.

(ii) a) The inventories consisting of raw materials, stores, spares and consumables 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) In our opinion and according to the information and explanation given to us, and on the basis of our examinations of the inventory records, the Company is maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) a) According to the information and explanations given to us, the Company has granted unsecured loan to seven parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.121,17,92,935 and the year-end balance of the loan granted to such parties was Rs.105,26,72,443.

b) In our opinion and according to the information and explanations given to us, the terms and conditions on which the loans have been granted are not prima facie prejudicial to the interests of the Company.

c) According to the information and explanations given to us, the terms of the arrangement do not stipulate any repayment schedule for principal and interest.

d) There is no overdue amount in respect of the above loans.

e) According to the information and explanations given to us, the Company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 3 (e), (f) and (g) of the Companies (Auditors' Report) Order, 2003 are 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 with regard to purchase of inventories and fixed assets and for sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weakness in internal control system.

(v) In our opinion and according to the information and explanations given to us, we are of the opinion that there are no particulars of contracts or arrangements (except unsecured loans taken from the parties stated in para (iii) above), referred to under section 301 of the Companies Act, 1956, that need to be entered into the register maintained under section 301 of the Companies Act, 1956.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from public. Accordingly, the provisions of clause 4(vi) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

(vii) In our opinion and according to the information and explanations given to us, the scope and coverage of the internal audit system needs to be strengthened to make it commensurate with the size and the nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records prescribed under Section 209(1)(d) of the Companies Act, 1956, and we are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

(ix) a) The company is not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, the following undisputed amounts were in arrears as at June 30, 2012for a period of more than six months from the date they became payable:

Rupees

Tax Deduction at Source 32,68,784

Provident Fund 1,316

VAT 5,46,250

Professional Tax 100

b) According to the information and explanations given to us, there were no dues of Income Tax / Sales Tax / Wealth Tax / Service Tax /

Custom Duty / Excise Duty / Cess which have not been deposited on account of any dispute.

(x) Subject to the matters specified in paragraph 4 of our report of even date, the accumulated losses at the end of the year does not exceed 50% of its net worth at the end of the year. The company has not incurred cash losses in the financial year under report and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks. Details of the same are stated in the Appendix.

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

(xiii) In our opinion, the Company is not a Chit Fund / Nidhi / Mutual Benefit Fund / Society. Accordingly, the provisions of clause 4(xiii) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

(xiv) In our opinion and according to information and explanations given to us, the Company does not deal or trade in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the company for loans taken by one of its subsidiaries from banks or financial institutions are not prima facie prejudicial to the interests of the Company.

(xvi) To the best of our knowledge and belief and according to information and explanations given to us, in our opinion, the term loans availed during the earlier years by the Company were, prima facie, applied by the Company for the purposes for which the loans were obtained.

(xvii) According to information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds were raised on short term basis which have been used for long term purposes.

(xviii) During the year under report, 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) According to the information and explanations given to us, no debentures have been issued by the Company. Accordingly, the provisions of clause 4

(xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xx) In our opinion and according to the information and explanations given to us, the Company has not raised any money by public issue during the year except by issue of Global Depository Receipts. The proceeds of the same were applied for the purposes for which the issue was made.

(xxi) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us, no instance of fraud on or by the Company was reported during the year, nor have we been informed of such case by the management.

For M.BHASKARA RAO & CO;

Chartered Accountants

Firm Registration No. 000459 S

V.K MURALIDHAR

Partner

Membership No. 201570

Hyderabad, July 16, 2012


Mar 31, 2011

1 We have audited the attached balance sheet of Suryachakra Power Corporation Limited ("the Company") as at 31 March 2011, the profit and loss account and the 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 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 ("the Order"), 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 in paragraph 3 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 those books;

(iii) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(iv) in our opinion, the balance sheet, profit and loss account and 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 written representations received from the directors, as on 31 March 2011, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 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 relation to the matter set out in note 3 of the Schedule 20 of the financial statements, pending the final agreement with the Andaman & Nicobar Administration (A & N Administration), we are unable to comment on the extent of ultimate recoverability of Rs.59,494,972 for the year ended 31 March 2011 (previous year: Rs.47,835,455) and the total receivables as at 31 March 2011 of Rs. 85,904,780 (previous year: Rs.118,640,315) which are subject to confirmation by the A&N Administration. Furthermore, the Company has accrued interest on the above cumulative billings of Rs. 43,721,965 for the year ended 31 March 2011 (previous year: Rs.28,503,384) which are subject to confirmations by the A&N Administration. The total interest accrued on such disagreements which are subject to confirmations by the A&N Administration is Rs. 127,574,329 (previous year: Rs.83,852,364). The Consequential impact of the above matter on the profit for the year ended 31 March 2011 and the retained earnings as at 31 March 2011 is indeterminable; and

(vii) in our opinion and to the best of our information and according to the explanations given to us, subject to the matter set out at paragraph (vi) above, 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 31 March 2011;

b. in the case of the 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

The Annexure referred to in the auditors' report to the members of Suryachakra Power Corporation Limited ("the Company") for the year ended 31 March 2011. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which all the fixed assets are verified every year. In our opinion, the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with the programme all the fixed assets were verified during the year and no material discrepancies were noted on such verification.

(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

ii. (a) The inventory consisting of raw materials, stores, spares and consumables have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, 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) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. (a) The Company has granted an unsecured loan to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 65,004 and the year-end balance of such loans was Rs. 65,004.

(b) In our opinion, terms and conditions on which the above mentioned unsecured loan have been granted is not, prima facie, prejudicial to the interest of the Company.

(c) In case of the above mentioned loan granted to companies listed in the register maintained under Section 301, the terms of arrangement do not stipulate any repayment schedule for principal and interest, which are repayable on demand.

(d) There are no overdue amounts of more than Rupees one lakh in respect of companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(e) The Company has taken interest free unsecured loan from a party covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 159,400 and the year-end balance of such loan was Rs. Nil.

(f) In our opinion, the terms and conditions on which such loan have been taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(g) The above mentioned loan was repayable on demand and was repaid before the year-end and accordingly the Company has been regular in repaying the principal.

iv. In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories are for the Company's specialised requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods. In our opinion and according to the information and explanation given to us, there is no continuing failure to correct major weaknesses in internal control system.

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 Companies Act, 1956 have been entered in the register required to be maintained under that Section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in point (a) above and exceeding the value of Rs.5 lakh with any party during the year, have been made 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.

vii. The scope and coverage of the internal audit system needs to be strengthened to make it 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 prescribed by the Central Government for 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. However, we have not made a detailed examination of the records.

ix. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has been generally regular in depositing amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Sales tax, Service tax, Customs duty and other material statutory dues except that there were significant delays in payment of Provident fund and Income tax. As informed to us the provisions of Investor Education and Protection Fund, Employee' State Insurance, Wealth tax and Excise duty are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Income tax, Sales tax, Service tax, Customs duty and other material statutory dues were in arrears as at 31 March 2011 for a period of more than six months from the date they became payable. As informed to us the provisions of Investor Education and Protection Fund, Employee' State Insurance, Wealth tax and Excise duty are not applicable to the Company.

(c) Further, there were no dues on account of Cess under Section 441A of the Act, since the date from which the aforesaid Section comes into force has not yet been notified by the Central Government.

(d) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Service tax, Customs duty and Cess which have not been deposited with the appropriate authorities on account of any dispute. As informed to us the provisions of Excise duty are not applicable to the Company.

x. Subject to the matter specified in paragraph 4(vi) of our report even dated, the Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, except for the delays stated in Appendix 1 attached, the Company has not defaulted in repayment of dues to its bankers or to any financial institutions.

xii. 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 and according to the information and explanations given to us, the Company is not a chit fund/ nidhi/ mutual fund/ society.

xiv. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the Order is not applicable.

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

xvi. In our opinion and according to the information and explanations given to us and on the basis of our examination of the books of account, the term loans obtained by the Company were applied for the purpose for which such 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 are of the opinion 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 to companies/ firms/ parties 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. There are no unutilised amounts of money raised by public issues and thus paragraph 4(xx) of the Order is not applicable.

xxi. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R and Co. for Visweswara Rao & Associates

Chartered Accountants Chartered Accountants

Firm registration No. : 128901W Firm registration No. : 005774S

Zubin Shekary A. S.Naidu

Partner Partner

Membership No: 48814 Membership No: 208582

Place : Hyderabad Place : Hyderabad

Date : 11 July 2011 Date : 11 July 2011

Details of defaults in repayment of principal on term loans to financial institutions.

Name Amount Due date Payment date Delay Days

SREI Infrastructure Finance Limited 4,955,060 30-Apr-10 29-Sep-10 152

SREI Infrastructure Finance Limited 5,180,290 31-Jul-10 29-Dec-10 151

SREI Infrastructure Finance Limited 4,966,210 31-Oct-10 30-Mar-11 150

SREI Infrastructure Finance Limited 5,123,425 31-Jan-11 31-Mar-11 59

Details of defaults in payment of interest on term loans to financial institutions.

Name Amount Due date Payment date Delay Days

SREI Infrastructure Finance Limited 890,457 30-Apr-10 29-Sep-10 152

SREI Infrastructure Finance Limited 814,809 31-Jul-10 29-Dec-10 151

SREI Infrastructure Finance Limited 732,006 31-Oct-10 30-Mar-11 150

SREI Infrastructure Finance Limited 569,194 31-Jan-11 31-Mar-11 59

Details of defaults in repayment of principal on term loans to banks.



Name Amount Due date Date of payment Delay Days

State Bank of India (Kolkata) Corporate loan 1,800,000 1-Jun-10 3-Jul-10 32

State Bank of India (Kolkata) Corporate loan 1,800,000 1-Jul-10 19-Jul-10 18

State Bank of India (Kolkata) Corporate loan 1,800,000 1-Aug-10 3-Aug-10 2

State Bank of India (Kolkata) Rupee loan 5,000,000 1-Jul-10 3-Jul-10 2

for B S R and Co. for Visweswara Rao & Associates

Chartered Accountants Chartered Accountants

Firm registration No. : 128901W Firm registration No. : 005774S

Zubin Shekary A.S.Naidu

Partner Partner

Membership No: 48814 Membership No: 208582

Place: Hyderabad Place: Hyderabad

Date : 11 July 2011 Date: 11 July 2011


Mar 31, 2010

1 We have audited the attached balance sheet of Suryachakra Power Corporation Limited ("the Company") as at 31 March 2010, the profit and loss account and the 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 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 (Auditors Report) Order, 2003 ("the Order"), 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 in paragraph 3 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 those books; (iii) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement

with the books of account;

(iv) in our opinion, the balance sheet, profit and loss account and 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 written representations received from the directors, as on 31 March 2010, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 2010 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 relation to the matter set out in note 2 of the Schedule 21 of the financial statements, pending the final agreement with the Andaman & Nicobar Administration (A & N Administration), we are unable to comment on the extent of ultimate recoverability of Rs. 47,835,455 billed during the year ended 31 March 2010 (previous year: Rs. 5,688,795) and the total receivables as on 31 March 2010 of Rs. 118,640,315 (previous year: Rs. 70,804,860) which are subject to confirmation by the A&N administration. Furthermore, the Company has accrued interest on the above cumulative billings of Rs.28,503,384 for the year ended 31 March 2010 (previous year: Rs. 21,032,797) which is subject to confirmation by the A & N Administration. The total amount of interest accrued on such disagreements which are subject to confirmations by the A&N Administration is Rs. 83,852,364 (previous year: Rs. 55,348,980). The consequential impact of the above matter on the profit for the year ended 31 March 2010 and the retained earnings at 31 March 2010 is indeterminable; and

(vii) in our opinion and to the best of our information and according to the explanations given to us, subject to the matter set out at paragraph (vi) above, 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 31 March 2010;

b. in the case of the 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

The Annexure referred to in the auditors report to the members of Suryachakra Power Corporation Limited ("the Company") for the year ended 31 March 2010. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which all the fixed assets are verified every year. In our opinion, the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noted on such verification.

(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

ii. (a) The inventory consisting of raw materials, stores, spares and consumables have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, 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) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. (a) The Company has granted interest free loans to three companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 151,380,810 and the year-end balance of such loans was Rs. Nil.

(b) In our opinion, terms and conditions on which loans have been granted to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(c) In case of loans granted to companies, firms and other parties listed in the register maintained under Section 301, the terms of arrangement do not stipulate any repayment schedule for principal, which are repayable on demand.

(d) Such loans have been repaid by the year end and accordingly there are no overdue amounts of more than Rupees one lakh in respect of companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has taken unsecured loan from a company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs.101,428,247 and the year-end balance of such loan was Rs. Nil.

(f) In our opinion, the rate of interest and other terms and conditions on which such loan have been taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(g) The Company has been regular in repaying the principal amounts and interest, as stipulated.

iv. In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories are for the Companys specialized requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods. In our opinion and according to the information and explanation given to us, there is no continuing failure to correct major weaknesses in internal control system.

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 Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in point (a) above and exceeding the value of Rs.5 lakh with any party during the year, have been made 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.

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 prescribed by the Central Government for 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. However, we have not made a detailed examination of the records.

ix. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has been generally regular in depositing amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Service tax, Customs duty and other material statutory dues except that there were significant delays in payment of Income tax and Sales tax. As informed to us the provisions of Investor Education and Protection Fund, Employee State Insurance, Wealth tax and Excise duty are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Income tax, Sales tax, Service tax, Customs duty and other material statutory dues were in arrears as at 31 March 2010 for a period of more than six months from the date they became payable. As informed to us the provisions of Investor Education and Protection Fund, Employee State Insurance, Wealth tax and Excise duty are not applicable to the Company.

(c) Further, there were no dues on account of Cess under Section 441A of the Act, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(d) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Service tax, Customs duty and Cess which have not been deposited with the appropriate authorities on account of any dispute. As informed to us the provisions of Excise duty are not applicable to the Company.

x. Subject to the matter specified in paragraph 4(vi) of our report even dated, the Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, except for the dues stated below, the Company has not defaulted in repayment of dues to its bankers or to any financial institutions.

Bank/Financial Institutions Period Amount (In INR) Delay (in days)

SREI Infrastructure Finance Limited Quarter ended 31 March 2009 5,607,384 182

SREI Infrastructure Finance Limited Quarter ended 30 June 2009 6,306,191 184

SREI Infrastructure Finance Limited Quarter ended 30 September 2009 6,023,657 180

SREI Infrastructure Finance Limited Quarter ended 31 December 2009 5,831,462 90



xii. 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 and according to the information and explanations given to us, the Company is not a chit fund/ nidhi/ mutual fund/ society.

xiv. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the Order is not applicable.

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

xvi. In our opinion and according to the information and explanations given to us and on the basis of our examination of the books of account, the term loans obtained by the Company were applied for the purpose for which such 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 are of the opinion 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 to companies/ firms/ parties 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. There are no unutilized amounts of money raised by public issues and thus paragraph 4(xx) of the Order is not applicable.

xxi. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R and Associates for Visweswara Rao & Associates

Chartered Accountants Chartered Accountants

Firm registration No. : 128901W Firm registration No. : 005774S

Zubin Shekary A.S.Naidu

Partner Partner

Membership No: 48814 Membership No: 208582

Place: Hyderabad Place: Hyderabad

Date: 28 May 2010 Date: 28 May 2010



 
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