Auditor Report of AJR Infra and Tolling Ltd.

Mar 31, 2024

We have audited the attached Revised Standalone
Financial Statements of AJR Infra and Tolling Limited
(Formerly known as Gammon Infrastructure Projects
Limited) ("the Company"), which comprise the
Revised Balance Sheet as at March 31, 2024, and the
Revised Statement of Profit and Loss (including Other
Comprehensive Income), Revised Statement of Changes
in Equity and Revised Statement of Cash Flows for the
year then ended, and notes to the Revised financial
statements, including a summary of Material Accounting
Policy Information and other explanatory information
(hereinafter referred to as "the Revised Standalone
Financial Statements").

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 matter described in Basis
of Qualified Opinion paragraph, the aforesaid Revised
Standalone Financial Statements give the information
required by the Companies Act, 2013 ("the Act") in
the manner so required and give a true and fair view
in conformity with the Indian Accounting Standards
prescribed under section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015,
as amended, ("Ind AS") and other accounting principles
generally accepted in India, of the state of affairs of the
Company as at March 31, 2024, the loss (including other
comprehensive income), changes in equity and its cash
flows for the year ended on that date.

Basis for Qualified Opinion

(a) Attention is invited to Note 27 (a) of the Revised
Financial Statement, relating to the Project in the
SPV; Indira Container Terminal Pvt Ltd. There exists
material uncertainty relating to the future of the
Project where the exposure of the Company in the
SPV/project is '' 13,243.29 lacs (funded and non¬
funded). The draft settlement agreement between
the SPV, Ministry of Shipping (MoS), Mumbai Port

Trust (MbPT) has been rejected by MbPT. The
Company and the SPV are in discussion with MbPT
and MoS to reconsider the Project. The credit facility
is marked as NPA by the Lenders. During the quarter
the Lenders have initiated proceedings under
Insolvency and Bankruptcy code, 2016 before the
NCLT and the NCLT admitted the said petition and
authorized the appointment of Interim Resolution
Professional ("IRP") vide its orders dated May
09,2024. The Company moved NCLAT and obtained
interim stay on the operation of the order of the
NCLT vide order dated May 16,2024. The stay is
granted is till July 25 , 2024,, and we are unable to
opine which way the matter would proceed after the
completion of the period of stay. The exposure of
the Company towards the said project is '' 13,243.29
lacs which is threatened by the possible loss of
control if the Company''s petition is not upheld on
merits. Without prejudice to the above, The SPV
and MbPT have initiated arbitration proceedings
which were in progress which may abate if the
lenders petition is upheld, and the IRP is reinstated.
The MBPT has requested conciliation proceedings
which are also under active discussions. One of the
grounds on which the stay is granted is the proposal
of OTS which has been submitted by the Company
whose terms and conditions has to be fulfilled
before the next date for the lenders to withdraw
their petition. There are uncertainties to the
adherence to terms and conditions which inter alia
requires an infusion of a substantial sum of money
by an Investor identified by the Company. In view of
the above reasons we reiterate that we are unable
to opine whether the Company would retain control,
honour the terms of the OTS and its petition will be
upheld by the Courts.

We conducted our audit in accordance with
the Standards on Auditing (SAs) specified under
section 143(10) of the Companies Act, 2013. Our
responsibilities under those Standards are further
described in the Auditor''s Responsibilities for
the Audit of the Revised Standalone Financial
Statements section of our report. We are
independent of the Company in accordance
with the Code of Ethics issued by the Institute of
Chartered Accountants of India together with the
ethical requirements that are relevant to our audit
of the Revised Standalone Financial Statements
under the provisions of the Companies Act, 2013
and the Rules thereunder, and we have fulfilled our

other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We
believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our qualified opinion on the Revised Standalone
Financial Statements.

Material Uncertainty relating to Going Concern.

We invite attention to Note 28 of the Revised Financial
Statement relating to material uncertainty relating
to going concern. The Company''s current liabilities
exceeded current assets significantly and are at ''
1,49,228.65 lacs. There is a continuing mismatch
including defaults in payment of its financial obligations
to its subsidiary Company. The liquidity crunch is
affecting the Company''s operation with increasing
severity. We also invite attention to note 27 of the
Statement wherein status of various SPV projects which
are stressed due to delay in completion, cost overrun,
liquidity crunch and have legal issues, arbitration
proceedings or negotiations including the pending
NCLT petition filed by the creditors of PHPL, admission
of ICTPL before NCLT. The future of these projects as
also the successful progress and completion depends
on favourable decisions on outstanding litigations being
received by the Management. The resolutions planned
by the Management are pending since a long time and
are not concluding in favour of the Company. These
conditions indicate the existence of Material Uncertainty
which may impact the Company''s ability to continue as a
going concern. Our report is not qualified on this matter.

Emphasis of Matter

Without qualifying our opinion, we draw attention to the
following matters;

(a) We invite attention to Note No 1 (C ) to Revised
Standalone Financial Statements. These Revised
Standalone Financial Statements arise out of the
revision to the standalone financial statements as at
March 31, 2024 adopted by the Board of Directors
on May 30, 2024 and those financial statements
have been revised to give effect to the erroneous
classification of an amount of '' 4,150 lacs under
Non-Current Borrowings as against its classification
under Current Borrowings as Current maturities of
Non-Current Borrowings. This error occurred due
to the erroneous formula in the excel file of the
financial statements which has been since corrected
to classify the amount of '' 4,150 lacs under Current
Borrowings as Current Maturities of Non-Current

Borrowing. There has been no other change either
to the Statement of Profit and Loss, Statement of
Cash flow or any other elements of the Balance
Sheet.

Since the said earlier financial statements adopted
by the Board of Directors on May 30, 2024 were yet
to be sent to the shareholders and consequently
not adopted by the shareholders of the Company,
the Board of Directors have now modified the
financial statements to give effect to the erroneous
classification of an amount of '' 4,150 lacs as
aforesaid and have now approved these revised
financial statements at their meeting held on
August 14, 2024 and we have been called upon to
issue our Audit Report on such revised financial
statements and also a report on the effectiveness of
internal control with reference to revised financial
statements.

We had issued our modified opinion vide our
Independent Auditors'' Report dated May 30, 2024
on the aforesaid standalone financial statements
dated May 30, 2024. This Revised Independent
Auditors Report supersedes our Independent
Auditors'' Report dated May 30, 2024 issued on
standalone financial results dated May 30, 2024.

In accordance with the provisions of Standard on
Auditing 560 (Revised) ''Subsequent Events'' issued
by The Institute of Chartered Accountants of India,
our audit procedures, in so far as they relate to
the revision to the Revised Standalone Financial
Statements, have been carried out solely on this
matter and no additional procedures have been
carried out for any other events occurring after May
30, 2024 (being the date of our earlier audit report
on the earlier standalone financial statements).

(b) Attention is invited to Note 30(a) of the Revised
Financial Statement in respect of Patna Highway
Projects Limited (PHPL) where the CIRP proceedings
had been initiated. NCLT has approved the
resolution plan vide order dated May 10,2022
submitted by Resolution Professional and as per the
NCLT Order no surplus is available to the Company.

The Company lost the appeal before NCLAT and has
filed an appeal in Supreme court against the NCLAT
order and expects a favourable outcome on the
matter.

Pending the outcome, in view of the long pendency
of the matter under litigation, the Company out of
abundant caution and on the principle of prudence
has impaired the entire exposure in its books for
accounting purposes while retaining its right to
litigate. The Lawyers have advised the management
that it has a good case for a favourable outcome of
the litigation. Based on their advise the Company is
also contesting the invocation of the Guarantee and
accordingly has not accounted the invocation.

(c) Attention is invited to Note 27(f) of the Revised
Financial Statements, relating to a power project
where the operation of the project is under
constraints as detailed in the note. The SPV has also
invoked arbitration against the Karkhana and the
Karkhana has approached Debt Recovery Tribunal
(DRT). Based on the submission of Karkhana that
the Plant was possessed and run by Karkhana,
the tribunal ordered to maintain status quo. The
Company is yet to file its response at DRT. Also, the
SPV''s credit facilities are marked as Non-Performing
Assets. The statutory auditor of the SPV have
disclaimed their opinion in their audit report for the
year ended March 31,2024 for illegal occupancy
of the factory by Karkhana and that the access to
facility and records and transactions for the period
from January 1, 2022 to March 31, 2024 are not
available with the Company. The Company on a
prudent basis has provided for the entire funded
exposure amounting to '' 10,745.53 lacs as at March
31, 2024. The Company has provided a letter of
Comfort to the lenders towards their credit facilities.

In view of the above-mentioned facts the management

contends:

i. The litigation is outstanding since more than 2 years
now and there is no progress in the matter before
the courts.

ii. The receiver appointed by the DRT does not
report the transactions to the Company and takes
decisions of the Company Management.

iii. Since there is no progress in the matter in
accordance with IND AS 110 para 7 the Company
has effectively lost control over the operations
and is unable to direct the variable returns from its
exposure in its favour.

iv. It has no record of transaction entered into on its
accounts nor it has access to its cash flows.

Therefore, pending the settlement of the litigation,
the Company contends it has no control as it does
not satisfy paragraph 7 of INDAS 110

The Statutory Auditors of the SPV on account of non¬
inclusion of aforesaid transactions conducted by the
receiver has given a disclaimer of opinion.

(d) We invite attention to Note 27 (c) of the Revised
Financial Statement, regarding unilateral termination
and closure of Concession in a bridge project,
which is subject to pending litigations / arbitrations
at various forums, which may impact the carrying
values of investments and loans and advances given
to the subsidiary. The Company''s funded exposure
towards the said project is '' 2,354.26 lacs against
the claim by the SPV of 1,787.13 lacs. Pending
conclusion on these legal matters, the company has
made provision for an amount of '' 583.36 lacs being
the excess of the exposure over the claim amount
submitted without considering the interest which
may be awarded by the courts.

(e) We invite attention to Note 27 (d) of the Revised
Financial Statement, in relation to the intention to
exit one of the hydro power projects at Himachal
Pradesh and seeking a claim of an amount against
the amount spent on the Project. The Company''s
subsidiary has cited reasons for non-continuance
on account of reasons beyond its control. Pursuant
to the completion of Arbitration vide order dated
23^rd January 2023, the SPV''s share of the arbitration
proceeds is adequate to cover the exposure and
therefore no adjustments are required towards the
exposure of '' 7,120.20 lacs.

Key Audit Matters

Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the Revised Standalone financial statements of
the current period. These matters were addressed in the
context of our audit of the Revised Standalone financial
statements as a whole, and in forming our opinion
thereon, we do not provide a separate opinion on these
matters.

Apart from what is mentioned in our paragraph titled
Basis of Qualified Opinion, paragraph titled Material

Uncertainty related to Going Concern and Emphasis of
Matter there are no other matters described to be the
key audit matters to be communicated in our report.

Information Other than the Revised Standalone
Financial Statements and Revised Auditor''s
Report thereon

The Company''s Board of Directors is responsible for
the Other Information. The other information comprises
the information included in the Company''s Annual
Report but does not include the Revised Standalone
and Revised Consolidated Financial Statements and our
Independent Auditors'' Report thereon. The Annual report
is expected to be made available to us after the date of
this report.

Our opinion on the Revised Standalone Financial
Statements does not cover the Other Information and
we do not and will not express any form of assurance or
conclusion thereon.

In connection with our audit of the Revised Standalone
Financial Statements, our responsibility is to read the
Other Information identified above and, in doing so,
consider whether the Other Information is materially
inconsistent with the Revised Standalone Financial
Statements, or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.

The Other Information has not been made available to
us till the date of this report. We will read the Other
Information as and when it is made available to us and if
conclude that there is a material misstatement, we are
required to communicate the matter with those charged
with governance and take necessary steps as may be
required thereafter.

Responsibilities of Management and those
Charged with Governance for the Revised
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 Revised Standalone Financial Statements
that give a true and fair view of the financial position,
financial performance, changes in equity 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. This responsibility also includes maintenance
of adequate accounting records in accordance with the

provisions of the Act for safeguarding of 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 revised standalone financial
statements that give a true and fair view and are free
from material misstatement, whether due to fraud or
error.

In preparing the revised standalone financial statements,
management is responsible for assessing the Company''s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and
using the going concern basis of accounting unless
management either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to
do so.

The Board of Directors is also responsible for overseeing
the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the
Revised Standalone Financial Statements

Our objectives are to obtain reasonable assurance about
whether the Revised Standalone Financial Statements
as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor''s report
that includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an audit
conducted in accordance with SAs will always detect a
material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of
users taken on the basis of these Revised Standalone
Financial Statements.

As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional
skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement
of the revised standalone financial statements,
whether due to fraud or error, design and perform
audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control.

2. Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances. Under section
143(3)(i) of the Companies Act, 2013, we are also
responsible for expressing our opinion on whether
the company has adequate internal financial controls
system in place and the operating effectiveness of
such controls.

3. Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting
estimates and related disclosures made by
management.

4. Conclude on the appropriateness of management''s
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether

a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Company''s ability to continue as a going concern.

If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor''s report
to the related disclosures in the revised financial
statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of
our auditor''s report. However, future events or
conditions may cause the Company to cease to
continue as a going concern.

5. Evaluate the overall presentation, structure
and content of the revised standalone financial
statements, including the disclosures, and whether
the revised standalone financial statements
represent the underlying transactions and events in
a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in
the revised standalone financial statements that,
individually or in aggregate, make it probable
that the economic decisions of a reasonably
knowledgeable user of the revised standalone
financial statements may be influenced. We consider
quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in
evaluating the results of our work; and (ii) to evaluate
the effect of any identified misstatements in the
revised standalone financial statements.

We communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit and
significant audit findings, including any significant
deficiencies in internal control that we identify
during our audit.

We also provide those charged with governance
with a statement that we have complied
with relevant ethical requirements regarding
independence, and to communicate with them all
relationships and other matters that may reasonably
be thought to bear on our independence, and
where applicable, related safeguards.

From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the revised
financial statements of the current period and
are therefore the Key Audit Matters. We describe
these matters in our auditor''s report unless law or
regulation precludes public disclosure about the
matter or when, in extremely rare circumstances,
we determine that a matter should not be
communicated in our report because the adverse
consequences of doing so would reasonably be
expected to outweigh the public interest benefits of
such communication.

Report on Other Legal and Regulatory
Requirements

1. As required by the Companies (Auditor''s Report)
Order, 2020 ("the Order"), issued by the Central
Government of India in terms of sub-section (11) of
section 143 of the Companies Act, 2013, we give
in the attached Annexure "A" 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, except for the possible impact arising
out of matters described in our Basis of Qualified
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
(including Other Comprehensive Income), the Cash
Flow Statement and Statement of Changes in Equity
dealt with by this Report are in agreement with the
books of account.

d. In our opinion, except for the possible effects of
the matter described in Basis of Qualified Opinion
paragraph, the aforesaid Revised 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 paragraphs under the Basis
for Qualified Opinion and the Material Uncertainty
related to Going Concern paragraph, 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 March 31, 2024 taken

on record by the Board of Directors, none of the
directors is disqualified as on March 31, 2024 from
being appointed as a director in terms of Section
164 (2) of the Act.

g. With respect to the adequacy of the internal
financial with reference to revised financial
statements of the Company and the operating
effectiveness of such controls, refer to our separate
Report in "Annexure B". Our report expresses

an unmodified opinion on the adequacy and
operating effectiveness of the Company''s internal
financial controls with reference to revised financial
statements.

h. With respect to the other matters to be included
in the Auditor''s Report in accordance with the
requirements of section 197(16) of the Act, as
amended:

In our opinion and to the best of our information
and according to the explanations given to us, the
remuneration paid by the Company to its directors

is in accordance to section 197(16) of the Act.

i. 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 Revised
Standalone Financial Statements - Refer Note 26 to
the Revised Standalone Financial Statements,

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

iii. There are no amounts required to be transferred to
the Investor Education and Protection Fund by the
Company.

iv. a. The management has represented that, to

the best of their knowledge and belief, other
than as disclosed in the notes to the accounts,
no funds have been advanced or loaned
or invested (either from borrowed funds or
share premium or any other sources or kind
of funds) by the company to or in any other
person or entity(ies), including foreign entities
("intermediaries") with the understanding
whether recorded in writing or otherwise,
that the intermediary shall, whether directly
or indirectly lend or invest in other persons or
entities identified in any manner whatsoever
by or on behalf of the company ("Ultimate
Beneficiaries") or provide any guarantee,
security, or the like on behalf of the Ultimate
Beneficiaries except disclosure made in note
3.4 (c) of notes to revised financial statements.

b. The management has represented that, to the
best of its knowledge and belief, other than
as disclosed in the notes to the accounts, no
funds have been received by the company
from any person(s) or entity(ies) including
foreign entities ("Funding Parties"), with the
understanding, whether recorded in writing or
otherwise, that the company shall, whether,
directly or indirectly lend or invest in other
persons or entities identified in any manner
whatsoever by or on behalf of the Funding

Party ("Ultimate Beneficiaries") or provide any
guarantee, security or the like on behalf of the
Ultimate Beneficiaries,

c. Based on such audit procedures considered
reasonable and appropriate in the
circumstances, nothing has come to our
notice that has caused us to believe that the
representations under sub-clause (iv)(a) and (iv)
(b) above contain any material misstatement.

v. The Company has neither declared nor paid any
dividend during the year.

vi. Based on our examination of the feature of the audit
trail in the Accounting Software which included
test checks, the company has used an accounting
software for maintaining its books of account which
has a feature of recording audit trail (edit log) facility
and the same has operated throughout the year for
all relevant transactions recorded in the software.
Attention is invited to Note 40 detailing the direct
access to tally data which is in encrypted form.

Further, during the course of our audit we did not
come across any instance of audit trail feature being
tampered with.

As proviso to Rule 3(1) of the Companies (Accounts)
Rules, 2014 is applicable from April 01,2023,
reporting under Rule 11(g) of the Companies (Audit
and Auditors) Rules,2014 on preservation of audit
trail as per the statutory requirements for record
retention is not applicable for the financial year
ended March 31,2024.

For Natvarlal Vepari & Co.

Chartered Accountants
Firm Registration No- 106971W
Nuzhat Khan

Partner
M. No. - 124960

Mumbai,

Dated: August 14, 2024

UDIN: 24124960BKCZPB3120

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Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS financial statements of Gammon Infrastructure Projects Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flow and Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as “Standalone Ind AS Financial Statements”).

Management’s Responsibility for the Standalone Ind AS 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 Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) specified under Section 133 of the Act, read with relevant rules thereon.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 Standalone Ind AS 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 Standalone Ind AS 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 Standalone Ind AS Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Standalone Ind AS 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 Standalone Ind AS Financial Statements that give a true and fair view 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 Company’s directors, as well as evaluating the overall presentation of the Standalone Ind AS 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 Standalone Ind AS Financial Statements.

Basis of Qualified Opinion

a) Attention is invited to note 18(a) of the Standalone Ind AS Financial Statements relating to the excess managerial remuneration paid of Rs. 497.17 lacs for the period upto March 2017 for the reasons detailed in the aforesaid note. The Company had once again submitted its representation to the Ministry to reconsider its decision and allow the waiver of recovery of the excess remuneration paid aggregating to Rs. 388.45 lacs for the period upto March 2016. If the Company’s representation is not accepted then the company would be required to recover the excess remuneration from the managerial personnel and to that extent the profit will be higher by an amount of Rs. 388.45 lacs. Pending the same no adjustments have been made to the financial results. Subject to the outcome of the representation made to the MCA, we are unable to ascertain the impact on profits on this account for the quarter and the year ended March 31, 2018. Similarly for the previous period ended March 31, 2017, the remuneration in excess of the limits computed under the provisions of Section 197 read with Schedule V to the Companies Act 2013 is Rs. 108.72 lacs for which the Company has made an application to the MCA for approval of the same. Pending these approvals, no adjustments have been made to the financial results for the remuneration of the said period. This matter was qualified in the auditors’ report dated June 18, 2017 by the previous auditors’ on the financial statements for the year ended March 31, 2017.

Attention is invited to Note no 29 of the Standalone Ind AS Financial Statements in respect of status of the Tolling Road Project in Andhra Pradesh where termination notice was received from NHAI on 26th August 2016 and consequently, NHAI took over possession of toll plaza. Based on the subsequent negotiation and discussion with NHAI, they agreed to revoke the termination notice vide its letter dated 16th January 2017, subject to completing of financial closure and fulfilling of other commitments specified in the letter within the stipulated timeframe. The Company could not fulfil the said conditions. Ultimately on 8th September 2017, the Company made an application to NHAI for mutual exit from the project. The decision of NHAI in response to the aforesaid letter of mutual exit is pending. In case the mutual exit proposal is accepted then the exposure of the Company is likely to be capped at Rs.7246.13 lacs as the Bank Guarantee would be released as requested by the Company in its letter dated 8th September 2017. In case the proposal is not accepted then the entire exposure of Rs. 15,666.13 lacs of the Company in the SPV needs to be tested for impairment. Accordingly, the decision of NHAI is more likely to have adverse impact on the Statement of Profit and Loss. No effects have been given in the financial statements of the SPV pending the decision of NHAI. The Auditors of the SPV have, in their audit report on the financial statements of the SPV for the year ended on 31st March 2018, carried a paragraph on Material Uncertainty related to Going Concern. The decision of the NHAI is awaited for determining the possible impairment and giving necessary effects. Pending the decision of NHAI we are unable to quantify the impairment that would be required in the matter and consequent impact on the Standalone Financial Statements.

b) Attention is invited to Note no. 30 to the Standalone Ind AS Financial Statements, where the Company has defaulted in fulfilling its obligation under the one time settlement (OTS) with IFCI Limited. The Company was required to pay the entire outstanding by September 30, 2017. The Company has been unable to discharge the liability and has not been able to get further extension for the payment of the outstanding although it is actively engaged with IFCI Limited for obtaining the extension and/or non-reversal of the benefits of the OTS. In terms of the original arrangement, the benefits received under the one time settlement were to be reversed. Although the management is hopeful of obtaining the extension and / or non-reversal of the benefits of the OTS, pending the acceptance by IFCI Limited we are unable to state whether the Company has to account for the reversal of benefits of Rs. 3,776.69 lacs in its financial statements. The company has however provided interest at the rate of 11.50% p.a. as per the agreement. The interest payable on the outstanding amount before reversal of the aforesaid benefit as on balance sheet date is Rs 158.13 lacs.

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 matter described in Basis of Qualified Opinion paragraph , the aforesaid Standalone Ind AS 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 including the Ind AS under section 133, of the financial position of the Company as at March 31, 2018, its financial performance including other comprehensive income, its cash flows and the statement of changes in equity for the year ended on that date.

Material Uncertainty relating to Going Concern.

We invite attention to Note 31 of the Standalone Ind AS Financial Statements, wherein the Company has stated that as of that date the Company’s current liabilities exceeded current assets resulting in continued mismatch despite the sale of some of the SPVs in the previous periods. There is therefore a continuing mismatch including defaults in payment of its financial obligations. The management is taking active steps to tide over the present situations for which based on detailed evaluation of the current situation plans are formulated and active discussions are underway with various stakeholders. These conditions, along with matters arising out of pending conclusions of decisions in respect of some of the SPVS set forth in the Note 32 of the Standalone Ind AS Financial Statements and the fact of the Auditors’ Report of some of the SPV carrying a separate paragraph on Material Uncertainty related to Going Concern as mentioned in Note 31 of the Standalone Ind AS Financial Statements, indicate the existence of significant uncertainty over the cash flows expected and the Company’s ability to continue as a going concern. Our report is not qualified on this matter.

Emphasis of Matter

Without qualifying our opinion, we draw attention to the following matters;

a) We invite attention to Note 32(a) of the Standalone Ind AS Financial Statements, regarding unilateral termination and closure of Concessions in a bridge project, which is subject to pending litigations/arbitrations at various forums, which may impact the carrying values of investments and loans and advances given to the subsidiary. The Company’s exposure towards the said project (funded and non-funded) is Rs.2,856.96 lacs. Pending conclusion on these legal matters, no adjustments have been made in the financial statements.

b) We invite attention to Note 32(b) of the Standalone Ind AS Financial Statements, in relation to intention to exit one of the hydro power projects at Himachal Pradesh and seeking a claim of an amount against the amount spent on the project. The Company’s subsidiary has cited reasons for non-continuance on account of reasons beyond its control. The subsidiary is negotiating with its client for an amicable settlement on beneficial terms and has also invoked arbitration. The Company’s exposure towards the said project includes investment and loans and advances of Rs. 7,119.23 lacs. Pending conclusion between the parties, no adjustments have been made in the financial statements.

c) We invite attention to Note 32(c) of the Standalone Ind AS Financial Statements, in connection with an amount invested (including deposits and advances given) in the subsidiary of Rs. 13,831.00 lacs (funded and non-funded). As mentioned in the said note a draft supplementary agreement has been discussed between the parties under which the project would go for a re-bid and the SPV has a Right Of First Offer. The management is hopeful that it will successfully match the bid and win the concession and continue to operate the facility, which would be operationally viable under the revised terms. The management has during the year acquired further stake from the JV partner and has obtained control over the SPV and holds 74% of the equity of the SPV Company. The auditors of the SPV have included a separate paragraph on Material Uncertainty related to Going Concern. Pending execution of the supplementary agreement and the conclusion of the Rebid, no adjustments have been made in the financial statements.

d) We invite attention to Note 32(d) of the Standalone Ind AS Financial Statements, in respect of a tolling bridge project in Andhra Pradesh where the monthly toll collections are not sufficient to pay the interest and the resultant defaults in the loan repayment resulting in the facility being marked NPA. The SPV had earlier submitted a proposal under the Scheme for Sustainable Structuring of Stressed Assets (S4A) to the Lenders, which was cleared by the Lenders for approval of the Overseeing Committee (OC) set up by the Indian Banking Association (IBA), in consultation with the Reserve Bank of India (RBI). The SPV provided its response to the observations of the Lenders and the OC on the S4A proposal and was awaiting the OC/lenders’ approval. In the interim, RBI vide its circular dated 12th February 2018, discontinued with immediate effect all restructuring schemes for stressed assets (including S4A). As per this circular, all schemes, including S4A which have been invoked but not implemented, shall be governed by the new circular. Thus the restructuring proposal proposed by the Company is no longer being pursued by the Lenders. Subsequently the Company has issued a cure period notice to Andhra Pradesh Road Development Corporation (APRDC or the Client) on 26th February 2018 under clause 37.2.1 of the Concession Agreement to cure the breaches of APRDC which includes provision of Revenue shortfall loan along with other mentioned breaches. Pending receipt of the response to the notice for cure period, no adjustments have been made in the financial statements. The auditors of the SPV have included a separate paragraph on Material Uncertainty related to Going Concern on the matter. The Company’s exposure towards the project/SPV is Rs. 95,578.24 lacs (funded and non-funded).

e) We invite attention to Note 32(e) of the Standalone Ind AS Financial Statements, an annuity project of the Company where the SPV has accounted for the asset as a financial asset. The SPV will have cost overrun on account of issue beyond the scope of the SPV and attributable to the Grantor. This will not result in any changes in the Annuity from the grantor. However this amount would be treated separately as receivable from the Grantor based on certification of delay period attributable to the Grantor certified by the Independent Engineer. The SPV expects a sizeable claim on this amount and has obtained legal support for the validity of its claim from an Independent Expert on claim and litigation. The SPV had also separately applied to the lenders for Scheme for 5:25 Flexible Structuring Scheme for which sanction from two banks among consortium members had been received and sanction from rest bankers were expected in near future. However, in view of the RBI circular dated 12th February 2018, all restructuring schemes for stressed assets (including 5/25 Flexible Structuring Scheme) have been discontinued and the application became infructuous. The management contends that in view of the strong case it has on the claim matter as aforesaid there will be no impairment necessary towards the financial asset or towards the investment of the Company. The exposure of the Company in the SPV is Rs. 1,30,254.07 lacs including non-fund exposure. Pending conclusions no adjustments have been made in the financial statements.

f) We invite attention to Note no 32(f) of the Standalone Ind AS Financial Statements, relating to the Hydropower project in Sikkim. As detailed in the note there are various factors affecting the progress of the project. The management, as detailed in the note, is confident that it will be able to pursue the project viably and does not foresee any need for impairment. Considering the assertion of the management no adjustments have been made towards any possible impairment. The exposure of the Company in the SPV is Rs. 9,622.91 lacs.

g) We invite attention to Note 33 of the Standalone Ind AS Financial Statements, wherein during the year, Western Coalfields Limited (WCF) had encashed Bank Guarantee amounting Rs 1,514.01 lacs given in favour of Aparna Infraenergy India Private Limited (one of the SPV’s sold to BIF India Holding Pte ltd on February 29, 2016). Subsequent to encashment Company has filed an application for converting earlier injunction application to suit for recovery of damages. The management is hopeful of getting favourable decision on the matter and recovery of damages based on legal advice on the matter. Pending the outcome, the Company has shown guarantee encashment amount as receivable from Western Coal Fields and not debited the same to the statement of profit and loss for the year ended March 31, 2018.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“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 , a statement on the matters specified in paragraphs 3 and 4 of the said Order.

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

(a) we have sought and except for the possible effects of the matter described in Basis of Qualified Opinion paragraph, 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 except for the possible effects of the matter described in Basis of Qualified Opinion paragraph , 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 including Other Comprehensive Income, the Cash Flow Statement and Statements of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion except for the possible effects of the matter described in Basis of Qualified Opinion paragraph, the aforesaid Standalone Ind AS Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rules thereon;

(e) The matters described in paragraphs under the Basis for Qualified Opinion and the Material Uncertainty related to Going Concern paragraph, in our opinion, may have an adverse effect on the functioning of the Company;

(f) On the basis of written representations received from the directors as on March 31, 2018 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of section 164(2) of the Act except Mr. Abhijit Rajan.

(g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

(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 Standalone Ind AS Financial Statements disclose the impact of pending litigations on the financial position in its financial statements- Refer Note 28 to the Standalone Ind AS Financial Statements;

ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses on long term contracts. The Company has not entered into any derivative contracts.

iii. There are no amounts that are required to be transferred to the Investor Education and Protection Fund during the year

To the Independent Auditors’ Report on the Standalone Ind AS Financial Statements Gammon Infrastructure Projects Limited

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

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

(c) There is no immovable property in the name of the company and hence clause 3(i)(c) of Companies (Auditors Report) Order 2016 is not applicable to the Company.

(ii) As the company does not hold any inventory during the year, clause 3(ii) of Companies (Auditors Report) Order 2016 is not applicable to the Company.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a), 3(iii) (b) and 3(iii) (c) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 with respect to loans, investments, guarantees and security given by the Company.

(v) The Company has not accepted any deposit from the public pursuant to sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and rules framed thereunder. As informed to us, there is no order that has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in respect of the said sections. Accordingly the provision of clause 3(v) is not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013, related to infrastructure developers business, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) The Company is generally regular in depositing undisputed statutory dues including Provident fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Cess, Work Contract Tax, Goods and Service Tax and other statutory dues with the appropriate authorities during the year. According to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid dues were outstanding as at March 31, 2018 for a period of more than six months from the date of becoming payable. .

(b) According to the information and explanations given to us, there are no dues of Income Tax or Sales Tax or Wealth Tax or Service Tax or duty of Customs or duty of Excise or Value Added Tax or Cess which have not been deposited on account of any dispute except as given herein below.

Name of the Statute	Nature of dues	Rs. in lacs	Period for which it relates	Forum where dispute is pending
Income Tax Act, 1961	Demand under u/s 153A	310.10	A.Y. 2007-08 to A.Y. 2011-12	Commissioner of Income-Tax
	Demand of Penalty u/s 271(1)(c)	1,715.40	A.Y. 2007-08 to A.Y. 2011-12	(Appeals)

(viii) According to the information and explanations given to us and based on the documents and records produced to us, the company has defaulted in repayment of dues to Bank of India aggregating to Rs. 17.46 lacs for Interest., the details of default have been disclosed in the IND AS Standalone Financial Statement vide note 12(e). The company has not borrowed any fund from financial institutions and by way of debenture.

(ix) The company has not raised any money by way of public issue / follow-on offer (including debt instruments) during the year. The Company has also not raised any term loans during the year. Therefore the clause 3(ix) of the Companies (Auditors Report) Order 2016 is not applicable to the Company.

(x) According to the information and explanations given to us and to the best of our knowledge and belief no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(xi) As regards the Managerial remuneration the Company has paid excess managerial remuneration paid of Rs. 497.17 lacs for the period upto March 2017 for the reasons detailed in the aforesaid note. The Company had once again submitted its representation to the Ministry to reconsider its decision and allow the waiver of recovery of the excess remuneration paid aggregating to Rs. 388.45 lacs for the period upto March 2016. If the Company’s representation is not accepted then the company would be required to recover the excess remuneration from the managerial personnel and to that extent the profit will be higher by an amount of Rs. 388.45 lacs. Pending the same no adjustments have been made to the financial results. Subject to the outcome of the representation made to the MCA, we are unable to ascertain the impact on profits on this account for the quarter and the year ended March 31, 2018. Similarly for the previous period ended March 31, 2017, the remuneration in excess of the limits computed under the provisions of Section 197 read with Schedule V to the Companies Act 2013 is Rs. 108.72 lacs for which the Company has made an application to the MCA for approval of the same. Pending these approvals, no adjustments have been made to the financial results for the remuneration of the said period. This matter was qualified in the auditors’ report dated June 18, 2017 by the previous auditors’ on the financial statements for the year ended March 31, 2017.

(xii) The Company is not a Nidhi Company hence clause 3(xii) of Companies (Auditors Report) Order 2016 is not applicable to the Company.

(xiii) All transactions with the related parties are in compliance with sections 177 and 188 of the Companies Act, 2013 in so far as our examination of the proceedings of the meetings of the Audit Committee and Board of Directors are concerned. The details of related party transactions have been disclosed in the Standalone Ind AS Financial Statements as required by the applicable Accounting Standard.

(xiv) The company has not made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and hence the clause 3(xiv) of the Companies (Auditors Report) Order, 2016 is not applicable to the Company.

(xv) The company has not entered into any non-cash transactions with directors or persons connected with him and hence the clause 3(xv) of the Companies (Auditors Report) Order, 2016 is not applicable to the Company.

(xvi) The nature of business and the activities of the Company are such that the Company is not required to obtain registration under section 45-IA of the Reserve Bank of India Act 1934.

To the Independent Auditors’ Report on the Standalone IND AS Financial Statements of Gammon Infrastructure Projects Limited

Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting with reference to financial statements of Gammon Infrastructure Projects Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Standalone Ind AS Financial Statement of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over with reference to Financial Statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to Financial Statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to Financial Statements included obtaining an understanding of internal financial controls with reference to Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system with reference to Financial Statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A company’s internal financial control with reference to Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control with reference to Financial Statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to Financial Statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control with reference to Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to Financial Statements and such internal financial controls with reference to Financial Statements were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Nayan Parikh & Co.

Chartered Accountants

Firm Registration No.107023W

K N Padmanabhan

Partner

Membership No. 36410

Mumbai, Dated: June 13, 2018

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Sep 30, 2014

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

Management''s Responsibility for the Consolidated Financial Statements

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

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated Financial Statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the Consolidated Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and presentation of the Consolidated Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the efectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.

Basis for qualified Opinion

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

Opinion

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

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

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

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

Emphasis of Matter:

Without qualifying our opinion, we report that:

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

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

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

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

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

Other Matter

We did not audit the financial statements of:

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

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

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

We did not audit the financial statements of:

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

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

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

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

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

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

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

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Dec 31, 2013

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 read with General Circular 15/2013 dated September 13, 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.

Opinion

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2013;

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

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

Emphasis of Matter:

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

Annexure to the Auditors'' Report

(Referred to in our report of even date)

Re: Gammon Infrastructure Projects Limited

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



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

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or bank. The Company did not have any outstanding dues in respect of debenture holders during the period.

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

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

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

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

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

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

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

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

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

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



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

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

Chartered Accountants Chartered Accountants



N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

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

---

Mar 31, 2013

Report on Financial Statements

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

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

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

Opinion

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

Annexure to the Auditors'' Report

(Referred to in our report of even date)

Re: Gammon Infrastructure Projects Limited

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or bank. The Company did not have any outstanding dues in respect of debenture holders during the year.

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

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

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

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

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

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

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

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

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

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

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

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

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

---

Mar 31, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in our report of even date)

Re: Gammon Infrastructure Projects Limited

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or bank. The Company did not have any outstanding dues in respect of debenture holders during the year.

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

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

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

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

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

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

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

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

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

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

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

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

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

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

---

Mar 31, 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(xi] Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution. The Company did not have any outstanding dues towards any bank or debenture holders during the year.

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

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

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

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

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

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

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

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

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

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

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

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

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M. No. 40441 M. No. 42650

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

---

Mar 31, 2010

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

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

3. We did not audit the financial statements of

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



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

Firm Registration Number Firm Registration Number

109671W 301003E

Chartered Accountants Chartered Accountants

N Jayendran per Hemal Shah

Partner Partner

M.No. 40441 M.No. 42650

Mumbai, Mumbai,

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