Auditor Report of ARSS Infrastructure Projects Ltd.

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of ARSS Infrastructure Projects Limited (‘the Company’), which comprise the Balance Sheet as at 31^st March, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information

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 state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed 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 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 of the standalone Ind AS financial statements 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 the 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 standalone Ind AS 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

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

Basis for Qualified Opinion

a) In the absence of audited books of accounts of Balaji-ARSS JV, ARSS-MVPL JV, ARSS-SIPS JV, ARSS-BMS JV, discrepancies, if any, between the said accounts with that of the Company is not ascertainable.

b) In absence of relevant records, Contract-wise surplus/loss has neither been ascertained nor recognized in compliance with Ind AS-115 ‘Revenue from contract with customers’.

c) The company has overdue accumulated secured debts amounting to Rs.1491.49 Crores subject to reconciliation interest thereon from 01.04.2016. Banks has classified it as NPA. No interest has been charged on these secured debts to the Profit & Loss account resulting in understatement of loss to that extent and understatement of liability. Secured lenders have served notices on various dates under section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for recovery of their dues.

d) Interest on Service Tax payable of Rs.88.03 Lakhs has not provided, resulting to underreporting of loss to that extent.

e) Interest on Mobilization Advance Received of Rs.365.89 Lakhs has not been provided, resulting to underreporting of loss to that extent.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, and further to our comments in the Annexure-A we state that except for possible effect of the matter described in sub para (a) to (e) in the ‘Basis for Qualified Opinion’ paragraph above, 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, of the state of affairs (financial position) of the Company as at 31^st March, 2018, and its loss (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the standalone Ind AS financial statements:

a) We draw attention to the Note No. 22 to accompanying statement, wherein, Company has recognized claims receivables from various agencies amounting to Rs.13055Lakhs as revenue during the year in view of increased certainty of the same.

b) We draw attention to the Note No.5 to accompanying statement, wherein, based on expert advice and management estimation, Company has made downward revaluation of fixed assets by Rs.9510.76 Lakhs to represent it at fair value.

c) We draw attention to the Note No.28 to accompanying statement, wherein, director’s remuneration given is pending for approval from Central Government.

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 the paragraph 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, except for the matter described in the sub para ‘a’ and sub para ‘b’ of the ‘Basis for Qualified Opinion’ paragraph above, all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid standalone Ind AS financial statements.

(b) except for the possible effect of the matter described in the ‘Basis for Qualified Opinion’ paragraph above, in our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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

(d) except for the possible effect of the matter described in the ‘Basis for Qualified Opinion’ paragraph above, in our opinion the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) on the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164 (2) of the Act; and

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

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure-B’.’

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements, Refer Note No. 9, 28 and 46 to the standalone Ind AS financial statements;

ii. the Company did not have any Long term contract including derivatives contract as such the question of commenting on any material foreseeable losses thereon does not arise.

iii. There has been not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise.

Referred to in paragraph 1 under the heading ‘Report on Other Legal & Regulatory Requirement’ of our report of even date to the standalone Ind AS financial statements of the Company for the year ended March 31, 2018, we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the company.

(ii) (a) As explained to us, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion, the discrepancies noticed on physical verification of the inventory were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) The Company has not granted loans amounting to bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act’). Accordingly, we have not commented upon the paragraph 3(iii) of the Order.

(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 in respect of loans, investments, guarantees, and security.

(v) The Company has not accepted any deposits from the public and hence the paragraph 3(v) of the Order relating to directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 or any rules framed there under with regard to the deposits accepted from the public are not applicable to the company. Accordingly we have not commented upon the paragraph 3(v) of the Order.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the Companies (Cost records and audit ) Rules 2014 and as prescribed by the Central Government under section 148(1) of the Act and are of the opinion that prima-facie, the prescribed accounts and cost records have been made and maintained by the Company. We have not however made a detailed examination of the cost records with a view to determining whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, duty of excise, service tax, duty of customs, employees’ state insurance , value added tax, cess and other material statutory dues have been regularly deposited with few delay in some cases during the year by the Company with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of excise, duty of customs, value added tax, cess and other material statutory dues were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable except TDS of '' 9,88,723/-, Entry Tax of ''46,10,931/- and Service Tax of ''88,03,979/.

(c) According to the information and explanations given to us, there are no material dues of wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, service tax and value added tax have not been deposited by the Company on account of disputes:

Name of the statute	Nature of dues	Amount (in Lakhs.)	Forum where dispute is pending
Orissa sales Tax Act	Sales Tax	165.00	Commissioner of Commercial Tax
Orissa Entry Tax Act	Entry Tax	144.00	Commissioner of Commercial Tax
Central Sales Tax Act	Sales Tax	791.10	Commissioner of Commercial Tax
Income Tax Act	Income Tax	5469.84	ITAT (Cuttack)
Income Tax Act	Income Tax	598.00	CIT(A), Bhubaneswar

(viii) Based on our Audit procedures and according to information and explanation given to us, the Company has paid dues to banks with certain delay. The Company have overdue outstanding dues to financial institutions, banks as at 31st March 2018 as follows:

Bank Name	Rs. In Crores
State Bank of India	910.94
Punjab National Bank	321.48
IDBI Bank Ltd.	119.43
Bank of India	59.63
EXIM Bank(Edelweiss ARC Ltd.)	189.94
Kotak Mahindra Bank	9.5

(ix) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments. The term loans have been applied for the purpose for which they were obtained.

(x) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.

(xi) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, which is subject to the approval from Central Government;

(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 3 (xii) of the Order are not applicable to the Company.

(xiii) In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the standalone Ind AS Financial Statements as required by the applicable accounting standards.

(xiv) Based upon the audit procedures performed and the information and explanations given by the management, the company has made preferential allotment of equity shares during the year under review. Company has complied requirement of section 42 of the Companies Act,2013 and the amount raised have been used for the purposes for which the funds were raised.

(xv) Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

(xvi) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

[Referred to in paragraph 2(g) under the heading ‘Report on Other Legal & Regulatory Requirement of our report of even date to the standalone Ind AS financial statements of the Company for the year ended March 31, 2018.]

Report on the Internal Financial Controls 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 of M/s. ARSS Infrastructure Projects Limited (‘the Company’), as of 31 March 2018 in conjunction with our audit of the standalone Ind AS financial statements 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 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 (‘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 over financial reporting 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 over financial reporting 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 over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, 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 standalone Ind AS 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 over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone Ind AS financial statements for external purposes in accordance with generally accepted accounting principles including Ind AS. A company’s internal financial control over financial reporting 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 standalone Ind AS financial statements in accordance with generally accepted accounting principles including Ind AS, 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 standalone Ind AS financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, 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 over financial reporting 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 over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 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 Ajay B Garg

Chartered Accountant

A Garg

Proprietor

Mem No. 32538

Place : Mumbai

Dated : 30^th May 2018.

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Mar 31, 2016

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of ARSS Infrastructure Projects Limited (‘the Company’), which comprise the balance sheet as at 31 March 2016, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Basis for Qualified Opinion

a) In absence of relevant records, Contract-wise surplus/loss has neither been ascertained nor recognized in compliance with the requirements of para 34 and 35 of AS-7 “Construction Contracts” issued by the Institute of Chartered Accountants of India.

b) In the absence of accounts of Balaji-ARSS (JV) and ARSS-MVPL JV, discrepancies, if any, between the said accounts with that of the Company is not ascertainable.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, and further to our comments in the ‘Annexure-A we state that except for possible effect of the matter described in sub para (a) and (b) in the ‘Basis for Qualified Opinion’ paragraph above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March, 2016, and its profit and its 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, 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 the paragraph 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, except for the matter described in the sub para ‘a’ and sub para ‘b’ of the ‘Basis for Qualified Opinion’ paragraph above, all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid standalone financial statements.

(b) except for the possible effect of the matter described in sub para ‘a’ and ‘b’ in the ‘Basis for Qualified Opinion’ paragraph above, in our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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

(d) except for the possible effect of the matter described in sub para ‘a’ and ‘b’ in the ‘Basis for Qualified Opinion’ paragraph above, in our opinion the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) on the basis of the written representations received from the directors as on 31^st March 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March 2016 from being appointed as a director in terms of Section 164 (2) of the Act; and

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

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure-B’.’

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements, Refer Note No. 15, 29, 31 and 35 to the financial statements;

ii. the Company did not have any Long term contract including derivatives contract as such the question of commenting on any material foreseeable losses thereon does not arise.

iii. There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise.

Referred to in paragraph 1 under the heading ‘Report on Other Legal & Regulatory Requirement’ of our report of even date to the standalone financial statements of the Company for the year ended March 31, 2016, we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the company.

(ii) (a) As explained to us, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion, the discrepancies noticed on physical verification of the inventory were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) The Company has granted loans amounting to '' 9.73 Lakhs to one bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act’).

(a) In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained under Section 189 of the Act were not, prima facie, prejudicial to the interest of the Company.

(b) In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, the borrowers have been regular in the payment of the interest and repayment of principal on demand. The terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand.

(c) There are no overdue amount for more than 90 days in respects of the loan granted to body corporate listed in the register maintained under section 189 of the Act.

(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 in respect of loans, investments, guarantees, and security.

(v) The Company has not accepted any deposits from the public and hence the paragraph (v) of the Order relating to directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 or any rules framed there under with regard to the deposits accepted from the public are not applicable to the company. Accordingly we have not commented upon the paragraph (v) of the Order.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the Companies (Cost records and audit ) Rules 2014 and as prescribed by the Central Government under section 148(1) of the Act and are of the opinion that prima-facie, the prescribed accounts and cost records have been made and maintained by the Company. We have not however made a detailed examination of the cost records with a view to determining whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, duty of excise, service tax, duty of customs, employees’ state insurance, value added tax, cess and other material statutory dues have been regularly deposited with few delay in some cases during the year by the Company with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of excise, duty of customs, value added tax, cess and other material statutory dues were in arrears as at 31^st March, 2016 for a period of more than six months from the date they became payable except TDS of Rs.3,03,67,708/- and Entry Tax of Rs. 1,16,09,250/-

(c) According to the information and explanations given to us, there are no material dues of wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, service tax and value added tax have not been deposited by the Company on account of disputes:

Name of the statute	Nature of dues	Amount (in Lakhs.)	Forum where dispute is pending
Orissa Sales Tax Act	Sales Tax	117.19	Commissioner of Commercial Tax
Orissa Entry Tax Act	Entry Tax	34.44	Commissioner of Commercial Tax
Central Sales Tax Act	Sales Tax	791.10	Commissioner of Commercial Tax
Income Tax Act	Income Tax	5469.84	ITAT (Cuttack)

(viii) Based on our Audit procedures and according to information and explanation given to us, the Company has paid dues to banks with certain delay. The Company have overdue outstanding dues to financial institutions, banks as at 31^st March, 2016 amounting to Rs.369.15 Crores.

(ix) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments. The term loans have been applied for the purpose for which they were obtained.

(x) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.

(xi) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act;

(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

(xiii) In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.

(xv) Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

(xvi) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

For Ajay B Garg

Chartered Accountant

A Garg

Proprietor

Mem No. 32538

Place : Mumbai

Dated : 27^th May, 2016

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Mar 31, 2015

We have audited the accompanying standalone financial statements of ARSS Infrastructure Projects Limited ('the Company'), which comprise the balance sheet as at 31st March 2015, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

1. In absence of relevant records, Contract-wise surplus/loss has neither been ascertained nor recognized in compliance with the requirements of para 34 and 35 of AS-7 "Construction Contracts" issued by the Institute of Chartered Accountants of India.

2. Interest for the year amounting to Rs. 31794 lakhs on inter corporate deposits received has not been charged to the Profit & Loss account resulting in overstatement of profit to that extent.

3. In the absence of accounts of ARSS Balajee JV and ARSS-MVPL JV, discrepancies, if any, between the said accounts with that of the Company is not ascertainable.

4. No provision has been made against performance bank guarantee invoked amounting to Rs. 82.83 Crores against the Company and the same is disputed by Company.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in sub para 2 and 4 and for possible effect of the matter described in sub para 1 and 3 in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its profit and its 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, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 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, except for the matter described in sub-paragraph 1 and 3 of Basis of Qualified Opinion above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid standalone financial statements.

(b) in our opinion, except for the effects of the matter described in sub para 2 and 4 and for possible effect of the matter described in sub para 1 and 3 in the Basis for Qualified Opinion paragraph above, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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

(d) in our opinion, except for the effects of the matter described in sub para 2 and 4 and for possible effect of the matter described in sub para 1 and 3 in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

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

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements, Refer Note No. 29, 31,35, and 37 to the financial statements;

ii. the Company did not have any Long term contract including derivatives contract as such the question of commenting on any material foreseeable losses thereon does not arise.

iii. There has been not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise.

Annexure to the Independent Auditors' Report

The Annexure referred to in our Independent Auditors' Report to the members of the Company on the standalone financial statements for the year ended 31st March 2015, we report that:

(i) FIXED ASSETS

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

b. The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(ii) INVENTORIES

a. As explained to us, the inventories have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

b. In our opinion and according to the information and explanations given to us, 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. In our opinion, the Company is maintaining proper records of inventory and the discrepancies noticed on physical verification of the same were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account;

(iii) LOAN GIVEN

a. The Company has granted loans amounting to Rs. 9.73 Lakhs to one bodies corporate covered in the register maintained under Section 189 of the Companies Act, 2013 ('the Act').

b. In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, the borrowers have been regular in the payment of the interest as stipulated. The terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand. Accordingly, paragraph 4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount.

c. There are no overdue amounts of more than rupees one lakh in respect of the loans granted to the bodies corporate listed in the register maintained under Section 189 of the Act.

(iv) INTERNAL CONTROL

In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from the public, hence the compliance of directives issued by Reserve Bank of India and the provisions of Section 73 to 76 of the Companies Act 2013 and rules framed thereunder are not applicable.

(vi) COST ACCOUNTING RECORDS

We have broadly reviewed the books of accounts maintained by the Company pursuant to the Companies (Cost records and audit ) Rules 2014 and as prescribed by the Central Government under Section 148(1) of the Act and are of the opinion that prima-facie, the prescribed accounts and cost records have been made and maintained by the Company. We have not however made a detailed examination of the cost records with a view to determining whether they are accurate or complete.

(vii) STATUTORY DUES

a. According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, duty of excise, service tax, duty of customs, employees' state insurance, value added tax, cess and other material statutory dues have been regularly deposited with few delay in some cases during the year the Company with the appropriate authorities.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of excise, duty of customs, value added tax, cess and other material statutory dues were in arrears as at 31st March 2015 for a period of more than six months from the date they became payable except TDS of Rs. 6,01,31,813/- and Entry Tax of Rs.1,16,09,250/-

c. According to the information and explanations given to us, there are no material dues of wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, service tax and value added tax have not been deposited by the Company on account of disputes:

Name of the statute Nature of dues Amount (in Lakhs.)

Orissa Sales Tax Act Sales Tax 117.19

Orissa Entry Tax Act Entry Tax 34.44

Central Sales Tax Act Sales Tax 791.10

Income Tax Act Income Tax 5469.84

Income Tax Act TDS 13.29

Name of the statute Forum where dispute is pending

Orissa Sales Tax Act Commissioner of Commercial Tax

Orissa Entry Tax Act Commissioner of Commercial Tax

Central Sales Tax Act Commissioner of Commercial Tax

Income Tax Act ITAT (Cuttack)

Income Tax Act CIT (A)

d. According to the information and explanations given to us there are no amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under.

(viii) IN RESPECT OF LOSSES

The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

(ix) REPAYMENT OF DUES

Based on our Audit procedures and according to information and explanation given to us, the Company has paid dues to banks with certain delay. The Company have overdue outstanding dues to financial institutions, banks or debenture holders as at 31st March 2015 amounting to Rs. 209.69 Crores.

(x) GUARANTEES GIVEN

In our opinion and according to the information and the explanations given to us, the Company has given guarantee for loans taken by others from banks or financial institutions amounting to Rs. 89.80 Crores, the terms and conditions whereof are not prejudicial to the interest of the Company.

(xi) END USE OF BORROWINGS

In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

(xii) FRAUDS

Based on the audit procedures performed for the purpose of reporting the true and fair view of financial statement and as per the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For Ajay B Garg Chartered Accountant

A Garg Proprietor Mem No 32538

Place : Bhubaneswar Dated : 12th May, 2015

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Mar 31, 2014

We have audited the accompanying financial statements of ARSS Infrastructure Projects Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of Significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''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 misstatements.

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 suffcient and appropriate to provide a basis for our qualifed audit opinion.

Basis for Qualifed Opinion

a) In absence of working papers on physical verifcation of inventories, discrepancies, if any, between book and physical inventories could not be ascertained including effect of the same in the financial statements of the company.

b) Interest on delayed deposit of statutory dues excluding TDS has not been provided for, which has neither been quantifed nor the effect of the same on the financial statements has been ascertained.

c) No provision has been made against performance bank guarantees invoked amounting to Rs.89.83 Crores against the company and disputed by it.

d) No provision has been made against claims recoverable amounting to Rs. 734.44 Crores disputed by the parties and referred for arbitration.

e) Revenue includes Rs. 292.44 Crores against claims raised on different parties, which has neither been acknowledged nor recoverability of which is ascertainable.

f) The Company has not given effect to the loss of Fixed Assets in fre with a gross value of Rs. 3.78 Crores resulting charging of higher depreciation by Rs. 0.67 Crores and reduction in Profit by the same amount . The gross value of fixed assets has remained higher by Rs. 3.78 crores.

g) In absence of relevant records, Contract-wise surplus/loss has neither been ascertained nor recognized in compliance with the requirements of para 34 and 35 of AS-7 "Construction Contracts" issued by the Institute of Chartered Accountants of India.

h) In absence of details of potential equity shares, diluted earning per share has not been ascertained in compliance with AS- 20- "Earning per Share" issued by the Institute of Chartered Accountants of India.

i) Cost of leasehold Land has not been amortized which is not in conformity with AS-19- "Accounting for Leases" issued by the Institute of Chartered Accountants of India. Amount of amortisation not ascertained.

j) Interest amounting to Rs. 3.18 Crores on inter corporate deposits received has not been charged to Profit & Loss Account resulting in overstatement of Profit to that extent.

k) In the absence of accounts of ARSS Balajee JV, HCIL-Adhikarya-ARSS JV, HCIL-ARSSPL JV, HCIL-ARSS-Kalindee JV, ARSS-MVPL JV and HCIL-ARSSPL-Triveni JV, discrepancies, if any, between the said accounts with that of the Company is not ascertainable.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualifed Opinion paragraph, the aforesaid financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(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 fows 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 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order.

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

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

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

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

d) Except for the effects of the matter described in the Basis for Qualifed Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Act.

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

Annexure referred to in Paragraph 3 of our report of even date

[Re : ARSS Infrastructure Projects Ltd. ( "the Company")]

i) In respect of its Fixed Assets

a) The company has maintained fixed assets register which, however is not complete.

b) In absence of the working papers of physical verifcation, methodology adopted by the Company for the verifcation of the Fixed Assets could not be ascertained.

c) According to the information and explanation provided to us , the Company has not disposed off a substantial part of its fixed assets during the year and hence the status of the Company as a going concern is not affected.

ii) In respect of its Inventories

a) As explained to us, inventories have been physically verifed by the management. However, in absence of working papers of physical verifcation, we are unable to comment on the adequacy of frequency of such verifcation / estimation.

b) According to information and explanations provided to us, inventories at different sites have been visually quantifed and the value estimated by respective site in charge. However, in absence of working papers as mentioned above, we are unable to comment on the correctness of the procedure of physical verifcation of inventories followed by the management.

c) In absence of working papers for the physical verifcation of inventories conducted by the management, we are unable to comment on the discrepancies between physical stock and book records, if any and adjustment there of in the books of accounts.

iii) a) According to the information and explanations provided to us, the company has granted loan to one party covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 7.65 lacs and the balance at the end of the year is Rs. 7.65 lacs.

b) In our opinion and according to the information and explanations provided to us, the aforesaid loan is interest free and other terms and conditions of the loan taken by the party, were not prima facie prejudicial to the interest of the company.

c) The said interest free loan is repayable on demand and there is no repayment schedule.

d) The company had taken loan from eleven parties covered in the register maintained U/s 301 of the Act. The maximum amount involved during the year was Rs. 5,055.79 lacs and the balance at the end of the year is Rs. 5,005.79 lacs.

e) In our opinion and according to the information and explanations provided to us, the aforesaid loans are interest free and other terms and conditions of the loan taken by the company , were not prima facie prejudicial to the interest of the company.

f) The said interest free loans are repayable on demand and there is no repayment schedule.

iv) In our opinion and according to the information and explanations provided 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 also for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information & explanation provided to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in to the register, maintained U/s 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations provided to us, the transactions (excluding loans reported under paragraph iii above) exceeding the value of Rs. 5 lacs in respect of any party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, where such market prices are available.

vi) In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other provisions of the Act and rules framed there under.

vii) In our opinion and according to the information and explanation provided to us the internal audit system adopted by the company and reviewed by the audit committee can be considered as adequate.

viii) According to the information and explanations provided to us, the Central Government has prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, which however has not been maintained.

ix) a) According to the information and explanations provided to us and on the basis of examination of the records, the company is not generally regular in deposit of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, and Service Tax and there is serious delays in large number of cases.

b) According to the information and explanation provided to us, in our opinion, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March,2014 for a period of more than six months from the date they became payable except Entry tax amounting to Rs. 104.59 lacs and TDS amounting to Rs. 159.82 lacs.

c) According to the information & explanation provided to us the following dues demanded by the relevant authorities have not been deposited on account of pending disputes.

Forum where disputes are Pending Period to which the Amount of demand dispute relates ( Rs. in lacs)

1. Orissa Sales Tax Act.

Appellate Tribunal 2000-01 & 2004-05 52.11

Commissioner of Commercial Taxes 2000-01 to 2002-03 31.86

2. Orissa VAT Act Commissioner of Commercial Taxes 2004-05 to 2006-07 14.51

Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 & 2010-11 18.70

3. Orissa Entry Tax Act Joint Commissioner of Commercial Taxes 2005-06 to 2006-07 24.60

Commissioner of Commercial Taxes 2005-06 to 2006-07 9.84

4. Central sales Tax Act Commissioner of Commercial Taxes 2008-09 to 2010-11 892.61

5. Income Tax Act, 1961 ITAT 2004-05 to 2010-11 5,469.84

CIT (A) 2010-11 to 2012-13 13.28

6. Andhra Pradesh VAT Act

Appellate Deputy Commissioner(CT) 2008-09 to 2010-11 28.63

x) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses in the financial year. However the Company has incurred cash losses in the immediately preceding financial year.

xi) As at the Balance sheet date, Interest and principal amounting to Rs. 2369.11 Lacs due to the financial institutions and banks have not been paid by the company.

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

xiii) In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

xiv) As explained to us and on the basis of information provided to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the order are not applicable to the Company.

xv) According to the information and explanations provided to us , the company has extended guarantee to the following parties covered under register maintained under section 301 in respect of loan taken by them and the terms and conditions of such guarantees are not prima facie prejudicial to the interest of the company.

a) M/s Anil Contractors Pvt Ltd : Rs. 2.80 Crores

b) M/s ARSS Damoh Hirapur Tolls Pvt Ltd : Rs. 87.00 Crores

According to the information and explanations provided to us, loan availed by M/s ARSS Damoh Hirapur Tolls Pvt. Ltd, has been classifed as NPA by its bankers on 31.03.2014, and there is a possibility of devolvement of the said liability against the company.

xvi) In our opinion and according to the information and explanations provided to us, the term loans have been applied for the purpose for which they were obtained.

xvii) According to the information and explanations provided to us and on an overall examination of the books of accounts of the company, we are of the opinion that no funds raised on short-term basis have been utilized for long term investment.

xviii) According to the information and explanations provided to us, during the year, the company has not made any preferential allotments of shares to parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause (xviii) of paragraph 4 of the order are not applicable to the Company.

xix) During the period covered by our audit report, the Company has not issued any debentures. Accordingly, the provisions of clause (xix) of paragraph 4 of the order are not applicable to the Company.

xx) The Company has not raised any monies by way of public issues during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of the order are not applicable to the company.

xxi) To the best of our knowledge and belief and according to the information and explanation provided to us, no material fraud on or by the company during the year noticed or reported, nor have we been informed of such case by the management.

For P. A. & Associates

Chartered Accountants

Firm Regn. No – 313085E

(CA. B. N. Dash)

Bhubaneswar Partner

The 30th day of April, 2014 M. No. 062142

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of ARSS Infrastructure Projects Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial 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 fnancial 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 fnancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial 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 fnancial 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 fnancial statements. We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fnancial statements subject to the observations in Para 2 (b) and 2 (e) below, 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 Proft and Loss Account, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fows 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 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order.

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

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

b) i. In absence of detailed working papers on physical verifcation of inventories, discrepancies, if any, between book and physical inventories could not be ascertained including effect of the same in the fnancial statements of the company.

ii. Interest on delayed payment of statutory dues has not been provided for, which has neither been quantifed nor the effect of the same on the fnancial statements has been ascertained.

iii. No provision has been made against performance Bank Guarantees invoked amounting to Rs. 59.40 Crores against the company and disputed by it.

iv. No provision has been made against sundry debtors amounting to Rs. 442.16 Crores disputed by the parties and referred for arbitration.

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

d) the Balance Sheet, Statement of Proft and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.;

e) in our opinion, the Balance Sheet, Statement of Proft and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 except Accounting Standard 2 ( Valuation of Inventories) issued by The Institute of Chartered Accountants of India as stated in Para .2 (b) (i) above.

f) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

g) Since the Central Government has not issued any notifcation as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure referred to in Paragraph 3 of our report of even date

[Re: ARSS Infrastructure Projects Ltd. ("the Company")]

i) In respect of its Fixed Assets

a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets, which however, is not complete

b) According to the information and explanations given to us, during the year, few categories of fxed assets have been physically verifed by the management which in our opinion, is not reasonable as far as the frequency of verifcation is concerned having regard to the size of the Company and the nature of its assets.

c) In our opinion the Company has not disposed off a substantial part of its fxed assets during the year and hence the status of the Company as a going concern is not affected.

ii) In respect of its Inventories

a) As explained to us, inventories have been physically verifed by the management. However, in absence of detailed working papers on physical verifcation, we are unable to comment on the adequacy of frequency of such verifcation / estimation.

b) According to information and explanations provided to us, inventories at different sites have been visually quantifed and the value estimated by respective site in charge. However, in absence of detailed working papers as mentioned above, we are unable to comment on the correctness of the procedure of physical verifcation of inventories followed by the management.

c) In absence of detailed working papers for the physical verifcation of inventories conducted by the management, we are unable to comment on the discrepancies between physical stock and book records, if any and adjustment there of in the books of accounts.

iii) a) According to the information and explanations provided to us, the company has granted loan to one party covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 8.45 lacs and the balance at the end of the year is Rs. 7.65 lacs.

b) In our opinion and according to the information and explanations provided to us, the aforesaid loan is interest free and other terms and conditions of the loan taken by the party, were not prima facie prejudicial to the interest of the company.

c) The said interest free loan is repayable on demand and there is no repayment schedule.

d) The company had taken loan from two parties covered in the register maintained U/s 301 of the Act. The maximum amount involved during the year was Rs. 485.06 lacs and the balance at the end of the year is Rs. 485.06 lacs.

e) In our opinion and according to the information and explanations provided to us, the aforesaid loan is interest free and other terms and conditions of the loan taken by the company , were not prima facie prejudicial to the interest of the company.

f) The said interest free loans are repayable on demand and there is no repayment schedule.

iv) In our opinion and according to the information and explanations provided 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 fxed assets and also for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information & explanation provided to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in to the register, maintained U/s 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations provided to us, the transactions (excluding loans reported under paragraph iii above) exceeding the value of Rs. 5 lacs in respect of any party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, where such market prices are available.

vi) In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other provisions of the Act and rules framed there under.

vii) The company has an internal audit system and the same is reviewed by the Audit Committee. In our opinion the same can be considered as adequate.

viii) According to the information and explanations provided to us, the Central Government has prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, which however has not been maintained.

ix) a) According to the information and explanations provided to us the company is not regular in deposit of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, VAT and Service Tax.

b) According to the information and explanation provided to us, in our opinion, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March,2013 for a period of more than six months from the date they became payable except Entry tax amounting to Rs104.59 lacs.

c) According to the information & explanation provided to us the following dues demanded by the relevant authorities have not been deposited on account of pending disputes.

Forum where disputes are Pending Period to which the dispute Amount of demand relates. (Rs. in lacs)

1. Orissa Sales Tax Act. Appellate Tribunal 2000-01 & 2004-05 52.11

Commissioner of Commercial Taxes 2000-01 to 2002-03 31.86

2. Orissa VAT Act Commissioner of Commercial Taxes 2004-05 to 2006-07 14.51

Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 & 2010-11 18.70

3. Orissa Entry Tax Act Joint Commissioner of Commercial Taxes 2005-06 to 2006-07 24.60 Commissioner of Commercial Taxes 2005-06 to 2006-07 9.84

4. Central sales Tax Act Commissioner of Commercial Taxes 2008-09 791.11

5. Income Tax Act, 1961 CIT(Appeal) 2004-05 to 2010-11 5,469.84

6. Andhra Pradesh VAT Act Appellate Deputy Commissioner(CT) 2008-09 to 2010-11 28.63

x) The Company does not have accumulated losses at the end of the fnancial year. However the Company has incurred cash losses during the fnancial year covered by our audit but not in the immediately preceding fnancial year.

xi) As at the Balance sheet date, Interest and principal amounting to Rs 1,026.63 Lacs due to the fnancial institutions and banks have not been paid by the company.

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

xiii) In our opinion, the company is not a chit fund or nidhi/mutual beneft fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

xiv) As explained to us and on the basis of information provided to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the order are not applicable to the Company.

xv) In our opinion and according to the information and explanations provided to us , the terms and conditions of guarantees given by the company for loans taken by others from banks are not prima facie prejudicial to the interest of the company.

xvi) In our opinion and according to the information and explanations provided to us, the term loans have been applied for the purpose for which they were obtained.

xvii) According to the information and explanations provided to us and on an overall examination of the books of accounts of the company, we are of the opinion that no funds raised on short-term basis have been utilized for long term investment.

xviii) According to the information and explanations provided to us, during the year, the company has not made any preferential allotments of shares to parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause (xviii) of paragraph 4 of the order are not applicable to the Company.

xix) During the period covered by our audit report, the Company has not issued any debentures. Accordingly, the provisions of clause (xix) of paragraph 4 of the order are not applicable to the Company.

xx) The Company has not raised any monies by way of public issues during the year. Accordingly, the provisions of clause (xx) of paragraph 4 of the order are not applicable to the company.

xxi) To the best of our knowledge and belief and according to the information and explanation provided to us, no material fraud on or by the company during the year noticed or reported, nor have we been informed of such case by the management.

For P. A. & Associates

Chartered Accountants

Firm Regn. No – 313085E

(CA. B. N. Dash)

Bhubaneswar

Partner

The 11th day of May, 2013 M. No. 062142

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of ARSS Infrastructure Projects Limited, as at 31st March 2012, the 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 by the Companies (Auditors' Report)(Amendment)Order, 2004( hereinafter referred to as 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,

4. Further to our comments in the Annexure I referred to in paragraph 3 above, we report that:

4.1 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.

4.2 Profit from HCIL-Adhikaria- ARSSPL JV has been considered on the basis of Provisional Accounts as on 31.03.2012 and also for earlier years instead of audited accounts, which is not in accordance with Accounting Standard - 27, "Financial Reporting of Interest in Joint Ventures" issued by The Institute of Chartered Accountants of India.

4.3 In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books.

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

4.5 In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement have been drawn up in accordance with Accounting Standards (AS) referred to in Sub- section (3C) of Section 211 of the Companies Act, 1956 except as stated in Para - 4.2 above.

4.6 According to the information and explanations provided to us and on the basis of written representations received from the Company, we report that none of the Directors are disqualified as on 31.03.2012 from being appointed as a director in terms of clause (g), sub section (i) of section 274 of the Companies Act, 1956.

4.7 In our opinion and to the best of our information and according to the explanations provided to us, the said accounts, subject to the observations in para 4.2 above regarding consideration of provisional profit and investment in one of the Joint Venture, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In the case of Balance Sheet, of the state of affairs of Company as at 31st March, 2012.

ii. In the case of Profit and Loss Account, of the Loss of the Company for the year ended on that date and.

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

[Re : ARSS Infrastructure Projects Ltd. ( "the Company")]

i) In respect of its Fixed Assets

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

b) According to the information and explanations provided to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

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

ii) In respect of its Inventories

a) As explained to us, inventories have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and nature of its business.

b) According to the information and explanation provided to us, the procedure of physical verification of inventories followed by the management in our opinion are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) On the basis of our examination, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii) a) According to the information and explanations provided to us, the Company has granted loan to one party covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 9.20 lacs and the balance at the end of the year is Rs. 8.45 lacs.

b) In our opinion and according to the information and explanations provided to us, the aforesaid loan is interest free and other terms and conditions of the loan taken by the party, were not prima facie prejudicial to the interest of the Company.

c) The said interest free loan is repayable on demand and there is no repayment schedule.

d) The Company had taken loan from two parties covered in the register maintained U/s 301 of the Act. The maximum amount involved during the year was Rs. 250.00 lacs and the balance at the end of the year is Rs. 250.00 lacs.

e) In our opinion and according to the information and explanations provided to us, the aforesaid loan is interest free and other terms and conditions of the loan taken by the Company , were not prima facie prejudicial to the interest of the Company.

f) The said interest free loans are repayable on demand and there is no repayment schedule.

iv) In our opinion and according to the information and explanations provided 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 also for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information & explanation provided to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in to the register, maintained U/s 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations provided to us, the transactions (excluding loans reported under paragraph iii above) exceeding the value of Rs. 5 lacs in respect of any party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, where such market prices are available.

vi) In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other provisions of the Act and rules framed there under,

vii) In our opinion and according to the information and explanations provided to us the Company has an internal audit system commensurate with the size of Company and the nature of its business.

viii) According to the information and explanations provided to us, the Central Government has not prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 for any of the products of the Company.

ix) a) According to the information and explanations provided to us the Company is irregular in deposit of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, VAT and Service Tax.

b) According to the information and explanation provided to us, in our opinion, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable except service tax amounting to Rs. 70.41 lacs.

c) According to the information & explanation provided to us and on basis of the records of the Company examined by us, the particulars of sales tax, income tax and entry tax as at 31st March, 2012 which have not been deposited on account of pending disputes are as under,

(Rs. in lacs)

Forum where disputes are Pending Period to which the dispute relates. Amount of demand

1. Orissa Sales Tax Act.

Appellate Tribunal 2000-01 & 2004-05 52.11

Commissioner of Commercial Taxes 2000-01 to 2002-03 31.86

2. Orissa VAT Act

Commissioner of Commercial Taxes 2004-05 to 2006-07 14.51

Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 & 2010-11 18.70

3. Orissa Entry Tax Act

Joint Commissioner of Commercial Taxes 2005-06 to 2006-07 24.60

Commissioner of Commercial Taxes 2005-06 to 2006-07 9.84

4. Central sales Tax Act

Commissioner of Commercial Taxes 2008-09 791.11

5. Income Tax Act, 1961 CIT(Appeal) 2006-07 to 2007-08 151.07

6. Andhra Pradesh VAT Act

Appelate Deputy Commissioner(CT) 2008-09 to 2010-11 28.63

x) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year,

xi) As at the Balance sheet date, Interest and principal amounting to Rs. 249.29 crores due to the financial institutions and banks have not been paid by the Company. Accordingly, the loan account with State Bank of India, and State Bank of Bikaner and Jaipur has been declared as Non Performing Assets.

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

xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

xiv) As explained to us and on the basis of information provided to us, the Company is not dealing in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the order are not applicable to the Company.

xv) In our opinion and according to the information and explanations provided to us , the terms and conditions of guarantees given by the Company for loans taken by others from banks are not prima facie prejudicial to the interest of the Company.

xvi) In our opinion and according to the information and explanations provided to us, the term loans have been applied for the purpose for which they were obtained.

xvii) According to the information and explanations provided to us and on an overall examination of the books of accounts of the Company, we are of the opinion that no funds raised on short-term basis have been utilised for long term investment.

xviii) According to the information and explanations provided to us, during the year, the Company has not made any preferential allotments of shares to parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause (xviii) of paragraph 4 of the order are not applicable to the Company.

xix) During the period covered by our audit report, the Company has not issued any debentures. Accordingly, the provisions of clause (xix) of paragraph 4 of the order are not applicable to the Company.

xx) The Company has not raised any monies by way of public issues during the year,

xxi) To the best of our knowledge and belief and according to the information and explanation provided to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For P. A. & Associates

Chartered Accountants

Firm Regn. No - 313085E

(CA. B. N. Dash)

Bhubaneswar Partner

The 14th day of May, 2012 M. No. 062142

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of ARSS Infrastructure Projects Limited, as at 31st March, 2011 the Profit and Loss Account and also 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 by the Companies (Auditors' Report) (Amendment) Order, 2004(hereinafter referred to as 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.

4. Further to our comments in the Annexure I referred to in paragraph 3 above, we report that:

4.1 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.

4.2 Profit from HCIL-Adhikaria- ARSSPL JV has been considered on the basis of Provisional Accounts as on 31.03.2011 and also for earlier years instead of audited accounts, which is not in accordance with Accounting Standard – 27, "Financial Reporting of Interest in Joint Ventures" issued by The Institute of Chartered Accountants of India.

4.3 In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books.

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

4.5 In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement have been drawn up in accordance with Accounting Standards (AS) referred to in Sub- section (3C) of Section 211 of the Companies Act, 1956 except as stated in Para – 4.2 above.

4.6 According to the information and explanations provided to us and on the basis of written representations received from the company, we report that none of the Directors are disqualified as on 31.03.2011 from being appointed as a director in terms of clause (g), sub section (i) of section 274 of the Companies Act, 1956.

4.7 In our opinion and to the best of our information and according to the explanations provided to us, the said accounts, subject to the observations in para 4.2 above regarding consideration of provisional profit and investment in one of the Joint Venture, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In the case of Balance Sheet of the state of affairs of company as at 31st March, 2011.

ii. In the case of Profit and Loss Account of the Profit of the Company for the year ended on that date and.

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

ANNEXURE TO AUDITOR'S REPORT (Referred to in Para 1 of the said report of even date)

1. In respect of its Fixed Assets

a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b) According to the information and explanations provided to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

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

2. In respect of its Inventories

a) As explained to us, inventories have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of its business.

b) According to the information and explanation provided to us the procedure of physical verification of inventories followed by the management in our opinion are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination , we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. a) According to the information and explanations provided to us, the company has granted loan to two parties covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 84.20 lacs and the balance at the end of the year is Rs. 9.20 lacs.

b) In our opinion and according to the information and explanations provided to us, the aforesaid loan is interest free and other terms and conditions of the loan taken by the parties, were not prima facie prejudicial to the interest of the company.

c) The said interest free loan is repayable on demand and there is no repayment schedule.

d) The company had taken loan from one party covered in the register maintained U/s 301 of the Act. The maximum amount involved during the year is Rs. 120.00 lacs and the balance at the end of the year was NIL.

e) In our opinion and according to the information and explanations provided to us, the aforesaid loan is interest free and other terms and conditions of the loan taken by the company , were not prima facie prejudicial to the interest of the company.

f) The company has repaid the loan during the year as stipulated in the terms and conditions of the loan.

4. In our opinion and according to the information and explanations provided 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 also for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. According to the information & explanation provided to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in the register maintained U/s. 301 of the Companies Act, 1956 have been so entered.

6. In our opinion and according to the information and explanations provided to us, each such transaction have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

7. In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposit from public within the meaning of section 58A and 58AA or any other provisions of the Act and rules framed there under.

8. In our opinion and according to the information and explanations provided to us, the company has an internal audit system commensurate with the size of company and the nature of its business.

9. According to the information and explanations provided to us , the Central Government has not prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 for any of the products of the Company.

10. According to the information and explanations provided to us the company is generally regular in deposit of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, VAT and Service Tax.

11. According to the information and explanation provided to us, in our opinion , no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March,2011 for a period of more than six months from the date they became payable.

12. According to the information & explanation provided to us and on basis of the records of the company examined by us, the particulars of sales tax, income tax and entry tax as at 31st March, 2011 which have not been deposited on account of pending disputes are as under.

(Rs. in lacs)

Forum where disputes are Pending Period to which the dispute relates. Amount of demand

1. Orissa Sales Tax Act.

Appellate Tribunal 2000-01 & 2004-05 52.11

Commissioner of Commercial Taxes 2000-01 to 2002-03 31.86

2. Orissa VAT Act

Commissioner of Commercial Taxes 2004-05 to 2006-07 14.51

Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 7.79

3. Orissa Entry Tax Act

Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 24.59

Commissioner of Commercial Taxes 2004-05 to 2006-07 9.83

4. Central sales Tax Act

Commissioner of Commercial Taxes 2008-09 791.10

5. Income Tax Act, 1961

CIT(Appeal) A.Y. 2006-07 to A.Y. 2007-08 151.07

13 The company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

14. In our opinion and based on the information and explanations provided to us the company has not defaulted in repayment of dues to financial institutions or banks.

15. According to the information and explanations provided to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

16. In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

17. As explained to us and on the basis of information provided to us, the company is not dealing in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the order are not applicable to the Company.

18. In our opinion and according to the information and explanations provided to us , the terms and conditions of guarantees given by the company for loans taken by others from banks are not prima facie prejudicial to the interest of the company.

19. In our opinion and according to the information and explanations provided to us, the term loans have been applied for the purpose for which they were obtained.

20. According to the information and explanations provided to us and on an overall examination of the books of accounts of the company, we are of the opinion that no funds raised on short-term basis have been utilised for long term investment.

21. According to the information and explanations provided to us, during the year, the company has not made any preferential allotments of shares to parties covered in the register maintained under section 301 of the Act.

22. During the period covered by our audit report, the Company has not issued any debentures.

23. The Company has not raised any monies by way of public issues during the year.

24. To the best of our knowledge and belief and according to the information and explanation provided to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For P. A. & Associates

Chartered Accountants

Firm Regn. No. 313085E

(CA P. S. Panda)

Bhubaneswar Partner

The 11th day of May, 2011 M. No. 51092

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of ARSS Infrastructure Projects Limited, as at 31st March, 2010, the Proft and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These fnancial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes assessing the accounting principles used and signifcant estimates made by management, as well as evaluating the overall fnancial 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 by the Companies (Auditors’ Report) (Amendment) Order, 2004 (hereinafter referred to as 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 specifed in Paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure I referred to in Paragraph 3 above, we report that:

4.1 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.

4.2 a) Provision of Rs. 30.51 lacs on account of retirement gratuity has been made on an adhoc basis, without ascertaining the liability through actuarial valuation which is not in accordance with Accounting Standard-15, “Employee Benefts” issued by The Institute of Chartered Accountants of India.

b) Proft from HCIL-Adhikaria-ARSSPL JV has been considered on the basis of Provisional Accounts as on 31st March, 2010 and also for earlier years instead of audited accounts, which is not in accordance with Accounting Standard-27, “Financial Reporting of Interest in Joint Ventures” issued by The Institute of Chartered Accountants of India.

4.3 In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books.

4.4 The Balance Sheet, Proft and Loss Account and Cash Flow Statement dealt with by this report, are in agreement with the books of account.

4.5 In our opinion, the Balance Sheet, Proft and Loss Account and Cash Flow Statement have been drawn up in accordance with Accounting Standards (AS) referred to in sub- Section (3C) of Section 211 of the Companies Act, 1956 except as stated in Para-4.2 above.

4.6 According to the information and explanations given to us and on the basis of written representations received from the Company, we report that none of the Directors are disqualifed as on 31st March, 2010 from being appointed as a director in terms of clause (g), Sub-section (i) of Section 274 of the Companies Act, 1956.

4.7 In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to the observations in Para 4.2 above regarding ascertainment of gratuity liability and consideration of provisional proft and investment in one of the Joint Venture, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In the case of Balance Sheet of the state of affairs of Company as at 31st March, 2010;

ii. In the case of Proft and Loss Account of the Proft of the Company for the year ended on that date; and

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

Annexure to Auditor’s Report

(Referred to in Para 1 of the said report of even date)

1. In respect of its Fixed Assets:

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

b) According to the information and explanations given to us, the fxed assets were physically verifed by the management in accordance with the programme of verifcation, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verifcation were not material and have been properly dealt with in the books of account.

c) In our opinion the Company has not disposed off a substantial part of its fxed assets during the year and hence the status of the Company as a going concern is not affected.

2. In respect of its Inventories:

a) As explained to us, inventories have been physically verifed by the management at the end of the year. In our opinion, the frequency of verifcation is reasonable having regard to the size of the Company and nature of its business.

b) The procedure of physical verifcation of inventories followed by the management in our opinion are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) On the basis of our examination, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verifcation between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. a) According to the information and explanations given to us, the Company has granted loan to one party

covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year is Rs. 10.00 lacs and the balance at the end of the year was Rs. 9.70 lacs.

b) The rate of interest and other terms and conditions of the loan taken by the party, were not prima facie prejudicial to the interest of the Company.

c) The party is regular in repayment of principal and interest.

d) The Company had taken loans from one party covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year is Rs. 90.00 lacs and the balance at the end of the year is NIL.

e) The rate of interest and other terms and conditions of the loan taken by the Company, were not prima facie prejudicial to the interest of the Company.

f) The Company has repaid the loan during the year as stipulated in the terms and conditions of the loan.

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

5. According to the information and explanation given to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

6. In our opinion and according to the information and explanations given to us, each such transaction have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

7. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from public within the meaning of Section 58A and 58AA or any other provisions of the Act and rules framed there under.

8. In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size of Company and the nature of its business.

9. To the best of our knowledge the Central Government has not prescribed the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for any of the products of the Company.

10. According to the information and explanations given to us the Company is generally regular in deposit of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, VAT and Service Tax.

11. According to the information and explanation given to us, in our opinion, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable.

12. According to the information and explanation given to us and on basis of the records of the Company examined by us, the particulars of sales tax, income tax and entry tax as at 31st March, 2010 which have not been deposited on account of pending disputes are as under:

(Rs. in lacs) Period to which Amount of Forum where disputes are pending the dispute relates demand 1. Orissa Sales Tax Act – Appellate Tribunal 2000-01 & 2004-05 52.11 – Commissioner of Commercial Taxes 2000-01 to 2002-03 31.86 2. Orissa VAT Act – Commissioner of Commercial Taxes 2004-05 to 2006-07 14.51 – Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 7.79 3. Orissa Entry Tax Act – Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 24.59 – Commissioner of Commercial Taxes 2004-05 to 2006-07 9.83 4. Central Sales Tax Act – Commissioner of Commercial Taxes 2008-09 500.15 5. Rajasthan VAT Act – Asst. Commissioner of Commercial Taxes, Jaipur 2007-08 to 2009-10 219.98 6. Andhra Pradesh Commercial Taxes Act – Appellate Dy. Commissioner (Commercial Taxes), 2008-09 2.08 Vishakhapatanam 7. Income Tax Act, 1961 – CIT (Appeal)/ITAT A.Y. 2006-07 41.97 – CIT (Appeal), Bhubaneswar A.Y. 2007-08 7.17 – CIT (Appeal), Bhubaneswar/ITAT A.Y. 2007-08 101.93

13. The Company has no accumulated losses as at 31st March, 2010 and has not incurred cash losses during the fnancial year covered by our audit and in the immediately preceding fnancial year.

14. In our opinion and based on the information and explanations given to us the Company has not defaulted in repayment of dues to fnancial institutions or banks.

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

16. In our opinion, the Company is not a chit fund or nidhi/mutual beneft fund/society.

17. As explained to us and on the basis of information given to us, the Company is not dealing in shares, securities, debentures and other investments.

18. In our opinion and according to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks are not prima facie prejudicial to the interest of the Company.

19. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

20. According to the information and explanations given to us and on an overall examination of the books of accounts of the Company, we are of the opinion that no funds raised on short-term basis have been utilised for long-term purposes.

21. According to the information and explanations given to us, during the year, the Company has not made any preferential allotments of shares to parties covered in the register maintained under Section 301 of the Act.

22. During the period covered by our audit report, the Company has not issued any debentures.

23. We have verifed the end use of money raised by initial public offer (IPO) from the draft prospectus fled with SEBI, the offer document and as disclosed in the notes to the fnancial statements and comment that issue proceeds are utilised as per the estimates in the prospectus and are within the limits set out in the prospectus except for issue expenses which has been over spent by Rs. 30.72 lacs.

24. To the best of our knowledge and belief and according to the information and explanation given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For P.A. & Associates

Chartered coountants Firm Regn. No:313085E (CA P.S. Pande) Membership No: 51092

Tirupati

27th April,2010

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Mar 31, 2009

1. We have audited the attached Balance Sheet of ARSS Infrastructure Projects Limited, as at 31* March2009, the Profit and Loss Account and also the Cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 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 I referred to in paragraph 3 above, we report that:

4.1 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.

4.2 a) Provision of Rs. 14.00 lacs on account of retirement gratuity has been made on an adhoc basis, without ascertaining the actual liability through actuarial valuation which is not in accordance with Accounting Standard - 15, "Employee Benefits" issued by The Institute of Chartered Accountants of India.

b) Profit from HCIL-Adhikaria- ARSSPL JV has been considered on the basis of Provisional Accounts as on 31.03.2009 instead of audited accounts, which is not in accordance with Accounting Standard - 27, "Financial Reporting of Interests in Joint Ventures" issued by The Institute of Chartered Accountants of India.

4.3 In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books.

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

4.5 In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement have been drawn up in accordance with Accounting Standards (AS) referred to in Sub- section (3C) of Section 211 of the Companies Act, 1956 except as stated in Para - 4.2 above.

4.6 According to the information and explanations given to us and on the basis of written representations received from the company, we report that none of the Directors are disqualified as on 31.03.2009 from being appointed as a director in terms of clause (g), sub section (i) of section 274 of the Companies Act, 1956.

4.7 In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to the observations in para 4.2 above regarding non ascertainment of actual gratuity liability and consideration of provisional profit and investment in Joint Venture, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In the case of Balance Sheet of the state of affairs of company as at 31st March, 2009.

ii. In the case of Profit and Loss Account of the Profit of the Company for the year ended on that date and.

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

ANNEXURE TO AUDITORS REPORT (Referred to in Para 1 of the said report of even date)

1. In respect of its Fixed Assets

a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b) According to the information and explanations given to us, the fixed assets were physically verified by the management in accordance with the programme of verification, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books of account.

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

2. In respect of its Inventories

a) As explained to us, inventories have been physically verified by the management at the end of the year. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of its business.

b) The procedures of physical verification of inventories followed by the management in our opinion are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. a) According to the information and explanations given to us, the company has not granted any loan to parties covered in the register maintained under section 301 of the Act.

b) In view of our comments in paragraph 3(a) above, provisions of clauses 3(b), (c), (d) are not applicable.

c) The company had taken loans from companies covered in the register maintained U/S 301 of the Act. The maximum amount involved during the year is Rs 548 lacs and the balance at the end of the year of loan taken from such parties were NIL.

d) The rate of interest and other terms and conditions of the loan taken by the company, were not prima facie prejudicial to the interest of the company.

e) The company has repaid the loan during the year as stipulated in the terms & conditions of the loan.

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

5. According to the information & explanation given to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in the register maintained U/S 301 of the Companies Act, 1956 have been so entered.

6. In our opinion and according to the information and explanations given to us, each such transaction have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

7. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from public within the meaning of section 58Aand 58AAor any other provisions of the Act and rules framed there under.

8. In our opinion and according to the information and explanation given to us, the company has an internal audit system commensurate with the size of company and the nature of its business.

9. To the best of our knowledge the Central Government has not prescribed the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 for any of the products of the Company.

10. According to the information and explanations given to us the company is generally regular in deposit of undisputed statutory dues including Provident Fund, Income Tax, VAT and Service Tax.

11. According to the information and explanation given to us, in our opinion , no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31* March,2009 for a period of more than six months from the date they became payable.

12. According to the information & explanation given to us and on basis of the records of the company examined by us, the particulars of sales tax as at 31* March, 2009 which have not been deposited on account of pending disputes are as under.

Period to which the Name of the statue Amount demanded Forum where dispute relates (in Rs.) dispute is pending

2000-01 Orissa Sales Tax Act 2,61,428 Appellate Tribunal

2004-05 Orissa Sales Tax Act 49,49,913 Appellate Tribunal

2000-01 Orissa Sales Tax Act 15,51,772 Commissioner of Commercial Taxes

2001-02 Orissa Sales Tax Act 8,01,687 Commissioner of Commercial Taxes

2002-03 Orissa Sales Tax Act 8,32,706 Commissioner of Commercial Taxes

13. The company has no accumulated losses as at 31st march 2009 and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

14. In our opinion and based on the information and explanations given to us the company has not defaulted in repayment of dues to financial institutions or banks.

15. According to the information and explanations given to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

16. In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/society.

17. As explained to us and on the basis of information given to us, the company is not dealing in shares, securities, debentures and other investments.

18. In our opinion and according to the information and explanations given to us , the terms and conditions of guarantees given by the company for loans taken by others from banks are not prima facie prejudicial to the interest of the company.

19. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

20. According to the information and explanations given to us and on an overall examination of the books of accounts of the company, we are of the opinion that no funds raised on short-term basis have been utilized for long term purposes.

21. According to the information and explanations given to us, during the year, the company has not made any preferential allotments of shares to parties covered in the register maintained under section 301 of the Act.

22. During the period covered by our audit report, the Company has not issued any debentures.

23. The Company has not raised any money during the year through the public issue.

24. To the best our knowledge and belief and according to the information and explanation given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For P.A.& ASSOCIATES

Chartered Accountants Place: Bhubaneswar

Dated: The 8th day of May, 2009

(CA. P. S. Panda)

Partner M. No.: 51092

---

Mar 31, 2008

1. We have audited the attached balance Sheet of ARSS Infrastructure Projects Ltd, as at 31st March2008, the Profit and Loss Account and also the Cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 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 I referred to in paragraph 3 above, we report that:

4.1 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.

4.2 a) Provision ofRs. 6.13 lacs on account of retirement gratuity has been made on an adhoc basis, without ascertaining

the actual liability through actuarial valuation which is not in accordance with Accounting Standard - 15, "Accounting for Retirement Benefits" issued by The Institute of Chartered Accountants of India.

b)Profit from HCIL-Adhikaria-ARSSPLJV has been considered on the basis of Provisional Accounts as on 31.03.2008 instead of audited accounts, which is not in accordance with Accounting Standard - 27, " Financial Reporting of Interests in Joint Ventures" issued by The Institute of Chartered Accountants of India.

4.3 In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books.

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

4.5 In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement have been drawn up in accordance with Accounting Standards (AS) referred to in Sub- section (3C) of Section 211 of the Companies Act, 1956 except as stated in Para - 4.2 above.

4.6 According to the information and explanations given to us and on the basis of written representations received from the company, we report that none of the Directors are disqualified as on 31.03.2008 from being appointed as a director in terms of clause (g), sub section (i) of section 274 of the Companies Act, 1956.

4.7 In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with Significant Accounting Policies and other notes appearing in Schedule - 20, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In the case of Balance Sheet of the state of affairs of company as at 31st March, 2008.

ii. In the case of Profit and Loss Account of the Profit of the Company for the year ended on that date and.

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

ANNEXURE TO AUDITORS REPORT (Referred to in Para 1 of the said report of even date)

1. In respect of its Fixed Assets

a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

b) As informed to us, all the fixed assets have been physically verified by the management in a phased periodical manner which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

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

2. In respect of its Inventories

a) As explained to us, inventories have been physically verified by the management at the end of the year. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of its business.

b) The procedures of physical verification of inventories followed by the management in our opinion are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. According to the information and explanations given to us, the company has not granted/accepted any loans from parties covered in the register maintained under section 301 of the Companies Act. 1956.

Hence provisions of clause (b), (c), (d), (e), (f) and (g) of the said order are not applicable to the company.

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

5. According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained.

6. In our opinion and according to the information and explanations given to us, each such transaction have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

7. The company has not accepted any deposits from the public.

8. In our opinion and according to the information and explanation given to us, the company has an internal audit system commensurate with the size of company and the nature of its business.

9. As explained to us by the company The Central Government has not prescribed for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

10. According to the information and explanations given to us the company is generally regular in deposit of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax and Service Tax.

11. According to the information and explanations given to us, in our opinion, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March,2008 for a period of more than six months from the date they became payable.

11. The disputed statutory dues aggregating to Rs. 91.96 lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under.

Year Nature of Dues Amount Forum where demanded dispute is (in lakhs) pending

2000 to 2003 Orissa Sales Tax 31.85 CCT

2000 to 2005 -Do- 60.11 ACCT

12. The company has no accumulated losses and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

13. In our opinion and based on the information and explanations given to us and records examined by us, the company has not defaulted in repayment of dues to financial institutions or banks.

14. According to the information and explanations given to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

15. In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/society

16. As explained to us and on the basis of information given to us, the company is not dealing in shares, securities, debentures and other investments.

17. The Company has given guarantees for loans taken by others from banks or financial institutions. The terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

18. The term loans have been applied for the purpose for which they were obtained.

19. According to the information and explanations given to us and on overall examination of the books of accounts of the company, we are of the opinion that no funds raised on short-term basis have been utilized for long term purposes.

20. According to the information and explanations given to us, during the year, the company has made a preferential allotments of shares to parties covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

21. During the period covered by our audit report, the Company has not issued any debentures.

22. The Company has not raised any money during the year through the public issue.

23. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

ForP.A. & ASSOCIATES Chartered Accountants

(CA.P.S.Panda) Place: Bhubaneswar Partner

Dated: The 5th day of May, 2008 M. No.: 51092

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Mar 31, 2007

We have audited the attached Balance Sheet of ARSS Infrastructure Projects Ltd., as at 31st March, 2007 and also the Profit and Loss Account and 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.

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.

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. Further to our comments in the Annexure-I referred to in paragraph 1 above, we report that :

3.1. 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.

3.2. In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books.

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

3.4. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement have been drawn up in accordance with Accounting Standards (AS) referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956.

3.5 According to the information and explanations given to us and on the basis of written representations received from the company, we report that none of the Directors are disqualified as on 31.03.2007 from being appointed as a director in terms of clause (g), sub section (i) of section 274 of the Companies Act, 1956.

3.6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with Significant Accounting Policies and other notes appearing in Schedule- 20, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in confirmity with the accounting prnciples generally accepted in India :

i. In the case of Balance Sheet of the state of affairs of company as at 31st March, 2007.

ii. In the case of Profit and Loss Account of the Profit of the Company for the year ended on that date and.

iii. In the case of Cash Flow Statement of the cash Flows for the year ended on that date.

Annexure to Auditor’s Report (Referred to in para 1 of the said report of even date)

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

b) As informed to us, the fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years which in our opinion is reasonable having regard to the size of the company and nature of its assets. Accordingly part of the fixed assets have been verified by the management during the year. As informed to us by the management no material discrepancies were noticed on such verification.

c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern.

ii. a) As explained to us, inventories have been physically verified by the management at the end of the year. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of its business.

b) The procedures of physical verification of inventories followed by the management in our opinion are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

iii. According to the information and explanation given to us, the company has not granted / accepted any loans from parties covered in the register maintained under section 301 of the Companies Act. 1956.

Hence provisions of clause (b), (c), (d), (e), (f) and (g) of the said order are not applicable to the company.

iv. In our opinion and according to the information and explanations given to us, internal control procedure is commensurate with the size of the company and nature of its business with regard to puchase of inventory and fixed assets and for the sale of goods and services.

v. According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained.

vi. In our opinion and according to the information and explanations given to us, each such transaction have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

vii. The company has not accepted any deposits from the public.

viii. In our opinion and according to the information and explanation given to us, the company has an internal audit system, including internal audit carried out by a firm of Chartered Accountants appointed by the Management during the year which is commensurate with the size of company and the nature of its business.

ix. As explained to us by the company, The Central Government has not prescribed for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

x. According to the information and explanations given to us the company is generally regular in deposit of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax and Service Tax.

According to the information and explanations given to us, in our opinion, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March 2007 for a period of moe than six months from the date they became payable.

xi. As at 31st March 2007, according to the information and explanation given to us the following disputed dues have not been deposited with the appropriate authorities.

Year Nature of dues Amount Forum where demanded dispute is (in lakhs) pending

2000 to 2003 Orissa Sales Tax 34.47 CCT

2003 to 2005 - Do - 62.09 ACCT

xii. The company has no accumulated losses and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

xiii. In our opinion and based on the information and explanations given to us and records examined by us, the company has not defaulted in repayment of dues to a financial institutions or banks.

xiv. According to the information and explanations given to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

xv. In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/society.

xvi. As explained to us and on the basis of information given to us, the company is not dealing in shares, securities, debentures and other investments.

xvii. The Company has given guarantees for loans taken by others from banks or financial institutions. The terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

xviii. The term loans have been applied for the purpose for which they were obtained.

xix. According to the information and explanations given to us and on overall examination of the books of accounts of the company, we are of the opinion that no funds raised on short-term basis have been utilized for long term purposes.

xx. According to the information and explanations given to us, the company has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

xxi. During the period covered by our audit report, the Company has not issued any debentures.

xxii. The Company has not raised any money during the year through the public issue.

xxiii. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For P.A. & ASSOCIATES Chartered Accountants

(CA P.S. Panda) Partner M. No. : 51092 Place : Bhubaneswar Dated : The 7th day of July, 2007

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Mar 31, 2006

1. We have audited the attached Balance Sheet of ARSS Infrastructure Projects Ltd., Bhubaneswar as at 31st March, 2006 and the Profit & Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by Central Government of India in terms of section 227(4A) of the Companies Act, 1956 we enclose in the Annexure a statement on the matters specified in paragraph 4 & 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.

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

iii) The Balance Sheet, Profit & Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

iv) In our opinion, the Balance Sheet and Profit & Loss Account and cash flow statement dealt with this report comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act 1956.

v) According to the information and explanations given to us and on the basis of written representations received from the directors as on 31st March2006 and taken on record by the Board of Directors we report that none of the Directors is disqualified as on 31st March2006 from being appointed as a director in terms of clause (g) sub-section (i) of section 274 of the Companies Act1956.

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to Notes to Accounts in Schedule-20 give the information required by the Companies Act, 1956 in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India :

a) In the case of the Balance Sheet, of the State of the Companys affairs as at 31st March2006.

b) In the case of the Profit and Loss Account, of the Profit for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Annexure Referred to in Paragraph 3 of the Auditors report of the even date to the members of ARSS Infrastructure projects limited for the year ended 31st March 2006.

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

b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion is reasonable having regard to the size of the company and nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

c) During the year, the company has not disposed off substantial / major part of fixed assets.

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

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

c. In our opinion and according to the information and explanations given to us the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of accounts.

iii. a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered into the Register maintained under section 301 of the companies act 1956 have been so entered.

b) According to the information and explanations given to us, in our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies, firms, other parties listed in the register maintained under section 301 of the Companies Act 1956 are not prejudicial to the interest of the company. The company has taken loans from following parties.

Sl. Name of the Party Amount of loan Maximum amount Closing No. taken during outstanding balance the year during the year

1. Anil Contractors (P) Ltd. 0.00 Rs.6,00,000 Rs.2,00,000

2. Rajesh Agarwal 0.00 Rs.1,10,000 Nil

customs duty, excise duty, cess and any other statutory dues with appropriate authorities during the year except wealth tax.

According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2006 for a period of more than six months from the date they become payable.

b) According to the information and explanations given to us, there are disputes regarding payment of sales tax. Details are given as under.

Sl. No Name of the Nature of the Period to which State dues the amount relates

1. Orissa Sales- Sales Tax 2000 - 2001 Tax Act demand 2001 - 2002

2. Orissa Sales Sales Tax 2000 - 2001 Tax Act Demand 2001 - 2002

2002 - 2003 2004 - 2005

3. Orissa Sales Sales Tax 2000 - 2001 Tax Act demand 2001 - 2002

2003 - 2004

2004 - 2005



Name of the State Amount (Rs.) Forum where matter is pending

Orissa Sales- Tax Act 2,61,428.00 Appellate Tribunal

Orissa Sales Tax Act 15,51,772.00 Commissioner

8,01,687.00 Commercial Taxes 8,32,706.00 4,68,283.00 1,88,074.00

Orissa Sales Tax Act 1,83,391.00 Asst.

30,38,260.00 Commissioner

6,72,849.00 Commercial Taxes 26,53,060.00

According to the information and explanations given to us, there are disputes regarding payment of Income Tax. Details are given as under.

Sl.No Name of the Nature of the Period to which State dues the amount relates

1. Income Tax Income Tax 2001 - 2002 Act 1961 demand

2. Income Tax Income Tax 2002 - 2003 Act 1961 demand

3. Income Tax Income Tax 2003 - 2004 Act 1961 demand



Name of the State Amount (Rs.) Forum where matter is pending

Income Tax Act 1961 54,41,709.00 Commissioner of appeals

Income Tax Act 1961 43,98,542.00 Commissioner of appeals

Income Tax Act 1961 45,04,747.00 Commissioner of appeals

x. The company does not have any accumulated loss as at year end and has not incurred cash loss during the financial year and the immediatelypreceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to financial institutions & banks. The details are given as follows- Name of the Financial Institutions Number of Instalments Amount (in Rs.)

L & T Finance One 57,000.00

SREI Finance One 24,24,560.00

xii. According to the information and explanations given 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. Therefore, the provisions of Clause 4. (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xiv. 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 not given any guarantee for loans taken by others from the banks or financial institutions.

xvi. To the best of our knowledge and belief and according to the information and explanations given to us, the term loans availed by the Company were prima-facie applied during the year for the purposes for which such loans were obtained, other than temporary deployment pending ultimate utilization.

xvii. According to the information and explanations given to us and on an over all examination of the books of accounts of the Company, we report that amount of Rs. 64,05,207/- raised on short term basis have been used for long term investment.

xviii.According to the information and explanations given to us, the Company has not made any preferential allotment of shares.

xix. The Company has not issued any debenture during the financial year 2005-06.

xx. The Company has not raised any money by public issue during the financial year 2005-06.

xxi. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have we been informed of such case by the management.

For K.C. Jena & CO. Chartered Accountants

Place : Bhubaneswar Sd/-

Date : 2nd September, 2006 (Janhabi Deo) FCA

Partner