Auditor Report of KSK Energy Ventures Ltd.

Mar 31, 2018

Report on the Standalone Financial Statements

We have audited the accompanying standalone Ind AS financial statements of KSK Energy Ventures Limited (“the Company”), which comprises the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including other Comprehensive income), the statement of Cash Flows and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as ‘Standalone Ind AS financial statements’).

Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other Comprehensive income, 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, read with relevant Rule issued there under.

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 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 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. We draw attention to note no. 35 of the statement regarding invocation of the pledged shares of KSK Mahanadi Power Company Limited (“KMPCL”) a subsidiary of the company, pledged by the Company in favour of the lenders of KMPCL. The company holds an amount of Rs. 411.22 Crores as Investments and Rs. 2,465.92 crores as receivable consequent to invocation of pledge referred above in the Financial Statements.

Pending disposal/transfer of shares by the Lenders no provision has been considered in these financial statements by the management, as impact, if any is currently unascertainable

b. We draw your attention to note no. 36 of the Statement regarding invocation of the pledged shares of Sai Wardha Power Generation Limited (“SWPGL”), pledged by the Company in favour of the lenders ofSWPGL. The company holds an amount of Rs. 164.90 crores as Investments and Rs. 134.42 crores as receivable consequent to invocation of pledge referred above in the Financial Statements.

Pending disposal/transfer of shares and pending debt restructuring/ change in management by the Lenders no provision has been considered in these financial statements by the management, as impact, if any is currently unascertainable.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of the matters described in “basis for qualified opinion” paragraph, the aforesaid 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 Ind AS:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2018;

b. in the case of the Profit and Loss Statement including other comprehensive income, of the loss for the year ended on that date;

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

d. in the case of the changes in equity for the year ended on that date.

Emphasis of Matters

We draw your attention towards:

a. Note no. 2.6 of the financial statement, which state that “the company has incurred a net loss during the year ended 31st March, 2018 and during the previous years with resultant defaults in payment of interest and instalments dues to banks and financial institutions. Further as discussed in Note no. 35 and 36 to the financial statements, the company has residual investments and receivables pursuant to invocation of shares. However, the company continues to prepare the financial statements as a going concern as the Company is making appropriate representation and is in discussion with the respective lenders to find an appropriate resolution plan at each of the assets”.

In the absence of any contrary information, our opinion is not modified in this matter.

b. Note no. 16.4 of the statement, stating that “some of the lenders have recalled the loan given to the Company and has issued notice for possession of underlying securities on account of non-payment of overdue amount. The Company would seek to take appropriate steps, for addressing the same. Notwithstanding of above, pending resolution, classification of borrowings into non-current and current is done based on original terms of sanction”.

Our opinion is not modified in this matter.

c. Note no. 37 of the Statement, stating that “the Impairment loss amounting to Rs. 188.88 Crores incurred by the company on account of Impairment of Property, Plant and Equipment (PPE), investments and other assets related to subsidiaries. The same has been disclosed as exceptional item in the Statement of Profit and Loss for the year ended 31st March 2018”. Our opinion is not modified in this matter

Other Matters

The comparative financial information of the company for the year ended March 31, 2017, included in these standalone financial statements, have been audited by the predecessor auditor. The report of the predecessor auditor on comparative financial information dated 27May 2017 expressed an unmodified opinion.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

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

d. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards referred to in section 133 of companies act 2013 , read with relevant Rules issued there under.

e. We have not received written representation from one of the directors of the company for non-disqualification under Section 164(2). As far as other directors are concerned, on the basis of written representations received from such directors as on March 31, 2018, and taken on record by the Board of Directors, none of the remaining directors are disqualified as on March 31, 2018, from being appointed as a director in terms of sub-section (2) of section 164of the Companies Act, 2013.

f. 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’; and

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 standalone Ind AS financial statements-Refer Note 27 to the standalone Ind AS financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivatives contracts. Refer to Note 17 to the standalone Ind AS financial statements.

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

Referred to in paragraph 1 of “Report on Other Legal and Regulatory Requirements “ in our report of even date:

According to the information and explanations given to us:

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

(b) The Company has a fixed programme of Physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified the fixed assets during the year. No material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the title deeds of the immovable properties are held in the name of the Company. In respect of immovable properties of land and building that have been taken on lease and disclosed as fixed assets in the standalone financial statements, the lease agreements are in the name of the company

ii. The Company is primarily engaged in the development of private sector power projects. The Company does not have any inventory and accordingly reporting under Clause 3 (ii) of the Order is not applicable.

iii. According to the information and explanations given to us, the Company has granted unsecured loans to ten companies covered in the register maintained under section 189 of the Companies Act, 2013.

(a) In our opinion, 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) The terms of arrangement do not stipulate any repayment schedule and loans are repayable on demand. Accordingly, paragraph 3(iii)(b) & (c) of the order is not applicable to the company in respect of repayment of principal amount.

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 Act, with respect to the loans, investments made and providing guarantees and securities, as applicable

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

vi. The maintenance of cost records under Section 148(1) of the Act, has not been specified by the Central Government for the business activity carried out by the Company. Thus, reporting under Clause 3(vi) of the Order is not applicable to the Company.

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

(a) the Company has generally been regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income tax, Sales Tax, Excise duty, Value Added Tax, Service Tax, Custom Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income tax, Sales Tax, Excise duty, Value Added Tax, Service Tax, Custom Duty, 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.

(c) According to the information and explanations given to us, there are no dues of duty of customs, Sales Tax, Income Tax, Service Tax, duty of excise and Value Added Tax which have not been deposited with the appropriate authorities on account of any dispute accept disclosed below.

S.no	Name of the Statue	Nature of Dues	Amount (in Crores)	Period to which it relates	Forum where the dispute is pending
1.	Finance Act, 1994-	Availment of	50.56	April 2008-	CESTAT
	Service Tax	Cenvat Credit		September 2010	(Hyderabad)
2.	Income Tax Act 1961	Income tax	24.90	AY 2014-15	CIT (Appeals)
3.	Income Tax Act 1961	Income tax	20.45	AY 2015-16	CIT (Appeals)

*in respect of S.no. 1 above, an amount of Rs 2.68 Crores has been deposited for grant of stay.

*in respect of S.no. 2 above, entire demand amount has been adjusted from refund relating to subsequent years.

*in respect of S.no. 3 above, an amount of Rs 5.15 Crores has been adjusted from refund relating to subsequent years.

viii. In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of loans or borrowings to financial institutions and banks as per the details given below:

Name of the Lender	Amount of Default in Principal (Rs. In Crores)	Amount of Default in Interest (Rs. In Crores)	Period of Default
IFCI	5.00	2.99	September 2017 to March 2018
LIC	90.03	136.66	October 2015 to March 2018
L&T	-	2.01	October 2017 to March 2018
Axis Bank	-	12.52	March 2018

ix. The company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the Order is not applicable.

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

xi. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv. 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, paragraph 3(xiv) of the Order is not applicable.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) ofthe Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

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 KSK Energy Ventures Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the standalone 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 and presentation 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 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 financial statements for external purposes in accordance with generally accepted accounting principles. 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls 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 March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Jawahar and Associates.,

Chartered Accountants

Firm Registration No: 001281S

Sd/-

M. Chandramouleswara Rao

Place: Hyderabad Partner

Date: 14 June , 2018 Membership No: 024608

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Mar 31, 2016

To

The Members of KSK Energy Ventures Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of KSK Energy Ventures Limited ("the Company"), which comprises the Balance Sheet as at March 31,2016, 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 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the 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, 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 audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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 31,2016;

(b) in the case of the Profit 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 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 subsection (11] of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by the Companies Act. 2013 under section 143(3)11] and 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, we give in the Annexure - B Audit Report of Internal Financial Controls over Financial Reporting.

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

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in section 133 of companies act 2013, read with Rule 7 of Companies (Accounts) Rules, 2014.

e. on the basis of written representations received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2016, from being appointed as a director in terms of sub-section (2) of section 164(2) of the Companies Act, 2013.

f. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our 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 23 to the financial statements

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

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

Referred to in paragraph 1 of "Report on Other Legal and Regulatory Requirements "inour report of even date:

According to the information and explanations given to us:

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

(b) The Company has a fixed programme of Physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified the fixed assets during the year. No material discrepancies were noticed on such verification.

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

ii. The Clause relating to Inventories is not applicable to the company, as the Company has not carried out any manufacturing activity.

iii. The Company has granted unsecured loans from time to time to nineteen companies covered in the register maintained under section 189 of the Companies Act, 2013.

(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) The terms of arrangement do not stipulate any repayment schedule and loans are repayable on demand. Accordingly, paragraph-3(iii)(b)& (c) of the order is not applicable to the company in respect of repayment of the principal amount.

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 Act, with respect to the loans and investments made.

v. The Company has not accepted any deposits from the public and consequently the directives issued by Reserve Bank of India; the provisions of Section 73to 76ofthe Companies Act, 2013 and the rules framed there under are not applicable.

vi. The central Government has not prescribed the maintenance of cost records under section 148(1] of the Act, for any of the services rendered by the Company.

vii. (a) According to the Information and explanations given to us and on the basis of examination of books of accounts of the Company,

amounts deducted/ accrued in the books of the account in respect of undisputed statutory dues including provident fund, Income tax, Sales tax, Value added tax, service tax, Custom duty, cess and other material statutory dues have been regularly deposited during theyear by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees'' state insurance and Excise duty.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at 31 March 2016 fora period of more than six months from the date they became payable.

(b] According to the information and explanations given to us, there are no dues of duty of customs, Sales Tax, Income Tax, Service Tax, duty of excise and Value Added Tax which have not been deposited with the appropriate authorities on account of any dispute.

viii. According to the books of account and other relevant records of the Company examined by us and the information and explanations given to us, the Company has not paid principal and interest of Rs.10 Crores and 23.66 Crores respectively to banks and financial institutions as at the balance sheet date.

ix. The amount received from term loans availed during theyear has been applied for the purpose for which they were raised.

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

xi. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv. The company has issued 1,736,580 Equity Shares of Rs.10 each to KSK Power Holdings at a premium of Rs. 89 against share warrants. The amounts so raised have been applied for the purpose for which they were raised.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

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 KSK Energy Ventures Limited ("the Company") as of 31 March 2016 in conjunction with our audit of the standalone 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 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 financial statements for external purposes in accordance with generally accepted accounting principles. 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and 13) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls 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 2016, 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 Umamaheswara Rao SiCo ,

Chartered Accountants

Sd/-

S.Venugopal

Partner

ICAI MRN: 205565

FRN 004453S

Hyderabad

Date: May 30,2016

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Mar 31, 2015

We have audited the accompanying standalone financial statements of KSK Energy Ventures Limited ("the Company"), which comprises the Balance Sheet as at March 31, 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 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the 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 audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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, 2015;

(b) in the case of the Profit 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 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 paragraphs 3 and 4 of the Order.

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in section 133 of companies act 2013 , read with Rule 7 of Companies (Accounts) Rules, 2014.

e. on the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of sub-section (2) of section 164(2) of the Companies Act, 2013.

f. with respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our 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 22 to the financial statements

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

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

Annexure to Auditors' Report

Referred to in paragraph 1 of "Report on Other Legal and Regulatory Requirements "in our report of even date:

According to the information and explanations given to us:

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

(b) The Company has a fixed programme of Physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified the fixed assets during the year. No material discrepancies were noticed on such verification.

ii. The Clause relating to Inventories is not applicable to the company, as the Company has not carried out any manufacturing activity.

iii. The Company has granted unsecured loans from time to time to five Companies covered in the register maintained under section 189 of the Companies Act, 2013.

(a) 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.

(b) The terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand. Accordingly, paragraph 3(iii)(b) of the Order is not applicable to the Company in respect of repayment of the principal amount.

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

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

vi. The maintenance of cost records has not been prescribed by the central government under subsection (1) of section 148 of the Act.

vii. (a) According to the Information and explanations given to us and on the basis of examination of books of accounts, the Company is regular in depositing undisputed statutory dues including provident fund, , Employee's State Insurance, Income tax, Sales tax, Wealth tax, service tax, Custom duty, Excise duty, cess and other statutory dues with the appropriate authority and as at 31st March, 2015, no undisputed statutory dues were outstanding for more than six months from the date they became payable.

(b) There were no dues in respect of income tax, sales tax, wealth tax, customs duty, excise duty, Value Added Tax and cess that have not been deposited with the appropriate authorities on the account of any dispute as on 31st March 2015, other than those furnished below:

Name of the statue Nature of dues Forum where pending

Finance Act, 1994 Service Tax CESTAT

Name of the statue Period to which Amount amount relates (In Crores)

Finance Act, 1994 April, 2008 to March,2010 50.20

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

viii. The company has no accumulated losses as at the end of the financial year. The company has incurred Cash losses during the current financial year. The company has not incurred cash losses in the immediately preceding year.

ix. The company has not defaulted in repayment of dues to any Financial Institution/Banks.

x. 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 or financial institutions are not prima facie prejudicial to the interests of the Company.

xi. In our opinion, the term loans raised have been applied for the purpose for which they were raised.

xii. Based on the audit procedures adopted we are of the opinion that, no fraud on or by the company has been noticed or reported during the course of our audit.

For UmamaheswaraRao& Co., Chartered Accountants

Sd/- S Venugopal Partner ICAI MRN: 205565 FRN 004453S

Place: Hyderabad Date: 30 May, 2015

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Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956("the Act") read with General Circular 15/2013 dated 13 September, 2013 of Ministry of Corporate Affairs in respect of Section 133 of Companies 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 misstatement.

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

Opinion

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

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

(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.

Report on Other Legal and Regulatory Requirements

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

2. As required 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. 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 Companies Act, 1956, read with General Circular 15/2013 dated 13 September, 2013 of Ministry of corporate affairs in respect of section 133 of companies act 2013;

e. on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. since the Central Government has not issued any notification 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.

Referred to in paragraph 1 of "Report on Other Legal and Regulatory Requirements"inour report of even date:

According to the information and explanations given to us:

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

The Company has a fixed programme of Physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified the fixed assets during the year. No material discrepancies were noticed on such verification.

During the period the Company has not disposed off substantial part of fixed assets and therefore do not affect the going concern assumption.

2. The Clause relating to Inventories is not applicable to the company, as the Company has not carried out any manufacturing activity.

3. (a) During the year the Company has granted unsecured loans and advances from time to time to Twelve Companies covered in the register maintained under section 301 of the Companies Act, 1956.The Maximum amount involved during the year amounts to Rs.1,363.41 crores and the year-end balance of such loans was Rs. 3.07 crores.

In our opinion, the rate of interest and other terms and conditions of such loans and advances made are not prima facie prejudicial to the interests of the company.

(b) The company has taken unsecured loans from Seven Companies covered in the register maintained under section 301 of the companies Act, 1956.The Maximum amount involved during the year amounts to Rs.497.46 crores and year-end balance of such loan was Rs.182.52 crores.

In our opinion, the rate of interest and other terms and conditions of such loans and advances made are not prima facie prejudicial to the interests of the company.

(c) The payment and receipt of interest is regular both in cases of the loans given and loans accepted. The loans are recoverable or payable on demand.

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. We have not observed any major weakness in the internal control system during the course of the audit.

5. (a) According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, have been entered in the register required to be maintained under that section.

(b) Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at that time.

6. The Company has not accepted any deposits from the public and consequently the directives issued by Reserve Bank of India; the provisions of Section 58 A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

7. In our opinion, the Company has an Internal Audit System commensurate with its size and the nature of its business.

8. During the year the maintenance of cost records is not applicable for the Company.

9. (a) According to the Information and explanations given to us and on the basis of examination of books of accounts, the Company is regular in depositing undisputed statutory dues including provident fund, Investor Education and Protection Fund, Employee''s State Insurance, Income tax, Sales tax, Wealth tax, service tax, Custom duty, Excise duty, cess and other statutory dues with the appropriate authority and as at 31st March, 2014, no undisputed statutory dues were outstanding for more than six months from the date they became payable.

(b) There were no dues in respect of income tax, sales tax, wealth tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on the account of any dispute as on 31st March 2014, other than those furnished below:

Name of the Nature of Forum where Period to which statue dues pending amount relates

Finance Act, 1994 Service Tax CESTAT April, 2008 to March, 2010

Income Tax Act Income Tax Demand CIT (Appeals) Financial Year 2009-10

Name of the statue Amount (In Crores)

Finance Act, 1994 50.20

Income Tax Act 28.03

10. The company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding year.

11. The company has not defaulted in payment of dues to any Financial Institution/Banks.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not a chit fund, nidhi, mutual benefit fund or a society. Accordingly the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

14. As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. 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 or financial institutions are not prima facie prejudicial to the interests of the Company.

16. In our opinion, the term loans raised have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance sheet of the company, we report that no funds raised on short term basis have been utilized for long term investment.

18. During the period the company has not made any preferential allotment of shares to Companies/firms/parties covered in the register maintained under Section 301 of the Act, 1956.

19. The company has not issued any debentures and accordingly the provisions of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

20. During the period the Company has not raised money by public issue and accordingly the provisions of clause 4 (xx) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

21. Based on the audit procedures adopted we are of the opinion that, no fraud on or by the company has been noticed or reported during the course of our audit.

For UmamaheswaraRao& Co., Chartered Accountants

Sd/-

S. Venugopal

Partner

ICAI MRN: 205565

FRN004453S

Place: Hyderabad

Date: 24 May 2014

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompenylng financial stBlsmsma of KSK Energy Ventures Limited of the Company), which comprise the Balance Sheet as at March31. 2013. and the Statement of Profit and Loss and Gash Flow Statement Tor the year then ended. and a summaryol significenl aooounlrig policios and Other explanatory information.

Management''s Responsibility for the Financial Statements

Managemenl is resoonsfcle tot the preparation of these financial statements that give a true and fair view of lhe financial poaJtson. financial performance and cash flows of lhe Company in accordance with the Accounting Standards referred to m 3UO-sactlon 0Q of section 211 of tna Companies Ad, IBWfthe Ad''). This responsibility includes ma design. Implementation and mairnonarico of internal eonvoi relevant 10 lhe preparation and prtMofltat.ion.oi the financial stalemerrt* the! give a. true and falrview and an free tram material misstatement, whatheroue Id fraud or error.

Auditor''s Responsibility

Our responsibility 19 to express an opinion on these financial statemems based on our audit. We conducted our audit m accordance with the 51andards en Auditing Issued by lhe Institute of Chartered Accouribints of India. Those Standards require that we comply with ethical requirements and plan and perform tha audit to obtain rsaaonabla assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit wtdencs sboul tna amounls and disclosures in the iinsncial statements. Ylw procedures selected depend on ma auditor''s judgment, including trie essessment cf the risks of material misstatement of the financial statements, wnettwrdue to fraud or error. In making those nsh assess menta, me auditor con aiders Inlemal conlrol relevajrt to trie Company''s preparation and fair presentation of the financial alatemenls In order to design audit procedures that are approprlsto In |hrj clrojmslsncos. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management as wall as evaluating (he overal I presentation of the financial statements. We beievethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudrt opinion.

Opinion

In our opinion end to the best of our aiformaHon and according to the explanations given to us, the financial statements give the information req uired by the Ac! in the menner so required and give a true and far view in conformity with the accounting pnnciples generally accepted in India:

(a) Inthe case of the Balance Sheet, of the state of affareof the Company asat March 31,2013;

(6) IftthecaSQOitT^StnliBinentofF''rotrlan

(c) Inthe case ottha Cash Row Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regu letory Requirements

1. As required by the Companies (Auditor''s Report) Order. 2003 ("the Order'') issued by the Central Government of India in terms oH sub-section (4A1 of section 227 or the Act, we give in Ihe Annexure a statement on tiro matters specified in paragraphs * anrj 5 of the Ordei-

2. As required by section 227(3) ol the Actr we repcrtthat:

a. wb novo obtained oil Ino infcrmoiiori onrj explanations *fiieh to tho best of our fcrwwiodge and oo»ol wcro nowsssi> Tor the purpose Of Or audit;

b, in our opinion proporbooKs of account as require en am: nation oi inot* books

c. |he Balance Sheet, Statement of Profit and Loss, and Cash Row Stetamenl dealt with by m a Report are In agreement wwtn (ho books of account.

d. In our opinion, the Balance Shoal. Statement of Profit and Loss, and Cash Flow Statement rjompry wtth the Accounlmg Standa.''ds referred to in subsection |3C) of section 211 of the Companies Act, libG;

a. on the basis of written representations received from the directors as on March 31,20-13, end taken on record by the Board of Directors. none of the directors Is disqualified as on March 31,2013. from being appointed as ad rector In lermsof clause (g) of sub-section {1) of section 274 of the Companies Ac!. 1956.

b. since the Central Government has not issued any ratification as to the rate at which the cess e to be paid undersecbon 441A of Ihe Companies Act, 1B56 nor hat tissued any FWe* unde* the Said section, prescribing the manfle* in which such cess la to bo paid, no cess is duo and payable by the Company.

Referred to In paragraph 1 of" Raporton Other Legal and Regulatory Requirements." in ou r re port of wan data Accofding to ine information and explanations givento us:

1. The company has maintained proper records showing full particulars, including quantitative detai Is and artuation of fixed assets.

Ths Company has a fixed programme of Physical verification of Us fixed asaels which. In our opnon. Is reasonable having regard to ths size of the Company axd the nature of its assets. Management has physically verified the fixed assets during theyaar, fJo materta! discrepancies were noticed onsjuch verification,

During the period the Company has d rsposad off fixed assets worth Rs. £9.1S crores. However, It does not affect going concern or the entity.

2. The Clause-relating to inventories anot eppicable to the company. rath&Company has not carried out anymanutacturtng activity,

3. (aj During th*ywih* Company hBgrwlB^

covered in the register rrnrrtained under section 301 of the Companies Act, 195& The Maximum amount involved during the year amounts to t941 67 crores and the year-end balance oP such loans was 7810.4acrores,

In ouroplnlon, ma rate of interest end other terms and conditions of such loans and advances made are ml prima recta prejudicial to the Interests of the company.

(b) During the year the company has taken unsecured loans tram two Companies covered In the register maintained under Section 301 of the companies Act, 1956. The Maximum amount involved during the year amounts to Rs. 62.74 crores and year-end bajanceof- such loan was* &2.31 ceres,

In our opinion, iho med interest end othar terms and conditions of auch loans and advances mad* are not prima facie prBJudiclaltotho interests of the company,

The payment and receipt oF interest Is rcgutair both in cases of tha loans given and loans accepted. The loans a/a recoverable or payable on demend.

4. In Our opln ion and according to the information and explanations given to us, there Is an adequate Interna) control system commensurate with the sbb of the company and the nature of its business. We have not observed any major weakness In the intemslcanUcI system during the course of the audit

5. (a) According to the information and explanations given Co ua, we are of the opinion that particutaia of contracts or arrangements referred to In Section 301 of the Companies Act, 1956, have been entered i n the register required Co be maintained underthat section.

(b) Transactions made in pursuance of such contracts or arrangements have been made et prices which are reasonable having regard 10 tine prevatfing market prices at that time,

B. The Company has not accepted any deposits from the public and consequently the directives Issued by Resefve Bank ot India: the provisions of Section 56 A and &&AA of Ihe Companies. Act 1956 and the njtea framed there under are not applicable.

7. In our opif trie Company haft an Internal Audrt

B. The maintenance of cost records has been proscribed by the central government under clause fd) of subsection {1) 04 Section 209 of the Act, such accounts and records have been made and maaitained.

S. (aj According to the Information and explanations given lo us and on the basis of examination of boohs of accounts, ths Company is regular in depositing undisputed statutory dues including provident hind, Investor Education and Protection Fund, Employees Stats Insurance, Income lax. Sales lax, Wealth taxr service tax, Custom duty. Excise duly, cess and otharst<fory dues wrtn the appropriate authority and as al 31 St March, 2Ql3h no undeputed statutory dues were out standing for mora than at* moMhs from the date iney became payable.

10. Trie company nermer has accumulated loasesas al the end of the flnandad year nor has Incurred cash Fosses during ths financial year and in 1he immediately praceding year.

12. The company has not granted any loans and advances on the basts ol security by way of pledge of snares, debentures and (Hher securities.,

13. The company is not a chrt fund. nJdhi. mutual ban efil fund or a ace lety. Accord in g{y theprovBtonso(clBuaB4(icli[}ofthB Companies (Auditors Report) Order. 3003 are not applicable to 1he company.

14. As per the information and explanations given to us, the Company is not dealing or Trading In shares, securities, debentures and other Invest men (a.

15. in our Opinion and according 10 Ihe information and explanations given to us, the terms and Conditions OF guarantees given by the Company for bans taken by others Irom banks orfi nancialcslilutions are not prima facia prejudicial lo the interests, pf tna Company.

16. In ouf opinion, Ihe term toens raised have been applied for the purpose for which they were raised.

17. According to the information and explanations, given :o us and en an overall examination or the Balance sheet ol the company, we rttport thai no funds raised on short lerm basis ivrvo boon irtfllzed fw lono term investment.

18- During the period the company has nol made any prefartnli&J sJJatmen! of Shares to ttjmpaniae/foms/paflies covered In the register maintained under Section 30i of Ihe Companies Act. 1956

19. The company has no! isstjed Any debentures and aeeording V C^ P™^^»™ °''clause ^ JkwI ol (he CornfiftniBS iAudrtor^ Report) Order, 2003 are ool applicable, lo Che company.

20. During the peood the Company hes dOl raised moneyby public issueand accordi r^gly the provlslonsc! clause 4 f«} of the Companies (Auditor''s Report] Older, 2003 are not applicable to Ins company.

£1. Based on the audit procedures adopted we are otffw opinion thai, no fraud on or by the company has been noticed or reported during the course of our audit.

For Umamaheawara Rao A Co.,

Chartered Accounlaifla

(Partner)

KVMAR: 205565

FRN0044S3S

Place: Hyderabad

Date: 2 May 2013

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Mar 31, 2012

We have audited the attached Balance Sheet of KSK ENERGY VENTURES LIMITED as at 31 March, 2012, the Profit and Loss Statement for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. The 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.

As required by the Companies (Auditors' Report) Order, 2003 and amendment order 2004 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.

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

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

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

iii. The Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt with by this report are in agreement with the Books of account of the Company.

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

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

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

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

b. In the case of the Profit and Loss Statement of the Company, of the profit of the Company for the year ended on that date.

c. In the case of Cash Flow Statement, of the cash flows of the Company forthe year ended on that date.

Referred to in paragraph 1 of our report of even date:

In our opinion and according to the information and explanations given to us:

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

The Company has a fixed programme of Physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified the fixed assets during the year. No material discrepancies were noticed on such verification.

During the year, the Company disposed off all its fixed assets (Wind Turbine Generators with land appurtenant there to) relating to power generation undertaking besides some other assets. In our opinion, it does not affect going concern of the entity.

2. The Clause relating to Inventories is not applicable to the company, as the Company has not carried out any manufacturing activity.

3. (a) During the year, the Company has granted unsecured loans and advances from time to time to fourteen Companies covered in register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 842.09 croresandtheyear-end balance of such loans was Rs 577.29 crores.

In our opinion, the rate of interest and other terms and conditions of such loans and advances made are not prima facie prejudicial to the interests of the Company.

(b) During the year, the Company has taken unsecured loans from one Company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.89.05 crores and year- end balance of such loan was Rs. 41.76 crores

In our opinion, the rate of interest and other terms and conditions of such loans and advances made are not prima facie prejudicial to the interests of the Company.

(c) The payment and receipt of interest is regular both in cases of the loans given and loans accepted and the loans are recoverable or payable on demand.

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. We have not observed any major weakness in the internal control system during the course of the audit.

5. According to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956, particulars of which are required to be entered into the register maintained under that section.

6. The Company has not accepted any deposits from the public.

7. In our opinion, the Company has an Internal Audit System commensurate with its size and the nature of its business.

8. The maintenance of cost records has been prescribed by the Central government under clause (d) of sub section (1) of Section 209 of the Act, such accounts and records have been made and maintained.

9. (a) According to the information and explanations given to us and on the basis of examination of books of accounts, the Company is regular in depositing undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employee's State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other statutory dues with the appropriate authority's and as at 31 March 2012 no undisputed statutory dues were outstanding for more than six months from the date they became payable.

(b) There were no dues in respect of Income tax, Sales tax, Wealth tax, Customs duty, Excise duty and Cess that have not been deposited with the appropriate authorities on account of any dispute.

(c) Details of dues which have not been deposited on 31 March2012 on account of dispute are furnished below

Name of the statue Nature of dues Forum where pending Period to which Amount amount relates (In Crores)

Finance Act, 1994 Service Tax CESTAT April, 2008 to 50.56 September, 2010

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

11. The Company has not defaulted in payment of dues to any Financial Institution/Banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund, nidhi, mutual benefit fund or a society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

14. As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. 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 or financial institutions are not prima facie prejudicial to the interests of the Company.

16. During the year, the Company has not raised any term loans. In our opinion, the term loans raised earlier have been applied forthe purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance sheet of the Company, we report that no funds raised on short term basis have been utilized for long term investment.

18. The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under section 301 of the Act, 1956.

19. The Company has not issued any debentures and accordingly the provisions of clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

20. During the year, the Company has not raised money by public issue and accordingly the provisions of clause 4 (xx) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

21. No fraud on or by the Company has been noticed or reported during the year.

For Umamaheswara Rao & Co.,

Chartered Accountants

Firm Registration No.004453S

Sd/-

(R.R. Dakshina Murthy)

Partner

Place: Hyderabad Membership No: 211639

Date : 5 May 2012

---

Mar 31, 2011

We have audited the attached Balance Sheet of KSK ENERGY VENTURES LIMITED as at March 31, 2011, the profit and loss account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. The 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.

As required by the Companies (Auditors' Report) Order, 2003 and amendment order 2004 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.

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

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

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

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

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

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

a. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

b. In the case of the Profit and Loss account of the company, of the profit of the company for the year ended on that date;

c. In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure to Auditors' Report Referred to in paragraph 1 of our report of even date:

In our opinion and according to the information and explanations given to us:

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

The Company has a fixed programme of physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified the fixed assets during the year. No material discrepancies were noticed on such verification. There was no disposal of a substantial part of fixed assets.

2. The Clause relating to Inventories is not applicable to the company, as the Company has not carried out any manufacturing activity.

3. (a) During the year the Company has granted loans and advances from time to time to fourteen Companies covered in the register maintained under section 301 of the Companies Act, 1956 aggregating to Rs 589 crores and the year-end balance of such loans was Rs 551.14 crores.

In our opinion, the rate of interest and other terms and conditions of such loans and advances made are not prima facie prejudicial to the interests of the company.

(b) During the year the Company has not taken unsecured loans from Companies covered in the register maintained under section 301 of the companies Act, 1956.

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. We have not observed any major weakness in the internal control system during the course of the audit.

5. According to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956, particulars of which are required to be entered into the register maintained under that section.

6. The Company has not accepted any deposits from the public.

7. In our opinion, the Company has an Internal Audit System commensurate with its size and the nature of its business.

8. Maintenance of cost records U/s 209 (1) (d) of the Companies Act, 1956 are not applicable to the Company.

9. According to the information and explanations give to us and on the basis of examination of books of accounts, the provident fund, professional tax and service tax dues have been regularly depositing by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed dues payable in respect of income tax, wealth tax and material statutory dues were in arrears as at March 31, 2011 for a period of more than six months from the date they became payable.

According to the information and explanations given to us, there were no dues in respect of income tax, customs duty, wealth tax and service tax which have not been deposited with the appropriate authorities on account of any dispute.

10. The clause relating to accumulated losses is not applicable to the Company. The Company has not incurred any cash losses during the financial year and in the immediate preceding financial year.

11. The Company has not defaulted in payment of dues to a Financial Institution/Banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund, nidhi, mutual benefit fund or a society.

14. As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. 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 or financial institutions are not prima facie prejudicial to the interests of the Company.

16. In our opinion, the term loans have been applied for the purpose for which they were raised.

17. According to the Information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been utilized for long term investment.

18. The Company has not made any preferential allotment of shares to companies / firms / parties covered in the register maintained under section 301 of the Act, 1956.

19. The Company has not issued any debentures. Accordingly the provisions of clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

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

for Umamaheswara Rao & Co.,

Chartered Accountants

Sd/-

(R.R. Dakshina Murthy)

Partner

Place: Hyderabad Membership No: 211639

Date: May 06, 2011 FRN 004453S

---

Mar 31, 2010

We have audited the attached Balance Sheet of KSK ENERGY VENTURES LIMITED as at March 31, 2010, the Profit and Loss account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. The financial statements are the responsibility of the Companys 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.

As required by the Companies (Auditors Report) Order, 2003 and Amendment Order 2004 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.

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

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

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

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

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

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

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

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

b.In the case of the Profit and Loss account of the company, of the profit of the Company for the year ended on that date.

c.In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure to Auditors Report Referred to in paragraph 1 of our report of even date:

In our opinion and according to the information and explanations given to us:

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

The Company has a fixed programme of physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified the fixed assets during the year. No material discrepancies were noticed on such verification.

There was no disposal of a substantial part of fixed assets.

2. The clause relating to Inventories is not applicable to the Company, as the Company has not carried out any manufacturing activity.

3. (a) During the year the Company has granted loans and advances from time to time to nine companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding during the year was Rs 1,724.10 crore and the year-end balance of such loans was Rs 1,502.62 crore.

In our opinion, the rate of interest and other terms and conditions of such loans and advances made are not prima facie prejudicial to the interests of the Company.

(b) During the year the Company has taken unsecured loans from two companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding during the year was Rs.892.98 crore and the year - end balance of such loans was Rs.74.45 crore.

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. We have not observed any major weakness in the internal control system during the course of the audit.

5. According to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956, particulars of which are required to be entered into the register maintained under that section.

6. The Company has not accepted any deposits from the public.

7. In our opinion, the Company has an Internal Audit System commensurate with its size and the nature of its business.

8. Maintenance of cost records U/s 209 (1) (d) of the Companies Act, 1956 are not applicable to the Company.

9. According to the information and explanations give to us and on the basis of examination of books of accounts, the Provident Fund, Professional Tax and Service Tax dues have been regularly depositing by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed dues payable in respect of Income Tax, Wealth Tax and material statutory dues were in arrears as at March 31, 2010 for a period of more than six months from the date they became payable.

According to the information and explanations given to us, there were no dues in respect of Income Tax, Customs Duty, Wealth Tax and Service Tax which have not been deposited with the appropriate authorities on account of any dispute.

10. The clause relating to accumulated losses is not applicable to the Company. The Company has not incurred any cash losses during the financial year and in the immediate preceding financial year.

11. The Company has not defaulted in payment of dues to a Financial Institution/Banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund, nidhi, mutual benefit fund or a society.

14. As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion, and according to the information and explanation given to us, the terms and conditions of guarantees given by the Company for loans taken by others from Banks / Financial Institutions are not prima-facial prejudicial to the i nterests of the Com pa ny.

16. In ouropinion,theterm loans have been applied forthepurposefor which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been utilized for long term investment.

18. The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures. Accordingly the provisions of clause 4 (xix) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

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

for Umamaheswara Rao & Co.,

Chartered Accountants

Sd/-

(R.R. Dakshina Murthy)

Partner

Hyderabad Membership No: 211639

May 29, 2010 FRN 004453S