Auditor Report of PVP Ventures Ltd.

Mar 31, 2018

STANDALONE FINANCIAL SECTION

INDEPENDENT AUDITOR''S REPORT

To the Members of PVP Ventures Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS Financial Statements of PVP Ventures Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2018, and 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.

Management''s Responsibility for the Standalone Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, 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) specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the 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. In conducting 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 of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone 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 obtained by us is sufficient and appropriate to provide a basis for our Qualified audit opinion on Standalone Ind AS Financial Statements.

Basis for Qualified Opinion

As stated in Note No: 25.3 to the Standalone Ind AS Financial Statements, in relation to investment in equity shares includes investments in two subsidiary companies net off provision made amounting to Rs. 24,528.90 Lakhs, and loans and advances to subsidiary companies of net off provision made amounting to Rs. 31,499.83 Lakhs. The management is of the view that considering the market value of the assets and expected cash flows from the business of these subsidiary companies the provision already made is adequate. Considering erosion in the net worth of the subsidiary companies and are their dependence on the holding company to continue as a going concern, absence of cash flows, delay in commencement of projects and other related factors indicate the existence of material uncertainty in carrying the value of investments and loans and advances at cost less provision already made. Hence we were unable to determine whether any adjustments to these net carrying amounts are necessary and additional provision for diminution, if any, to be made are not quantifiable at this point of time.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion Paragraph, the aforesaid Standalone Ind AS Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs (financial position) of the Company as at 31st March 2018, and its profits (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to

a) As stated in Note No: 25.4(3) to the Standalone Ind AS Financial Statements, the company mortgaged perambur land as a security to the lenders for the borrowings made by third parties and the borrowers have not repaid the loan along with interest to the lenders on the due dates. The outstanding loan by these companies as on 31st March 2018 is Rs. 2,866.02 Lakhs. The realizable value of mortgaged assets is dependent on the repayment of the loans by the third parties. The management asserts that no adjustment to the carrying value is required as it is confident that the payment obligations will be met by the third party borrower in due course. Relying on the same no adjustments have been made to the carrying value of the assets.

b) As stated in Note No: 25.5 to the Standalone Ind AS Financial Statements, the obligations towards disputed income tax matters amounting to Rs. 1,783.25 Lakhs are pending before different judicial forums. Pending disposal of these appeals the eventual obligation in this regard is unascertainable at this time. Based on the management''s assessment and based on the experts view on the merits of the dispute, no provision is considered necessary in this regard.

Our Opinion is not modified in respect of the above matters.

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" statement on the matters specified in the paragraph 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 purpose of our audit.

b) Except for the possible effects of the matter described in the Basis for Qualified Opinion Paragraph, 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, the Statement of Profit and Loss including other comprehensive income, the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d) Except for the possible effects of the matter described in the Basis for Qualified Opinion Paragraph, in our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Ind AS specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

f) With respect to the adequacy of the Internal financial control over financial reporting of the company and operating effectiveness of such controls, refer to our separate report in "Annexure B"; and

g) With respect to the other matters to be included 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 25.4 and 25.5 to the Standalone Ind AS 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 Clause 1 of "Report on Other Legal and Regulatory Requirements" Paragraph of the Independent Auditors'' Report of even date the members of "PVP Ventures Limited" on the Standalone Ind AS Financial Statements as of and for the year ended 31st March 2018.

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, there are no immovable properties that are held in the name of the company other than inventory (refer point ii below).

(ii) In our opinion and according to the information and explanations given to us, having regard to nature of inventory i.e Land, the physical verification of title deeds, reconciliations with survey numbers of stock in hand and certification of extent of land sold by competent persons, are at reasonable intervals and no material discrepancies were noticed on physical verification.

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

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

(v) The Company has not accepted any deposits from the public during this year. Therefore the provisions of clause (v) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company''s products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund, employee''s state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays.

Undisputed amounts payable in respect thereof, which were outstanding at the year- end for a period of more than six months from the date they became payable are as follows:

Name of the Statue	Nature of Dues	Amount (in Rs.)	Period to which the amount relates	Date of Payment
The Income Tax Act, 1961	Income Tax	2,94,98,201/-	Financial Year 2016-17	Yet to be remitted
The Tamilnadu Urban Land Ceiling and Regulation Act, 1978	Urban Land Tax	6,77,637/-	Financial Year 2015-16	Yet to be remitted
The Tamilnadu Urban Land Ceiling and Regulation Act, 1978	Urban Land Tax	9,03,516/-	Financial Year 2016-17	Yet to be remitted
The Tamilnadu Urban Land Ceiling and Regulation Act, 1978	Urban Land Tax	4,51,758/-	April 2017 to September 2017	Yet to be remitted

(b) According to the information and explanations given to us, the details of dues of Income tax which is not deposited on account of any dispute as on 31st March, 2018 is given below: -

(Rs. in lakhs)

Nature of Statue	Nature of Dues	Tax Amount Disputed	Period to which Amount Relates	Forum where dispute is pending
The Income Tax Act, 1961	Income Tax	13.24	Assessment Year 2009-10	ITAT, Chennai
The Income Tax Act, 1961	Income Tax	493.43	Assessment Year 2013-14	CIT-A, Chennai
The Income Tax Act, 1961	Penalty	1,276.58	Assessment Year 2008-09	CIT-A, Chennai

(viii) According to the records of the company examined by us and the information and explanation given to us, the company has not defaulted in repayment of loans or borrowings to a financial institution, bank, government or dues to debenture holders as on reporting date. The company received extension letter from debenture holder for repayment of interest till 30th September, 2018.

(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). The term loans obtained were applied for the purpose for which those were raised.

(x) According to the information and explanations given to us, no fraud by the Company and no fraud 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 given 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 Companies Act 2013.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Therefore, the provisions of Clause (xii) of Paragraph 3 of the Order are 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 Standalone Ind AS Financial Statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of Clause (xiv) of Paragraph 3 of the Order are 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 any non-cash transactions with directors or persons connected with them covered under section 192 of the Companies Act 2013. Therefore, the provisions of Clause (xv) of Paragraph 3 of the Order are not applicable.

(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. Therefore, the provisions of Clause (xvi) of Paragraph 3 of the Companies (Auditors Report) Order 2016 are not applicable to the company.

ANNEXURE-B TO THE INDEPENDENT AUDITOR''S REPORT

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 PVP Ventures Limited ("the Company") as of 31st March 2018 in conjunction with our audit of the Standalone Ind AS Financial Statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

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

Auditors'' Responsibility

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

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone 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 Standalone 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 (3) 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 Standalone 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit procedure performed, the following material weakness has been identified in the operating effectiveness of the company''s Internal Financial Controls over Financial Reporting as at 31st March 2018:

The company''s internal financial controls in respect of supervisory and review controls over process of determining of

a) Carrying value of the company''s non-current investments in its subsidiaries and

b) Recoverability of loans to its subsidiaries included under Non-current investments.

Absences of aforesaid assessment in accordance with the accounting principles generally accepted in India could potentially result in a material misstatement in the carrying value of investments in such subsidiaries and the aforesaid dues from such subsidiaries and consequently, could also impact the profit (financial performance including other comprehensive income) after tax.

A ''material weakness'' is a deficiency, or a combination of deficiencies, in internal financial controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the company has, maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018, based on internal control over financial reporting 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.

We have considered the material weakness identified and reported above in determining the nature, timing and extent of audit tests applied in our audit of the Standalone Ind AS Financial Statements of the Company and we have issued a qualified opinion on the Standalone Ind AS Financial Statements.

For Brahmayya & Co.,

Chartered Accountants

Firm Regn. No.000511S

Sd/-

K. Jitendra Kumar

Place : Chennai Partner

Date : 30th May 2018 Membership No. 201825

---

Mar 31, 2016

To the Shareholders of PVP Ventures Limited, Chennai

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of PVP Ventures Limited (herein after referred to "the Company") which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Financial Statements).

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, as amended. 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; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR''S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

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

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

BASIS FOR QUALIFIED OPINION

Attention is drawn to the (a) Note 12 in notes to the financial statements with regard to the investment in equity shares of subsidiary companies with provision made, (b) Note 13 loans and advances to subsidiary companies. The management is of the view that considering the market value of the assets and expected cash flows from the business of these subsidiary companies the provision already made are adequate. However considering the net worth of the subsidiary companies is negative, dependence on the parent to continue as a going concern, absence of cash flows, delay in commencement of projects and other related factors indicate that the existence of material uncertainty in carrying the value of investments and loans and advances at cost less provision already made. Hence we were unable to determine whether any adjustments to these net carrying amounts are necessary and additional provision for diminution, if any, to be made are not quantifiable.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except to the possible effects of the matters described in Basis for Qualified Opinion paragraph, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, and their Profit, and its cash flows for the year ended on that date.

EMPHASIS OF MATTERS

We draw the attention to (a) the Note No.24.6 with regard to the Income Taxes disputed before respective authorities, which describes the uncertainty related to the outcome of the Appeals filed against the Orders of the Authorities; and (b) the Note No.24.6.4 with regard to the security by way of mortgage of property given to the lenders for the borrowings by other body corporate and they have not repaid the loan with interest to the lenders. All these items describe the uncertainty related to the outcome of the future events. Our opinion in respect of these matters is not modified.

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, to the extent applicable.

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account.

d. except for the possible effects of the matter described in Basis for Qualified Opinion paragraph, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, as amended.

e. on the basis of written representation received from the Directors as on 31st March,

2016 taken on record by the Board of Directors, none of the directors of the Company is disqualified as on 31st March, 2016, from being appointed as a director in terms of section 164(2) of the Act;

f. with respect to the adequacy of the internal financial controls over the 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 Auditor''s) Rules, 2014, as amended, 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 statements - Refer Note: 24.6 to the financial statements

ii) The Company did not have 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-A TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements in our Independent Auditors'' Report of even date)

In terms of the information and explanations sought by us and given by the Company and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

1 a. The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b. The company has physically verified the fixed assets at reasonable intervals and there are no discrepancies noticed on such verification.

c. The company''s fixed assets do not have any immovable properties.

2. The company holds inventory of Land. The physical verification of the lands was conducted at reasonable intervals by the management and there is no material discrepancies noticed on such verification.

3. During the year the company has granted unsecured loans to the parties covered in the register maintained under section 189 of the Act. The outstanding loans Rs.58843.71 lakhs is due from four parties. It is represented that these loans are repayable on demand. The other clauses regarding repayment of principal, interest and overdue are not applicable.

4. The company has complied with the provisions of section 185 and 186 of the Companies Act in respect of securities and guarantees given.

5. The Company has not accepted deposits from public during this year. Therefore the provision of clause 3 (v) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

6. The Company has made and maintained the cost records prescribed by the Central Government under sub-section (1) of Section 148 of the Act.

7. a. The Company is depositing, with delays, undisputed statutory dues with appropriate authorities, like Provident Fund, Employee''s State insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs Duty, Excise Duty, Value Added Tax, Cess, wherever applicable. The ULT tax of Rs.9.03 lakhs is arrears of outstanding dues as at 31st March, 2016 for a period of more than six months from the date they become payable.

b. The details of disputed statutory dues, which have not been deposited on account of dispute are as under:

Nature Of Statue	Nature Of Dues	Amount Rs In Lakhs	Period To Which Amount Relates	Forum Where Dispute Is Pending
Income Tax Act	Income Tax	78.21	AY 2007-08	ITAT, Hyderabad
Income Tax Act	Income Tax	1480.00	AY 2008-09	High Court, Chennai
Income Tax Act	Penalty	1276.58	AY 2008-09	CIT-A, Chennai
Income Tax Act	Income Tax	13.24	AY 2009-10	CIT-A, Chennai
Income Tax Act	Income Tax	493.43	AY 2013-14	CIT-A, Chennai

8. The company has not defaulted in repayment of loans or borrowings from financial institutions, bank or government. The interest on Debentures amounting to Rs.963.45 lakhs due and not paid for the period from 15-12-2015.

9. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). The term loans obtained were applied for the purpose for which those were raised.

10. There are no fraud by the company or any fraud on the company by its officers or employees and hence the provision of clause 3 (x) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

11. The company has paid managerial remuneration in accordance with the provisions of section 197 read with Schedule V to the Companies Act.

12. The company is not a Nidhi company and hence the provision of clause 3 (xii) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

13. The transactions with the related parties are in compliance with section 177 and 188 of the Act wherever applicable and the details have been disclosed in the financial statements as required by the applicable accounting standards.

14. The company has not made any preferential allotment of shares or private placement of shares or convertible debentures during the year and hence the provision of clause 3 (xiv) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

15. The company is not entered into any non-cash transactions with directors or persons connected with them and hence the provision of clause 3 (xv) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

16. The company is not required to be registered under section 45-IA of Reserve Bank of India Act, 1934 and hence the provision of clause 3 (xvi) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

ANNEXURE - B TO THE AUDITORS'' REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act”) (Referred to in paragraph 2(f) of Report on Other Legal and Regulatory Requirements in our Independent Auditors'' Report of even date)

We have audited the internal financial controls over financial reporting of PVP Ventures Limited ("the Company”) as on 31 March 2016 in conjunction with our audit of the 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 ICAI. 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 (3) 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.

QUALIFIED OPINION

According to the information and explanations given to us and based on our audit, the following weakness has been identified as at 31st March, 2016. "The Companies internal control system for advance given to subsidiary companies and investments in subsidiary companies, which could potentially result in existence of uncertainty that may cast significant doubt about the recoverability or otherwise of these advances and investments and thereby non provision for the shortfall as at the balance sheet date could not have been reasonably established".

A material weakness'' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual financial statements will not be prevented or detected on a timely basis.

In our opinion, except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, 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 issued by the ICAI.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016 standalone financial statements of the Company, and the material weaknesses does affect our opinion on the standalone financial statements of the Company.

for M/s CNGSN & ASSOCIATES LLP

CHARTERED ACCOUNTANTS

Firm Registration No: 004915S

Camp: Hyderabad

Date : 23rd May, 2016

Sd/-

R. Thirumalmarugan

Partner

Membership No: 200102

---

Mar 31, 2015

We have audited the accompanying standalone financial statements of PVP Ventures Limited ('the Company') which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information (the 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 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 Stan- dards specified under section 133 of the Act, read with Rule 7 of the Companies (Ac- counts) Rules, 2014.

This responsibility also includes maintenance of adequate accounting records in ac- cordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of in- ternal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and pre- sentation 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 ac- counting 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosure in the financial statements. These procedures selected depend on the auditor's judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk as- sessments, 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 de- sign audit procedures that are appropriate in the circumstances. An audit also in- cludes evaluating the appropriateness of the accounting policies used and the rea- sonableness of the accounting estimates made by the Company's Board of Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence obtained by us 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 aforesaid standalone financial statements give the information re- quired by the Act in the manner so required and give a true and fair view in conformi- ty with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its Profit, and its cash flows for the year end- ed on that date.

Emphasis of Matters

We draw the attention of members notes to the financial statements in Note 12 with regard to the Unquoted investment of equity shares in Subsidiary Companies Rs.54365.90 lakhs with provision for diminution in carrying value provided for Rs.30000.00 lakhs and Note 13 unsecured and good advances to subsidiaries Rs.218180.51 lakhs with provision for diminution in carrying value provided for Rs.5160.16 lakhs. The management is of the view that considering market value of the assets, present value of investments and expected cash flows and expected development of projects the provision already made are adequate (also refer note 21.13) which describes the uncertainty related to the outcome of the future events. Our opinion in respect of these matters is not modified.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ( the Order), issued by the Central Government of India, in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and obtained all the information and 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, the Statement of Profit and Loss, and the Cash Flow State- ment dealt with by this Report are in agreement with the relevant books of account.

d. In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Compa- nies (Accounts) Rules, 2014

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

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

1. The Company has disclosed the impact of the pending litigations on its financial position in its financial statements – refer note 24.6 to the financial statements.

2. The Company did not have any long term contracts including derivative con- tracts for which there were any material forseeable losses.

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

Annexure To Independent Auditors' Report

[Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements in our Independent Auditors' Report of even date]

1. a. In our opinion and according to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations provided to us, the Company has physically verified the fixed assets during this year and there is no material dis- crepancies noticed on such verification.

2. a. According to the information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals.

b. According to the information and explanations given to us the procedures of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

c. According to the information and explanation given to us the Company is maintaining proper records of inventory and there is no material discrepancies noticed on physical verification.

3. According to the information and explanations given to us, the Company has granted, secured and unsecured loans to subsidiary Companies, the parties cov- ered in the register maintained under section 189 of the Act. Total outstand- ing as at the year end is Rs.58327.18 lakhs (including conversion of FCDs into Advances). It is informed that these advances are interest free and recoverable on demand and hence the overdue amount, receipt of principal amount and the interest are not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for purchases of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls systems.

5. In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from public during this year. Therefore the provisions of section 73 to 76 and relevant rules framed thereunder and any con- travention of these provisions for the year under audit are not applicable.

6. As per the information and explanations given to us, we are of the opinion that the Company has made and maintained the cost records pursuant to the Rules made by the Central Government under sub-section (1) of Section 148 of the Act.

7. a. According to the information and explanation given to us, the Company is depositing undisputed statutory dues with appropriate authorities, like Provident Fund, Employee's State insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs Duty, Excise Duty, Value Added Tax, Cess, wherever applicable, except few delays in depositing Income Tax TDS. There are no undisputed Statutory outstanding dues as at 31st March, 2015 for a period of more than six months from the date they become payable.

b. According to the information and explanation given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess which have not been deposited on account of any dis- pute, except the following:

STATUE PERIOD AMOUNT [RUPEES] DISPUTE PENDING BEFORE

Income Tax AY 2007-08 78.21 lakhs CIT-A, Hyderabad

Income Tax AY 2008-09 1112.35 lakhs High Court, Chennai

Income Tax AY 2009-10 13.24 lakhs CIT-A, Chennai

c. According to the information and explanation given to us, there are no amount required to the transferred to investor education and protection fund in accordance with the provisions of the Act.

8. In our opinion and according to the information and explanation given to us the accumulated losses as at the end of the financial is not more than 50% of its net worth. The Company has not incurred cash losses during the financial year cov- ered by our audit and the immediately preceding financial year.

9. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institutions or banks or debenture holders.

10. In our opinion and according to the information and explanation given to us, the Company has given corporate guarantee and security for loans taken from the Banks by its group companies and others, and the terms and conditions whereof are not prejudicial to the interest of the Company.

11. In our opinion and according to the information and explanation given to us, there are no term loans borrowed by the Company.

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

Camp Hyderabad for M/s CNGSN & Associates LLP

Date May 29, 2015 Chartered Accountants

Firm Registration No: 004915S



Sd/-

R.Thirumalmarugan

Partner

Membership No: 200102

---

Mar 31, 2014

We have audited the accompanying financial statements of PVP Ventures (the Company), which comprises 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). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosure in the financial statements. These procedures selected depend on the auditor''s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessment, 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 the 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 Statement of Profit and Loss, of the PROFIT for the year ended on that date; and

c) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date

Emphasis of Matter

Attention is drawn to the (a) Note 12 in notes to the financial statements with regard to the investment in equity shares of subsidiary companies at cost Rs.54357.20 lakhs with provision for diminution in carrying value provided for Rs.30000.00 lakhs, (b) investment in Redeemable Nonconvertible Debentures of subsidiary company of Rs.24832.00 lakhs, and (c) Note 13 in notes to the financial statements with regard to Unsecured Loans to subsidiary companies of net of provision Rs.3650.09 lakhs. The management is of the view that considering the market value of the assets, present value of investments and expected cash flows from the business of these subsidiary companies and the expected development of projects, the provision already made are adequate (Note 24.9) which describes the uncertainty related to the outcome of future events. Our opinion is not qualified in respect of these matters.

Report on Other LegaI and ReguIatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 (the Order), as amended, issued by the Central Government of India, in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure, a statement on the matters 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 the 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 sub-section (3C) of Section 211 of the Act;

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

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 Act, nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements in our Independent Auditors'' Report of even date)

1. a. In our opinion and according to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations provided to us, the Company has physically verified the fixed assets during this year and there is no material discrepancies noticed on such verification.

c. As per the information and explanation provided to us, substantial part of fixed assets have not been disposed off during the year, which affects the going concern.

2. a. According to the information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals.

b. According to the information and explanations given to us the procedures of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. According to the information and explanation given to us the company is maintaining proper records of inventory and there are no material discrepancies were noticed on physical verification.

3. a. According to the information and explanations given to us, the Company has granted, unsecured loans to two subsidiary companies, the parties covered in the register maintained under section 301 of the Companies Act, 1956. The total amount of outstanding as on the balance sheet date is Rs.41730.25 lakhs, out which a sum of Rs.5160.16 lakhs has already been provided for. It is also informed to us that these advances are interest free and recoverable on demand and therefor the other clause related to terms and conditions of loans, receipt of principal and overdue amounts are not applicable.

b. According to the information and explanations given to us, the Company has taken unsecured interest free loans from two subsidiary companies, the parties covered in the register maintained under section 301 of the Act. It is informed that these loans are repayable on demand and total outstanding as on the balance sheet date is Rs. 4085.61 lakhs. Therefore the rate of interest, terms and conditions, repayment are not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for purchases of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls systems.

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from public during this year. Therefore the provisions of section 58A, 58AA of the Act and any contravention of these provisions for the year under audit are not applicable.

7. The Company has an internal audit system commensurate with its size and nature of its business.

8. As per the information and explanations given to us, we are of the opinion that the Company has made and maintained the cost records pursuant to the Rules made by the Central Government under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956.

9. a. According to the information and explanation given to us, the Company is depositing undisputed statutory dues with appropriate authorities, like Provident Fund, Investor Education and Protection Fund, Employee''s State insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs Duty, Excise Duty, Cess, wherever applicable, except few delays in depositing Income Tax TDS and Service Tax remittances on reverse charge. There are no undisputed Statutory outstanding dues as at 31st March 2014 for a period of more than six months from the date they become payable.

b. According to the information and explanation given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess which have not been deposited on account of any dispute, except the Income Tax demands disputed before the ITAT, Chennai for the Asst year 2008-09 Rs.1480.00 lakhs.

10. In our opinion and according to the information and explanation given to us, the accumulated loss the Company as at the end of the financial year is more than 50% of its networth. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institutions or banks or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of securities by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanation given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provision of clause 4 (xiii) of the Companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the Company.

15. In our opinion and according to the information and explanation given to us, the Company has given corporate guarantee for loans taken by group companies from banks and the terms and conditions whereof are not prejudicial to the interest of the company.

16. In our opinion and according to the information and explanation given to us, the Company has not obtained any term loans during the year.

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 the no funds raised on short-term basis have been used for long-term investment.

18. According to the information and explanation given to us, the Company has not made allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued any debentures during the year and hence creation of security for issue of debenture does not arise.

20. According to the information and explanation given to us, the Company has not raised money by public issue during the year and disclosure of end use of public issue does not arise.

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

for M/s CNGSN & ASSOCIATES CHARTERED ACCOUNTANTS Firm Registration No: 004915S

Date : May 28, 2014 Place : Hyderabad Sd/- R.THIRUMALMARUGAN Partner Membership No: 200102

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of PVP Ventures (the Company), which comprises the Balance Sheet as at March, 31 2013 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). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

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

Basis for Qualified Opinion:

Attention is drawn to the (a) Note 12 in notes to the financial statements with regard to the investment in equity shares of subsidiary companies at cost C54718.10 lakhs with provision for diminution in carrying value provided for C30358.10 lakhs, (b) investment in Redeemable Non-convertible Debentures of subsidiary company of C24832.00 lakhs, and (c) Note 13 in notes to the financial statements with regard to Unsecured Loans to subsidiary companies of C43660.75 lakhs with provision for doubtful advances made for C5160.16 lakhs. The management is of the view that considering the market value of the assets and expected cashflows from the business of these subsidiary companies the provision already made are adequate. However considering the networth of the subsidiary companies are negative, dependence on the parent to continue as a going concern and other related factors indicate that the existence of material uncertainty in carrying the value of investments and loans and advances at cost less provision already made. Hence we were unable to determine whether any adjustments to these amounts were necessary.

Qualified Opinion

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

a) In the case of the Balance Sheet, of the State of Affairs of the Company as at March, 31, 2013;

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

c) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date

Emphasis of Matter

We draw attention to (a) Note 4 with regard to the waiver of Interest payable to the Debentures (parent company) (b) Note 12 with regard to the waiver of Interest receivable from Debentures (subsidiary company), and (c) Note 18 and Note 24.7 with regard to the Income Tax demands disputed before the authorities and payment of taxes under dispute, which describes the uncertainty related to the outcome of the Appeals filed against the Orders of the Authorities. Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ( the Order), as amended, issued by the Central Government of India, in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure, a statement on the matters 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 the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. except for the possible effects of the matter described in Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow statement comply with the accounting standards referred to sub-section (3C) of Section 211 of the Act;

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

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 Act, nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements in our Independent Auditors'' Report of even date)

1. a. In our opinion and according to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations provided to us, the Company has physically verified the fixed assets during this year and there is no material discrepancies noticed on such verification.

c. As per the information and explanation provided to us, the disposal of fixed assets has not affected the going concern.

2. a. According to the information and explanations given

to us, the management has conducted physical verification of inventory at reasonable intervals.

b. According to the information and explanations given to us the procedures of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. According to the information and explanation given to us the company is maintaining proper records of inventory and there are no material discrepancies were noticed on physical verification.

3. a. According to the information and explanations given to us, the Company has granted, unsecured loans to five subsidiary companies, the parties covered in the register maintained under section 301 of the Companies Act, 1956. The total amount of outstanding as on the balance sheet date is H43660.75 lakhs, out which a sum of H5160.16 lakhs has already been provided for. It is also informed to us that these advances are interest free and recoverable on demand and therefore the other clause related to terms and conditions of loans, receipt of principal and overdue amounts are not applicable.

b. According to the information and explanations given to us, the Company has taken unsecured interest free loans from three subsidiary companies, the parties covered in the register maintained under section 301 of the Act. It is informed that these loans are repayable on demand and total outstanding as on the balance sheet date is H4753.32 lakhs. Therefore the rate of interest, terms and conditions, repayment are not applicable.

4. In our opinion and according to the in format ion and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for purchases of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls systems.

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from public during this year. Therefore the provisions of section 58A, 58AA of the Act and any contravention of these provisions for the year under audit are not applicable.

7. The Company has an internal audit system commensurate with its size and nature of its business.

8. As per the information and explanations given to us, we are of the opinion that the Company has made and maintained the cost records pursuant to the Rules made by the Central Government under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956.

9. a. According to the information and explanation given to us, the Company is depositing undisputed statutory dues with appropriate authorities, like Provident Fund, Investor Education and Protection Fund, Employee''s State insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs Duty, Excise Duty, Cess, wherever applicable, except few delays in depositing, P.F, In come Tax TDS a nd Service Tax remittances on reverse charge. There are no undisputed Statutory outstanding dues as at 31st March 2013 for a period of more than six months from the date they become payable.

b. According to the information and explanation given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess which have not been deposited on account of any dispute, except the Income Tax demands disputed before the CIT (Appeals), Chennai for the Asst year 2008-09 H16497.15 lakhs, and before ITAT, Hyderabad for the Asst year 2007-08 H819.31 lakhs.

10. In our opinion and according to the information and explanation given to us, the accumulated loss the Company as at the end of the financial year is more than 50% of its networth. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institutions or banks or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of securities by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanation given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provision of clause 4 (xiii) of the Companies (Auditor''s Report ) (Amendment) Order, 2004 are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the Company.

15. In our opinion and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion and according to the in formation and explanation given to us, the Company has not obtained any term loans during the year.

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 the no funds raised on short- term basis have been used for long-term investment.

18. According to the information and explanation given to us, the Company has not made allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued any debentures during the year and hence creation of security for issue of debenture does not arise.

20. According to the information and explanation given to us, the Company has not raised money by public issue during the year and disclosure of end use of public issue does not arise.

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

For M/s CNGSN & ASSOCIATES

CHARTERED ACCOUNTANTS

Firm Registration No: 004915S

Sd/-

R. THIRUMALMARUGAN

Partner

Membership No: 200102

Camp: Hyderabad

Date: 27th May, 2013

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of PVP Ventures Limited as at 31st March 2012, the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed there to. These Financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors' Report)(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 give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

(a) We have obtained all 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 such 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, the Statement of Profit and Loss and the Cash Flow Statement dealt by this report, comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) On the basis of written representation received from the Directors and taken on records by the Board of Directors, we report that, none of the Directors is disqualified as on 31/03/2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(f) Attention is drawn to the following material matters:

(i) Note 12 in notes on accounts, with regard to the investment in Equity shares and debentures of Subsidiary Companies. The carrying value of these investment and debentures as at the balance sheet date is Rs 49192.00 lakhs ( cost Rs 79552. TO lakhs less provision already made Rs 30360.10 lakhs). The management considers these investments as long term and not provided for the diminution in value of these investments. In the absence of materials, we are not expressing any opinion on the amount of investments and provisions carried in the balance sheet.

(ii) Note 13 in notes on accounts, with regard to the advances given to subsidiaries. The carrying value of these loans and advances as at the balance sheet date is Rs 35377.77 lakhs (Loans and advances Rs 40537.93 lakhs less provision already made Rs 5160.16 lakh). The management considers these loans and advances as long term and not provided for the diminution in value of these loans and advances. In the, absence of materials, we are not expressing any opinion on these amounts of loans and advances and the provisions.

(iii) Further we invite the attention of the members to the following material matters given in notes relating to the status of project at Perambur, Chennai, interest waiver on debentures issued and received, non providing of interest on loans obtained to the extent of Rs 336.72 lakhs and contingent liabilities shown for the disputed income tax demands.

(g) In our opinion and to the best of our information and according to the explanations given to us, subject to the effect on the financial statements on the matters referred to in the preceding paragraph, the said accounts read with the accounting policies and notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of Balance Sheet, of the State of Affairs of the Company as at 31st March 2012,

(ii) In the case of Statement of Profit and Loss, of the PROFIT of the Company for the year ended on that date; and

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

1. a. In our opinion and according to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations provided to us, the Company has physically verified the fixed assets during this year and there is no material discrepancies noticed on such verification.

c. As per the information and explanation provided to us, substantial parts of fixed assets have not been disposed off during the year, which affects the going concern.

2. a. According to the information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals.

b. According to the information and explanations given to us, the procedures of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

c. According to the information and explanation given to us, the Company is maintaining proper records of inventory and there are no material discrepancies were noticed on physical verification.

3. a. According to the information and explanations given to us, the Company has granted, unsecured interest free loans to seven group companies, the parties covered in the register maintained under section 301 of the Companies Act, 1956. It is informed that these advances are recoverable on demand. The total outstanding as on the balance sheet date is Rs 40571.91 lakhs. In the absence of materials available, we are unable to ascertain whether the rate of interest, terms and conditions of loans, receipt of principal and overdue amounts are there or not.

b. According to the information and explanations given to us, the Company has taken unsecured interest free loans from three subsidiary companies, the parties covered in the register maintained under section 301 of the Act. It is informed that these loans are repayable on demand and total outstanding as on the balance sheet date is Rs 4750.57 lakhs. Therefore the rate of interest, terms and conditions, repayment are not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for purchases of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls systems.

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from public during this year. Therefore the provisions of section 58A, 58AA of the Act and any contravention of these provisions for the year under audit are not applicable.

7. The Company has an internal audit system commensurate with its size and nature of its business.

8. As per the information and explanation given to us the maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

9. a. According to the information and explanation given to us, the Company is depositing undisputed statutory dues with appropriate authorities, like Provident Fund, Investor Education and Protection Fund, Employee's State insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs Duty, Excise Duty, Cess, wherever applicable, except few delays in depositing TDS remittances. There are no undisputed Statutory outstanding dues as at 31st March 2012 for a period of more than six months from the date they become payable.

b. According to the information and explanation given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess which have not been deposited on account of any dispute, except the Income Tax demands disputed before the CIT (Appeals), Chennai for the Asst year 2008-09 Rs 16497.15 lakhs, disputed before the CIT(Appeals), Hyderabad for the Asst year 2007-08 Rs 346.01 lakhs and disputed before ITAT, Hyderabad for the Asst year 2007-08 Rs 473.30 lakhs.

10. In our opinion and according to the information and explanation given to us, the accumulated loss the Company as at the end of the financial year is more than 50% of its networth. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institutions or banks or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of securities by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanation given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provision of clause 4 (xiii) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable to the Company.

15. In our opinion and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion and according to the information and explanation given to us, the Company has not obtained any term loans during the year.

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 the no funds raised on short-term basis have been used for long-term investment.

18. According to the information and explanation given to us, the Company has not made allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued any debentures during the year and hence creation of security for issue of debenture does not arise.

20. According to the information and explanation given to us, the Company has not raised money by public issue during the year and disclosure of end use of public issue does not arise.

21. According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the course of our audit. Attention is invited to the note relating to the status of CBI investigation and as represented by the management, these investigations shall not have any impact on the financials for the year.

For M/s CNGSN & ASSOCIATES

CHARTERED ACCOUNTANTS

R.THIRUMALMARUGAN

PARTNER

Membership No.200102

Firm Registration No. 004915S

Place: Chennai

Date: 30th May, 2012

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of PVP Ventures Limited as at 31st March 2011, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed there to. These Financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors' Report)(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 give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

(a) We have obtained all 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 such books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this Report are in agreement with the Books of Account;

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

(e) On the basis of written representation received from the Directors and taken on records by the Board of Directors, we report that, none of the Directors is disqualified as on 31.03.2011 from being appointed as a Director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956;

(f) Attention is drawn to the following material matters:

(i) A(a)(c) and B2 in notes on accounts of Schedule 15, with regard to the preparation of financial statements on going concern. The Company has incurred cash losses (before extraordinary income) in the current year, waiver of the interest payable for the year on the debentures by the debenture holder due to the financial position of the Company as stated in Note B7 in notes on accounts, provisions made in the investments and advances given to the subsidiary companies as stated in note B4 in notes on account, transfer of all employees to the other group company as stated in note B10 in notes on accounts, and other related factors indicate the existence of material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

(ii) Note B4 in notes on accounts of Schedule 15, with regard to the carrying the investment as long term and advances given to the subsidiary companies and bodies corporate on which the provisions already made. Any additional provisions to be made, for the shortfall, if any, on these investment and advances are not quantified at this stage.

(iii) Note B9 with regard to the Income Tax Demands. Pending outcome of the results of appeal the company has not provided for the Income tax demands. The ultimate provisions to be made, if any, on the outcome of the appeals are not quantified at this stage.

(g) In our opinion and to the best of our information and according to the explanations given to us, subject to the effect on the financial statements on the matters referred to in the preceding paragraph, the said accounts read with the accounting policies and notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of Balance Sheet, of the State of Affairs of the Company as at 31st March 2011,

(ii) In the case of Profit and Loss Accounts, of the PROFIT of the Company for the year ended on that date; and

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

ANNEXURE TO AUDITORS REPORT (Referred to in Paragraph 3 of our Report of even date)

1. a. In our opinion and according to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations provided to us, the Company has physically verified the fixed assets during this year and there is no material discrepancies noticed on such verification.

c. As per the information and explanation provided to us, substantial parts of fixed assets have not been disposed off during the year, which affects the going concern.

2. a. According to the information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals.

b. According to the information and explanations given to us the procedures of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. According to the information and explanation given to us the company is maintaining proper records of inventory and there are no material discrepancies were noticed on physical verification.

3. a. According to the information and explanations given to us, the Company has granted, unsecured loans to seven group companies, the parties covered in the register maintained under section 301 of the Companies Act, 1956. It is informed that these advances are recoverable on demand. The total outstanding as on the balance sheet date is Rs. 31163.04 lakhs. Therefore the rate of interest, terms and conditions of loans, receipt of principal and overdue amounts are not applicable.

b. According to the information and explanations given to us, the Company has taken unsecured loans from group companies, the parties covered in the register maintained under section 301 of the Act. It is informed that these loans are repayable on demand and total outstanding as on the balance sheet date is Rs. 4765.66 lakhs. Therefore the rate of interest, terms and conditions, repayment are not applicable. Further, whether these loans are prima facie prejudicial to the interest of the Company is not ascertainable at this stage.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for purchases of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls systems.

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanation given to us, the Company has not accepted deposits from public during this year. Therefore the provisions of section 58A, 58AA of the Act and any contravention of these provisions for the year under audit are not applicable.

7. The Company has an internal audit system commensurate with its size and nature of its business.

8. As per the information and explanation given to us the maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

9. a. According to the information and explanation given to us, the Company is depositing undisputed statutory dues with appropriate authorities, like Provident Fund, Investor Education and Protection Fund, Employee's State insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs Duty, Excise Duty, Cess, wherever applicable, except few delays in depositing TDS remittances and property tax. There are no undisputed Statutory outstanding dues as at 31st March 2011 for a period of more than six months from the date they become payable.

b. According to the information and explanation given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess which have not been deposited on account of any dispute, except the Income Tax demands disputed before the CIT (Appeals) for the Asst year 2006-07 Rs. 473.00 lakhs and disputed before Assessing Officer and CIT(Appeals) for the Asst year 2008-09 Rs. 18731.36 lakhs.

10. In our opinion and according to the information and explanation given to us, the accumulated loss of the Company as at the end of the financial year is more than 50% of its networth. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institutions or banks or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of securities by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanation given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provision of clause 4 (xiii) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable to the Company.

14. In our opinion and according to the information and explanation given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable to the Company.

15. In our opinion and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion and according to the information and explanation given to us, the Company has not obtained any term loans during the year.

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 there are no funds raised on short-term basis have been used for long-term investment.

18. According to the information and explanation given to us, the Company has made allotment of shares by way of conversion of Debentures into equity shares as stated in note B6 in notes on accounts of Schedule 15. The price at which the said allotment has been made is not prejudicial to the interest of the company.

19. According to the information and explanation given to us, the Company has not issued any debentures during the year and hence creation of security for issue of debenture does not arise.

20. According to the information and explanation given to us, the Company has not raised money by public issue during the year and disclosure of end use of public issue does not arise.

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

For M/s CNGSN & ASSOCIATES

CHARTERED ACCOUNTANTS

R.THIRUMALMARUGAN

PARTNER

Membership No.200102

Firm Registration No. 004915S

Camp: Hyderabad

Date: 27th May, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of PVP Ventures Limited as at 31st March 2010, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

4. Attention is drawn to Note No 4 in Schedule 75 to the financial statements regarding preparation of financial statements on a going concern basis. The Company has been incurring cash losses for the last 4 years as there is no significant business income to meet the operating and administration expenses. The interest due on debentures of Rs. 123.58crores has been waived for the current and previous years by the holding company. The Companys ability to service its debts and continue as a going concern is dependent on the successful implementation of the project referred in the Note. These conditions along with other matters as set forth in the Note, indicate the existence of a material uncertainty that may cast significant doubt about the Companys ability to continue as a going concern.

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

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

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

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

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) or section 211 of the Companies Act, 1956

(v) On the basis of written representations received from the directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director of the Company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1 956;

(v) In view of the significant losses made by the companies in which investments have been made and advances have been given and also in view of the significant down-turn in the real estate sector, we are unable to quantify the exact provision required for the following

faj diminution other than temporary, if any, in the carrying value of the Companys long term investments in the form of equity shares and debentures aggregating to Rs 247.42 crores

(b) long pending advances to subsidiaries aggregating to Rs 187.29crores and other bodies corporate aggregating to Rs 8.53 crores.

In view of the above, we are unable to express an opinion on whether the said financial statements together with the notes thereon and attached thereto, give the information required by the Companies Act, 1956in 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 st March, 2010;

(b) In the case of the profit and loss account, of the loss of the Company forthe year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3OF THE AUDITORS REPORT TO THE MEMBERS OF PVP VENTURES LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31 ST MARCH 2010

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

(b) The Company has not physically verified fixed assets during the year.

(c) In our opinion and according to the information and explanations given to us a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory.

There are no discrepancies between physical inventory as compared to book records.

(iii) (a) The Company has granted unsecured loans to fifteen companies / other parties covered in the register maintained under section 301 of the Act. The maximum amount involved during the year and the year end balance of such loans aggregates to Rs.512.75 crores and Rs.247.24 crores respectively. In our opinion since such loans were granted without any stipulations as regards repayment of principal or interest, commenting on whether the rate of interest, repayment terms are prima facie prejudicial to the interest of the Company and whether they are overdue does not arise.

(b) The Company has borrowings in the form of unsecured debentures outstanding to its holding company and has taken unsecured loans from two other companies covered in the Register maintained under section 301 of the companies Act 1956. The maximum amount involved during the year and the yearend balance of such loans aggregates to Rs.462.79 crores and Rs.440.95 crores respectively.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory, fixed assets and purchase and sale of goods and services. On the basis of our examination and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that there are no contracts or arrangements that need to be entered into the register maintained under Section 301 of The Companies Act, 1956..

(b) According to the information and explanations given to us, there are no transactions entered in the Register pertaining to such contracts or arrangements exceeding the value of five lakh rupees.

(vi) The Company has not accepted any deposits from the public within the meaning of section 58A and 58AA of the Act and the rules made there under.

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

(viii) The Company is not required to maintain cost records prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company has generally been regular in depositing undisputed statutory dues including, income-tax, sales tax, service tax, cess and other material statutory dues applicable to it with the appropriate authorities except for delays in depositing Tax deducted at source. Statutory dues in respect of provident fund, customs duty, excise duty, investor education and protection fund and employees state insurance are not applicable to the Company.

(b) According to the information and explanation given to us and the records of the Company examined by us, no undisputed amounts payable in respect of Income Tax, Service Tax, and cess were in arrears, as at 31st March 2010 for a period of more than six months from the date they became payable.

(c) There are no dues of SalexTax, Service Tax and Cess that have not been deposited on account of any dispute. Dues relating to Income tax which have not been deposited on account of disputes with the related authorities, are stated in the table below:

Nome of Finacial Year Amount Forum where the the Stotute (Rs.incrores) dispute is pending

Income Tax 2007-08 25.13 CIT (Appeals)

2006-07 4.73 CIT (Appeals)



(x) The Company has no accumulated losses at the end of the year. However, it has incurred cash losses in the current year and the immediately preceding financial year.

(xi) Based on our audit procedure and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to any financial institutions, banks or debenture holders as at the Balance sheet date.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, accordingly paragraph 4 (xii) of the Order is not applicable.

(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society to which the provisions of special statute relating to chit fund etc., are applicable, accordingly paragraph 4 (xiii) of the Order is not applicable.

(xiv) According to the information and explanation given to us and the records of the Company examined by us, the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4 (xiv) of the Order is not applicable.

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

(xvi) In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purpose for which they have been obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that, during the year, short-term funds have not been used to finance long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties covered in the Register maintained under Sec 301 of the Companies Act, 1 956 during the year.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not made any public issue during the year.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year ended 31st March 2010.

For PKF Sridhar & Santhanam

Chartered Accountants

Firm Registration No 003990S

V. Kothandaraman

Partner

Membership No.: 25973

Place: Chennai

Date: July 30, 2010