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Auditor Report of Ramky Infrastructure Ltd.

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Ramky Infrastructure Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March 2018, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred as âstandalone Ind AS financial statementsâ).

Managementâs Responsibility for the Standalone Ind AS Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 (âthe Actâ) 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 specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditorsâ Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit of the standalone Ind AS Financial Statements in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs 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 Companyâs 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 Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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 of the Company as at 31st March 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

Attention is invited to

a Note 49 to the standalone Ind AS financial statements in respect of existence of material uncertainties over the realisability of certain construction work in progress, inventories and trade receivables aggregating to Rs. 3,607.42 mn, which are subject matters of arbitration proceedings/negotiations with the customers and contractors due to foreclosure of contracts and other disputes. The management of the Company, keeping in view the status of negotiations and the outcome of arbitration proceedings on the basis of which steps to recover these amounts are currently in process, is confident of recovering the aforesaid dues. In view of pending billing of project WIP/slow progress/termination of these projects, and lack of other alternate audit evidence to corroborate managementâs assessment of recoverability of these balances, we are unable to comment on the extent to which these balances are recoverable.

b Note 50 to the standalone Ind AS financial statements with regard to insurance claim due to floods on one of the Companyâs project in Srinagar, Jammu and Kashmir, the Company has recognised insurance claim revenue aggregating to Rs. 350.46 mn to the extent measured reliably and accounted/charged off related additional costs incurred towards damage by floods.

c Note 51 to the standalone Ind AS financial statements in respect of write back of the âliabilities no longer requiredâ outstanding for a long period aggregating to Rs. 2,388.04 mn. The management is confident that the liabilities no longer required and no material adjustment will be required.

d Note 52 to the standalone Ind AS financial statements in respect of write off of the âassets no longer receivableâ outstanding for a long period aggregating to Rs. 1,437.82 mn. The management considered it prudent not to carry such receivables.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1 As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of subsection 11 of section 143 of the Act, we give in the âAnnexure Aâ a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 it appears from our examination of those books;

c. the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity dealt with by this report are in agreement with the books of account;

d. in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

e. on the basis of the written representations received from the directors as on 31st March 2018 taken on record by the Board of Directors, none of the directors 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 internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Bâ to this report; and

g. with respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) 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 position in its standalone Ind AS financial statements; (Refer Note 42 to the standalone Ind AS financial statements);

ii. the Company has made provision as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts; (Refer Note 36 to the standalone Ind AS financial statements) and

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

âANNEXURE Aâ TO THE INDEPENDENT AUDITORSâ REPORT

The Annexure referred to in Paragraph 1 under âReport on Other Legal and Regulatory Requirementsâ in our Independent Auditorsâ Report to the members of the Company on the standalone Ind AS financial statements for the year ended, 31st March, 2018, we report that;

(i) In respect of the Companyâs fixed assets:

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

(b) The fixed assets were physically verified during the year by the management in accordance with a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, the discrepancies noticed on such verification were not material.

(c) According to the information and explanations given to us, the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company.

(ii) In respect of the Companyâs Inventory:

According to the information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals during the year. The discrepancies noticed on verification between physical stocks and book records were not material.

(iii) The Company has granted unsecured loans to 5 companies (out of which the loans granted to 2 companies are interest free) covered in the register maintained under section 189 of the Act, in respect of such loans;

a) In our opinion, the terms and conditions of the loans granted by the Company are not prejudicial to the interest of the Company except in the case of interest free unsecured loans granted to 2 parties, aggregating to Rs. 1,350.70 mn as at March 31, 2018, having regard to the cost of funds to the Company which are prejudicial to the interest of the Company.

b) The receipt of principal amount and interest, wherever stipulated is regular other than an amount disclosed in (c) below. Further in case of interest free loan granted to 2 parties where the schedule of repayment of the principal and payment of interest has not been stipulated, we are unable to comment as to whether repayments are regular.

c) In case of loans carrying interest, there is an overdue interest amounting to Rs.170.95 mn for more than 90 days. As per the information and explanations given to us, the Company has made reasonable steps to recover overdue interest portion. Further, in case of interest free unsecured loans granted to 2 parties as the schedule of repayment has not been stipulated, we are unable to comment whether any amount is overdue and whether any steps for recovery of the principal is required.

(iv) According to information and explanations given to us and based on the legal opinion obtained by the Company that it is engaged in the business of providing infrastructure facilities in terms of Section 186, the Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013, in respect of grant of loans, making investments and providing guarantees and securities as applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposits during the year within the meaning of section 73 to 76 of the Act and the Rules framed thereunder, as amended.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Rules made by the Central Government under section 148 (1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us:

(a) According to information and explanations given to us and records of the Company examined by us, amounts deducted/ accrued in the books of accounts in respect of undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, value added tax, goods and services tax, cess and other material statutory dues as applicable have been actually/regularly deposited with the appropriate authorities and there have been delays in number of cases during the year. As per information and explanations given to us the Company did not have any dues on the account of excise duty and customs duty. Details of undisputed dues in respect of provident fund, employees state insurance, service tax, sales tax, entry tax, works contract tax, value added tax and income-tax that were in arrears for a period of more than six months from the date they become payable are provided in Appendix-I.

(b) According to the information and explanations given to us and records of the Company examined by us, particulars of dues outstanding in respect of sales tax, service tax, and value added tax which have not been deposited on account of any dispute are given in Appendix-II to this report.

(viii) In our opinion and according to the information and explanations given to us, the Company has defaulted in the repayment of certain dues to financial institutions and banks. The details of such default are setout in Appendix-III to the report. There are no loans or borrowings payable to Government and debenture holders.

(ix) According to the information and explanations given to us, the Company has not raised moneys by way of initial public offer or further public offer including debt instruments and term loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

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

(xi) According to the information and explanations given to us, the managerial remuneration has been paid / provided 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 3 (xii) of the Order are not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable. The details of related party transactions as required by the applicable accounting standards have been disclosed in the notes to standalone Ind AS financial statements.

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

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

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

Appendix I as referred to in Para vii (a) of Annexure A to the Independent Auditorâs Report

Name of the statue	Nature of the due	Amount Rs. in mn
Andhra Pradesh VAT Act,2005	Value Added Tax (VAT)	7.76
Telangana VAT	Value Added Tax (VAT)	6.36
Chandigarh Value Added Tax Act	Works Contract Tax Deducted at source	0.20
Chhattisgarh Value Added Tax Act	Works Contract Tax Deducted at source	1.38
Madhya Pradesh Value Added Tax Act	Works Contract Tax Deducted at source	20.39
New Delhi Value Added Tax Act	Works Contract Tax Deducted at source	3.88
Telangana Value Added Tax Act	Works Contract Tax Deducted at source	0.33
Uttar Pradesh Value Added Tax Act	Works Contract Tax Deducted at source	6.84
West Bengal Value Added Tax Act	Works Contract Tax Deducted at source	2.03
Central Sales Tax Act, Telangana	Central Sales Tax	3.29
Central Sales Tax Act, Karnataka	Central Sales Tax	1.70
Madhya Pradesh Entry Tax Act	Entry Tax	4.49
Central Sales Tax Act, Telangana	Central Sales Tax	3.29
Finance Act 1994	Service Tax	4.76
Employees Provident Fund and Miscellaneous Provisions Act	Employees Provident Fund	0.03
Employees State Insurance Act	Employees State Insurance	0.17
Income-tax Act, 1961	Tax deducted at Source	0.17

Appendix II as referred to in Para vii (b) of Annexure A to the Independent Auditorâs Report

Name of the Statue	Nature of the due	Amount (Rs. in mn)	Period to which it pertain	Forum where dispute pending
Andhra Pradesh General sales Tax Act, 1957	Tax	1.74	2001-02	High Court of Andhra Pradesh. High Court dismissed the petition. Company waiting for order.
		(0.35)*
Andhra Pradesh General sales Tax Act, 1957	Tax	9.07	2002-03	Sales Tax Appellate Tribunal, Hyderabad
		(4.53)*
Andhra Pradesh VAT Act, 2005	Tax and Penalty	142.46	2005-09	Sales Tax Appellate Tribunal, Hyderabad
		(74.60)*
Andhra Pradesh VAT Act, 2005	Tax	63.08	2010-11	High Court, Andhra Pradesh and Telangana
Andhra Pradesh VAT Act, 2005		11.90		Sales Tax Appellate Tribunal, Hyderabad
	Tax	(4.35)*	2007-09
Bihar VAT Act, 2005	Penalty	44.61	2010-12	DCCT(Appeal), Patna
JVAT Act	Penalty	15.60	2012-13	DCCT, Jamshedpur
Karnataka Value Added Tax, 2003	Tax	8.76	2005-06	Joint Commissioner of CT- Appeal 3
		(8.76)*
Madhya Pradesh Value Added Tax, 2002	Tax	23.79	2010-14	Appellate Tribunal, Bhopal
		(5.95)*
Maharashtra Value Added Tax	Tax	44.43	2011-14	DCCT, Jamshedpur
Punjab Value Added Tax, 2005	Tax	3.50	2006-07	VAT Tribunal, Punjab, Chandigarh
Punjab Value Added Tax, 2005	Tax	3.41	2008-09	Appealed before AETC(Appeal)
West Bengal Value Added Tax, 2005	Tax	261.61	2005-13	The Additional Commissioner Commercial taxes, Kolkata
		(0.36)*

West Bengal Value Added Tax,	Tax	85.22	2010-13	DCCT, Bureau of Investigation, Kolkata
2005	Tax	(1.00)*	2010-13	DCCT, Bureau of Investigation, Kolkata
West Bengal Value Added Tax, 2005	Tax	16.26	2013-14	Joint Commissioner Appeals West Bengal Commercial Tax Appellate & Revision Board
West Bengal Value Added Tax, 2005	Tax	3.04	2014-15	Sr. JCCT(Appeal)

* indicates pre-security deposits with respective authorities

Appendix II as referred to in Para vii (b) of Annexure A to the Independent Auditorâs Report_

Name of the Statue	Nature of the due	Amount (Rs. in mn)	Period to which it pertain	Forum where dispute pending
Finance Act 1994	Tax	30.50	2004-05 to 2006-07	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru
Finance Act 1994	Tax	7.98	2002-03	Central Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata
Finance Act 1994	Tax	(0.80)*
Finance Act 1994	Tax	10.45 (4.00)*	2007-08 to 2009-10	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru
Finance Act 1994	Tax	442.35 (2.30)*	2004-05 to 2007-08	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru
Finance Act 1994	Tax	142.61 (2.00)*	01-04-2007 to 30-092008	Central Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata
Finance Act 1994	Tax	17.90	2005-07	Commissioner of Customs, Central Excise & Service Tax, Orissa
Finance Act 1994	Tax	17.33	01-07-2005 to 30-062010	Central Excise & Service Tax Appellate Tribunal (CESTAT), Hyderabad
Finance Act 1994	Tax	42.86	01.04.2007 to 31.03.2010	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Tamilnadu
Finance Act 1994	Tax	1.92	01.04.2010 to 31.03.2011	Commissioner of Service tax Tamilnadu-35
Finance Act 1994	Tax	138.72	01.04.2007 to 31.03.2012	Commissioner of Service tax Andhra Pradesh
Finance Act 1994	Tax	6.82	01.04.2010 to 31.03.2011	Commissioner of Service tax Tamilnadu
Finance Act 1994	Tax	21.75	01.10.2007 to 31.03.2012	Commissioner of Service tax Andhra Pradesh
Finance Act 1994	Tax	27.07 (2.03)*	2009-10 to 2011-12	Commissioner of Service tax Andhra Pradesh
Finance Act 1994	Tax	26.09	2010-11 to 2012-13	Hyderabad II Service Tax Commissionerate
Finance Act 1994	Tax	12.99 (0.49)*	2010-11 to 2011-12	Commissioner of Service tax, Shillong
Finance Act 1994	Tax	27.56	2011-12 to 2013-14	Commissioner of Service tax, Telangana
Finance Act 1994	Tax	1.99	2011-12 to 2013-14	Asst. Commissioner (Audit), Service Tax Cell, Visakhapatnam
Finance Act 1994	Tax	5.24	2011-12 to 2013-14	Additional Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Tamilnadu
Finance Act 1994	Tax	0.26	2004-05 to 2006-07	Commissioner of Customs, Central Excise & Service Tax (CCCE&S)

Finance Act 1994	Tax	0.38	2007-08	Commissioner of Customs, Central Excise & Service Tax (CCCE&S) (Appeals), Chennai.
Finance Act 1994	Tax	1.34	2007-08	Commissioner of Customs, Central Excise & Service Tax (CCCE&S) (Appeals), Chennai.
Finance Act 1994	Tax	9.85	2007-08	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru
Finance Act 1994	Tax	59.42	01.08.2012 to 31.03.2015	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad
Finance Act 1994	Tax	41.94 (10.00)*	1-6-2007 to 31-5-2008	High Court of Andhra Pradesh
Finance Act 1994	Tax	19.35	01.06.2008 to 31.03.2009	High Court of Andhra Pradesh
Finance Act 1994	Tax	23.00	01.04.2009 to 31.03.2010	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad
Finance Act 1994	Tax	6.38	01.04.2010 to 31.03.2011	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad
Finance Act 1994	Tax	4.65	01.04.2011 to 31.03.2012	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad
Finance Act 1994	Tax	8.03	01.04.2011 to 31.03.2012	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru
Finance Act 1994	Tax	1.81	01.06.2008 to 31.03.2009	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru
Finance Act 1994	Tax	1.91	01.04.2009 to 31.03.2010	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad
Finance Act 1994	Tax	6.54	01.04.2010 to 31.03.2011	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad
Finance Act 1994	Tax	6.11	01.04.2011 to 31.03.2012	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

* indicates pre-security deposits with respective authorities

Appendix III as referred to in para viii of Annexure A to the Independent Auditorâs Report:

Details of delay in repayment of dues to banks and others, which were outstanding as at 31 March, 2018.(i.e. continuing default) i) FITL

Particulars	Total amount of Principal in Default (Rs. in mn)	Period of Default (In days)
Punjab National Bank (Principal)	276.96	1
IDBI (Principal)	78.05	1

ii) Term loans

Particulars	Total amount of Principal in Default (Rs. in mn)	Period of Default (In days)
State Bank of India (Principal) - WCTL I	22.21	1
Punjab National Bank - WCTL I	7.10	1
IDBI - WCTL I	3.08	1
Punjab National Bank - WCTL II	1.30	1
IDBI - WCTL II	0.03	1

iii) Other defaults

Particulars	Total amount of Principal in Default (Rs. in mn)	Period of Default (In days)
Punjab National Bank (Principal) -Priority debt	7.10	1
IDBI -Priority debt	219.46	1

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)

We have audited the internal financial controls over financial reporting of Ramky Infrastructure Limited. (âthe Companyâ) as of March 31, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Managementâs Responsibility for Internal Financial Controls

The Companyâs 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 (âthe Guidance Noteâ) issued by the Institute of Chartered Accountants of India. 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 the Companyâs 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.

Auditorsâ Responsibility

Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, 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 auditorsâ 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 Companyâs internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Companyâs 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 Companyâs 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 Companyâs assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. However, the Company needs to improve its systems with respect to realisation of receivables including retention monies, work-in-progress, etc.

For M V NARAYANA REDDY & CO.,

Chartered Accountants

Firm Registration No. 002370S

Sd/-

M V NARAYANA REDDY

Place : Hyderabad Partner

Date : 30-May-2018 Membership No. 028046

Mar 31, 2017

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Ramky Infrastructure Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred as âstandalone Ind AS financial statementsâ)

Managementâs Responsibility for the Standalone Ind AS Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, 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; 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.

Auditorsâ Responsibility

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

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

We conducted our audit of the standalone Ind AS Financial statements in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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 of the Company as at 31st March 2017, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

Attention is invited to

a Note 49 to the standalone Ind AS financial statements in respect of existence of material uncertainties over the realisability of certain construction work in progress, trade receivables and loans and advances aggregating to Rs. 4415.49 mn, which are subject matters of arbitration proceedings/negotiations with the customers and contractors due to foreclosure of contracts and other disputes. The management of the Company, keeping in view the status of negotiations and the outcome of arbitration proceedings on the basis of which steps to recover these amounts are currently in process, is confident of recovering the aforesaid dues. In view of pending billing of project WIP/slow progress/termination of these projects, and lack of other alternate audit evidence to corroborate managementâs assessment of recoverability of these balances, we are unable to comment on the extent to which these balances are recoverable.

b Note 51 to the standalone Ind AS financial statements with regard to insurance claim due to floods on one of the Companyâs project in Srinagar, Jammu and Kashmir, the Company has recognised insurance claim revenue aggregating to Rs. 219.73 mn to the extent measured reliably and accounted/charged off related additional costs incurred towards damage by floods.

c Note 52 to the standalone Ind AS financial statements in respect of the write back of the âliabilities no longer requiredâ outstanding for a long period aggregating to Rs. 1208.29 mn. The management is confident that the liabilities no longer required and no material adjustment will be required.

d Note 53 to the standalone Ind AS financial statements in respect of profit on sale of land of Rs. 636.07 mn.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1 As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of sub-section 11 of section 143 of the Act, we give in the âAnnexure Aâ a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

c. the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and the Statement of changes in Equity dealt with by this report are in agreement with the books of account;

e. on the basis of the written representations received from the directors as on 31st March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2017 from being appointed as a director in terms of section 164(2) of the Act;

f. with respect to the adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such internal controls, refer to our separate Report in âAnnexure Bâ to this report; and

i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements; (Refer Note 42 to the standalone Ind AS financial statements)

iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company for the year ended 31st March, 2017; and

iv. the Company has provided requisite disclosures in the standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes as defined in the Notification No. G.S.R. 307(E) dated 30th March 2017, during the period from 8th November 2016 to 30th December 2016. Based on our audit procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management. (Refer Note 15 to the standalone Ind AS financial statements)

âANNEXURE Aâ TO THE INDEPENDENT AUDITORSâ REPORT

(i) In respect of the Companyâs fixed assets:

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

(c) According to the information and explanations given to us, the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company.

(ii) In respect of the Companyâs Inventory:

iii) The Company has granted unsecured loans to 4 companies (out of which the loans granted to 2 companies are interest free) covered in the register maintained under section 189 of the Act, in respect of such loans;

a) In our opinion, the terms and conditions of the loans granted by the Company are not prejudicial to the interest of the Companyâs interest except in the case of interest free unsecured loans granted to 2 parties, aggregating to Rs. 959.00 mn as at March 31, 2017, having regard to the cost of funds to the Company which are prejudicial to the interest of the Company.

c) In case of loans carrying interest, there is an overdue interest amounting to Rs. 271.89 mn for more than 90 days. As per the information and explanations given to us, the Company has made reasonable steps to recover overdue interest portion. Further, in case of interest free unsecured loans granted to 2 parties, as the schedule of repayment has not been stipulated, we are unable to comment whether any amount is overdue and whether any steps for recovery of the principal is required.

(vii) According to the information and explanations given to us:

(a) According to information and explanations given to us and records of the Company examined by us, amounts deducted/ accrued in the books of accounts in respect of Undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, Cess and other material statutory dues as applicable have been actually/regularly deposited with the appropriate authorities and there have been delays in number of cases during the year. As per information and explanation given to us the Company did not have any dues on the account of Excise duty and Customs duty. Further there are no undisputed amounts payable in respect of Excise duty and Customs duty as at 31st March 2017, which were in arrears for a period of more than six months from the date they became payable. Details of undisputed dues in respect of Sales Tax and Value Added Tax that were in arrears for a period of more than six months from the date they become payable are provided in Appendix-I.

(b) According to the information and explanations given to us and records of the Company examined by us, particulars of dues outstanding in respect of Sales tax, Service tax and Value Added Tax which have not been deposited on account of any dispute are given in Appendix-II to this report.

(viii) In our opinion and according to the information and explanations given to us, the Company has defaulted in the repayment of certain dues to financial institutions and banks. The details of such default are setout in Appendix-III to the reports. There are no loans or borrowings payable to Government and debenture holders.

(xiii) In our opinion and according to the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of the Act, to the extent applicable. The details of related party transactions as required by the applicable accounting standards have been disclosed in the notes to standalone Ind AS financial statements.

Appendix I as referred to in Para vii (a) of Annexure A to the Independent Auditorâs Report

Name of the statue	Nature of the due	Period to which amount relates (Rs. in millions)
Name of the statue	Nature of the due	Upto 2015-16	April â16	May â16	June â16
Jammu & Kashmir Value Added Tax, 2005	Value Added Tax(VAT)	425.80			37.38
Jammu & Kashmir Value Added Tax, 2005	Due date	30th April			30th July
West Bengal Value Added Tax	Works Contract Tax Deducted at source	1.94	0.41	0.54	0.43
West Bengal Value Added Tax	Due date	30th April	30th May	30th June	31st July
Bihar Value Added Tax	Works Contract Tax Deducted at source	17.85
Bihar Value Added Tax	Due date	20th April
Jharkhand Value Added Tax	Works Contract Tax Deducted at source	29.45	0.033	0.82	1.44
Jharkhand Value Added Tax	Due date	20th April	20th May	20th June	20th July
Delhi Value Added Tax	Works Contract Tax Deducted at source	3.50
Delhi Value Added Tax	Due date	20th April
Chattisgarh Value Added Tax	Works Contract Tax Deducted at source	1.38	0.007
Chattisgarh Value Added Tax	Due date	20th April	20th May

Appendix II as referred to in Para vii (b) of Annexure A to the Independent Auditorâs Report

Name of the Statue	Nature of the due	Amount (Rs. in millions)	Period to which it pertain	Forum where dispute pending
Andhra Pradesh General sales Tax Act, 1957	Tax	1.740 (0.35)*	2001-02	High Court of Andhra Pradesh. High Court dismissed the petition. Company waiting for order.
Andhra Pradesh General sales Tax Act, 1957	Tax	9.065 (4.53)*	2002-03	Sales Tax Appellete Tribunal, Hyderabad
Andhra Pradesh VAT Act,2005	Tax and Penalty	142.456 (62.99)*	2005-09	Sales Tax Appellete Tribunal, Hyderabad
Andhra Pradesh VAT Act,2005	Tax	63.082	2010-11	High Court, Andhra Pradesh and Telangana
Bihar VAT Act, 2005	Penalty	44.611	2010-12	DCCT(Appeal), Patna
Bihar VAT Act, 2005	Tax	1.503	2010-12	DCCT(Appeal), Patna
JVAT Act	Penalty	15.599	2012-13	DCCT, Jamshedpur
JVAT Act	Tax	19.649	2013-14	DCCT, Jamshedpur
Karnataka Value Added Tax,2003	Tax	8.760 (8.76)*	2005-06	Joint Commissioner of CT- Appeal 3
Madhya Pradesh Value Added Tax, 2002	Tax	23.785 (5.95)*	2010-14	Appellate Tribunal, Bhopal
Maharashtra Value Added Tax	Tax	264.371 (1.50)*	2008-12	DCCT, Jamshedpur
Punjab Value Added Tax,2005	Tax	3.495	2006-07	VAT Tribunal, Punjab, Chandigarh
Punjab Value Added Tax,2005	Tax	3.413	2008-09	Appealed before AETC(Appeal)
West Bengal Value Added Tax,2005	Tax	261.606 (0.36)*	2005-13	The Additional Commissoner Commercial taxes, Kolkata
West Bengal Value Added Tax,2005	Tax	85.222 (1.00)*	2010-13	DCCT, Bureau of Investigation, Kolkata
West Bengal Value Added Tax,2005	Tax	6.971	2013-14	Joint Commissioner Appeals

* indicated pre security deposits with respective authorities.

Appendix II as referred to in Para vii(b) of Annexure A to the Independent Auditorâs Report

Name of the Statue	Nature of the due	Amount (Rs. in millions)	Period to which it pertain	Forum where dispute pending
Finance Act 1994	Tax	30.50	2004-05 to 2006-07	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore
Finance Act 1994	Tax	7.98 (0.80)*	2002-03	Central Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata
Finance Act 1994	Tax	10.45 (4.00)*	2007-08 to 2009-10	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore
Finance Act 1994	Tax	442.35 (2.30)*	2004-05 to 2007-08	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore
Finance Act 1994	Tax	142.61 (2.00)*	01-04-2007 to 30-09-2008	Central Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata
Finance Act 1994	Tax	17.90	2005-07	Commissioner of Customs, Central Excise & Service Tax, Orissa
Finance Act 1994	Tax	28.07	01-07-2005 to 30-06-2010	Central Excise & Service Tax Appellate Tribunal (CESTAT), Hyderabad
Finance Act 1994	Tax	42.86	2007-08 to 2009-10	Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Tamilnadu
Finance Act 1994	Tax	1.92	2010-11	Commissioner of Service tax Tamilnadu-35
Finance Act 1994	Tax	138.72	2007-08 to 2011-12	Commissioner of Service tax Andhra Pradesh
Finance Act 1994	Tax	6.82	2010-11	Commissioner of Service tax Tamilnadu
Finance Act 1994	Tax	21.75	01-10-2007 to 31-03-2012	Commissioner of Service tax Andhra Pradesh
Finance Act 1994	Tax	27.07 (2.03)*	2009-10 to 2011-12	Commissioner of Service tax Andhra Pradesh
Finance Act 1994	Tax	26.09	2010-11 to 2012-13	Hyderabad II Service Tax Commissionerate
Finance Act 1994	Tax	12.99 (0.49)*	2010-11 to 2011-12	Commissioner of Servicetax, Shillong
Finance Act 1994	Tax	27.56	2011-12 to 2013-14	Commissioner of Service tax, Telangana
Finance Act 1994	Tax	1.99	2011-12 to 2013-14	Asst. Commissioner (Audit), Service Tax Cell, Visakhapatnam
Finance Act 1994	Tax	5.24	2011-12 to 2013-14	Additional Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Tamilnadu
Finance Act 1994	Tax	0.26	2004-05 to 2006-07	Commissioner of Customs, Central Excise & Service Tax (CCCE&S)
Finance Act 1994	Tax	0.38	2007-08	Commissioner of Customs, Central Excise & Service Tax (CCCE&S) (Appeals), Chennai.
Finance Act 1994	Tax	1.34	2007-08	Commissioner of Customs, Central Excise & Service Tax (CCCE&S) (Appeals), Chennai.
Finance Act 1994	Tax	9.85	2007-08	Central Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore

* indicated pre security deposits with respective authorities.

A. Details of delay in repayment of dues to banks and others, which were outstanding as at 31 March,2017.(i.e. continuing default)

	Particulars	Total amount of Principal in Default (Rs. in millions)	Total amount of Interest in Default (Rs. in millions)	Period of Default / Overdrawn (in days)
i)	Cash Credit facilities (i.e. Overdrawn)
	State Bank of India	1.68	56.27	60
	Axis Bank	-	2.20	32
	Punjab National Bank	-	8.23	1
	State Bank of Hyderabad	3.01	9.68	32
ii)	FITL
	State Bank of India	-	19.78	60
	State Bank of India (Principal)	2.56	-	1
	Punjab National Bank	-	5.17	60
	Punjab National Bank (Principal)	0.81	-	1
	State Bank of Hyderabad	-	1.52	1
	State Bank of Hyderabad (Principal)	0.58	-	1
	IDBI	-	2.04	60
	IDBI (Principal)	0.38	-	1
	Yes Bank	-	0.03	4
iii)	Term loans
	State Bank of India -TL	-	16.20	60
	State Bank of Hyderabad - TL	-	1.31	1
	State Bank of India - WCTL I	-	58.81	60
	State Bank of India (Principal) - WCTL I	5.60	-	1
	State Bank of Hyderabad - WCTL I	-	4.43	1
	State Bank of Hyderabad (Principal) - WCTL I	1.25	-	1
	Punjab National Bank - WCTL I	-	18.79	60
	Punjab National Bank (Principal) - WCTL I	1.80		1
	IDBI - WCTL I	-	8.14	60
	IDBI (Principal) - WCTL I	0.77	-	1
	State Bank of India - WCTL II	-	3.31	60
	State Bank of India (Principal) - WCTL II	0.31		1
	Punjab National Bank - WCTL II	-	2.47	32
	Punjab National Bank (Principal) - WCTL II	0.30		1
	IDBI - WCTL II	-	0.07	60
iv)	Other defaults
	State Bank of India -Priority debt	-	18.75	60
	State Bank of India (Principal) -Priority debt	1.92	-	1
	Punjab National Bank -Priority debt	-	5.64	60
	Punjab National Bank (Principal) -Priority debt	0.58	-	1
	State Bank of Hyderabad -Priority debt	-	1.64	1
	State Bank of Hyderabad (Principal) -Priority debt	0.49	-	1
	IDBI -Priority debt	-	6.04	60
	IDBI (Principal) -Priority debt	0.59	-	1
	Shriram Equipment Finance	50.67	4.44	497 to 1076

For M.V. Narayana Reddy & Co.,

Chartered Accountants

Firm Registration. No.002370S

M.V. Narayana Reddy

Place : Hyderabad Partner

Date : 28-July-2017 Membership No.028046

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of RAMKY INFRASTRUCTURE LIMITED ("the Company"), which comprise the Balance sheet as at March 31, 2015, the Statement of profit and loss, cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information for the year then ended.

Management's Responsibility for the Standalone Financial Statements

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

Auditors' Responsibility

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

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

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

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

Basis for Qualified Opinion

We refer to:

1. Note 31 of the financial statements with regard to recognition of deferred tax assets amounting to Rs. 409.08 Crore, on unabsorbed depreciation, business losses and other timing differences incurred by the Company. Based on unexecuted orders on hand, the Management is confident that sufficient future taxable income will be available against which such deferred tax assets will be realised. However, in our opinion, in absence of virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which the deferred tax assets can be realized, such recognition is not consistent with the principles enunciated under Accounting Standard 22, "Accounting for Taxes on Income" (AS 22). Had the aforesaid deferred tax assets not been recognised, loss after tax for the year ended would have been higher by Rs. 409.08 Crore.

2. Note 32 of the financial statements with regard to impact of floods on one of the Company's project in Srinagar, Jammu and Kashmir, the Concessionaire of the Project, a subsidiary Company, has made an assessment of the damage to the project materials and assets located at the site amounting to Rs. 141.51 crore and has lodged insurance claims of Rs. 141.51 crore with the insurers. The management of the Company, considering the insurance claim in this regard, is confident that no consequential material adjustment for loss of project materials and assets, will be required. In view of pending final assessment, We are unable to comment on the extent of adjustment on account of such loss.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the paragraph 1 and possible effects of the matter described in the paragraph 2 of the Basis for Qualified Opinion paragraph above, 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 March 31, 2015 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to note 33 to the financial statements in connection with the existence of material uncertainties over the realisability of certain construction work in progress, trade receivables and loans and advances aggregating to Rs. 580.78 crores, which are subject matters of arbitration proceedings/negotiations with the customers and contractors due to foreclosure of contracts and other disputes. The management of the Company, keeping in view the status of negotiations and the outcome of arbitration proceedings and the basis of which steps to recover these amounts are currently in process, is confident of recovering the aforesaid dues.

Our report is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

a. We have sought and except for the matters described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. Except for the effects of the matters 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 and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

d. Except for the effects of the matters described in the 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;

e. The matters described in the Basis for Qualified Opinion and under Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

g. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph and under the annexure referred to in paragraph 1 of Report on other Legal and Regulatory requirements;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements Â Refer Note 27 to the financial statements;

ii. except for the effects of matters described in the basis for qualified opinion paragraph, the Company has made provision as at March 31, 2015, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts;

iii. there were no amounts which were required to be transferred by the Company to the Investor Education and Protection Fund for the year ended March 31, 2015.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

(Refer to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' Section of our report of even date)

(i) (a) The Company has maintained proper records showing particulars, including quantitative details and situation of fixed assets. Where assets have been moved between locations of the company is in the process of carrying out the necessary updation to the records.

(b) The company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the company and nature of its assets. In accordance with this programme, certain fixed assets were verified during the year. While the reconciliation of the fixed assets verified with the books are currently in progress, in the opinion of the management the discrepancies if any are not expected to be material.

(ii) (a) According to the information and explanations given to us, the management has conducted physical verification of inventory as at the year end. In our opinion, the frequency of verification of inventory needs to be increased to be adequate in relation to the size of the company and nature of its business.

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

(c) While the company has maintained proper records of inventory, we are of the opinion that, the procedures for updating these records needs to be further strengthened keeping in view the nature and scale of its operations. However, the management has carried out physical verification of the inventories and the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has granted unsecured loans to Company's covered in the Register maintained under Section 189 of the Companies Act, 2013. In respect of such loans, having regard to the rollover of the loans.

(a) The receipt of principal amount and interest, wherever stipulated, is regular;

(b) There is no overdue amount of more than Rs. one lakh remaining outstanding as at the year end.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories, fixed assets and sale of services are for the Company's/buyer's specialized requirements, and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, with regard to purchase of inventories, fixed assets and sale of services. During the course of audit, we noted in certain instances, that the underlying supporting documentation needs to be further strengthened with respect to certain purchases of inventories and services and sale of services. However, based on other alternative existing controls, in our opinion, the same did not result in a major weakness in internal control. The Management has taken steps to strengthen the supporting documentation subsequent to the yearend.

(v) According to the information and explanation given to us, the company has not accepted any deposit within the meaning of Section 73 to 76 of the Act, and the rules framed thereunder to the extent notified.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Rules made by the Central Government under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(vii) (a) According to the information and explanation given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Investor Educational and Protection Fund, Wealth Tax and other material statutory dues have been generally regularly deposited during the year by the company with the appropriate authorities. However, undisputed dues in respect of Provident Fund, Employees State Insurance, Income tax deducted at source, Works contract Tax deducted at source, Sales tax and Service Tax, have not been regularly deposited with the appropriate authorities and there have been serious delays in number of cases. As explained to us, the company did not have any dues on account of Excise Duty and custom duty. other material statutory dues that were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable, except for Income Tax deducted at source, Work Contract Tax deducted at sources by the company, sales Tax and Service Tax as set out in Appendix I. As explained to us, the company did not have any dues on account of Excise Duty.

(b) According to the information and explanation given to us, there are no dues of customs duty and Wealth Tax which have not been deposited with the appropriate authorities on account of any dispute. However, the company disputes the dues in respect of Sales tax, Service Tax and Income Tax as set out in Appendix II

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

(viii) Without considering the consequential effects, if any, of the matters stated in the basis for qualified opinion paragraph of our report, in our opinion, The accumulated losses of the company are more than fifty percent of its net worth. The company has incurred cash losses during the financial year covered by our Audit and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, except for the dues stated in Appendix III the company has not defaulted in repayment of dues to its bankers. The company did not have any outstanding debentures or dues to any financial institutions during the year.

(x) According to the information and explanations given to us, the Company has given guarantee for loans taken by subsidiaries from banks and financial institutions, the terms and conditions whereof, in our opinion, are not prima facie prejudicial to the interest of the Company.

(xi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the period.

For CHATURVEDI & PARTNERS. Chartered Accountants

Firm Registration No.307068E

R N CHATURVEDI

Hyderabad Partner

May 30, 2015 Membership No. 092087

Mar 31, 2014

We have audited the accompanying financial statements of Ramky Infrastructure Limited (''the Company''), which comprise the balance sheet as at 31 March 2014, the statement of profit and loss and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information (''financial statements'').

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 presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls 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 qualified audit opinion.

Basis for Qualified Opinion

We draw attention to note 2.28 to the financial statements with regard to recognition of deferred tax asset on unabsorbed depreciation, business losses and other timing differences incurred by the Company during the year aggregating to Rs. 202.10 crores. Based on existing unexecuted orders on hand the Management is confident of the virtual certainty of sufficient future taxable income for realization of deferred tax assets as enunciated in Accounting Standard 22 "Accounting for Taxes on Income" (AS 22). However, in our opinion, the requirements of virtual certainty criteria may not be met due to the lack of convincing supporting evidence that sufficient future taxable income will be available. Had the aforesaid deferred tax asset not been recognised, loss after tax of the Company for the year ended 31 March 2014 would have been higher by Rs. 202.10 crores.

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the 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 31 March 2014;

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

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

Emphasis of Matter

a) Without qualifying our opinion, we draw attention to note 2.31 to the

financial statements, regarding the search and seizure operations carried out by the Income Tax Authorities on the Company during the previous year. The Company has during the year received the intimations for reassessment of income from the Income Tax department for filling the revised returns for the relevant assessment years, which has been filled by the Company. The additional tax liabilities accepted amounting to Rs. 10.78 crores have been recognised in the Statement of profit and loss and disclosed as taxes relating to prior years.

b) Without qualifying our opinion, we draw attention to note 2.39 to the financial statements with regard to contracts not being pursued on account of foreclosure by the Company/ disputes with customers. As at 31 March 2014 an amount of Rs. 77.63 crores (including amount pertaining to advances, trade receivables, Contract work-in-progress and performance bank guarantees invoked by them) is receivable from these customers. The Management of the Company, keeping in view the long term nature of the contracts, terms and conditions implicit in these contracts and the ongoing discussions based on which steps to recover are currently in process, is confident of recovering the aforesaid amount as these are contractually tenable.

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 cash flow statement dealt with by this Report are in agreement with the books of account;

d) in our opinion, except for the effect of the matter described in the Basis for Qualified Opinion paragraph, the balance sheet, statement of profit and loss and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act, to the extent applicable; and

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

Annexure to the Independent Auditors'' Report

Annexure referred to in our independent report to the members of Ramky Infrastructure Limited ("the Company") for the year ended 31 March 2014.

We report that:

(i) (a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixed assets. Where assets have been moved between location the Company is in the process of carrying out the necessary updation to the records.

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and nature of its assets. In accordance with this programme, certain fixed assets were verified during the year. While the reconciliation of the fixed assets verified with the books are currently in progress, in the opinion of the management the discrepancies if any are not expected to be material.

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

(ii) (a) The management has conducted physical verification of inventory as at the year end. In our opinion, the frequency of verification of inventory needs to be increased to be adequate in relation to the size of the Company and the nature of its business.

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

(c) While the Company has maintained proper records of inventory, we are of the opinion that the procedures for updating these records needs to be further strengthened keeping in view the nature and scale of its operations. However, the Management has carried out physical verification of the inventories and the discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 ("the Act"). Accordingly clauses 4(iii)(a) to 4(iii)(d) of the Order are not applicable to the Company.

(b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act, Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories, fixed assets and sale of services are for the Company''s/ buyer''s specialised requirements, and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, with regard to purchase of inventories, fixed assets and sale of services. During the course of our audit, we noted in certain instances, that the underlying supporting documentation needs to be further strengthened with respect to certain purchases of inventories and services and sale of services. However, based on other alternative existing controls, in our opinion, the same did not result in a major weakness in internal control. The Management has taken steps to strengthen the supporting documentation subsequent to the yearend.

(v) (a) In our opinion, and according to the information and explanations

provided by the Management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakh with each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for work performed in respect of civil, turnkey contracts and related contract consultancy services which are for the specialised requirements of buyer for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided to us, the same appears reasonable.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable to the Company.

(vii) The Company has an internal audit system commensurate with the size and nature of its business. However, the coverage of internal audit needs to be increased.

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government of India for the maintenance of cost records under Section 209(1)

(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and

on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Investor Education and Protection Fund, Wealth Tax, Customs Duty and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. However, undisputed dues in respect of Provident Fund, Employees'' State Insurance, Income Tax deducted at source, Works Contract Tax deducted at source, Sales Tax and Service Tax, have not been regularly deposited with the appropriate authorities and there have been serious delays in number of cases. As explained to us, the Company did not have any dues on account of Excise Duty.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Wealth Tax, Customs Duty and other material statutory dues that were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable, except for Income Tax deducted at source, Work Contract Tax deducted at sources by the Company, Sales Tax and Service Tax as set out in Appendix I. As explained to us, the Company did not have any dues on account of Excise Duty.

(b) According to the information and explanations given to us, there are no dues of Customs Duty and Wealth Tax which have not been deposited with the appropriate authorities on account of any dispute. However, the Company disputes the dues in respect of Sales Tax, Service Tax and Income Tax as set out in Appendix II.

(x) Without considering the consequential effects, if any, of the matter(s) stated in in the Basis for Qualified Opinion paragraph of our auditors'' report, the Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the immediately preceding financial year. However, the Company has incurred cash losses in the current financial year.

(xi) In our opinion and according to the information and explanations given to us, except for the dues stated in Appendix III the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding debentures or dues to any financial institutions during the year.

(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.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund /nidhi/ mutual benefit fund/ society.

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

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interests of the Company.

(xvi) According to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 252.04 crores raised on short-term basis have been used for long-term purposes.

(xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Act.

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

(xx) During the year the Company has not raised any money by public issues.

(xxi) Based on the information and explanations provided to us, the Company has filed cases under section 138, 141 and 142 of the Negotiable Instruments Act, 1881 against three ex - employees for cheques returned by the banks on presentation for payment. These cheques were obtained by the Company towards recovery of losses on account of the alleged irregularities amounting to Rs. 20.86 crores which the Company believes were committed by the concerned employees while discharging their duties. Legal proceeding are currently on going in this regards.

Appendix I as referred to in para ix (a) of Annexure to the Independent Auditors'' Report:

Amount Name of the Statute Nature of the Dues (Rs.in crores) Income Tax Act, 1961 Income Tax deducted at source 4.92

Finance Act, 1994 Service tax 1.01

Value Added Tax Acts of Work Contract Tax deducted at 0.85 various States source

The Jammu and Kashmir Value Added Tax Act, 2005 Work Contract Tax 17.71

The Employees'' Provident Funds and Miscellaneous Provident Fund 0.14 Provisions Act, 1952

Period to which the Unpaid as on date Name of the Statute amount relates (Rs.in crores) Income Tax Act, 1961 Various months 3.11

Finance Act, 1994 Various months 1.01

Value Added Tax Acts of Various months 0.85 various States

The Jammu and Kashmir Value Added Tax Act, 2005 Various months 17.71

The Employees'' Provident Funds and Miscellaneous May 13 and July 13 0.14 Provisions Act, 1952

Appendix II as referred to in para ix (b) of Annexure to the Independent Auditors'' Report:

Amount Period to Name of the Statute Nature of (Rs.in which the the Dues crores) amount General sales tax/ relates Value added tax

Andhra Pradesh General Sales Tax Tax 0.17 2001-02 Act, 1957 (0.09)*

Andhra Pradesh General Sales Tax Tax 0.91 2002-03 Act, 1957 (0.45)*

Andhra Pradesh VAT Act, 2005 Tax 1.05 2005-07 (1.53)*

Andhra Pradesh VAT Act, 2005 Interest 0.08 2007-08

Andhra Pradesh VAT Act, 2005 Tax 6.85 2005-08

(6.85)*

Andhra Pradesh VAT Act 2005 Tax and 1.19 2007-09 penalty (0.43)*

Andhra Pradesh VAT Act, 2005 Tax and 4.32 2009-10 penalty (1.99)*

Karnataka Value Added Tax, 2003 Tax 0.88 2004-06 (0.88)*

The Punjab Value Added Tax, 2005 Tax 0.10 2006-07 (0.03)*

West Bengal Value Added Tax, 2003 Tax 0.86 2005-06

West Bengal Value Added Tax, 2003 Tax 2.51 2006-07

Madhya Pradesh Value Added Tax, Tax 0.95 2010-11 2002 (0.09)*

Service tax

Finance Act, 1994 Tax 6.13 2007-09 (0.75)*

Finance Act, 1994 Tax 0.98 2007-09

Finance Act, 1994 Tax and 44.23 2004-08 penalty (0.23)*

Finance Act, 1994 Tax 3.05 2004-05 & 2006-07

Finance Act, 1994 Tax 15.06 2004-08 (0.20)*

Finance Act, 1994 Tax 4.86 2009-12 Name of the Statute Forum where dispute is pending General sales tax/Value added tax

Andhra Pradesh General Sales Tax High Court of Andhra Pradesh Act, 1957 (0.09)*

Andhra Pradesh General Sales Tax The Deputy Commissioner, Hyderabad Act, 1957 (0.45)*

Andhra Pradesh VAT Act, 2005 Sales Tax Appellate Tribunal, Hyderabad

Andhra Pradesh VAT Act, 2005 Commercial Tax Officer, Hyderabad

Andhra Pradesh VAT Act, 2005 Commercial Tax Officer, Hyderabad

Andhra Pradesh VAT Act 2005 Sales Tax Appellate Tribunal, Hyderabad

Andhra Pradesh VAT Act, 2005 The Addl Deputy Commissioner (Appeals), Hyderabad

Karnataka Value Added Tax, 2003 Joint Commissioner (Appeals), Bangalore

The Punjab Value Added Tax, 2005 Deputy Excise and Taxation Commissioner (Appeals), Punjab

West Bengal Value Added Tax, 2003 West Bengal Commercial Taxes Appellate and Revisional Board, Kolkata

West Bengal Value Added Tax, 2003 The Addl Commissioner of Commercial Taxes, Kolkata

Madhya Pradesh Value Added Tax, The Appellate Tribunal, Bhopal 2002

Service tax

Finance Act, 1994 High Court of Andhra Pradesh

Finance Act, 1994 Central Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore

Finance Act, 1994 CESTAT, Bangalore

Finance Act, 1994 CESTAT, Bangalore

Finance Act, 1994 CESTAT, Kolkata Finance Act, 1994 Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad.

Amount Period to which the Name of the Statute Nature of the Dues (Rs.in amount relates crores)

Finance Act, 1994 Tax and penalty 53.22 2004-12 (4.09)*

Finance Act, 1994 Tax 0.20 2005-08 Finance Act, 1994 Tax 0.19 2010-11

Finance Act, 1994 Tax 0.04 2007-08

Finance Act, 1994 Tax 0.71 2011-12

Finance Act, 1994 Tax 2.17 2007-12

Income tax

Income Tax Act, 1961 Deductions 1.26** 2002-03 disallowed

Income Tax Act, 1961 Deductions 1.05** 2003-04 disallowed

Income Tax Act, 1961 Deductions 1.61** 2004-05 disallowed

Income Tax Act, 1961 Deductions 5.08** 2005-06 disallowed

Income Tax Act, 1961 Deductions 4.44** 2006-07 disallowed

Income Tax Act, 1961 Deductions 6.48** 2007-08 disallowed

Income Tax Act, 1961 Deductions 12.43** 2008-09 disallowed

Name of the Statute Forum where dispute is pending Finance Act, 1994 CCCE&S of various States

Finance Act, 1994 Asst. Commissioner (Audit), Service Tax Cell, Visakhapatnam

Finance Act, 1994 Addl CCCE&S, Hyderabad

Finance Act, 1994 CCCE&S (Appeals), Chennai Finance Act, 1994 Addl CCCE&S, Chennai

Finance Act, 1994 CCCE&S, Hyderabad

Income tax

Income Tax Act, 1961 Assessing Officer, Hyderabad Income Tax Act, 1961 Assessing Officer, Hyderabad Income Tax Act, 1961 Assessing Officer, Hyderabad

Income Tax Act, 1961 Assessing Officer, Hyderabad

Income Tax Act, 1961 Assessing Officer, Hyderabad Income Tax Act, 1961 Assessing Officer, Hyderabad

Income Tax Act, 1961 Assessing Officer, Hyderabad * The amounts in parenthesis represent the payment made under protest.

** These amounts have been deducted against refund receivable.

Appendix III as referred to in para xi of Annexure to the Independent Auditors'' Report:

A. Details of delays in repayment of dues to banks, which were outstanding as at 31 March 2014:

Amount due Name of the bank Nature of dues (Rs.in Due date crores)

ICICI Bank Limited Loan Repayment 6.25 8 February 2014

ICICI Bank Limited Interest 1.53 1 February 2014

ICICI Bank Limited Interest 1.31 1 March 2014

Axis Bank Limited Letter of Credit 19.06 6 February 2014

Axis Bank Limited Letter of Credit 13.00 February 2014

Punjab National Bank Letter of Credit 1.60 February 2014

ICICI Bank Limited Buyers Credit 10.87 30 January 2014

Delays Name of the bank Paid by (in days)

ICICI Bank Limited 2 April 2014 53

ICICI Bank Limited 2 April 2014 60

ICICI Bank Limited 19 April 2014 49

Axis Bank Limited 30 May 2014 113

Axis Bank Limited - Not yet paid

Punjab National Bank - Not yet paid

ICICI Bank Limited 3 April 2014 63

B.Details of delays in repayment of principal and interest against the borrowing facilities availed from banks and fallen due during the year ended 31 March 2014, but repaid before 31 March 2014 are as follows:

Name of the bank Principal Delay range Interest Delay range (Rs.in (in days) (Rs.in (in days) crores) crores) State Bank of India - - 1.53 1 - 7

ING Vysya Bank - - 0.79 25 - 29

ICICI Bank Limited 18.75 20 - 77 16.78 2 - 84

Axis Bank Limited 0.70 11 - 189 0.24 11 - 189

HDFC Bank Limited 2.82 11 - 155 0.44 11 - 155

ICICI Bank Limited 2.68 9 - 131 0.54 9 - 131

for B S R & Co. LLP for Visweswara Rao & Associates Chartered Accountants Chartered Accountants Firm Registration No.: 101248W Firm Registration No.: 005774S

Supreet Sachdev Mahidhar. S. G Partner Partner Membership No.: 205385 Membership No.: 216463

Hyderabad 20 June 2014

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Ramky Infrastructure Limited (''the Company''), which comprise the balance sheet as at 31 March 2013, 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 presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 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 31 March 2013;

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

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

Emphasis of Matter

Without qualifying our opinion, we draw attention to note 2.31 to the financial statements regarding the search and seizure operations carried out by the Income Tax Authorities on the Company. Pending completion of the proceedings, the final outcome of the search and seizure operation and the consequent tax liability, if any, is currently not ascertainable.

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 cash flow statement dealt with by this Report are in agreement with the books of account;

d) in our opinion, the balance sheet, statement of profit and loss, and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act, to the extent applicable; and

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

Annexure to the Independent Auditors'' Report

Annexure referred to in our independent report to the members of Ramky Infrastructure Limited ("the Company") for the year ended 31 March 2013. We report that:

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

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

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

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

(b) The procedures for the 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) While the Company has maintained proper records of inventory, we are of the opinion that the same needs to be further strengthened keeping in view the scale of the operations. However, the Management has carried out physical verification of the inventories and the discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 ("the Act"). Accordingly clauses 4(iii)(a) to 4(iii)(d) of the Order are not applicable to the Company.

(e) According to the information and explanations given to us, the Company had taken unsecured loan from a company covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year was Rs. 30 crores and the year-end balance of such loan was Rs. Nil. The Company has not taken any loans from firms or other parties covered in the registers maintained under Section 301 of the Act.

(f) In our opinion, the rate of interest and other terms and conditions on which the loan had been taken from a company listed in the register maintained under Section 301 of the Act are not, prima facie, prejudicial to the interest of the Company.

(g) The loan including interest taken from a company listed in the register maintained under Section 301 of the Act has been repaid during the year. Accordingly, clause 4(iii)(g) of the Order is not applicable.

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

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

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakh with each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for work performed in respect of civil, turnkey contracts and related contract consultancy services which are for the specialised requirements of buyer for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided to us, the same appears reasonable.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company has an internal audit system commensurate with the size and nature of its business. However, the same needs further strengthening.

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government of India for the maintenance of cost records under Section 209(1)(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities though there have been slight delays in few cases. However, undisputed dues in respect of Income Tax deducted at source and Works Contract Tax deducted at source have not been regularly deposited with the appropriate authorities and there have been serious delays in a large number of cases. As explained to us, the Company did not have any dues on account of Excise Duty.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and other material statutory dues that were in arrears as at 31 March 2013 for a period of more than six months from the date they became payable. As explained to us, the Company did not have any dues on account of Excise Duty.

(b) According to the information and explanations given to us, there are no dues of Customs Duty and Wealth Tax which have not been deposited with the appropriate authorities on account of any dispute. However, the Company disputes the dues in respect of Sales Tax, Service Tax and Income Tax as set out in Appendix I.

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

(xi) In our opinion and according to the information and explanations given to us, except for the dues stated in

Appendix II the Company has not defaulted in repayment of dues to its bankers or to any financial institutions. The Company did not have any outstanding debentures during the year.

(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.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund/ nidhi/mutual benefit fund/society.

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

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interests of the Company.

(xvi) According to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Act.

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

(xx) During the year the Company has not raised any money by public issue. We have verified the end use of funds raised by public issue during the earlier year as disclosed in note 2.37 to the financial statements.

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

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

Chartered Accountants Chartered Accountants

Firm''s Registration No.: 101248W Firm''s Registration No.: 005774S

Zubin Shekary S V R Visweswara Rao

Partner Partner

Membership No.: 048814 Membership No.: 029088

Hyderabad 27 May 2013

Mar 31, 2012

1. We have audited the attached balance sheet of Ramky Infrastructure Limited ("the Company") as at 31 March 2012, the statement of profit and loss and the cash flow statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

4. Further to our comments in the Annexure referred to above, 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 purposes of our audit;

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

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

(d) subject to our comments in paragraph (f) below, in our opinion, the balance sheet, the statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable;

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

(f) we draw attention to note 2.35 to the financial statements, wherein deductions claimed by the Company under Section 80-IA (4)of Income Tax Act, 1961 in its returns of income relating to assessment years 2003-04 to 2011-12 amounting to Rs 66.56 crores have now been provided for by directly debiting the surplus in statement of profit and loss account balance under "Reserves and Surplus" rather than debiting these amounts to the statement of profit and loss for the year ended 31 March

2012 as required by Accounting Standard-5 "Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies". Had this provision been charged to the statement of profit and loss for the current year, the profit after tax for the year would reflect as Rs 77.12 crores as compared to the reported profit after tax ofRs 143.68 crores. Further, the basic and diluted EPS for the current year would be Rs 13.48 per share compared to the reported EPS ofRs 25.12 per share; and

(g) except for effects of the matter described in paragraphs

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

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2012;

(ii) in the case of the statement of profit and loss, of the profit of the Company for the year ended on that date; and

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

Annexure referred to in our report to the members of Ramky Infrastructure Limited ("the Company") for the year ended 31 March 2012. We report that:

(i) (a) The Company has maintained proper records

showing full particulars, including quantitative details and situation of fixed assets.

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

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

(ii) (a) The inventory has been physically verified by the

Management during the year. In our opinion, the frequency of such verification is reasonable.

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

(c) The Company has maintained proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly clauses 4(iii)(a) to 4(iii)(g)of the Order are not applicable to the Company.

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

(v) (a) In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs 5 lakh with each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for work performed in respect of civil, turnkey contracts and related contract consultancy services which are for the specialized requirements of buyer for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided to us, the same appears reasonable.

(vi) The Company has not accepted any deposits from the public.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government of India for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities, though there has been a slight delay in a few cases. As explained to us, the Company did not have any dues on account of Excise duty.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty and other material statutory dues that were in arrears as at 31 March 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Customs duty and Wealth tax which have not been deposited with the appropriate authorities on account of any dispute. However, the Company disputes the dues in respect of Sales tax, Service tax and Income tax as set out in Appendix 1.

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

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers or any financial institutions during the year. The Company did not have any outstanding debentures or dues to any financial institutions during the year.

(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.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund / nidhi/mutual benefit fund/society.

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

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interests of the Company.

(xvi) According to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

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

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

(xx) During the year the Company has not raised any money by public issue. We have verified the end use of funds raised by public issue during the previous year as disclosed in note 2.36 to the financial statements.

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

Nature of Nature of Amount Period to which Forum where the statute the dues (Rs.) the amount rela dispute is tes pending

General sales tax/Value added tax

Andhra Pradesh General Tax 1,740,746 2001-02 Appeal filed with Sales Tax Act, 1957 (906,633)* High Court of Andhra Pradesh.

Andhra Pradesh General Tax 9,065,397 2002-03 Sales Tax Appellate Sales Tax Act, 1957 (4,532,699)* Tribunal, Hyderabad.

Andhra Pradesh Value Tax 7,064,549 2005-09 Sales Tax Appellate Added Tax Act, 2005 (23,356,058)* Tribunal, Hyderabad.

Andhra Pradesh Value Tax 27,199,309 2005-09 Commercial Tax Officer, Hyderabad. Added Tax Act, 2005

Andhra Pradesh Value Interest and 21,447,125 2005-09 Commercial Tax Officer, Hyderabad.

Added Tax Act, 2005 penalty (1,945,483)*

Andhra Pradesh Value Tax and interest 87,546,525 2005-08 Commercial Tax Officer, Hyderabad.

Added Tax Act, 2005 (85,080,660)*

Andhra Pradesh Value Tax 44,085,191 2007-10 Appellate Deputy Commissioner

Added Tax Act, 2005 (8,666,360)*

Andhra Pradesh Value Penalty 11,021,298 2007-10 Commercial Tax Officer, Hyderabad. Added Tax Act, 2005

Karnataka Value Added Tax 8,759,830 2004-06 Sales Tax Appellate Tribunal,

Tax Act, 2003 (8,759,830)* Bangalore

The Punjab Value Tax 2,198,812 2005-07 Deputy Excise and Taxation

Added Tax Act, 2005 Commissioner (Appeals), Punjab

West Bengal Value Tax 8,255,424 2005-06 Commercial Tax Officer, Kolkata. Added Tax Act, 2003

West Bengal Value Tax 25,078,273 2006-07 West Bengal Sales Tax Tribunal, Added Tax Act, 2003 Kolkata

Service Tax

Finance Act, 1994 Tax 30,502,660 2004-07 Central Excise & Service Tax

Tribunal (CESTAT), Bangalore

Finance Act, 1994 Tax 74,341,004 2004-07 Commissioner of Customs, Central (35,570,924)* Excise & Service Tax (CCCE&S), Hyderabad.

Finance Act, 1994 Tax 7,982,189 2004-07 CESTAT, Kolkata

Finance Act, 1994 Tax 256,289 2004-07 CCCE&S, Ahmadabad.

Finance Act, 1994 Tax 71,133,154 2007-09 CESTAT, Bangalore

Finance Act, 1994 Tax 37,821,891 2009-11 CCCE&S, Hyderabad.

Finance Act, 1994 Tax and pen alty 442,346,138 2004-08 CCCE&S,Bangalore. (26,756,523)*

Finance Act, 1994 Tax 1,987,370 2005-08 Asst. Commis sioner (Audit), (110,588)* Service Tax Cell, Visakha patnam

Finance Act, 1994 Tax and Penalty 142,606,046 2007-09 CESTAT, Kolkata

Finance Act, 1994 Tax 377,246 2007-08 CCCE&S (Appeals), Chennai.

Nature of Nature of Amount (Rs.) Period to Forum where the statute the dues the amount dispute is relates pending Service Tax (Contd.)

Finance Act, 1994 Tax 17,896,099 2005-07 CCCE&S, Kolkata. (7,913,167)*

Finance Act, 1994 Tax 4,323,907 2007-10 Addle CCCE&S, Hyderabad.

Finance Act, 1994 Tax 8,836,619 2007-10 CCCE&S, Hyderabad.

Finance Act, 1994 Tax 28,070,720 2005-10 CCCE&S,Hyderabad.

Finance Act, 1994 Tax 13,881,404 2005-10 CCCE&S,Hyderabad.

Finance Act, 1994 Tax 10,446,547 2007-10 CCCE&S,Bangalore (118,090)*

Finance Act, 1994 Tax 1,850,657 2010-11 Addnl CCCE&S, Hyderabad.

Finance Act, 1994 Tax 5,621,126 2011-12 Deputy Commis sioner of Customs, (5,621,126)* Mumbai.

Finance Act, 1994 Tax 44,789,432 2007-11 CCCE&S, Chennai. (20,916,640)*

Income tax

Income Tax Act, 1961 Deductions 12,619,040** 2002-03 Income Tax Appellate Tribunal

disallowed

Income Tax Act, 1961 Deductions 10,537,804** 2003-04 Income Tax Appellate Tribunal disallowed

Income Tax Act, 1961 Deductions 16,064,740** 2004-05 Income Tax Appellate Tribunal disallowed

Income Tax Act, 1961 Deductions 50,777,088** 2005-06 Income Tax Appellate Tribunal disallowed

Income Tax Act, 1961 Deductions 44,426,473** 2006-07 Income Tax Appellate Tribunal disallowed

Income Tax Act, 1961 Deductions 64,780,599** 2007-08 Income Tax Appellate Tribunal disallowed

Income Tax Act, 1961 Deductions 124,270,337** 2008-09 Commissioner of Income Tax disallowed (Appeals)

* The amounts in parenthesis represent the payment made under protest.

** These amounts have been deducted against refund receivable.

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

Chartered Accountants Chartered Accountants

Firm's Registration No: 101248W Firm's Registration No: 005774S

Zubin Shekary S V R Visweswara Rao

Partner Partner

Membership No.: 048814 Membership No.: 029088

Hyderabad

29 May 2012

Mar 31, 2011

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

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

As required by the Companies (Auditors Report) Order, 2003, as amended, issued by the Ministry of Corporate Affairs in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

a. 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;

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

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

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

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

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

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

Annexure to the Auditors report

Annexure referred to in our report to the members of Ramky Infrastructure Limited (the Company) for the year ended March 31, 2011. We report that:

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

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

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

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

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

c. The Company has maintained proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. a. According to the information and explanations given to us, the Company has granted loan to one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was `6,05,85,343 and the year-end balance of such loans was `6,05,85,343. The Company has not given loans to firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b. In our opinion, the terms and conditions on which the loan has been granted to the company listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

c. Loans granted to company listed in the register maintained under Section 301 of the Companies Act, 1956 are receivable on demand and do not have a stipulated repayment schedule. Accordingly, clause 4(iii)(c) of the Order is not applicable.

d. There is no overdue amount of more than Rupees one lakh in respect of loans granted to the company listed in the register maintained under Section 301 of the Companies Act, 1956 as the Company has not exercised the repayment option.

e. The Company has not taken loans from Companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

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

v. a. In our opinion, and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b. In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of `5 lakh with each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for work performed in respect of civil, turnkey contracts and related contract consultancy services which are for the specialised requirements of buyer for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided to us, the same appears reasonable.

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

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

viii. The Central Government of India has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the services rendered by the Company. The business of the Company does not involve sale of goods.

ix. a. According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities, though there has been a slight delay in a few cases. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund and excise duty.

Further, there were no dues on account of Cess under Section 441A of the Companies Act, 1956 since the date from which the aforesaid Section comes into force has not yet been notified by the Central Government of India.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of provident fund, employees state insurance, income- tax, wealth tax, service tax, works contract tax, customs duty and other material statutory dues that were in arrears as at March 31, 2011 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, there are no dues of customs duty and wealth tax which have not been deposited with the appropriate authorities on account of any dispute. However, the Company disputes the dues in respect of sales tax, works contract tax, service tax and income tax as set out in Appendix 1.

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

xi. In our opinion and according to the information and explanations given to us, the company has not defaulted in

repayment of dues to its bankers or any financial institutions during the year. The Company did not have any outstanding debentures or dues to any financial institutions during the year.

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.

xiii. In our opinion and according to the information and explanations given to us, the Company is not a chit fund/ nidhi/mutual benefit fund/society.

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

xv. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interests of the Company.

xvi. According to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

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

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

xx. We have verified the end use of funds raised by public issue during the year as disclosed in Note 2 of Schedule 20 to the financial statements.

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

Name of the Statute Nature of the Amount (`) dues

General sales tax/Value added tax

Andhra Pradesh General Tax 17,40,746

Sales Tax Act, 1957 (9,06,633)*

Andhra Pradesh General Tax 90,65,397 Sales Tax Act, 1957 (45,32,699)*

Andhra Pradesh VAT Act, 2005 Tax 55,53,920 (41,65,440)*

Andhra Pradesh VAT Act, 2005 Tax 1,48,39,623 (1,11,29,717)*

Andhra Pradesh VAT Act, 2005 Tax 45,02,965 (33,77,226)*

Andhra Pradesh VAT Act, 2005 Interest and 1,36,65,194 penalty

Andhra Pradesh VAT Act, 2005 Tax, interest and 1,71,49,281 penalty (66,29,158)*

Andhra Pradesh VAT Act, 2005 Tax and penalty 1,18,94,979 (43,44,845)*

Andhra Pradesh VAT Act, 2005 Tax and interest 8,75,46,525

(8,50,80,660)*

Karnataka Value Added Tax, 2003 Tax 87,59,830 (87,59,830)*

The Punjab Value Added Tax, 2005 Tax 10,20,061 (2,55,015)*

West Bengal Value Added Tax, 2003 Tax 82,55,424

West Bengal Value Added Tax, 2003 Tax 2,50,78,273

Service Tax

Finance Act, 1994 Tax and penalty 3,05,02,660

Finance Act, 1994 Tax 7,43,41,004 (3,55,70,924)*

Finance Act, 1994 Tax 2,56,289

Finance Act, 1994 Tax 6,12,87,432

Finance Act, 1994 Tax 2,29,97,813

Finance Act, 1994 Tax 98,45,722

Finance Act, 1994 Tax 19,08,709

Finance Act, 1994 Tax and penalty 46,89,53,094

(2,67,56,523)*

Finance Act, 1994 Tax 19,87,370 (1,10,588)*

Name of the Statute Period to which Forum where dispute the amount is pending relates

General sales tax/Value added tax

Andhra Pradesh General Sales Tax Act, 1957 2001-02 Appeal filed with High Court of Andhra Pradesh

Andhra Pradesh General Sales Tax Act, 1957 2002-03 Sales Tax Appellate Tribunal, Hyderabad

Andhra Pradesh VAT Act, 2005 2005-06 Appellate Deputy Commissioner (ADC), Hyderabad

Andhra Pradesh VAT Act, 2005 2006-07 ADC, Hyderabad

Andhra Pradesh VAT Act, 2005 2007-08 ADC, Hyderabad

Andhra Pradesh VAT Act, 2005 2005-08 Commercial Tax Officer, Hyderabad

Andhra Pradesh VAT Act, 2005 2008-09 Commercial Tax Officer, Hyderabad

Andhra Pradesh VAT Act, 2005 2007-08 Commercial Tax Officer, Hyderabad

Andhra Pradesh VAT Act, 2005 2005-08 Commercial Tax Officer, Hyderabad

Karnataka Value Added Tax, 2003 2004-06 Commercial Tax Officer, Bangalore

The Punjab Value Added Tax, 2005 2006-07 Dy. Excise & Taxation Commissioner (Appeals), Punjab

West Bengal Value Added Tax, 2003 2005-06 Commercial Tax Department, Kolkata

West Bengal Value Added Tax, 2003 2006-07 West Bengal Tribunal, Kolkata

Service Tax 2004-07 Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Bangalore

Finance Act, 1994 2004-07 CCCE&S, Hyderabad

Finance Act, 1994 2004-07 CCCE&S, Ahmedabad

Finance Act, 1994 2007-09 Central Excise & Service Tax Tribunal (CESTAT), Bangalore

Finance Act, 1994 2009-10 CCCE&S, Hyderabad

Finance Act, 1994 2007-09 CESTAT, Bangalore

Finance Act, 1994 2009-10 CCCE&S, Hyderabad

Finance Act, 1994 2004-08 CCCE&S, Visakhapatnam

Finance Act, 1994 2005-08 Asst. Commissioner (Audit), Service Tax Cell, Visakhapatnam Service Tax (Contd.)

Finance Act, 1994 Tax 14,26,06,046

Finance Act, 1994 Tax 79,82,189

Finance Act, 1994 Tax 3,77,246

Finance Act, 1994 Tax 1,78,96,099

(79,13,167 )*

Finance Act, 1994 Tax 43,23,907

Finance Act, 1994 Tax 88,36,619

Finance Act, 1994 Tax 2,80,70,720

Finance Act, 1994 Tax 1,38,81,404

Income Tax

Income Tax Act, 1961 Deductions 1,26,19,038**

disallowed

Income Tax Act, 1961 Deductions 1,05,37,804** disallowed

Income Tax Act, 1961 Deductions 1,60,64,740** disallowed

Income Tax Act, 1961 Deductions 5,07,77,088** disallowed

Income Tax Act, 1961 Deductions 4,44,26,473** disallowed

Income Tax Act, 1961 Deductions 6,47,80,599** disallowed

Finance Act, 1994 2007-09 CCCE&S, Kolkata

Finance Act, 1994 2004-07 CCCE&S, Kolkata

Finance Act, 1994 2007-08 CCCE&S (Appeals), Chennai

Finance Act, 1994 2005-07 CCCE&S, Bhubaneswar

Finance Act, 1994 2007-10 Addl. CCCE&S, Hyderabad

Finance Act, 1994 2007-09 CCCE&S, Hyderabad

Finance Act, 1994 2005-10 CCCE&S, Hyderabad

Finance Act, 1994 2005-09 CCCE&S, Hyderabad

Income Tax Income Tax Act, 1961 2002-03 Income-tax Appellate Tribunal

Income Tax Act, 1961 2003-04 Income-tax Appellate Tribunal

Income Tax Act, 1961 2004-05 Income-tax Appellate Tribunal

Income Tax Act, 1961 2005-06 Income-tax Appellate Tribunal

Income Tax Act, 1961 2006-07 The Commissioner of Income-tax (Appeals)

Income Tax Act, 1961 2007-08 The Commissioner of Income-tax (Appeals)

* The amounts in parenthesis represent the payment made under protest. ** These amounts have been deducted against refund receivable.

For B S R & Co For Visweswara Rao & Associates

Chartered Accountants Chartered Accountants

Firm Registration No: 101248W Firm Registration No: 005774S

Zubin Shekary S. V. R. Visweswara Rao

Partner Partner

Membership No.: 48814 Membership No.: 29088

Hyderabad May 26, 2010

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