Auditor Report of DFL Infrastructure Finance Ltd.

Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

Basis for Qualified Opinion

The debit balances under receivables and debtors1 accounts and the credit balances are as per books of accounts subject to confirmation from the parties.

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 Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

Attention of the share holders is invited to the following:

a. The Company has taken loans from certain bankers which it could not repay and the Company approached the CDR for reschedulement of these loans. The implementation of the CDR and the CDR Re- work Package has reached stalemate condition. Pursuant to this the Company has approached the bankers for One Time Settlement Scheme for settlement of Loans and some of the banks have approved the same. The OTS Scheme offered by some of the Banks is pending implementation and settlement. These conditions, indicate the existence of material uncertainty that may cast a significant doubt about the

Company''s ability to continue as a Going Concern. {Refer Note 1,5 & 6 of Schedule 18)

b. The Reserve Bank of India, has issued certain prohibitory directions (Refer Note 2 of Schedule 18) under Section 45JA and Section 45L of Reserve Bank of India Act, 1934. These conditions along with those stated in Note 1, 5 & 6 of Schedule 18 indicate the existence of material uncertainty that may cast a significant doubt about the Company''s ability to continue as a Going Concern.

c. The Company''s net owned funds is below Rs. 25 lakhs, the limit prescribed by Reserve Bank of India under section 45 - 1A of the Reserve Bank of India Act, 1934. This could attract penal provisions under section 45 - MC of the Act

d. The Company has entered into an amendment agreement with Asia Pragati Capfin Pvt. Ltd. (Preference Share Holder) on 27th March 2012 for redemption of preference shares of Rs. 10 @ Rs. 8.54 per share. The gain on redemption amounting to Rs.325 lakhs has not been accounted for as the same would be accounted at the time of redemption during the years 2017, 2018 & 2019. (Refer Note No.4 of Schedule

18)

e. The shareholders have not approved the re-appointment and increase in remuneration of the erstwhile Managing Director and the amount is included in Loans and Advances. We are unable to express an opinion on the recoverability of the amount. (Refer Note No.9 of Schedule 18)

f. In the absence of profits, the Company could not declare dividend on the 4% and 9% Redeemable Preference Shares for the financial year 2013 -14 and hence it is charged to the Statement of Profit and Loss. (Refer Note No. 17 of Schedule 18)

Report on Other Legal and Regulatory Requirements

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

2. As required under provisions of section 227(3) of the Companies Act, 1956, we report that:

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

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

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

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

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

1) In respect of fixed assets:

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

b. As per the information and explanation given to us all the fixed assets have been physically verified by the management at regular intervals, which in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c. The Company has not disposed off substantial part of fixed assets during the year.

2) As the Company is a Non Banking Finance Company, the provisions of sub clause (ii) a, band c of the Companies (Auditor''s Report) Order, 2003 are not applicable.

3) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a. According to the information and explanations given to us, the Company has taken unsecured loans from group companies, covered in the register maintained under Section 301 of the Companies Act, 1956. The year-end balance of loans taken from such parties was Rs. 691.38 lakhs.

b. The Company is not providing any interest on the loans taken from group companies. As per terms of arrangement, the interest is payable on maturity along with Principal.

All other terms and conditions prima-facie are not prejudicial to the interest of the Company.

c. As the loans taken from the group companies are repayable on demand along with the interest, the question of overdue as on the Balance Sheet Date, does not arise.

d. 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.

4) In our opinion and according to the information and explanations given to us, there are internal control procedures commensurate with the size of the Company and nature of its business for purchase of fixed assets and sale of goods and services. During the course of audit, no major weakness has been noticed in the internal control.

5) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956.

a) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements, if any, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6) During the year Company has not accepted any deposits from the public. However, in the case of deposits accepted by the Company from the public in the earlier years, in our opinion and according to the information and explanations given to us, the directives issued by Reserve Bank of India and the provisions of sections 58A and of the Companies Act and the rules framed there under, wherever applicable to the Company have been complied with.

7) In our opinion, the Company''s present internal audit system is commensurate with its size and nature of its business.

8) The Central Government has not prescribed maintenance of cost records under Section 209 (l)(d) of the Act.

9) In respect of statutory dues:

a) According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues'' including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India.

b) According to the information and explanations given to us and records of the Company examined by us the particulars of dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax and Excise Duty which have not been deposited on account of any dispute are as follows:

ASST.YEAR TAX DUE AMOUNT TAX REMARKS IN RS. (In Lakhs)

1995-96 To 246.16 Appeal Before CIT (A) 1999-2000

2001- 02 294.03 Appeal Before CIT (A)

2002- 03 56.35 Chief Commissioner of Income Tax.

2003- 04 13.91 Chief Commissioner of Income Tax.

2004- 05 8.34 Appeal before CIT(A)

2005- 06 4.44 Appeal before CIT(A)

2007- 08 58.17 Appeal before CIT(A)

2008- 09 482.15 Appeal before CIT(A)

2009- 10 581.28 Appeal before CIT(A)

10) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth. The Company has incurred cash losses in the financial year and in the immediately preceding financial year also.

11) The Company had a Working Capital Term Loan, under the Corporate Debt Restructuring Package (CDR), for which the repayment has to commence from 01.04.2012. The Company has gone for rescheduling the repayment of the term loans under CDR. However, the implementation of the CDR Package has ended in a stalemate. The Company has submitted proposals for One Time Settlement and the same is being taken up by the Banks. Also the One Time Settlement Scheme has been approved by 3 out of 12 participating banks and one another bank not forming part of CDR. Pending

repayment of amounts accepted through OTS Scheme the Company has not repaid the Working Capital Term Loan pending consideration.

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

13) The provisions of any special statute applicable to chit fund / Nidhi / mutual benefit fund / societies are not applicable to the Company

14) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15) As per the information and explanations given to us the Company has not given any guarantees for loans taken by others.

16) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by Company were applied for the purposes for which the loans were obtained.

17) On the basis of review of utilization of funds on an overall basis in our opinion, the funds raised on short-term basis have not been used for long-term investment or vice versa during the year.

18) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

19) The Company has not issued Debentures.

20) The Company has not raised any money by public issues during the year.

21) During the course of our examination of the books of accounts carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the management of any such instance being noticed or reported during the year.

For P.B.VIJAYARAGHAVAN AND CO., hartered Accountants Firm Registration No.: 004721S

P.R.KRISHNAMURTHY Place : Chennai Partner Date : 27.05.2014 Membership No.: 12622

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Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that 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 judgement, 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 qualified audit opinion.

Basis for Qualified Opinion

The debit balances under receivables and debtors'' accounts and the credit balances are as per books of accounts subject to confirmation from the parties.

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 Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Emphasis of Matter

Attention of the share holders is invited to the following:

a. The Company''s net owned funds is below Rs. 25 lakhs, the limit prescribed by Reserve Bank of India under section 45 – IA of the Reserve Bank of India Act, 1934. This could attract penal provisions under section 45 - MC of the Act

b. The shareholders have not approved the increase in remuneration of the erstwhile Managing Director. The amount is shown as recoverable from erstwhile Managing Director. We are unable to express an opinion on the recoverability of the amount. (Refer Note No.8 of Schedule 19)

c. The Company has entered into an amendment agreement with Asia Pragati Capfin Pvt. Ltd. (Preference Share Holder) on 27th March 2012 for redemption of preference shares of Rs.10 @ Rs. 8.54 per share. The gain on redemption amounting to Rs.325 lakhs has not been accounted for as the same is being accounted at the time of redemption during the years 2017, 2018 & 2019. (Refer Note No.2 of Schedule 19)

d. In the absence of profits, the Company could not declare and pay dividend on the Preference Shares for the financial year 2012 -13. This dividend of Rs. 435.56 lacs has not been Charged to P&L and not provided for. The Provision will be made in the subsequent years subject to the availability of Profits. (Refer Note No.11 of Schedule 19)

e. From 1st April 2012, the Company recognises the income arising out of Additional Finance Charges (AFC), Due Date Missing Charges and Cheque Bouncing Charges on receipt basis as against on Accrual basis hitherto. Due to this change, the loss has been over stated by Rs. 117.23 Lacs during the year under consideration. (Refer Note B of Schedule 19)

Report on Other Legal and Regulatory Requirements

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

2. As required under provisions of section 227(3) of the Companies Act, 1956, we report that:

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

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

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

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

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

1) In respect of fixed assets:

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

b) As per the information and explanation given to us, all the fixed assets have been physically verified by the management at regular intervals, which in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) The Company has not disposed off substantial part of fixed assets during the year.

2) As the Company is a Non Banking Finance Company, the provisions of sub clause (ii) a, b and c of the Companies (Auditor''s Report) Order, 2003 are not applicable.

3) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us, the Company has taken unsecured loans from group companies, covered in the register maintained under Section 301 of the Companies Act, 1956. The year-end balance of loans taken from such parties was Rs.91.38 lakhs.

b) The Company is not providing any interest on the loans taken from group companies. As per terms of arrangement, the interest is payable on maturity along with Principal.

All other terms and conditions prima-facie are not prejudicial to the interest of the Company.

c) As the loans taken from the group companies are repayable on demand along with the interest, the question of overdue as on the Balance Sheet Date, does not arise.

d) 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.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business for purchase of fixed assets and sale of goods and services. During the course of audit, no major weakness has been noticed in the internal control.

5) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956.

a) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements, if any, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6) During the year Company has not accepted any deposits from the public. However, in the case of deposits accepted by the Company from the public in the earlier years, in our opinion and according to the information and explanations given to us, the directives issued by Reserve Bank of India and the provisions of sections 58A of the Companies Act and the rules framed there under, wherever applicable to the Company have been complied with.

7) In our opinion, the Company''s present internal audit system is commensurate with its size and nature of its business.

8) The Central Government has not prescribed maintenance of cost records under Section 209 (1)(d) of the Act.

9) In respect of statutory dues:

According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India.

10) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth. The Company has incurred cash losses in the financial year and in the immediately preceding financial year also.

11) The Company has Working Capital Term Loan, under the Corporate Debt Restructuring Package (CDR), for which the repayment has to commence from 01.04.2012. The Company has gone for rescheduling the repayment of the term loans under CDR. The Company has submitted proposals for One time Settlement and the same is under consideration. The Company has not repaid the Working Capital Term Loan pending consideration.

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

13) The provisions of any special statute applicable to chit fund / Nidhi / mutual benefit fund / societies are not applicable to the Company

14) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15) As per the information and explanations given to us the Company has not given any guarantees for loans taken by others.

16) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by Company were applied for the purposes for which the loans were obtained.

17) On the basis of review of utilization of funds on an overall basis in our opinion, the funds raised on short-term basis have not been used for long-term investment or vice versa during the year.

18) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

19) The Company has not issued Debentures.

20) The Company has not raised any money by public issues during the year.

21) During the course of our examination of the books of accounts carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the management of any such instance being noticed or reported during the year.

For P.B.VIJAYARAGHAVAN AND CO.,

Chartered Accountants

Firm Registration No.: 004721S

P.R.KRISHNAMURTHY

Place : Chennai Partner

Date : 28.05.2013 Membership No.: 12622

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Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s. DFL Infrastructure Finance Limited as on March 31, 2012 and the related Profit And Loss Account and Cash Flow Statement for the period ended on that date annexed thereto which we have signed under reference to this report. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. Attention of the shareholders is invited to the following:

a. The Company's net owned funds is below Rs. 25 lakhs, the limit prescribed by Reserve Bank of India under section 45 - IA of the Reserve Bank of India Act, 1934. This could attract penal provisions under section 45 - MC of the Act.

b. The shareholders have not approved the re-appointment and increase in remuneration of the erstwhile Managing Director. The amount is shown as recoverable from erstwhile Managing Director. We are unable to express an opinion on the recoverability of the amount. (Refer Note No. 8 of Schedule 19)

c. The Company has entered into an amendment agreement with Asia Pragati Capfin Pvt. Ltd. (Preference Share Holder) on 27th March 2012 for redemption of preference shares of Rs. 10 @ Rs. 8.54 per share. The gain on redemption amounting to Rs. 325 lakhs has not been accounted for as the same is being accounted at the time of redemption during the years 2017, 2018 & 2019. (Refer Note No. 2 of Schedule 19)

4. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure, a statement on the matters specified in paragraph 4 and 5 of the said Order.

5. Further to our comments in the Annexure referred to in paragraph 4 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, the Company has maintained 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 and Profit and Loss Account dealt with by this are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Profit and loss Account dealt with by this report complies with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 except as mentioned in paragraph 5.

e. On the basis of written representation received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of Sub-section (I) of section 274 of the Act.

f. The debit balances under receivables and debtors' accounts and the credit balances are as per books of accounts subject to confirmation from the parties.

g. The Company has made an allotment of 9% Optionally Convertible Cumulative Preference Shares to various banks during the year in accordance with Corporate Debt Restructuring package. The Company has not provided for preference dividend of Rs. 222.49 lakhs during the year due to inadequacy of profits. To that extent, losses and liabilities are understated.

Subject to the matters specified in the paragraphs 5(f) & 5(g) above, in our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon given in the prescribed manner, the information required by the Act, 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 31,2012;

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

iii) In the case of Cash Flow Statements, the cash flow for the year ended on that date.



ANNEXURE TO THE AUDITORS' REPORT

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATED

1) In respect of fixed assets:

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

b) As per the information and explanation given to us, all the fixed assets have been physically verified by the management at regular intervals, which in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) The Company has not disposed off substantial part of fixed assets during the year.

2) As the Company is a Non Banking Finance Company, the provisions of sub clause (ii) a, b and c of the Companies (Auditor's Report) Order, 2003 are not applicable.

3) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us, the Company has taken unsecured loans from group companies, covered in the register maintained under Section 301 of the Companies Act, 1956. The year-end balance of loans taken from such parties was Rs. 98.14 lakhs.

b) The Company is not providing any interest on the loans taken from group companies. As per terms of arrangement, the interest is payable on maturity along with Principal.

All other terms and conditions prima-facie are not prejudicial to the interest of the Company.

c) As the loans taken from the group companies are repayable on demand along with the interest, the question of overdue as on the Balance Sheet Date, does not arise.

d) 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.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business for purchase of fixed assets and sale of goods and services. During the course of audit, no major weakness has been noticed in the internal control.

5) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956.

a) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements, if any, that needed to be entered into in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6) During the year Company has not accepted any deposits from the public. However, in the case of deposits accepted by the Company from the public in the earlier years, in our opinion and according to the information and explanations given to us, the directives issued by Reserve Bank of India and the provisions of sections 58A and of the Companies Act and the rules framed there under, wherever applicable to the Company have been complied with.

7) In our opinion, the Company's present internal audit system is commensurate with its size and nature of its business.

8) The Central Government has not prescribed maintenance of cost records under Section 209 (1)(d) of the Act.

9) In respect of statutory dues:

a) According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India.

b) According to the information and explanations given to us and records of the Company examined by us the particulars of dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax and Excise Duty which have not been deposited on account of any dispute are as follows:

Asst. year Tax Due Classification Remarks Amount of Dispute of Rs. in Lacs

Interest Tax Act 16.37 Tax and Appeal before 1995-96 to Interest CIT (A) 1999-2000

Income Tax 14.54 Interest Chief Assessment Year Commissioner of 1998-99 Income Tax Assessment Year 196.90 Interest Chief 2001-02 Commissioner of Income Tax

Assessment Year 3.79 Interest Chief 2005-06 Commissioner of Income Tax

10) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth. The Company has incurred cash losses in the financial year and in the immediately preceding financial year also.

11) According to the records produced, the Company has not defaulted in repayment of dues to any financial institution or bank during the year.

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

13) The provisions of any special statute applicable to chit fund/Nidhi/mutual benefit fund/societies are not applicable to the Company

14) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15) As per the information and explanations given to us the Company has not given any guarantees for loans taken by others.

16) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by Company were applied for the purposes for which the loans were obtained.

17) On the basis of review of utilization of funds on an overall basis in our opinion, the funds raised on short-term basis have not been used for long-term investment or vice versa during the year.

18) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

19) The Company has not issued Debentures.

20) The Company has not raised any money by public issues during the year.

21) During the course of our examination of the books of accounts carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the Company nor have we been informed by the management of any such instance being noticed or reported during the year.





For P B VIJAYARAGHAVAN & CO., For SURESH AND BALAJI Chartered Accountants Chartered Accountants Firm Regn. No. 004721S Firm Regn. No. 004998S

P R KRISHNAMURTHY K R SRIPRIYA Partner Partner M. No: 12622 M. No: 206404

Place : Chennai Date : 26.05.2012

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Sep 30, 2009

1. We have audited the attached Balance Sheet of M/s. Dhandapani Finance Limited as on September 30, 2009 and the related Profit AndXoss Account and Cash Flow Statement for the year ended on that date annexed thereto which we have signed under reference to this report. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about 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. Attention of the shareholders is invited to the following:

a. The services of the whole time Secretary of the Company were available only from the last month of the year under audit - September 2009.

b. The Companys net owned funds have fallen below Rs. 25 lakhs, the limit prescribed by Reserve Bank of India under section 45-14 of the Reserve Bank of India Act, 1934. This could attract penal provisions under section 45-MC of the Act.

c As the slump sale agreement entered into by the company during the year ended 30/09/2008 with Zwirn Pragati Capfin PvL Ltd., could not be proceeded with due to non-fulfilment of certain conditions precedent to the transfer, the assets and liabilities, which were transferred earlier, were brought back in the books of the Company. During the year under review, the net worth of the company has become negative and we are unable to comment on the going concern of the CompanyfRefer Note No. 2)

4. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure, a statement on the matters specified in paragraph 4 and 5 of the said Order.

5. Further to our comments in the Annexure referred to in paragraph 4 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, the company has maintained 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 and Profit and Loss Account dealt with by this are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Profit and loss Account dealt with by this report complies with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 except as mentioned in paragraph 5.

e. We have received written representation from the directors as on September 30,2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on September 30, 2009 from being appointed as a director in terms of clause (g) of Sub-section (I) of section 274 of the Act.

f. The managerial remuneration paid by the Company to the Managing Director during the year is in excess of the limits prescribed by Schedule XIII of the Companies Act 1956 by Rs. 48.38 lakhs for which the approval of the central government has been obtained, which is subject to special resolution at the general meeting(Refer Note No. 4.1 (a))

g. The debit balances under receivables and debtors accounts and the credit balances are as per books of accounts subject to confirmation from the parties and provision if any is not ascertainable at this stage.

h. Secured advances include Rs. 720.02 lakhs due from Dhandapani Properties (P) Ltd. outstanding for more than one year. No provision has been made in the Profit &. Loss account as the impact of the same is unascertainable in view of the documents available and ongoing steps taken by the Company(Refer Note No.3.6)

Subject to the matters specified in the paragraphs f to h above, the net effect of which has resulted in higher losses of Rs. 48.38 lakhs, in our Opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon given in the prescribed manner, the information required by the Act, 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 September 30,2009;

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

iii) In the case of Cash Flow Statements, the cash flow for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 4 of our report of even date to the members of M/s. Dhandapani Finance Ltd.)

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

(b) As per the information and explanation given to us by the management fixed assets according to the practice of the company are physically verified by the management at reasonable intervals, which, in our opinion, is reasonable, looking at the size of the company and nature of the business. No material discrepancies were noticed on such verification.

(c) The Company has not disposed of a substantial part of fixed assets.

(ii) As the Company is a Non Banking Finance Company, the provisions of sub clause (ii) a, b and c of the Companies (Auditors Report) Order, 2003 are not applicable.

(iii) (a) According to the information and explanations given to us the company has not granted loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act.

(b) The rate of interest and other terms and conditions of the loan are prima facie, not prejudicial to the interest of the company.

(c) The above loans do not have any stipulation for payment of any principal and interest and hence no amount of outstanding as at 30* September 2009 is considered as overdue.

(d) As the company has not granted any loan, the provisions contained in clause (iii) (d) are not applicable.

(e) According to the information and explanations given to us the company has taken unsecured loans from group companies, covered in the register maintained under Section 301 of the Companies Act, 1956. The year-end balance of loans taken from such parties was Rs 102.28 lakhs

(f) The rate of interest and other terms and conditions of loans taken by the company, secured or unsecured, are prima facie not prejudicial to the interest of the company

(g) The payment of the principal amount and interest are also regular.

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for purchase of fixed assets and sale of goods and services during the course of our audit; we have not observed any continuing failure to correct major weakness in such internal control system.

(v) (a) The contracts and arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section. (b) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) During the year Company has not accepted any deposits from the public. However, in me case of deposits accepted by the Company from the public in the earlier years, in our opinion and according to the information and explanations given to us, the directives issued by Reserve Bank of India and the provisions of sections 58A and of the Companies Act and the rules framed there under, wherever applicable to the Company have been complied with.

(vii) In our opinion, the companys present internal audit system is commensurate with its size and nature of its business. The scope and coverage needs to be enlarged. (viii) The Central Government has not prescribed maintenance of cost records under Section 209 (l)(d) of the Act.

(ix) (a) The company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities in India. (b) According to the information and explanations given to us and records of the Company examined by us the particulars of dues of Sales Tax, Income Tax, Wealth Tax, and Excise Duty, which have not been deposited on account of any dispute are as follows

Asst year Tax Due Classification of Remarks Amount of Dispute Rs. in lakhs

Interest Tax Act 1995-96 to 1999-2000 16.37 Tax and Interest Appeal before CIT(A)

Service Tax Madras High court has 2001-02 to 2005-06 8.90 Tax decided the case against assessee. Appeal has been filed before the Supreme Court.

Income Tax Assessment Year Chief Commissioner of 1998-99 14.54 Interest Income Tax

Assessment Year Chief Commissioner of 2001-02 196.90 Interest Income Tax

Assessment Year Chief Commissioner of 2005-06 3.79 Interest Income Tax

(x) The accumulated losses of the company at the end of the financial year are not less than fifty percent of its networth. The company has incurred cash losses in the financial year and in the immediately preceding financial year also.

(xi) According to the records produced, the company has not defaulted in repayment of dues to any financial institution or bank 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) The provisions of any special statute applicable to chit fund / Nidhi / mutual benefit fund / societies are not applicable to the Company.

(xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

(xv) As per the information and explanations given to us the company has not given any guarantees for loans taken by others.

(xvi) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by company were applied for the purposes for which the loans were obtained.

(xvii) On the basis of review of utilization of funds on an overall basis in our opinion, the funds raised on short-term basis have not been used for long-term investment or vice versa during the year.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

(xix) The company has issued no Debentures.

(xx) The company has not raised any money by public issues during the year.

(xxi) During the course of our examination of the books of accounts carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the company nor have we been informed by the management of any such instance being noticed or reported during the year.

For P B VIJAYARAGHAVAN A CO.,

Chartered Accountants P R KRISHNAMURTHY

Place: Chennai Partner

Date : 26.02.2010 Membership Number: 12622