Auditor Report of PNB Gilts Ltd.

Mar 31, 2025

We have audited the accompanying standalone financial statements of PNB Gilts Ltd. (“the Company”), which
comprise the Balance Sheet as at 31st March 2025, the Statement of Profit and Loss (including Other Comprehensive
Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and
notes to the financial statements, including a summary of the material accounting policies and other explanatory
information (hereinafter referred to as “the financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial
statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and
give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act
read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("lnd AS") and other accounting
principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2025, its profit, total
comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing (“SA”s) as specified
under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s
“Responsibilities for the Audit of the Financial Statements section of our report. We are Independent of the Company
in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together
with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the
Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. We have determined the matters described below to be the key audit matters to be communicated in our
report.

Sr. No.	Key Audit Matter	Auditor’s Response
1	Evaluation of uncertain income tax positions: The Company has material uncertain income tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer Note 38 to the Financial Statements	Principal Audit Procedures: Obtained summary of tax demand for various assessment years, from the management and tax retainers of the Company, for reason of such demand of Income Tax, mitigation measures taken by the Company and result thereof. We engaged our experts to cross check management''s underlying assumptions in estimating the tax provision and the possible outcome of the disputes.

2.	Classification and Valuation of Investments,	Our audit approach towards Investments with
	Identification of and provisioning for Non-Performing	reference to the RBI Circulars/directives included
	Investments (Note 8) to the financial Statements).	the understanding of internal controls and
	Investments include investments made by the	substantive audit procedures in relation to valuation,
	Company in various Government Securities,	classification, identification of nonperforming
	Bonds, Debentures, Shares, Security receipts and	investments (NPIs}, provisioning related to
	other approved securities. Investments constitute	Investments. In our audit -
	more than 93% of the Company''s total assets.	a) In respect of ''Amortized Cost Portfolio'', the
	These are governed by the circulars and directives of the RBI. These directions of RBI, interalia,	valuation output from the software deployed by
	cover valuation of Investments, classification	the Company, comprising factor like effective
	of investments, identification of non-performing	interest rate (EIR) was used by us.
	Investments, the corresponding non-recognition of	b) We reviewed Company''s internal control
	income and provision there against.	system on compliance with applicable RBI
	The valuation of unquoted investments and	guidelines regarding valuation and provisioning related to investments.
	thinly traded Investments is an area of inherent
	risk because of market volatility, unavailability of	c) For the selected sample of investments in hand,
	reliable prices and macroeconomic uncertainty.	we test checked accuracy and compliance with the RBI Master Circulars and directions by re-
	Accordingly, our audit was focused on valuation	performing valuation.
	of investments, classification, identification of
	non-performing investments and provisioning	d) We assessed and evaluated the process
	related to Investments. The valuation of each	of identification of NPIs and corresponding
	category (type) of the aforesaid securities is to be	reversal of income and creation of provision;
	done as per the method prescribed in circulars	e) We carried out substantive audit procedures
	and directives issued by the RBI which involves collection of data/information from various sources	to re-compute independently the provision to be maintained in accordance with the circulars
	such as FIMMDA rates, rates quoted on BSE/ NSE, financial statements of unlisted companies	and directives of the RBI.
	etc. Considering the complexities and extent of	Accordingly, we selected samples and tested
	judgement involved in the valuation, volume of	for NPIs as per the RBI guidelines and
	transactions, investments on hand and degree of	recomputed the valuations and provision to be
	regulatory focus, we determined the above area as	maintained in accordance with the RBI Circular
	a Key Audit Matter.	for those selected sample.

Information other than the Financial Statements and Auditor’s Report thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information
comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures
to Board''s Report, Business Responsibility & Sustainability Report, Corporate Governance and Shareholder''s
Information, but does not include the financial statements and our auditor''s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with Governance for the Financial Statements

The Company''s Management / Board of Directors is responsible for the matters stated in Section 134(5) of the Act,
with respect to preparation and presentation of these financial statements that give a true and fair view of the financial
position, financial performance, including other comprehensive income, changes in equity and cash flows of the

Company in accordance with the accounting principles generally accepted in India including Ind AS specified under
section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to
the preparation and presentation of the financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements, management and board of directors is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the board of directors either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

The company''s Board of Directors is responsible for overseeing the Company''s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion. forgery, intentional omissions,
misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures
that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for
expressing our opinion on whether the Company has adequate internal financial controls with reference to
financial statements system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.

• Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate,
makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements
may be influenced. We consider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the financial statements.

• We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.

• We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit 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 books of accounts of the company are maintained at head office. Hence, there is no separate branch audit
report by any other auditor of any branch office. The audit of the company is conducted at head office only.

d. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of
Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant
books of account.

e. In our opinion, the aforesaid financial statements comply with the lnd AS specified under Section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014.

f. There is no observations or comments on financial transactions or matters which have any adverse effect on the
functioning of the company.

g. On the basis of the written representations received from the directors as on March 31,2025 taken on record
by the Board of Directors, none of the directors is disqualified as on March 31,2025 from being appointed as a
director in terms of Section 164 (2) of the Act.

h. There is no qualification, reservation or adverse remark relating to the maintenance of accounts and other
matters connected herewith.

i. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the
operating effectiveness of such controls, refer to our separate Report in "Annexure A".

j. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of
section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration
paid/payable by the Company to its directors during the year is broadly in accordance with the provisions of
section 197 of the Act.

k. 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, 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 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.

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and
Protection Fund by the Company.

{iv) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the
notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or
share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies},
including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise,
that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in
any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee.
security or the like on behalf of the Ultimate Beneficiaries.

{v) The management has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the
notes to the accounts, no funds have been received by the company from any person(s} or entity(ies), including
foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the
company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or
the like on behalf of the Ultimate Beneficiaries.

{vi) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances,
performed by us, nothing has come to our notice that has caused to believe that the representations under sub¬
clause (iv) and (v) contain any material misstatement.

1. The dividend declared and paid during the year by the company is in compliance with Section 123 of the
Companies Act,2013 as applicable.

m. Based on our examinations which included test checks, the company has used an accounting software for
maintaining its books of account for the financial year ended 31st March 2025, which has a feature of recording
audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded
in the software systems. Further, during the course of our audit we did not come across any instance of audit
trail feature being tempered with and the audit trail has been preserved by the company as per the statutory
requirements for record attention.

2. As required by the Companies (Auditor''s Report) Order, 2020 (“the Order”) issued by the Central Government of
India in terms of sub-section (11) of Section 143 of the Act, we give in Annexure "B", a statement on the matters
specified in paragraphs 3 and 4 of the Order.

3. As required by the Comptroller and Auditor General of India through directions issued under section 143(5) of
the Act, we give a report in the attached Annexure “C”.

For Batra Deepak & Associates

Chartered Accountants
(FRN: 005408C)

v''

(CA Ashish Mittal)

Partner

Date: May 02, 2025 Membership No. 511442

Place : New Delhi UDIN: 25511442BMNUYD5467

---

Mar 31, 2024

We have audited the accompanying standalone financial statements of PNB Gilts Ltd. ("the Company"), which comprise the Balance Sheet as at 31st March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity, the Cash Flow Statement for the year ended on that date and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so requ ired and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("lnd AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2024, its profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing ("SA"s) as specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are Independent to the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("''ICAI") together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAl''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No.	Key Audit Matter	Auditor’s Response
1	Evaluation of uncertain income tax positions: The Company has material uncertain income tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer Note 38 to the Financial Statements	Principal Audit Procedures: Obtained summary of tax demand for various assessment years, from the management. Obtained certificate from tax retainers of the Company, for reason of such demand of Income Tax, mitigation measures taken by the Company and result thereof. We engaged our experts to cross check management''s underlying assumptions in estimating the tax provision and the possible outcome of the disputes.

	Classification and Valuation of Investments,	Our audit approach towards Investments
	Identification of and provisioning for Non-Performing	with reference to the RBI Circulars/directives
	Investments (Note 8) to the financial Statements).	included the understanding of internal controls
	Investments include investments made by the	and substantive audit procedures in relation to
	Company in various Government Securities,	valuation, classification, identification of non-
	Bonds, Debentures, Shares, Security receipts and	performing investments (NPIs), provisioning
	other approved securities. Investments constitute	related to Investments. In our audit -
	more than 93% of the Company''s total assets. These are governed by the circulars and directives of the RBI. These directions of RBI, interalia,	a) In respect of ''Amortized Cost Portfolio'', the valuation output from the software deployed by
	cover valuation of Investments, classification	the Company, comprising factor like effective
	of investments, identification of non-performing	interest rate (EIR) was used by us.
	Investments, the corresponding non-recognition of	b) We reviewed Company''s internal control system
	income and provision there against.	on compliance with applicable RBI guidelines
	The valuation of unquoted investments and thinly traded Investments is an area of inherent	regarding valuation and provisioning related to investments.
	risk because of market volatility, unavailability of	c) For the selected sample of investments in hand,
	reliable prices and macroeconomic uncertainty. Accordingly, our audit was focused on valuation of investments, classification, identification of	we test checked accuracy and compliance with the RBI Master Circulars and directions by reperforming valuation.
	non-performing investments and provisioning	d) We assessed and evaluated the process
	related to Investments. The valuation of each	of identification of NPIs and corresponding
	category (type) of the aforesaid securities is to be	reversal of income and creation of provision;
	done as per the method prescribed in circulars	e) We carried out substantive audit procedures to
	and directives issued by the RBI which involves collection of data/information from various sources	recompute independently the provision to be maintained in accordance with the circulars and
	such as FIMMDA rates, rates quoted on BSE/ NSE, financial statements of unlisted companies	directives of the RBI.
	etc. Considering the complexities and extent of	Accordingly, we selected samples and tested for
	judgement involved in the valuation, volume of	NPIs as per the RBI guidelines and recomputed
	transactions, investments on hand and degree of	the valuations and provision to be maintained in
	regulatory focus, we determined the above area	accordance with the RBI Circular for those selected
	as a Key Audit Matter.	sample.

Information other than the Financial Statements and Auditor''s Report thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility & Sustainability Report, Corporate Governance and Shareholder''s Information , but does not include the financial statements and our auditor''s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with Governance for the Financial Statement

The Company''s Management/Board of Directors is responsible for the matters stated in Section 134(5) of the Act, with respect to preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance, including other comprehensive income, changes in equity and cash flows of the

Company in accordance with the accounting principles generally accepted in India including Ind AS specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management and board of directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The company''s Board of Directors is responsible for overseeing the Company''s financial reporting process. Auditor''s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions. misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the financial statements.

• We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit 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 books of accounts of the company are maintained at head office. Hence, there is no separate branch audit report by any other auditor of any branch office. The audit of the company is conducted at head office only.

d. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.

e. In our opinion, the aforesaid financial statements comply with the lnd AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f. There is no observations or comments on financial transactions or matters which have any adverse effect on the functioning of the company.

g. On the basis of the written representations received from the directors as on March 31 , 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31 , 2024 from being appointed as a director in terms of Section 164 (2) of the Act.

h. There is no qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected herewith.

i. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".

j. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid/payable by the Company to its directors during the year is broadly in accordance with the provisions of section 197 of the Act.

k. 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, 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 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.

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

(iv) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. •

(v) The management has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vi) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, performed by us, nothing has come to our notice that has caused to believe that the representations under subclause (iv) and (v) contain any material misstatement.

1. The company has not declared or paid any dividend during the year ended 31st March 2024.

m. Based on our examinations which included test checks, the company has used an accounting software for maintaining its books of account for the financial year ended 31st March 2024, which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded on the software except in respect of transactions entered by the use of import data feature in the accounting software. Further, during the course of our audit we did not come across any instance of audit trail feature being tempered with.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, is applicable from 1st April 2023, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31,2024.

2. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in Annexure "B", a statement on the matters specified in paragraphs 3 and 4 of the Order.

3. As required by the Comptroller and Auditor General of India through directions issued under section 143(5) of the Act, we give a report in the attached Annexure "C".

For Batra Deepak & Associates

Chartered Accountants (FRN: 005408C)

(CA Tarun Gupta)

Partner

Date: May 01,2024 Membership No. 535428

Place : New Delhi UDIN: 24535428BKGPBH3671

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Mar 31, 2023

PNB Gilts Ltd,

This revised Independent Auditor''s Report is being issued in supersession of our earlier Independent Auditors'' Report dated 3^rd May 2023, at the instance of Comptroller & Auditor General (C&AG) of India, which do not affect the true & fair view and our opinion as expressed earlier in any manner. The revised report is being issued in view of certain modification as pointed out by C&AG of India in our earlier report. Further, we confirm that none of the figures have undergone any change in the Financial Statements of the Company as at 31st March 2023.

Report on the Audit of the Ind AS Financial Statements

Opinion

We have audited the accompanying standalone financial statements of PNB Gilts Ltd. (“the Company”), which comprise the Balance Sheet as at 31st March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity, the Cash Flow Statement for the year ended on that date and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2023, its loss, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the standards on Auditing as specified under section 143(10) of the Act (SAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are Independent to the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No.	Key Audit Matter	Auditor’s Response
1	Evaluation of uncertain income tax positions: The Company has material uncertain income tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer Note 37 to the Financial Statements	Principal Audit Procedures: Obtained summary of tax demand for various assessment years, from the management. Obtained certificate from tax retainers of the Company, for reason of such demand of Income Tax, mitigation measures taken by the Company and result thereof. We engaged our experts to cross check management''s underlying assumptions in estimating the tax provision and the possible outcome of the disputes.

2.	Classification and Valuation of Investments,	Our audit approach towards Investments
	Identification of and provisioning for Non-	with reference to the RBI Circulars/directives
	Performing Investments (Note 7) to the financial	included the understanding of internal controls
	Statements). Investments include investments	and substantive audit procedures in relation to
	made by the Company in various Government	valuation, classification, identification of non-
	Securities, Bonds, Debentures, Shares, Security	performing investments (NPIs), provisioning
	receipts and other approved securities. Investments	related to Investments. In our audit -
	constitute more than 86% of the Company''s total	a) In respect of ‘Amortized Cost Portfolio’, the
	assets. These are governed by the circulars and directives of the RBI. These directions of	valuation output from the software deployed by
	RBI, interalia, cover valuation of Investments,	the Company, comprising factor like effective
	classification of investments, identification of non-	interest rate (EIR) was used by us.
	performing Investments, the corresponding non-	b) WereviewedCompany’sinternalcontrolsystem
	recognition of income and provision there against.	on compliance with applicable RBI guidelines
	The valuation of unquoted investments and thinly traded Investments is an area of inherent	regarding valuation and provisioning related to investments.
	risk because of market volatility, unavailability of	c) For the selected sample of investments in hand,
	reliable prices and macroeconomic uncertainty. Accordingly, our audit was focused on valuation of investments, classification, identification of	we test checked accuracy and compliance with the RBI Master Circulars and directions by reperforming valuation.
	non-performing investments and provisioning	d) We assessed and evaluated the process
	related to Investments. The valuation of each	of identification of NPIs and corresponding
	category (type) of the aforesaid securities is to be	reversal of income and creation of provision;
	done as per the method prescribed in circulars	e) We carried out substantive audit procedures to
	and directives issued by the RBI which involves collection of data/information from various sources	recompute independently the provision to be maintained in accordance with the circulars
	such as FIMMDA rates, rates quoted on BSE/ NSE, financial statements of unlisted companies	and directives of the RBI.
	etc. Considering the complexities and extent of	Accordingly, we selected samples and tested for
	judgement involved in the valuation, volume of	NPIs as per the RBI guidelines and recomputed
	transactions, investments on hand and degree of	the valuations and provision to be maintained in
	regulatory focus, we determined the above area as	accordance with the RBI Circular for those selected
	a Key Audit Matter.	sample.

Information other than the Financial Statements and Auditor’s Report thereon

The Company’s Board of Directors is responsible for the preparation of the other information. The other information comprises the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility & Sustainability Report, Corporate Governance and Shareholder’s Information, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with Governance for the Financial Statement

The Company''s Management / Board of Directors is responsible for the matters stated in Section 134(5) of the Act, with respect to preparation and presentation of these financial statements that give a true and fair view of the

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

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the financial statements.

• We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit 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 books of accounts of the company are maintained at head office. Hence, there is no separate branch audit report by any other auditor of any branch office. The audit of the company is conducted at head office only.

d. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.

e. In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f. There is no observations or comments on financial transactions or matters which have any adverse effect on the functioning of the company.

g. On the basis of the written representations received from the directors as on March 31,2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2023 from being appointed as a director in terms of Section 164 (2) of the Act.

h. There is no qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected herewith.

i. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”.

j. With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid/payable by the Company to its directors during the year is broadly in accordance with the provisions of section 197 of the Act. However, final approval for the same from the members / shareholders of the company is to be obtained.

k. 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, 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 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.

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

(iv) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

(v) The management has represented, that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

(vi) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, performed by us, nothing has come to our notice that has caused to believe that the representations under subclause (iv) and (v) contain any material misstatement.

1. The Dividend declared or paid during the year by the Company is in Compliance with Section 123 of the Act.

m. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1,2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.

2. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in Annexure "B", a statement on the matters specified in paragraphs 3 and 4 of the Order.

3. As required by the Comptroller and Auditor General of India through directions issued under section 143(5) of the Act, we give a report in the attached Annexure “C”.

For Batra Deepak & Associates

Chartered Accountants (FRN: 005408c)

Sd/-

(CA Ashish Mittal)

Partner

Date: June 08, 2023 Membership No. 511442

Place : New Delhi UDIN: 23511442BGVOBL5646

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Mar 31, 2017

The Members of PNB Gilts Ltd,

Report on the Financial Statements

We have audited the accompanying financial statements of PNB Gilts Ltd. (‘the Company’) which comprise the Balance Sheet as at 31^st March 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material 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 risk of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers the 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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Board as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2017, its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

2. As required by Section 143(3) 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 accounts 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 aforesaid Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.

(d) In our opinion, the Financial Statements comply with the Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representation received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2017 from being appointed as a Director in terms of sub-section(2) of Section 164 of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”.

(g) With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of Companies (Audit and Auditors) Rules, 2014, as amended from time to time, in our opinion and to the best of our information and according to the explanations given to us :

a. The Company has disclosed pending litigations relating to Income Tax in the notes of accounts under Note No.2.34-Contingent liability (claims against the Company not acknowledged as debt) forming a part of financial statements. There is no impact on the financial position in the financial statements of the Company as no provision for the same has been created by the Company during the period under review.

b. The Company does not have any material foreseeable losses on long term contracts including derivative contracts.

c. The Company has transferred Rs, 4,80,999 on 10^th October, 2016, being unclaimed final dividend pertaining to financial year 2008-09 to the Investor Education & Protection Fund which was due and supposed to be transferred to Investor Education & Protection Fund by 20^th October, 2016. Thus there has been no default in transferring the amounts due and required to be transferred to the Investor Education & Protection Fund.

d. The Company has provided requisite disclosures in the financial statements as to holding as well as dealings in Specified Bank Notes during the period from 8^th November, 2016 to 30^th December,

2016 and these are in accordance with the books of accounts maintained by the Company. (Refer Note 2.37 to the financial statements).

3. As required by the Comptroller and Auditor General of India through directions issued under Section 143(5) of

the Act, we give a report in the attached Annexure C.

(Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements of our report of even date to the Financial Statements of the Company for the year ended March 31, 2017) Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, 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 conducted physical verification of its fixed assets on quarterly basis for the head office and yearly for the branch offices. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were observed during the physical verification of assets.

(c) The Company owns only flats as immovable properties. The title deeds of the flats are in the name of the Company.

(ii) (a) The Company’s inventory comprising of Treasury Bills and Dated Government Securities are held

in the form of Subsidiary General Ledger (SGL) account maintained with the Reserve Bank of India and the said stock is verified by the management with the confirmation certificate received from Reserve Bank of India on a monthly basis. The stock of other securities held by the Company in de-materialized form with NSDL/SHCIL, is verified by the management with the confirmation certificates received from them on a monthly basis. In our opinion, the frequency of such verification is reasonable. No material discrepancies were observed during the physical verification of inventory as compared to book records.

(iii) In accordance with the legal opinion obtained by the company, the Directors of the Company who are nominees of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under Section 189 of the Companies Act, 2013. The Company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained u/s 189 of the Act. The Company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained u/s 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, no loans, investments, guarantees and securities have been given by the Company to concerns which are covered under Section 185 of the Companies Act, 2013 and Section 186 of the Companies Act, 2013.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 73 of the Companies Act, 2013 to Section 76 of the Companies Act, 2013 or any other relevant provisions of the Companies Act, 2013 and rules framed there under.

(vi) In our opinion and according to the information/explanations given to us, maintenance of the cost records for the products/services/activities of the Company has not been prescribed by the Central Government under Section 148(1) of the Companies Act, 2013.

(vii) (a) In our opinion and according to information/explanations given to us, the Company is regular in

depositing undisputed statutory dues including Provident fund, Employees’ State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues to the appropriate authorities.

(b) In our opinion and according to information/explanations given to us, the Company has some disputes which have resulted into demands under the Income Tax Act, 1961 which have not been deposited. The details of which are given below:

Assessment Year	Amount involved	Forum where dispute is pending
2010-2011 under Section 143(3) of the Income Tax Act, 1961	46.39	ITAT
2012-2013 under Section 143(3) of the Income Tax Act, 1961	356.58	ITAT
2013-2014 under Section 143(3) of the Income Tax Act, 1961	205.25	CIT Appeals
2010-2011 under Section 271(1)(c) of the Income Tax Act, 1961	3.86	CIT Appeals
2014-15 under Section 143(3) of the Income Tax Act, 1961	277.72	CIT Appeals

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank as applicable.

(ix) In our opinion and according to the information and explanations given to us, the Company has not raised any money out of initial public offer or further public offer (including debt instruments). The Company has not raised any term loan during the year under audit.

(x) According to the information and explanations given to us, we have neither come across any instance of fraud on or by the company noticed or reported during the year nor have we been informed of such case by the management during the course of our audit.

(xi) In our opinion and according to the information and explanations given to us, the managerial remuneration paid by the Company is in accordance with provisions of Section 197 read with Schedule V to the Companies Act, 2013. The Company has also taken requisite approvals as mandated by the provisions of Section 197 in terms of managerial remuneration being paid.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company, thus this para does not apply to it.

(xiii) In our opinion and according to the information and explanations given to us, the Company has complied with requirements of Section 177 of the Companies Act, 2013 and Section 188 of the Companies Act, 2013 in relation to the related parties. The Company has also disclosed the requirements as laid down in the accounting standards in the relation to the related parties in the financial statements in the Note No. 2.25- Related Party Information.

(xiv) In our opinion and according to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or convertible debentures during the year under review.

(xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with the Directors or persons connected with it during the year under review.

(xvi) In our opinion and according to the information and explanations given to us, the Company is a NBFI already registered under Section 45 I-A of the Reserve Bank of India Act, 1934

Annexure - “B” to the Independent Auditor’s Report

(Referred to in Paragraph 2 (f) of Report on other Legal and Regulatory Requirements of our report of even date to the Financial Statements of the Company for the year ended 31^st March, 2017)

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

We have audited the internal financial controls over financial reporting of PNB Gilts Ltd (“the Company”) as of 31 March, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

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

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit.

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

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

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

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Kapoor Tandon & Co.,

Chartered Accountants .

FRN: 000952C

(Devendra Swaroop Mathur)

Dated : May 12, 2017 Partner

Place : New Delhi Membership No.082570

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Mar 31, 2015

We have audited the accompanying financial statements of M/s.PNB Gilts Ltd. ("the Company") which comprise the Balance Sheet as at March 31,2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's 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 Section 133 of the Companies Act, 2013 ("the Act"). This responsibility includes the design, 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material 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 risk of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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 accepted in India.

(a) In the case of the Balance Sheet of the state of affairs of the Company as at March 31,2015.

(b) In the case of the Statement of Profit & Loss of the profit of the Company for the year ended on that date and

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

Report on Other Legal and Regulatory Requirements

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

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

(a) We have 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 accounts as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts and returns.

(d) In our opinion, the Financial Statements comply with the Accounting Standards referred to in Section 133 of the Act.

(e) On the basis of the written representation received from the Directors as on March 31,2015 and taken on record by the Board of Directors in meeting held on April 29, 2015, none of the Directors is disqualified as on March 31,2015 from being appointed as a director in terms of Sub-Section(2) of Section 164 of the Act.

(f) In our opinion, the Company has adequate internal financial controls system in place and also there is operating effectiveness of such controls.

(g) In accordance with Para 11 of Rule 11 of Companies (Audit and Auditors) Rules, 2014 relating to such matters as may be prescribed:

a. In our opinion, the Company has disclosed the impact of pending litigations in the financial statements.

b. In our opinion, no amount has been transferred by the company in the Investor Education & Protection Fund during the year and also there has been no default in transferring any amounts to the Investor Education and Protection Fund.

c. In our opinion, the Company does not have any material forseeable losses on long term contracts.

3. In accordance with provisions of Section 143(5) of Companies Act, 2013 and in terms of directions issued by the Comptroller and Auditor General of India during the course of audit of annual accounts of PNB Gilts Limited, we report that:

a. The Company has not been selected for disinvestment, thereby there is no status report on valuation of assets and liabilities which needs to be examined.

b. The Company has not waived/written off any debt/loan or interest during the year under consideration.

c. The Company does not have any inventories lying with the third parties excepting for the securities pledged with RBI/CCIL for availing secured loans for which proper records have been maintained by the company. Similarly, the Company has not received any asset as a gift from the Central Government or other authorities.

d. As informed to us, there are no pending legal cases or arbitrations pending against the company except the following Income Tax assessments which are given below:

(Rs. in lacs)

Assessment Amount Forum where dispute is pending Year involved

2006-2007 198.97 Income Tax Appellate Tribunal, New Delhi (ITAT)

2010-2011 46.39 Income Tax Appellate Tribunal, New Delhi (ITAT)

2012-2013 356.58 CIT Appeals

Assessment Reason for pendency Year

2006-2007 Pending for Fixation of hearing at the ITAT

2010-2011 Pending for Fixation of hearing at the ITAT

2012-2013 Pending for Fixation of hearing at the CIT-Appeals

Out of the above the Income Tax Department has retained and not given refunds of Rs. 118.60 lacs towards the above outstanding demands. As per the information and explanations given to us, the Company has engaged an income tax consultant for carrying out of the day to day tax compliances, appearances before the Income Tax authorities and arguing cases at various appellate levels. The Income tax consultant is being paid a retainership fees of Rs. 20,000 (plus service tax) per month towards carrying out all the above works.

Annexure to the Auditors' Report

(Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements of our report of even date)

Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, we report that to the best of our knowledge and belief:

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

(b) The Company has conducted physical verification of its fixed assets during the year. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the company and the nature of the assets. No material discrepancies were observed during the physical verification of assets.

(ii) (a) The Company's inventory comprising of Treasury Bills and Dated Government Securities are held in the form of Subsidiary General Ledger (SGL) account maintained with the Reserve Bank of India and the said stock is verified with the confirmation certificate received from Reserve Bank of India. The stock of other securities are held by the company in de-materialized form with NSDL/SHCIL, and the same is verified with the confirmation certificates received from them at the year end. In our opinion, the frequency of such verification is reasonable.

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

(c ) The Company is maintaining proper records of inventory. No discrepancy is noticed on physical verification of inventory as compared to book records.

(iii) In accordance with the legal opinion obtained by the company, the Directors of the Company who are nominees of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under Section 189 of the Companies Act, 2013. The Company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained u/s 189 of the Act. The company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained u/s 189 of the Act.

(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 the business for the purchase of inventories and fixed assets and for the sale of goods and services. We have not observed any continuing failure to correct major weakness in internal control system during the course of the audit.

(v) To the best of our knowledge, the Company has not accepted any deposits from the public within the meaning of Section 73 to 76 of the Act and Rules framed thereunder.

(vi) To the best of our knowledge and according to the information/explanations given to us, maintenance of the cost records has not been prescribed by the Central Government under Section 148(1) of the Companies Act, 2013.

(vii) To the best of our knowledge and according to information/explanations given to us, the Company is regular in depositing undisputed statutory dues including Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities.

However, under the Income Tax Act, the following amounts are under dispute, the details of which are as under:

(Rs. in lacs)

Assessment Year Amount involved Forum where dispute is pending

2006-2007 198.97 ITAT

2010-2011 46.39 ITAT

2012-2013 356.58 CIT Appeals

Out of the above the Income Tax Department has retained and not given refunds of Rs 118.60 lacs towards the above outstanding demands.

All the amounts which are required to be transferred to Investor Education & Protection Fund have been transferred within time.

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

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank or debenture holders as applicable.

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

(xi) The Company has not raised any term loan during the year under audit.

(xii) According to the information and explanations given to us, we have neither come across any instance of fraud on or by the company noticed or reported during the year nor have we been informed of such case by the management during the course of our audit.

Dated : April 29, 2015 For Kapoor Tandon & Co. Place : New Delhi Chartered Accountants FRN: 000952C

(Himanshu Kapoor) Partner Membership No.078180

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Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

The Company''s 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material 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 the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date, and

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

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 purposes of our audit.

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

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

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

(e) On the basis of the written representations received from the directors as on March 31, 2014 and taken on record by the Board of Directors in meeting held on April 26, 2014, 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.

Annexure to the Auditors'' report

(Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements of our report of even date) Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, we report that to the best of our knowledge and belief:-

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

(b) The Company has conducted physical verification of its fixed during the year. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the company and the nature of its assets. 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 company''s inventory comprising of Treasury Bills & Dated Govt. Securities are held in the form of

Subsidiary General Ledger (SGL) account maintained with the Reserve Bank of India and the said stock is verified with the confirmation certificate received from Reserve Bank of India. The stock of other securities are held by the company in de-materialised form with NSDL/SHCIL and the same is verified with the confirmation certificates received from them at the year end. In our opinion, the frequency of such verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. No discrepancy is noticed on physical verification of inventory as compared to book records.

(iii) In accordance with the legal opinion obtained by the company, the Directors of the Company who are nominees of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under Section 301 of the Companies Act, 1956. The company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act. The company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained u/s 301 of the Act.

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

(v) In accordance with the legal opinion obtained by the company, the Directors of the Company who are nominees of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under Section 301 of the Companies Act, 1956. Based on the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that there are no transactions which need to be entered into the register maintained under Section 301 of the Companies Act, 1956.

(vi) To the best of our knowledge, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and rules framed there under.

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

(viii) To the best of our knowledge and according to the information/explanations given to us, maintenance of the cost records has not been prescribed by the Central Government under S ection 209(1) (d) of the Companies Act, 1956.

(ix) To the best of our knowledge and according to information / explanations given to us the Company is regular in depositing undisputed statutory dues including Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. There were no arrears of outstanding undisputed statutory dues as at the last day of the financial year for a period of more than six months from the date they become payable.

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

(xi) In our opinion & according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution or bank or debenture holders as applicable.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records, where the company has granted loans and advances on the basis of security by way of pledge of securities.

(xiii) In our opinion and according to the information and explanations given to us, the provisions of special statute applicable to a chit fund or a nidhi/ mutual benefit fund/ societies are not applicable to the company.

(xiv) According to the information and explanations given to us, the company is dealing or trading in shares, securities, debentures and other investments and proper records have been maintained for the same. All the shares, securities, debentures and other investments are held in the name of the company.

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

(xvi) The Company has not raised any term loan during the year under audit.

(xvii) To the best of knowledge and information and explanation given to us, 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) According to information and explanations given to us, the Company has not issued any debenture during the year.

(xx) According to information and explanations given to us the Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, we have neither come across any instance of fraud on or by the company noticed or reported during the year nor have we been informed of such case by the management during the course of our audit.

For S. Mohan & Co. Chartered Accountants (R. K. Mittal) Place : New Delhi FCA Date : April 26, 2014 Partner Membership No. 088767

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Mar 31, 2013

1. We have audited the attached Balance Sheet of PNB GILTS LTD. as at March 31, 2013 and also 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 Companyls 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. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together tthe orderl) issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956 of India (the Act) 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 in paragraph 3 above, we report that :

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

ii) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from liaison offices of the Company.

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

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

v) On the basis of written representation received from the Directors as on March 31, 2013 and taken on record by the Board of Directors in meeting held on April 27, 2013 we report that none of the Director is disqualified as on March 31, 2013 from being appointed as director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read in conjunction with the significant accounting policies (Note-1) and notes on accounts (Note-2), 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;

a) In the case of 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 Profit of the Company for the year ended on that date.

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

Annexure referred to in Paragraph 3 of our report of even date to the members of PNB Gilts Limited, New Delhi on the accounts of the Company for the year ended March 31, 2013.

Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, we report that to the best of our knowledge and belief:-

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

(b) The Company has conducted physical verification of its fixed assets during the year. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. 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 Companyls inventory comprising of Treasury Bills & Dated Govt. Securities are held in the form of Subsidiary General Ledger (SGL) account maintained with the Reserve Bank of India and the said stock is verified with the confirmation certificate received from Reserve Bank of India. The stock of other securities are held by the Company in de-materialised form with NSDL/SHCIL and the same is verified with the confirmation certificates received from them at the year end. In our opinion, the frequency of such verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. No discrepancy is noticed on physical verification of inventory as compared to book records.

(iii) In accordance with the legal opinion obtained by the Company, the Directors of the Company, who are nominees of Punjab National Bank, are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under Section 301 of the Companies Act,1956. The Company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act. The Company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained u/s 301 of the Act.

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

(v) In accordance with the legal opinion obtained by the Company, the Directors of the Company, who are nominee of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not to be required to be listed in the register to be maintained under Section 301 of the Companies Act, 1956. Based on the audit procedures applied by us and according to the information and explanations given to us, we are of opinion that there are no transactions, which need to be entered into the register maintained under Section 301 of the Companies Act, 1956.

(vi) To the best of our knowledge, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and rules framed there under.

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

(viii) To the best of our knowledge and according to the information/explanations given to us, maintenance of the cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956.

(ix) To the best of our knowledge and according to the information / explanations given to us the Company is regular in depositing undisputed statutory dues including Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. There were no arrears of outstanding undisputed statutory dues as at the last day of the financial year for a period of more than six months from the date they become payable.

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

(xi) In our opinion & according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank or debenture holders as applicable.

(xii) Based on our examination of documents and records, we are of the opinion that the Company has maintained adequate records, where the Company has granted loans and advances on the basis of security by way of pledge of securities.

(xiii) In our opinion and according to the information and explanations given to us, the provisions of special statute applicable to a chit fund or a nidhi/ mutual benefit fund/ societies are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company is dealing or trading in shares, securities, debentures and other investments and proper records have been maintained for the same. All the shares, securities, debentures and other investments are held in the name of the Company.

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

(xvi) The Company has not raised any term loan during the year under audit.

(xvii) To the best of knowledge and information and explanation given to us, 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) According to information and explanations given to us, the Company has not issued any debenture during the year.

(xx) According to information and explanations given to us, the Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year nor have we been informed of such case by the management during the course of our audit.

For S. Mohan & Co.

Chartered Accountants

(R. K. Mittal)

Date : April 27, 2013 Partner

Place : New Delhi Membership No. 088767

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Mar 31, 2012

1. We have audited the attached Balance Sheet of PNB GILTS LTD. as at March 31, 2012 and also the Profit and Loss account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of India (the 'Act'), 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 in paragraph 3 above, we report that :

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

ii) In our opinion, proper books of account as required by law have been kept by the company so far as it appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from liaison offices of the company.

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

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

v) On the basis of written representation received from the Directors as on March 31, 2012 and taken on record by the Board of Directors in meeting held on May 2, 2012 we report that none of the Director is disqualified as on March 31, 2012 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read in conjunction with the significant accounting policies (Note-1) and notes on accounts (Note-2), 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;

a) In the case of Balance Sheet, of the State of affairs of the company as at March 31, 2012.

b) In the case of the Profit & Loss Account, of the Profit of the company for the year ended on that date.

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

Annexure referred to in Paragraph 3 of our report of even date to the members of PNB Gilts Limited, New Delhi on the accounts of the company for the year ended March 31, 2012.

Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, we report that to the best of our knowledge and belief:-

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

(b) The company has conducted physical verification of its fixed assets during the year. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the company and the nature of its assets. 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 company's inventory comprising of Treasury Bills & Dated Govt. Securities are held in the form of Subsidiary General Ledger (SGL) account maintained with the Reserve Bank of India and the said stock is verified with the confirmation certificate received from Reserve Bank of India. The stock of other securities are held by the company in de-materialised form with NSDL/SHCIL and the same is verified with the confirmation certificates received from them at the year end. In our opinion, the frequency of such verification is reasonable.

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

(c) The company is maintaining proper records of inventory. No discrepancy is noticed on physical verification of inventory as compared to book records.

(iii) In accordance with the legal opinion obtained by the company, the Directors of the company who are nominees of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under Section 301 of the Companies Act,1956. The company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act. The company has taken unsecured loans (Call Money) from companies, firms or other parties covered in the register maintained u/s 301 of the Act. The number of parties involved is one and total amount involved in the transactions is Rs.1220 crores with closing balance of Rs. NIL. The rate of interest and other terms and conditions of loans taken are not prima facie prejudicial to the interest of the company and the company is regular in payment of the principal amount and interest.

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

(v) In our opinion, and according to the information and explanations given to us, the transactions which need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered and these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time as confirmed to us by the management.

(vi) To the best of our knowledge, the company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and rules framed there under.

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

(viii) To the best of our knowledge and according to the information/explanations given to us, maintenance of the cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956.

(ix) To the best of our knowledge and according to the information / explanations given to us the Company is regular in depositing undisputed statutory dues including Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. There were no arrears of outstanding undisputed statutory dues as at the last day of the financial year for a period of more than six months from the date they become payable.

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

(xi) In our opinion & according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution or bank or debenture holders as applicable.

(xii) Based on our examination of documents and records, we are of the opinion that the company has maintained adequate records, where the company has granted loans and advances on the basis of security by way of pledge of securities.

(xiii) In our opinion and according to the information and explanations given to us, the provisions of special statute applicable to a chit fund or a nidhi/ mutual benefit fund/ societies are not applicable to the company.

(xiv) According to the information and explanations given to us, the company is dealing or trading in shares, securities, debentures and other investments and proper records have been maintained for the same. All the shares, securities, debentures and other investments are held in the name of the company.

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

(xvi) The company has not raised any term loan during the year under audit.

(xvii) To the best of knowledge and information and explanation given to us, 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) According to information and explanations given to us, the company has not issued any debenture during the year.

(xx) According to information and explanations given to us, the company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, we have neither come across any instance of fraud on or by the company noticed or reported during the year nor have we been informed of such case by the management during the course of our audit.



For S. Mohan & Co.

Chartered Accountants

(R. K. Mittal)

Date : May 2, 2012 Partner

Place : New Delhi Membership No.088767

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Mar 31, 2011

1. We have audited the attached Balance Sheet of PNB GILTS LTD. as at March 31, 2011 and also the Profit and Loss account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together ‘the order’) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 of India (the ‘Act’), 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 in paragraph 3 above, we report that :

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

ii) In our opinion, proper books of account as required by law have been kept by the company so far as it appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from liaison offices of the company.

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

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

v) On the basis of written representation received from the Directors as on March 31, 2011 and taken on record by the Board of Directors in meeting held on April 30, 2011 we report that none of the Director is disqualified as on March 31, 2011 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read in conjunction with the significant accounting policies (Schedule – 18A) and notes on accounts (Schedule – 18B), 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;

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

b) In the case of the Profit & Loss Account, of the Profit of the Company for the year ended on that date.

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

Annexure referred to in Paragraph 3 of our report of even date to the members of PNB Gilts Limited, New Delhi on the accounts of the company for the year ended March 31, 2011.

Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, we report that to the best of our knowledge and belief:-

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

(b) The Company has conducted physical verification of its fixed during the year. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the company and the nature of its assets. 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 company’s inventory comprising of Treasury Bills & Dated Govt. Securities are held in the form of Subsidiary General Ledger (SGL) account maintained with the Reserve Bank of India and the said stock is verified with the confirmation certificate received from Reserve Bank of India. The stock of other securities are held by the company in de-materialised form with NSDL/SHCIL and the same is verified with the confirmation certificates received from them at the year end. In our opinion, the frequency of such verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. No discrepancy is noticed on physical verification of inventory as compared to book records.

(iii) In accordance with the legal opinion obtained by the company the Directors of the Company who are nominees of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under section 301 of the Companies Act,1956.The company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Act. The company has taken unsecured loans (Call money) from companies, firms or other parties covered in the register maintained u/s 301 of the Act. The number of parties involved is one and total amount involved in the transactions is Rs.5070 crores with closing balance of Rs. NIL. The rate of interest and other terms and conditions of loans taken are not prima prejudicial to the interest of the company and the company is regular in payment of the principal amount and interest.

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

(v) In our opinion, and according to the information and explanations given to us, the transactions which need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered and these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time as confirmed to us by the management.

(vi) To the best of our knowledge the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and rules framed there under.

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

(viii) To the best of our knowledge and according to the information/explanations given to us, maintenance of the cost records has not been prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956.

(ix) To the best of our knowledge and according to information / explanations given to us the Company is regular in depositing undisputed statutory dues including Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. There were no arrears of outstanding undisputed statutory dues as at the last day of the financial year for a period of more than six months from the date they become payable.

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

(xi) In our opinion & according to the information and explanations given to us, the company has not defaulted in repayment of dues to the financial institution or bank or debenture holders as applicable.

(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 provisions of special statute applicable to a chit fund or a nidhi/ mutual benefit fund/ societies are not applicable to the company.

(xiv) According to the information and explanations given to us, the company is dealing or trading in shares, securities, debentures and other investments and proper records have been maintained for the same. All the shares, securities, debentures and other investments are held in the name of the company.

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

(xvi) The Company has not raised any term loan during the year under audit.

(xvii) To the best of knowledge and information and explanation given to us, 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) According to information and explanations given to us, the Company has not issued any debenture during the year.

(xx) According to information and explanations given to us the Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, we have neither come across any instance of fraud on or by the company noticed or reported during the year nor have we been informed of such case by the management during the course of our audit.

For S. Mohan & Co. Chartered Accountants

(R. K. Mittal)

Partner Membership No. 088767

Date : April 30, 2011 Place: New Delhi

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Mar 31, 2010

We have audited the attached Balance Sheet of PNB GILTS LTD., as at March 31, 2010 and also 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.

Without qualifying our opinion we draw attention to Note No. 12 of Schedule 19 B pertaining to change in policy regarding transfer of a portion of Government Securities in the HTM category as permitted by the RBI vide circular dated August 31, 2009 (subject to certain conditions) and as a result thereof further diminution in market value of securities as on March 31, 2010 to the tune of Rs. 213.04 lacs not provided in the books.

As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 & 5 of the said order to the extent applicable to the Company.

Further to our comments in the annexure we report that:

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

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books (and proper returns adequate for the purpose of our audit have been received from the branches not visited by us).

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

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

(v) On the basis of written representations received from the Directors, as on March 31, 2010 and taken on record by the Board of Directors in its meeting held on May 3, 2010, we report that none of the Director is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) The Govt. has not notified the rate of cess envisaged under Section 441A(i), of the Companies Act, 1956 hence, no provision/payment has been made for the same (refer Note no. 14 of schedule 19(B)).

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

(b) in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and (c ) in the case of Cash Flow Statement, of the cash flow for the year ended on that date.

Annexure referred to in our report of even date to the members of PNB Gilts Limited, New Delhi on the accounts of the company for the year ended March 31, 2010

1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. The fixed assets have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. As informed to us, no material discrepancies were noticed on such verification. Further, no substantial part of fixed assets have been disposed off during the year.

2. (a) The companys stock comprising of Treasury Bills & Dated Govt. Securities is held in the form of Subsidiary

General Ledger Account, maintained with the Reserve Bank of India. The said stock in the SGL account was verified with the confirmation certificate received from the Reserve Bank of India. The stock of other securities held by the company in de-materialised form in NSDL / SHCIL was verified with the confirmation certificate received from them at the year end.

(b) The existing procedures of reconciliation of stock followed by the management at periodical interval is reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The company is maintaining proper records of its inventory and no material discrepancies were noticed on the reconciliation as mentioned above, as compared with book records.

3. In our opinion and according to the information and explanations given to us, the internal control procedure for purchase of fixed assets, companys money market operations and trading in Government Securities, Corporate Bonds, Debentures and Equities are commensurate with the size of the company and nature of its business.

4. In accordance with the legal opinion obtained by the company the Directors of the company who are nominees of Punjab National Bank are not to be regarded as concerned or interested. Hence the transactions with Punjab National Bank are not required to be listed in the register to be maintained under section 301 of the Companies Act, 1956. Further, for other transactions as required to be entered into the register in pursuance to Section 301 to the Companies Act, 1956 have been entered. Further, these transactions have been made at prices which are reasonable having regard to the prevailing market price as observed from test check basis.

5. The Company has not accepted any deposits from the public, hence the provisions of Section 58A & 58AA of the Companies Act, 1956 are not applicable.

6. The Company has an Internal Audit System which in our opinion is commensurate with the size of the company and nature of its business.

7. (a) According to the records made available and information provided to us, the company is regular in depositing

undisputed statutory dues like Provident Fund, Investor Education and Protection Fund, Service Tax and other Statutory Dues with the appropriate authorities. Further, as explained to us, the provisions for Employee State Insurance, Sales Tax, Wealth Tax, Customs Duty, Excise Duty are not applicable to the company during the year. In the absence of notification/ guidelines for levy of Cess towards rehabilitation of Sick Industries, the dues remain unascertained and not deposited. However, in respect of undisputed Advance Income Tax there have been delays by the Company in depositing the same. The arrears of Advance Income Tax outstanding beyond six months as on March 31, 2010 are as follows:-

Name of the Statute Nature of Amount the dues (Rs. in lacs)

The Income Tax Act, 1961 Advance 54.49 Income Tax

The Income Tax Act, 1961 Advance 511.41 Income Tax

Name of the Statute Period to which Due date Date of the amount payment relates (with interest)

The Income Tax Act, 1961 1st Installment 15.06.09 28.04.10 of Advance Tax for 2009-10

The Income Tax Act, 1961 2nd Installment 15.09.09 28.04.10 of Advance Tax for 2009-10

(b) According to the information and explanation given to us there are no dues of Income Tax/ Service Tax and other Statutory Dues, which have not been deposited on account of any dispute.

8. According to information and explanation given to us, the Company has not defaulted in repayment of dues to the financial institution / bank / debenture holder during the year.

9. In respect of the Companys dealings in Treasury Bills, Certificate of Deposits, Commercial Paper, Dated Govt. Securities, Corporate Bonds, Debentures and Equities, proper records have been maintained and timely entries have been made thereof. Since the principal business of the company consists of buying and selling of securities, the provisions of Section 49(1) of the Companies Act, 1956, regarding holding of investments in its own name are not applicable to it.

10. According to the information and explanation given to us, no fraud has been committed to or by the Company during the year.

11. The provisions of para (iii), (viii), (x), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix) and (xx) are not applicable during the year ended March 31, 2010.

For Bansal R. Kumar & Associates Chartered Accountants

(R. K. Gupta) Date : May 3, 2010 Partner Place : New Delhi Membership No. 86851